Magazine article The American Prospect

Our Incoherent China Policy: The Proposed Trans-Pacific Partnership Is Bad Economics-And Even Worse Geopolitics as Containment of China

Magazine article The American Prospect

Our Incoherent China Policy: The Proposed Trans-Pacific Partnership Is Bad Economics-And Even Worse Geopolitics as Containment of China

Article excerpt

In the summer of 2009,1 was invited with a few other policy analysts to the White House for a briefing on the newly proposed Trans-Pacific Partnership (TPP). At that time, the potential participants included Canada, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Brunei, Malaysia, Vietnam, and, of course, the United States. Whether or not Japan would be invited to join had not yet been decided.

Noting that the United States already had free-trade agreements with Canada, Mexico, Peru, Chile, Australia, and Singapore, I asked why we needed an agreement that added only the tiny economies of New Zealand, Brunei, Malaysia, and Vietnam. The reply from a member of the National Security Council staff was that it would reassure our Asian allies that America was back; that this agreement would be the economic complement to the increased military deployments of the recently announced "Pivot to Asia" foreign policy, obviously aimed at counterbalancing the spread of Chinese power and influence. Along with health care and a possible treaty on nuclear weapons with Iran, TPP would be a major part of the president's hoped-for legacy.

My first reaction was surprise. How could America come back to Asia? As far as I could tell, it had never left. The U.S. Seventh Fleet was in its 66th year of patrolling the western Pacific and keeping the seas safe for the mushrooming trade that was making the region rich. The United States still maintained almost 100,000 troops in Japan, South Korea, and Australia, and on the seas to maintain stability. Trade was burgeoning. The enormous U.S. trade deficit with Asia continued to grow as Americans bought everything Asian, and U.S. corporations transferred much of their production and employment, along with most of their technology, to Asia. Thus a policy aimed at correcting an absence seemed to be based on a false assumption.

Of course, this would not be the first time that false assumptions had guided U.S. policy (Vietnam War, Iraq War, War on Drugs, etc.). But it seemed to be a U.S. habit when it came to proposing and negotiating international trade agreements. That was due largely to the fact that after World War II, the U.S. foreign-policy elite tightly embraced the classical free-trade catechism. As Britain's 19th-century free-trade crusader Richard Cobden had put it, "Free trade is God's diplomacy."

Trade was taken to be mutually beneficial for the countries involved, leading to prosperity, democratization, and ultimately to peace among nations. It was assumed that even unilateral free trade, in which Country A opens its markets while Country B does not, is still a win-win proposition, because the more open country would get cheaper imports and the closed nation was just harming itself. The possibility of strategic use of trade by nations, an insight for which Paul Krugman won the Nobel, was not part of the story.

Thus it was natural to conclude that concessions on trade, such as unilateral market opening, could yield geopolitical objectives with no negative economic consequences. For example, the United States might want Japan to stop manipulating its currency, but it also might want Japan to vote with it on something in the U.N. Washington has invariably yielded on the economic issue in order to prevail on the geopolitical issue. Geopolitics trumped economics. The result has been a long series of international trade agreements that tended to disadvantage the United States.

Two recent examples are the deal under which the United States agreed to bring China into the World Trade Organization (WTO) in 2001, and the U.S.-Korea Free Trade Agreement of 2012. In the case of China, U.S. strategic thinking was heavily influenced by the notion that by adopting capitalism (or what the Chinese called socialism with Chinese characteristics), China would more and more become like America. As former Deputy Secretary of State Robert Zoellick noted, we wanted to encourage China to become a "responsible stakeholder in the global system. …

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