News Analysis/Opinion
Trade policy’s future remains unclear in the Biden administration. In the wake of Trump’s trade-oriented administration policy, a lack of clear trade direction has left some experts debating the risks of political limbo. Deals such as the TPP, experts warn, present a risk overlap to trade and national security.
Trade policy has been unclear of late
Trump and Biden’s public policy have been opposites on a long list of issues. This polarity has a strong reflection on U.S. trade, with the world holding its breath. U.S. domestic markets and foreign markets alike look on with anticipation of the market uncertainty continuing from an unclear follow-up to the Trump era.
Trans-Pacific Partnership: What it is and why it’s challenging
The Trans-Pacific Partnership, a 12-nation trade agreement in the Asia Pacific region, policy limbo has set the stage for the aggressive nature of Beijing’s interventionist tactics.
The TTP re-entry debate highlights the risks of U.S. foreign market dependence. Likewise, it gives context to the policies that have gone into creating a foreign-first trade landscape.
The TPP Now and Then
Even as the U.S. left the TPP, the political effect that it left behind has been a significant footprint in the challenges of today’s trade landscape.
Then
The U.S. Trade Office calls the Trans-Pacific Partnership the “cornerstone” of the Obama administration’s Indo-Pacific trade policy.
In 2009, Obama initiated talks between the U.S. and 11 Indo-Pacific states to lead an Asia Pacific regional integration strategy. The Obama administration marketed the former TPP terms as a way to sharpen the United States’ competitive edge in the region.
The old TPP stood on five pillars, wrote the United States Trade Representative office. These included “Comprehensive market access,” “Regional approach to commitments,” “development of the digital economy,” “inclusive trade” and a “platform for the regional economy.”
The Trump administration chose to nullify U.S. commitment to the Trans-Pacific Partnership. This sparked a trade policy debate that has yet to be resolved by the Biden administration.
Following this decision, the other 11 members negotiate the terms for a new Comprehensive TPP. The TPP is now officially referred to as the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership” (CPTPP).
Now
Nikkei Asia reports that, during her recent visit to Tokyo, the U.S. Commerce Secretary Gina Raimondo told officials that the Biden administration “would not be a part of the CPTPP at this time.” Meanwhile, Southeast Asia states continue to try for membership.
Thailand now plans to join the talks, says Reuters.
While Raimondo suggested that the Biden administration has interests in comprehensive cooperation with Japan and other CPTPP states, the uncertainty remains.
As Raimondo continued discussions in Tokyo, Biden’s virtual summit with Chinese regime leader Xi Jinping took the spotlight. The Epoch Times reports that there were “no breakthroughs” regarding guidelines for the future of Taiwan during these talks.
Taiwan’s membership in the CPTPP is a primary contention of China’s burgeoning interest in CPTPP membership. A lack of guidelines on Taiwan adds to the overall lack of clarity regarding the future of trade and security overlap in the region. Meanwhile, Financial Times writes that Beijing may attempt to “hold hostage” Taiwan’s bid to join the new CPTPP, as a Taiwan membership ahead of Beijing would undermine Beijing’s political influence over Taiwan.
A political vacuum for China to fill
Meanwhile, Chinese regime propaganda generates favorable political narratives about trade with Washington. Regime propaganda outlets write that America is ready to “ease” the American stance on trade with the PRC.
China is taking a political incentive in this moment of pause. It is an advantage to amplify the voices of U.S. trade business groups calling for relaxed tariffing.
While the U.S. may remain out from under the CPTPP’s negative policy, under the current activity of the Biden administration, it is still leaving a space for the PRC to fill.
Calls from Trans-Pacific for comprehensive agenda alignment
The Biden administration’s trade agenda is an unclear area. In the wake of an undefined Biden era of trade, the former TPP partners continue to look for U.S. participation.
This comes as the geopolitics surrounding regional integration economics heat up. Because both Taiwan and Beijing are contending for authority over Taiwan, tensions are on the rise.
Beijing puts maximum pressure on the states within its region, to have full control of Asia Pacific economics. Beijing demands to be recognized as sovereign over Taiwan, which moves to govern itself as a fully independent nation.
