The U.S. Can’t Keep Dodging the Trade Issue in Asia
(Bloomberg Opinion) -- Antony Blinken’s first official trip to Southeast Asia ended on a deflating note — cut short after a member of his traveling entourage tested positive for Covid-19. What’s most disappointing isn’t how the U.S. secretary of state left the region, though. It’s what he didn’t say while there.
Blinken spent a great deal of time talking about U.S. priorities, from China’s activities in the South China Sea to the coup in Myanmar. But he generally avoided the topic most local leaders would prefer to discuss: trade. The “Indo-Pacific economic framework” he touted in a speech in Jakarta on Tuesday remains maddeningly vague on details. What little has come out since President Joe Biden first raised the idea in October suggests the U.S. is hoping to enlist allies to secure supply chains, strengthen export controls, and write technical standards and rules to counter China. Asian nations understandably fear the whole endeavor is meant to distract from the administration’s unwillingness or inability to offer greater access to the U.S. market.
Such a dodge would be deeply unwise. Since Biden took office, the U.S. has recovered much ground lost to China in the region — strengthening security ties with allies and partners, regaining the diplomatic initiative on issues ranging from vaccines to climate, and reviving faith in U.S. leadership. At the same time, it continues to lag badly on measures of economic engagement. China trades nearly three times as much with the rest of the region as the U.S. does and far outpaces Washington in economic diplomacy. This week, the United Nations estimated that China would be one of the biggest beneficiaries of increased intra-regional trade once the Regional Comprehensive Economic Partnership goes into effect next year.
China has even applied to join the Comprehensive and Progressive Trans-Pacific Partnership, the successor to an agreement negotiated by the Obama administration in large part to restore U.S. economic leadership in the region. Current members, especially U.S. allies such as Japan and Australia, have plenty of reason to question whether China would ever uphold the spirit and high standards of the agreement. But, given the potential economic gains, even they will be hard-pressed to resist its entry forever if the U.S. refuses to offer any alternative.
The obvious course — and the one most favored by America’s partners in the region — is for the U.S. to join CPTPP. While administration officials may be correct to assume that such a volte-face would be politically hazardous before the midterms, they shouldn’t write off the possibility entirely. Support for trade is broader among the general public than key Democratic constituencies. If Congress passes Biden’s Build Back Better legislation, he can credibly claim to have fulfilled his promise to invest in American workers before signing any trade deals. Republican China hawks should in theory be supportive.
Biden’s predecessor even developed a template: Pronounce the existing deal flawed, negotiate a few key changes, and declare victory. Importing some of the stiffer labor and environmental protections from the U.S.-Mexico-Canada trade pact, for instance, would help address at least some of the concerns of progressives, and the deal no longer includes some of the intellectual-property provisions they earlier opposed. Adding a climate chapter could help promote green goods and services.
Merely signaling interest in rejoining might at least encourage U.S. allies to slow-walk China’s bid. If even that proves too politically fraught, the administration needs to ensure that its “framework” includes some measurable increase in access to U.S. markets, and isn’t pitched solely as a means of containing Beijing. Its best option might be to include a robust digital trade chapter, drawing on the USMCA and focused primarily on smoothing cross-border trade, including by digitizing customs documentation and payments, which could greatly aid small and medium-sized businesses in the region.
Biden’s respect for U.S. partners in Asia and his concern for American workers are both commendable. He should remember that a more open trade policy, properly designed, will benefit both.
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