Since President Donald Trump’s arrival on the political scene, the United States has, in many respects, been in retreat from the world stage. A significant aspect of this withdrawal has been focused on free trade. An outspoken critic of these measures from the start, Trump has focused his heavy criticism on the Trans-Pacific Trade Partnership, which expanded trade between the United States and the Asia-Pacific region and was set to become the world’s largest free trade deal. “The Trans-Pacific Partnership is another disaster done and pushed by special interests who want to rape our country,” Trump said at a 2016 campaign rally in St. Clairesville, Ohio. And this was not empty rhetoric — on his third day in office, Trump withdrew the United States from the agreement, claiming he was doing a “great thing for the American worker.”
The involvement of the United States in the Asia-Pacific region did not start with the TPP. It also did not start with the so-called ‘Asia pivot’ approach of the Obama administration, which focused on deepening the United States’ ties in the Asia-Pacific region and making sure that “the United States — and not countries like China — [were] the one[s] writing this century’s rules for the world’s economy.” As Edward Alden, a senior fellow at the Council on Foreign Relations, explained in an interview with the HPR, this was not the United States’ first attempt to influence trade in the region: “It was really, during the Bush administration, a way to try to continue to move forward on trade liberalization at a time when the Doha Round, multilateral negotiations, was hopelessly stalled.” The United States also served at the forefront of negotiations in order to ensure that this agreement was created, using its leadership to bring countries together to cooperate and compromise on this issue.
On the whole, the United States’ withdrawal from the TPP did not hinder trade in the Asia-Pacific region — instead, the emergence of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the TPP’s successor agreement, signified a continued commitment by powers in the region to ensure trade liberalization. More importantly, the withdrawal of the United States from the agreement weakened its strategic ties in the region and opened the door for countries like China to further increase their influence there. Alden wrote that this move gave something away for nothing, putting the United States in a weaker strategic position in the Asia-Pacific.
A Missed Opportunity
While this trade agreement included many benefits, one of the main goals of the TPP was to create a fully integrated economic region and set rules for global investment and trade. This agreement, which covered about 40 percent of world trade, was set to become the largest trade deal ever signed by the United States. In addition to the agreement’s global impact, the United States was projected to experience gains in economic growth as a result of the TPP. As Peter A. Petri and Michael G. Plummer, two experts on international economics, wrote, it was projected that the TPP would have led to an increase in real incomes of $131 billion, or about 0.5 percent, to U.S. GDP by 2030.
However, for the United States, this economic boom was not even slated to be the greatest benefit of involvement in the region. In an interview with the HPR, the Center for Strategic and International Studies’ Matthew Goodman explained that, while the economic effects were significant, the true power of this agreement was more strategic — it would allow the United States “to deepen our engagement in this critical region … [and] whether you’re talking economically or politically or even from a security point of view, that this is where the action is going to be.” Prior initiatives like the Asia pivot prove that deals such as the TPP can play a crucial role in serving the United States’ economic and geopolitical interests by allowing it to strengthen its leadership and build alliances in the region, while also having a hand in rewriting global trade regulations. Withdrawing from this agreement, meanwhile, threatened to weaken the United States’ position in the region, making it harder for the country to pursue these strategic interests.
And the domestic costs were not the only potential consequences of U.S. withdrawal from the TPP — experts worried about the future of trade in the Asia-Pacific region too. “The TPP was negotiated over about a seven-year period, and the United States played a leading role in doing that,” Plummer told the HPR. The absence of U.S. leadership created uncertainty about who would lead the process of organizing and facilitating free trade in the region, which threatened the future of free trade among countries in the Asia-Pacific region.
Shifts in Power
But the United States’ withdrawal from the TPP did not end the push for free trade in the region. The CPTPP, which emerged in the wake of the TPP, reduced tariffs and barriers to trade between member countries, which make up more than 13 percent of the global economy and have a collective $10 trillion GDP. Member countries made some minor changes to the original TPP — 22 provisions from the original agreement that were favored by the United States but were not as popular among the current member countries were suspended or otherwise changed. However, as Plummer explained, from an economic standpoint, “It’s literally the same agreement as the TPP, with a few exceptions.” Overall, this transition to the CPTPP shows a continued commitment to maintaining rules-based trade and promoting economic integration in the region. By choosing to participate in the CPTPP, the countries in the region have shown that the removal of the United States from the region did not signify the end of trade integration. What it did signify was the United States’ weakened presence in the region and the end of its role as the region’s trade leader.
