Regional News
This is a re-posted opinion piece.
The U.S. is leaving itself behind as allies—and China—ink trade deals left and right.
After years of delay, the United States last week approved three free trade agreements, including a landmark accord with South Korea. Behind the fanfare that accompanied their passage, however, lies a stark reality: Washington is failing to demonstrate leadership in expanding international trade. This failure threatens to undermine not only America’s economic ambitions but also its aim of preserving strategic influence, especially in Asia.
With the exception of the U.S.-South Korea free trade agreement, America has signed not a single trade pact since 2007. Two other agreements signed during the George W. Bush administration, with Panama and Colombia, languished in Washington for four and five years, respectively, before being ratified last week. All of them could have been approved years ago; renegotiations with the Koreans to secure concessions on automobile exports yielded little substantive change.
The long delay in passing these agreements until now has dampened the enthusiasm of foreign governments for talks with America. This imposes real foreign policy costs. Washington has typically used trade links to deepen ties to key partners.
In Asia, where the business of the region is quite often business, Washington’s trade posture is a key sign of its presence and continued commitment to the region. As Korean President Lee Myung-bak observed before his recent visit to Washington, “For us, the FTA is not just simply a trade agreement or an economic agreement. It really is much more than that. . . . [It] will play a very important part of the Obama administration’s new Asia policy as well.”
Yet precisely what part trade policy will play remains unclear. And as China becomes the largest trading partner of many Asian nations, governments increasingly worry about their economic vulnerability should ties with Beijing sour.
Leaders would like to hedge their economic bets and to see America more engaged in the region. Singapore’s Lee Kwan Yew summed this up last year: “There is still time for the U.S. to counter China’s attraction by instituting a free-trade agreement with other countries in the region. This would prevent these countries from having an excessive dependence on China’s market.”
A lack of trade leadership from Washington leaves these countries in the lurch, deprived of opportunities to negotiate with the country with which they would most like to deepen ties. This is a concern especially as Asian governments see Washington, bedeviled by fiscal problems at home, contemplating reduced defense and foreign-aid budgets that could dent America’s footprint around the Pacific. Continued complacency on trade could further contribute to a picture of a disengaged America with less to offer the region’s countries in the future than in the past.
Already there are signs of what may happen if this American disengagement on trade continues. One consequence will be the development of a complex and overlapping web of intra-regional trade deals. Members of the Association of Southeast Asian Nations have secured FTAs with India, Korea, Australia and New Zealand. Japan has signed a raft of agreements, including with Indonesia, Singapore and Vietnam. India has deals with Thailand and Malaysia, and is negotiating a free trade agreement with the European Union. A new report by the Council on Foreign Relations points out that Asian countries have concluded or are negotiating nearly 300 trade deals—none of which include America.
Such trade deals among America’s partners leave the U.S. out of the economic loop, but at least they’re not an obvious strategic threat. The problem is that such deals are no substitute for U.S. engagement in a strategic sense, and while America remains mostly disengaged on trade, China does not—having secured agreements already with Asean, Singapore, Pakistan, New Zealand, Chile, Peru and Costa Rica.
Many of these accords must be taken with a grain of salt on the economic merits; they tend not to produce the same degree of liberalization as the comprehensive agreements more frequently pursued by the U.S. Nevertheless, Beijing’s aggressive promotion of trade as an element of its foreign policy is obvious throughout the region. It has even secured an economic cooperation agreement with Taiwan, which provides a stellar example of Chinese soft power at work.
The costs to America of standing aloof from this trade-negotiation frenzy will only increase. So now, with the Korea trade deal under its belt, the Obama administration should launch a rethink of its trade policy in Asia.
There are signs such a rethink may be underway. At the Asia-Pacific Economic Cooperation summit in Honolulu next month, the Obama administration hopes to announce the framework of a Trans-Pacific Partnership, a trade liberalization pact with eight Pacific Rim countries. By all accounts, the announcement will not include concrete, negotiated steps toward freer trade, but rather will point the way forward. It is, at least, a start.
Restoring America’s trade prestige will not be a matter of one announcement, however. By aggressively promoting trade throughout the Pacific and the world, by pressing forward with TPP negotiations, and by seeking other creative ways to deepen its foreign economic ties, America can at once serve both its national security and its economic interests. Washington’s competitors and collaborators are not standing still, and neither should America.
Mr. Fontaine is a senior advisor at the Center for a New American Security.
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By: Richard Fontaine
Source: The Wall Street Journal, Opinion Asia, October 26, 2011
To view the original article, click here.
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