The appeal of a U.S. return to the CPTPP
Japan, and other CPTPP members, rationalize that a U.S. return to the CPTPP negotiations would fix the awkward political position the agreement departure left them with.
This political position sees China attempting to step up to fill in the U.S. position in an economic agreement that commentators argue was created to counter China’s influence.
Joining the CPTPP is a lengthy process that requires existing members’ consent, say experts from the Peterson Institute for International Economics. The CPTPP membership status discussion with China is a vacuum building pressure for its members the longer they resist the Chinese regime’s demands over the pact.
China vies for current TPP membership
As China pressures admittance in the existing TPP partnership, U.S. officials foster stronger Asia-Pacific trade bolsters through state visits, writes The Wall Street Journal.
The United States Institute of Peace commented on China’s eligibility for CPTPP membership. China officially applied for CPTPP membership on September 16.
USIP expert Dr. Carla Freeman wrote that a CPTPP membership would “Only increase China’s regional influence.” The original TPP was part of the Obama administration’s “Rebalance Asia” policy, a concentrated effort to revive an Asia-Pacific “open-rules economy.”
The Obama administration regarded the CPTPP as a way to “strengthen US alliances” with Australia, Japan, the Republic of Korea, and other members of the pact.
CPTPP and “the rise of China”
In his latter presidency, Obama conveyed to Xi Jinping that his administration welcomed “the rise of China” as far as it was “peaceful, prosperous, and responsible,” wrote the Obama presidency Office of the Press Secretary.
The first TPP claimed to promote “stronger investment links” as well as “networking links” in the Asia Pacific region. The CPP prioritizes its membership to cement its influence over the region, Dr. Freeman analyzes.
The Chinese Communist Party has defined the CPTPP as “one of the key free trade agreements,” of the region, the USIP wrote. The Chinese economy is a regional behemoth. Due to this heavy influence, geopolitical experts worry that China will pressure the CPTPP member states to “relax the terms of its admission,’ the USIP analyzed.
A lack of Western counter-influence creates tensions
Without the Western counterbalance that the US membership in the original TPP boasted, the Chinese Communist Party has the regional influence to turn trade negotiations in its favor. This is often executed through maximum pressure campaigns.
Geopolitical pressure continues to converge on recent summits working out the trajectory of the Asia Pacific trade.
Meanwhile, CCP propaganda continues to downplay U.S. trade plans for Southeast Asia and the Pacific. Biden likewise continues to draw criticism even from mainstream media such as Bloomberg for giving “China opportunities” with his “America First” policies. Bloomberg wrote that the Biden administration “struggles to articulate” its trade policy.
Why Trump stepped back from the TPP
Why did Trump leave the TPP in the first place? What does this mean for the future of a new TPP void of US influence? In review:
Trump’s withdrawal from the former Trans-Pacific Partnership was controversial at the time. A criticism of Trump-era trade strategy in Foreign Policy highlights the reasons. Withdrawing from the former TPP conditions was part of Trump’s strategy to enforce job opportunities for middle-class Americans.
TPP critics at Tufts University stated that the former TPP pact condition would cut 448,000 U.S. jobs.
The allure of TPP
This study, Foreign Policy argued, failed to address the lower consumer prices and “job-generating foreign investments” that the TPP pact appeared to ensure. TPP promised the integration of multiple low-cost nations into a network of China-alternative manufacturing locations. TPP’s marketing also promised to “lower 18,000 tariffs,” wrote Supply Chain Drive.
Due to its secretive nature, pro-TPP speakers failed to highlight the loopholes that made the pact a security hazard. The promises had strong marketing, as was evident in the Supply Chain Drive assessment of the deal, which notes that both Trump and Hillary Clinton, despite polar opposite policy in most other fields, appeared to agree that the pact had a negative implication for American competitiveness.
Withdrawal as a two-fold strategy for security and trade alliances
Despite the heat on NATO at that time, the Trump era made NATO enforcement a priority, claims Balkan ally states. NATO, an alliance criticized as ineffectual by world policy leaders, was set on track for greater policy enforcement.