In order to understand why the United States’ role has been diminished so significantly, it is crucial to consider the Trump administration’s approach to trade policy. “If you look more broadly at the Trump administration’s approach, it’s a go-it-alone approach. It’s this belief that the U.S. is powerful enough and its market is big enough that it can bully other countries into changing their behavior by threatening the loss of access to the U.S. market,” Alden explained. “That might have worked 30 years ago, but the U.S. relatively is a much less important economy than it was 30 years ago.” Being directly involved in the TPP allowed the United States to play an important role in the region by directly involving itself in regional trade dynamics. However, without this direct involvement, the United States is no longer able to exert the same influence, diminishing its influence.
While U.S. influence is being undermined by these changes, other countries are expected to benefit from these shifts in power. One notable example is Vietnam. As Goodman said, the trade and investment diversions that have arisen as a result of the United States’ anti-free trade measures have left Vietnam as one of the biggest beneficiaries. “People who were producing in China are now moving to Vietnam, whether American or Chinese producers are moving some of that production to Vietnam,” he said. Another notable example is Japan, which played an influential role in ensuring that the CPTPP came about and hence was able to improve its strategic role in the region. “For Japan, who led the move from TPP to CPTPP, this was an important assertion of their leadership in the Indo-Pacific region,” Goodman says. “And I think they kind of surprised people by their ability to broker this new deal after the United States pulled out.” By playing this role, Japan has started to fill the void left by U.S. withdrawal.
Even countries that are not within the CPTPP are experiencing benefits from this trade agreement. Perhaps the most important of these is China. While it is not currently in the CPTPP, U.S. withdrawal from the TPP has cleared the way for China to play a larger role in determining trade rules in the region. As Goodman put it, the United States “is still there, we haven’t pulled out of the region, but unlike China, which is in the region geographically, we have to prove our Asia-Pacific credentials by not only still having a critical role in regional security, but also being embedded in economic affairs there.” By not being involved in the TPP and consequential economic affairs in the region, the United States has only made it easier for China to exert its influence on the region unchallenged.
And if China joins the CPTPP, this gulf will only grow — according to Petri and Plummer, while the current version of the CPTPP is projected to generate annual gains of $147 billion, China’s entrance into the agreement would quadruple that to $632 billion. This is larger than the projected $492 billion annual gains under the TPP, which had included the United States. As United States leadership is eclipsed by Chinese leadership, the U.S. government is losing leverage and struggling to maintain its historical relevance in the region.
Reclaiming Relevance
The United States can still re-enter trade in the Asia-Pacific region by joining the CPTPP. Trump has made some comments about re-negotiating the trade agreement, and the current CPTPP members suspended instead of removed the 22 measures they did in order to make this trade agreement potentially more appealing for the United States. But given domestic American politics, the chances of this happening are slim to none. “I would be extremely surprised if [Trump] did that, he’s put too much political capital into getting out of the agreement,” Plummer said. And even if the current U.S. position on trade changes, other countries are also likely to be more careful in entering future trade agreements. “I think the other CPTPP countries are going to be very wary, right?” Alden mentioned. “The United States is going to insist on changes to the agreement before it comes back, and I think that the rest of the TPP countries are gonna be pretty reluctant to negotiate with the United States given the heavy-handed way in which it pulled out.”
Overall, by undermining the United States’ involvement in Asia-Pacific trade, The Trump administration has given up a crucial strategic role in the world. “Through a variety of measures — pulling out of TPP, the steel and aluminum tariffs, the aggressive way that its bullied the Canadians and Mexicans in the NAFTA renegotiations — the United States has been left with no real friends in the world when it comes to getting support for its approach to trade,” Alden said. These current measures and approaches are not set in stone. However, if the United States is to improve its relationships as well as its own role on the international stage, it will have to change course — and fast.