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One year after the United States pulled out of the Trans-Pacific Partnership, it’s clear Asia-Pacific nations have not been waiting around for the Trump administration to change its mind.

Just today, the 11 remaining TPP countries announced that they have reached a deal, which could be signed as early as March, without the U.S. A number of other regional and bilateral trade negotiations were concluded in 2017, including a landmark agreement between Japan and the EU. Several others were launched, with Australia, Canada, New Zealand and Singapore each starting talks with the four Latin American countries of the Pacific Alliance.

As other countries negotiate greater market access, American companies are being left behind. Under the Japan-Europe agreement, for example, Japanese tariffs on European beef will be lowered from 38.5% to 9% over 15 years. That makes it harder and harder for U.S. beef exporters, who remain stuck with the 38.5% tariff, to compete. Multiply that impact across other products and trading partners.

The administration has made clear its preference for bilateral deals over larger regional deals like TPP. Yet other countries have not lined up to negotiate with the U.S.  Why? They’re waiting to see how the U.S. renegotiations of NAFTA and the U.S.-Korea trade agreement play out.

What's next: Successful conclusions to NAFTA and KORUS deals may entice other countries to the negotiating table, helping place American exporters and their workers on equal footing with their global competitors. But if these renegotiations fail, other countries will continue to bypass the U.S., leading to mounting losses.

Wendy Cutler is vice president at the Asia Society Policy Institute and a former negotiator in the Office of the U.S. Trade Representative.

https://asiasociety.org/policy-institute/shifting-trade-winds-us-bilateralism-and-asia-pacific-economic-integration

https://alianzapacifico.net/en/what-is-the-pacific-alliance/

Asia has moved on after U.S. withdrawal from TPP

A new deal among 11 Asia-Pacific nations will leave the U.S. behind.

Asian trade delegates around a conference table

Trade ministers and delegates from the remaining members of the Trans Pacific Partnership (TPP) attend the TPP Ministerial Meeting in the central Vietnamese city of Danang on November 9, 2017. Photo: NA SON NGUYEN / AFP / Getty Images

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Politics

One year after the United States pulled out of the Trans-Pacific Partnership, it’s clear Asia-Pacific nations <a class="gtmContentClick" data-vars-link-text="have not been waiting around" data-vars-click-url="https://app.salesforceiq.com/r?target=5a678940e4b0af727542a786&amp;t=AFwhZf3JWPbhEtBbAmbslbzxtnR5hTk3LOt88lRT2czD1n4R74_Rhi7CnoGsy3Iu2dtH26Ke30M9NIX8Ka10K_Oiud6ZKx89Jpe_jfEoknuRHYhVnkKkLMxiBEBnuKfDaKlmMDIhf-iY" data-vars-content-id="28d9f759-1f30-438c-be69-55f9d45a264d" data-vars-headline="Asia has moved on after U.S. withdrawal from TPP" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://app.salesforceiq.com/r?target=5a678940e4b0af727542a786&amp;t=AFwhZf3JWPbhEtBbAmbslbzxtnR5hTk3LOt88lRT2czD1n4R74_Rhi7CnoGsy3Iu2dtH26Ke30M9NIX8Ka10K_Oiud6ZKx89Jpe_jfEoknuRHYhVnkKkLMxiBEBnuKfDaKlmMDIhf-iY" target="_blank">have not been waiting around</a> for the Trump administration to change its mind.Just today, the 11 remaining TPP countries announced that they have reached a deal, which could be signed as early as March, without the U.S. A number of other regional and bilateral trade negotiations were concluded in 2017, including a landmark agreement between Japan and the EU. Several others were launched, with Australia, Canada, New Zealand and Singapore each starting talks with the four Latin American countries of the <a class="gtmContentClick" data-vars-link-text="Pacific Alliance" data-vars-click-url="https://app.salesforceiq.com/r?target=5a678940e4b0af727542a788&amp;t=AFwhZf3JWPbhEtBbAmbslbzxtnR5hTk3LOt88lRT2czD1n4R74_Rhi7CnoGsy3Iu2dtH26Ke30M9NIX8Ka10K_Oiud6ZKx89Jpe_jfEoknuRHYhVnkKkLMxiBEBnuKfDaKlmMDIhf-iY" data-vars-content-id="28d9f759-1f30-438c-be69-55f9d45a264d" data-vars-headline="Asia has moved on after U.S. withdrawal from TPP" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://app.salesforceiq.com/r?target=5a678940e4b0af727542a788&amp;t=AFwhZf3JWPbhEtBbAmbslbzxtnR5hTk3LOt88lRT2czD1n4R74_Rhi7CnoGsy3Iu2dtH26Ke30M9NIX8Ka10K_Oiud6ZKx89Jpe_jfEoknuRHYhVnkKkLMxiBEBnuKfDaKlmMDIhf-iY" target="_blank">Pacific Alliance</a>.

