Take a look at the beta version of dw.com. We're not done yet! Your opinion can help us make it better.
China has scored a major multilateral trade deal with traditional US allies such as Japan and South Korea. The pact will raise the stakes of Washington's protectionist turn on Trump's watch, DW's Ashutosh Pandey writes.
President Donald Trump pulled out of the Trans-Pacific Partnership (TPP) within days of assuming office as part of his "America First" push. The free trade deal with the United States and 11 other Pacific Rim countries had been assiduously nurtured by his predecessor, President Barack Obama, as a centerpiece of his pivot to Asia.
At a time when Trump was trying, mostly unsuccessfully, to fire up struggling US manufacturing industries and bullying partners to sign up for bilateral trade pacts, China and some of the traditional US allies such as Japan, South Korea and Australia were "negotiating with blood, sweat and tears," in the words of the Malaysian trade minister, to form the world's biggest free trade bloc: the Regional Comprehensive Economic Partnership (RCEP).
The RCEP's 15 countries include all 10 member states of the Association of Southeast Asian Nations and China, Japan, Australia, New Zealand and South Korea. This means that the free trade bloc would encompass nearly one-third of the world's population and economic output. So Trump's inward-looking economic policy has taken the US from forming an economic bulwark against a rising China to becoming a bystander as Beijing boosts its regional heft, aided by some of Washington's closest allies.
The trade deal would only increase China's preeminence in global supply chains, undermining US efforts to cut Beijing's clout in global trade. It threatens to make US companies less competitive in the region and further diminish the importance of the US on the trade front.
Geopolitical blow to the US
By signing up for a multilateral trade deal, a first for the Asian economic powerhouse, Beijing is trying to project itself as a supporter of free trade. This is likely to give heart to many of Beijing's detractors, worried about China-centric supply chains as evident during the pandemic, only making it difficult for Washington to build multilateral alliances to rein in China, something US President-elect Joe Biden plans to do.
The geopolitical implications of the RCEP for the US should also worry China hawks in Washington. The fact that two of Washington's key strategic partners — Japan and South Korea — are cozying up with their bete noire just shows that US friends, frustrated with Trump's protectionist turn and unpredictability, are moving on. Even Australia, which has so far refused to sign up for any US-led containment of China, has endorsed the deal, despite an ongoing diplomatic rift with Beijing, its biggest trade partner by far.
Biden can ill afford to remain on the sidelines as China helms a new Asian trade order. He must clean up the mess created by Trump and reset trade alliances with traditional partners in a more predictable and less bellicose atmosphere.
Just a more amenable Trump?
A return to TPP's successor agreement could be an option, even though there seems to be little appetite for new trade deals in the US where economic nationalism unleashed by Trump has spread its tentacles wide and deep. A divided Congress is only going to make Biden's task more difficult and would need the career politician to channel all his decadeslong experience to forge alliances at the Capitol Hill and bring back America's traditional, bipartisan trade policy that Trump abandoned.
To be fair, Biden hasn't ruled out joining the CPTPP, as the TPP is now called, albeit with some changes, but he must put it down as one of his administration's priorities. We all know how long these talks can linger.
Biden's opportunity lies in the fact that the RCEP in its current form is largely an old-school deal, which obsesses with tariffs and leaves out the more contentious issues like environmental and labor standards and intellectual property. That leaves space for Biden to get like-minded partners like the EU and Japan, who care more about these issues, onboard for more sustainable trade pacts.
But, above all Biden must stop being just a more predictable and amenable clone of Trump. He must tone down his "Buy America" stance and make America the champion of free trade again.