The Trump administration’s China-bashing strategy is based on the mistaken belief that a newly muscular US has all the leverage in dealing with its presumed adversary, and that any Chinese response is hardly worth considering. Nothing could be further from the truth.
Even before Donald Trump enters the White House and formally abandons a U.S.-led trade deal that represented a cornerstone of his country’s economic policy in Asia, Chinese President Xi Jinping will get a chance to prove his willingness to step into the leadership vacuum.
A logical implication of the externality argument is that trade agreements lead to freer trade. Some have equated this with the argument for free trade, but the arguments are quite distinct. The case for free trade rests on strong assumptions that may or may not be reasonable.
Is the TPP really targeting China? US President Barack Obama said on Monday, “we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”
This is not the first time that Obama expressed such views. This seems to prove that the US-led TPP is aimed at China. Objectively speaking, some TPP partners want to use the agreement as leverage against China. But it’s not surprising that geopolitical considerations mingle with economic relations.
The Trans-Pacific Partnership is the biggest trade agreement in history, reducing tariffs and other forms of protectionism in a dozen countries making up about 40 percent of the global economy with economic output of almost $30 trillion. The White House estimates it will eliminate 18,000 tariffs on U.S.-manufactured goods, while giving everyone from Vietnamese shrimpers to New Zealand dairy farmers cheaper access to markets across the Pacific.
Global swing states are nations that possess large and growing economies, occupy central positions in a region or stand at the hinge of multiple regions, and embrace democratic government at home. Increasingly active at the regional and global level, they desire changes to the existing international order but do not seek to scrap the interlocking web of global institutions, rules, and relationships that has fostered peace, prosperity and freedom for the past six decades.
A new free-trade agreement is under negotiation in the Asia-Pacific. If the talks are successful, the Trans-Pacific Strategic Economic Partnership Agreement (TPP) will bring closer together at least 11 economies in East Asia and the Americas. But it faces many hurdles, and raises broader geopolitical issues. For example, China, the world’s second-largest economy, is not part of the negotiations, and may see the TPP as an effort to contain its growing power.