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

As President Trump signed proclamations for tariffs on steel and aluminum this afternoon, the 11 remaining members of the Trans-Pacific Partnership (TPP) finally closed their sweeping trade deal, just over a year after the U.S. withdrew.

Why it matters: For the U.S., the TPP deal means that manufacturing, agricultural and services exporters and their workers will be at a disadvantage in the markets of the 11 Asian-Pacific countries. Beef, pork and dairy exporters, for example, will not benefit from the tariff cuts made by Japan that competitors from Australia, New Zealand and Canada will soon enjoy.

Few expected the other countries to proceed without their largest partner, but Japan filled the leadership vacuum left by the U.S. and pushed negotiations to the finish line. The final text is close to original agreement struck two years ago, minus a handful of provisions on areas including intellectual property, investment, government procurement and customs.

What's next: The TPP countries now must initiate their domestic approval procedures, which differ from country to country and in most cases include legislative votes. The deal will come into effect once six of the 11 countries complete these procedures, which should happen by early 2019.

After that, the door will be open for others to join. Thailand, South Korea and Indonesia have all expressed interest in the past. Some have suggested the United Kingdom, in need of trade partners post-Brexit, would be a good candidate. In light of President Trump’s statement in January that he would consider rejoining TPP provided significant changes were made, the U.S. may also find itself back at the negotiating table.

The bottom line: U.S. exporters will be hurt, but it’s not all bad for America. Many of the provisions included in TPP-11 — in such areas as state-owned enterprises, digital trade and labor — were based on U.S. proposals. These rules provide an important alternative to the state capitalism model offered by China and do so without invoking actions that would risk a trade war.

TPP signed without U.S., but it’s not all bad for America

The deal still includes important provisions based on U.S. proposals.

container ship in Tokyo port in front of skyscrapers

A container ship at a port in Tokyo. Photo: Alessandro Di Ciommo / NurPhoto via Getty Images

Trans-Pacific Partnership (TPP)

Business

As President Trump signed proclamations for tariffs on steel and aluminum this afternoon, the 11 remaining members of the Trans-Pacific Partnership (TPP) finally closed their sweeping trade deal, just over a year after the U.S. withdrew.Why it matters: For the U.S., the TPP deal means that manufacturing, agricultural and services exporters and their workers will be at a disadvantage in the markets of the 11 Asian-Pacific countries. Beef, pork and dairy exporters, for example, will not benefit from the tariff cuts made by Japan that competitors from Australia, New Zealand and Canada will soon enjoy.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Upcoming meetings of the WTO, G20, APEC, OECD and other ad hoc coalitions could offer the U.S. an opportunity to secure a broader base of international support for meaningful and durable Chinese economic reforms.

Why it matters: U.S. negotiators have made notable progress on the most pressing trade issues with China, especially around intellectual property rights, forced technology transfers and industrial subsidies. But the Trump administration's parallel use of unilateral tariffs under Section 232 of the Trade Expansion Act has rankled longtime U.S. partners.

Background: The U.S. is not alone in raising these concerns. In a 2018 WTO trade policy review, many countries voiced similar grievances about China's intellectual property and technology practices and industrial policies like Made in China 2025.

Between the lines: These policies have had global impacts that call for a coordinated approach. Take steel and aluminum, for example. China now accounts for half of world production, largely due to excessive subsidies and other financial assistance.

While U.S. 232 actions on steel and aluminum were aimed at China, they have mostly hurt U.S. allies and partners, raising tensions at a time when the U.S. could benefit from multilateral support.

What's next: If the U.S. chooses to work more closely with like-minded countries, it could begin to do so at upcoming meetings like the June G20 summit in Japan and the November APEC summit in Chile, while also pushing for much needed reforms within the WTO.

Go deeper: Read the Asia Society Policy Institute's "Strength in Numbers" report.

Wendy Cutler is vice president at the Asia Society Policy Institute and a former negotiator at the Office of the U.S. Trade Representative.

https://insidetrade.com/daily-news/countries-escalate-section-232-tariff-disputes-wto-us-follows-suit

https://www.wto.org/english/tratop_e/tpr_e/tp475_e.htm

International support could bolster U.S. trade talks with China

There are plenty of countries with similar concerns.