NATO is a treaty alliance between the post-World War 2 order Western allies. It was created with the intent of ensuring democratic freedoms and security of all of its member states, see NATO mission statement. Under NATO Article 5, the alliance pledges to defend all members when any one member is attacked.
The Trump era worked to enforce priorities of NATO enlargement. Commitments to Western power alliances enforce Trump’s “America first” strategies of economics and security.
American inconsistency and NATO backlash
These were in strong contrast to Obama-era open global economics. The strong contrast was observed in the criticism of NATO by other member state presidents.
French President Emmanuel Macron told The Economist in 2019 that NATO was experiencing “brain death” and an “unreliability” of the United States as its leading member. Macron criticized the efficacy of Article 5, wondering what it would mean to future eras of the alliance.
This, Politico wrote, led to harsh rhetoric from Trump and the other NATO member states “defending the alliance” against Macron’s statements. Despite this, Macron’s statements were regarded as having highlighted hard truths NATO must face about itself, Politico wrote.
The highly partisan shift in U.S. policy makes U.S. diplomacy inconsistent. This adds strain to NATO co-operations as well as the appearance of an unreliable U.S. An example of NATO ally response can be found in the Biden administration’s treatment of the AUKUS submarine pact, and France’s response to it.
Carnegie Endowment highlighted some reasons why the execution of this deal was “bad for nonproliferation” or bad for the prevention of nuclear weapons. This analysis also highlights reasons why inconsistent trade policy on the part of U.S. presidential administrations poses a negative for military alliances in general.
The consensus here is that U.S. behaviors in recent defense trade and commercial trade policies reflect dangerous precedents, a sidestepping of negotiation protocols, and an overall air of bad faith agreements.
Comparing NATO efficiency between recent presidential administrations
Latvian Foreign Minister Edgar Rinkevics, speaking with Newsweek, recalled the strength of Trump-era NATO ties. Despite harsh rhetoric on “both sides” during the Trump administration, the minister claims NATO ties had a greater “understanding” of relevant ties in that era.
In 2017, Trump’s economic strategies aligned with his defense alliance policies. The Trump-era defense strategy hinged primarily on limiting Beijing’s interventionism in the U.S. market. Trump’s administration appeared to tackle trade with China and security protocol with China as aligning goals.
The Biden administration, however, appears inconsistent in its China stance. While claiming a hardline policy against CCP interventionist politics in security, the administration fails to back up defense talks with trade policies that prevent Beijing’s pressure intervention.
Inconsistency
For example, the Biden administration released a joint statement on climate change with the Chinese government on November 10. The statement regards the U.S.-China’s “firm commitment to work together” regarding climate change and to strengthen the terms of the Paris Agreement. The two states announced the intent to create a working group to collaborate to address climate change in the 2020s.
This direct cooperation comes at the same time that the Biden administration publicly stresses cooperation with the NATO alliance on China’s gray zone threats. This statement, made on November 10, appears to be a walk back from reports by Politico on November 1, that the Biden administration was “looking past China” and “to other countries” to achieve climate goals, citing a lack of commitment to contingencies on China’s part.
The Biden administration likewise does not appear to directly condemn the Chinese government for its contribution to China’s “long string of gray zone activity” in the energy industry, which War on the Rocks analysts observed in Beijing’s Blue Arctic science advancements in 2019.
Gray zone threats here refer to issues where competition between state and non-state actors falls between the traditional balance of war and peace, see this Special Warfare report.
This reflects the inconsistency of the Biden administration’s trade policy. This administration appears to move away from the marriage of American trade and American national security policy observed during the previous administration.
NATO relevance as a counter-influence
Democratic alliances among Western states took precedence in the Trump era because the Trump era built much of its policy on countering the Chinese government’s interventionism. This “rise of China” is often met with maximum pressure on the states that China approaches with its open, global trade.
NATO alliance undermined by “rise of China” pacts
An alliance such as the initial TPP was problematic to Western alliances because its openness and inclusivity of the “rise of China.” This global openness appears to contradict realistic counterbalance.
The AFL-CIO organization wrote that China could “reap benefits” of the TPP “without even joining” and strongly critiqued the pact, explaining how it advanced loophole conditions that would enforce China manufacturing over U.S. manufacturing.
