The politics of trade policy have become toxic in the U.S.
For decades, the mainstream of both the Democratic and Republican parties favored expanding trade between the U.S. and other countries. Greater globalization, these politicians promised, would increase economic growth — and with the bounty from that growth, the country could compensate any workers who suffered from increased trade. But it didn’t work out that way.
Instead, trade has contributed to the stagnation of living standards for millions of working-class Americans, by shrinking the number of good-paying, blue-collar jobs here. The incomes of workers without a bachelor’s degreeover the past few decades. Many measures of well-being — even life expectancy — in recent years.
All along, many politicians and experts continued to insist that trade was expanding the economic pie. And they were often right. But struggling workers understandably viewed those claims as either false or irrelevant, and they refused to support further expansions of trade.
After President Barack Obama negotiated a major new trade deal — the Trans-Pacific Partnership, or T.P.P. — members of both parties criticized it, and the Senate declined to ratify it. Donald Trump then won the presidency partly, and he formally withdrew the U.S. from the T.P.P.
This morning, President Biden, on his first trip to Asia since taking office,that he hopes represents the future of trade policy. It’s known as the Indo-Pacific Economic Framework and includes India, Japan, Indonesia, South Korea, Australia, Vietnam, the Philippines, Thailand and a handful of other countries.
This framework is much less ambitious than Obama’s T.P.P. But the T.P.P. never became law in the U.S., so it is in some ways a meaningless comparison. Biden’s goal is to manage trade policy in a way that is boththan Trump’s approach but also than both parties tended to be before Trump’s presidency.
As one Biden adviser told me, the new framework is central to the Biden administration’s “post-neoliberal foreign policy.”
The crucial distinction between Biden’s framework and past trade deals is that this deal does not involve what economists call “market access” — the opening of one country’s markets to other countries’ goods, through reduced tariffs and regulations. The framework instead revolves around increased cooperation on areas like clean energy and internet policy. As a result, the deal does not require Senate ratification.
A tangible example is the global supply chain. As part of the framework, the 13 countries agree to identify supply-chain problems early and solve them. If a Covid outbreak in one country forces a certain kind of factory to close, a backup factory in another country can quickly increase production and minimize shortages around the world.
The China factor
Officials in much of Asia remain disappointed that the U.S.They rightly note that Biden’s framework is much narrower and will do less to help Asian economies increase their exports to the U.S. “You can sense the frustration for developing, trade-reliant countries,” Calvin Cheng, a senior analyst at Malaysia’s Institute of Strategic and International Studies, .
Still, the Biden administration persuaded virtually every country that it wanted to join the framework to do so. Officials in these countries recognize that Biden is trying to re-engage with Asian allies, in contrast to Trump’s, and many badly want the U.S. to play an active role in the Pacific. Otherwise, they fear, China may dominate the region.
U.S. officials have the same concern, and the new framework — vague as parts of it may be — offers a structure for economic cooperation that bypasses China. If the U.S. and other major Asian economies can agree to standards on the supply chain, internet policy, energy and more, China will be left to choose between playing by those rules or missing out on new trade opportunities.
Katherine Tai, the top U.S. trade official, who has joined Biden on his trip,that the U.S. was “very, very focused on our competition with China.” The new framework, she added, is intended to counter China’s growing influence in the Pacific region.
Biden said the U.S.if China invaded.
“Biden is traveling this week to Asia to project U.S. diplomatic and economic power in a region that has been rattled by the blunders of America’s two most powerful rivals, Russia and China.
“The Chinese government clearly senses a threat as the administration sharpens its focus on Asia.” China’s foreign minister, Wang Yi, warned South Korea of “the risk of a new Cold War.”
The framework includes both U.S. allies and “fence sitter” countries that want to maintain close ties with both China and the U.S.,. These fence sitters have insisted that Taiwan not be part of the deal.
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