Two suitcases stuffed with cash, with the U.S. and Chinese flags on them

Trade agreements

Upcoming meetings of the WTO, G20, APEC, OECD and other ad hoc coalitions could offer the U.S. an opportunity to secure a broader base of international support for meaningful and durable Chinese economic reforms.Why it matters: U.S. negotiators have made notable progress on the most pressing trade issues with China, especially around intellectual property rights, forced technology transfers and industrial subsidies. But the Trump administration&#x27;s parallel use of unilateral tariffs under Section 232 of the Trade Expansion Act has <a class="gtmContentClick" data-vars-link-text="rankled longtime U.S. partners." data-vars-click-url="https://insidetrade.com/daily-news/countries-escalate-section-232-tariff-disputes-wto-us-follows-suit" data-vars-content-id="ba633eba-80f2-475a-895c-00244fb1d605" data-vars-headline="International support could bolster U.S. trade talks with China" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://insidetrade.com/daily-news/countries-escalate-section-232-tariff-disputes-wto-us-follows-suit" target="_blank">rankled longtime U.S. partners.</a>

The global trade system created in the aftermath of World War II has expanded economic prosperity, lifted millions out of poverty and contributed to global stability. But it hasn't kept up with the emergence of new major trading countries, advances in technology or new types of trade barriers.

The big picture: A growing number of people around the world, particularly in the U.S. and Europe, feel disenfranchised by the current order, which they hold responsible for widening income inequality and a decline in well-paying jobs. Reforms are needed if the rules-based trading system is to remain viable and relevant.

The Trump administration advocates a fundamental overhaul, while others prefer adjustments on the margins, leaving the system largely intact. Here are five suggestions for a third path that would capture the benefits of the current rules-based trade system while addressing its greatest shortcomings:

Shape rules for state-led economies. Instead of pushing for the dismantling of China’s state-led economic system, negotiations should ensure that its businesses, products and services don’t distort international trade or harm others. The EU, Japan and the U.S. made a good start in their May Joint Statement, a basis for working with China and other key partners.

Look to the future. Emerging technologies — additive manufacturing, robotics, AI and new types of vehicles — will call into question many of the current system's basic tenets, such as the traditional distinction between goods and services found in most trade agreements and the rules for determining product origins. As the Fourth Industrial Revolution advances, the WTO should task senior trade experts with recommending updates to spur negotiation.

Opt out of the most-favored-nation (MFN) obligation. This rule applies the outcome of any given trade negotiation to all economies, regardless of their participation. While MFN may have made sense in the past, today it allows some countries to “free ride” on the work of others without making any concessions themselves, which hinders new market-opening agreements between specific countries. The ability to opt out of MFN could prove a particular boon to the automotive, medical technology and environmental technology industries.

Reform the WTO’s dispute settlement system. It's not viable as it stands, especially in light of the U.S.' blocking the appointment of new appellate body judges. Without an effective dispute settlement system, countries will be increasingly encouraged to take matters into their own hands.

Convene joint meetings of the WTO and International Labor Organization (ILO). Addressing workforce issues will help stave off calls for protectionism. WTO-ILO meetings would allow member countries to share their experiences educating and training their workforces for the next generation and to build effective social safety nets for those left behind.

The bottom line: With tariff wars front and center, and the rules-based system under attack, making only minor reforms would be short-sighted. The best course is for countries to work on robust and inclusive initiatives that reflect new realities, fix the system's problems and prepare it for the next century.

Wendy Cutler is vice president at the Asia Society Policy Institute.

Go deeper: Read the full recommendations.

Pitfalls in the global trade system call for bold reforms

A growing number of people feel disenfranchised by the current order.

The World Trade Organization headquarters are seen in Geneva on April 12, 2018.

The World Trade Organization headquarters in Geneva. Photo: Fabrice Coffrini/AFP via Getty Images

International trade

The global trade system created in the aftermath of World War II has expanded economic prosperity, lifted millions out of poverty and contributed to global stability. But it hasn&#x27;t kept up with the emergence of new major trading countries, advances in technology or new types of trade barriers.The big picture: A growing number of people around the world, <a class="gtmContentClick" data-vars-link-text="particularly in the U.S. and Europe" data-vars-click-url="http://www.pewglobal.org/2014/09/16/faith-and-skepticism-about-trade-foreign-investment/" data-vars-content-id="cb5819d8-4c17-4985-af59-1bd4e23b4c22" data-vars-headline="Pitfalls in the global trade system call for bold reforms" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="http://www.pewglobal.org/2014/09/16/faith-and-skepticism-about-trade-foreign-investment/" target="_blank">particularly in the U.S. and Europe</a>, feel disenfranchised by the current order, which they hold responsible for widening income inequality and a decline in well-paying jobs. Reforms are needed if the rules-based trading system is to remain viable and relevant.

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

Wendy Cutler

Stories

International support could bolster U.S. trade talks with China

Pitfalls in the global trade system call for bold reforms

TPP signed without U.S., but it’s not all bad for America

Asia has moved on after U.S. withdrawal from TPP