From a political standpoint, the TPP exists as a vacuum to the current NATO policy of countering China in terms of tech and trade overlapping threats. At the Brussels Summit Communique, NATO emphasized the importance of addressing China’s growing influence together and the issues it presents the alliance.
CPTPP remains an open-ended question for NATO counter-China policy
“We will engage China with a view to defending the security interests of the Alliance. We are increasingly confronted by cyber, hybrid, and other asymmetric threats, including disinformation campaigns, and by the malicious use of ever-more-sophisticated emerging and disruptive technologies,” the NATO press office writes.
As the CPTPP remains an open-ended question, without a strong and clearly defined counter policy, NATO is faced with greater challenges from a security perspective.
Defense and economy issues overlapping with the TPP
The Trump administration prioritized these new defense strategies and economic strategies contemporary to the time of the Huawei Telecom Espionage Scandal of 201. This was a protracted legal battle in which a jury sided with T-Mobile against the Huawei company. The trial determined that Huawei and its Iranian subsidiary committed industrial espionage against the United States. Withdrawing from the original TPP was justified to serve this objective.
Failings of the first TPP
Communications Workers of America Union (CWA) reviewed 10 ways in which the former TPP was harmful to U.S. interests, with specific regards to communications.
They argued that TPP was a permanent pact, which gave foreign firms equal access to domestic U.S. firms for U.S. government contracts.
The TPP, CWA argued, put manufacturing jobs in America at risk, arguing issues with the “rules of origin” for manufacturing parts. “Rules of origin” refers to the attribution of a product’s “economic origin” or the original country that products are sourced from, see World Trade Organization for more.
TPP weakness and backdoor benefits for China
The TPP, by placing manufacturing in Southeast Asian off-shore low-cost alternative countries, would see roughly 35% of products manufactured in a low-cost alternative country such as Korea with 65% of the manufactured parts produced in China and then distributed through the production chain. This, CWA argued, was a way in which China could get a backdoor to pushing products to the United States duty-free.
Information security risks
CWA also argued that the former TPP granted the means for private corporations to challenge U.S. domestic laws, and may influence the regulation of cross-border data of telecoms.
Electronic Frontier Foundation, a nonprofit digital civil liberties defender, says that the policies of the original TPP enforced digital policies beneficial to corporations but at the expense of public information privacy rights. The inherent lack of transparency in the pact, EFF argues, was a fatal flaw that “shut out multi-stakeholder participation.” Furthermore, EFF argues that the TPP would have “rewritten global rules on intellectual policy enforcement.”
From this analysis, one could observe that the former TPP conditions were, in line with the Obama and Biden administrations, in favor of a foreign market open policy. Priority for this deal appeared to align more with mass corporate interest than enhancing the American domestic market competition.
Obama and Biden era foreign-first market objectives have also reflected on the energy sector. See further analysis: Foreign Energy Market Dependence Puts U.S. at Risk
There was also added risk to national security as the economic deal provided grounds for actors, such as Huawei, to exploit the telecom industry regulation system.
Official U.S. withdrawal from previous TPP
This was a detriment to the U.S. domestically on both the economic and security fronts.
The Trump administration gave a memorandum to the United States Trade Representative. Then Acting Trade Representative Mara L. Pagan was then to execute the memorandum. There are minor technicalities to review here.
Technicalities
The U.S. formally sent notice to the TPP signatories on January 30, 2017, that it “had no legal obligations” to the pact. The U.S. signed the TPP on February 4, 2016. Because the Trump administration’s “un-signing” of the TPP agreement was more of a nullification than a formal contractual termination, the possibility to review the agreement remains says the Practice Law Arbitration blog.
In technical terms, the U.S. did not “withdraw” from the agreement as much as it declared that it had no legal obligation to its signature, and did not intend to ratify further TPP agreement.
As foreign dependence persists
Withdrawal from the TPP was in line with the Trump era policy of domestic market enforcement and a stronger national security policy.
As the Biden administration continues an incoherent trade policy, the lapse of American policies and the expected push to radically different agendas may have staggering consequences.
