President Joe Biden speaks to State Department officials on his first visit to Washington, DC on February 4, 2021.
Saul Loeb | AFP | Getty Images
President Joe Biden’s administration has indicated that trade talks are not high on the agenda right now – but that is exactly what the US might need to draw closer to its partners in the Asia-Pacific region, two former American trade officials said.
Trade is important to the Asia-Pacific region as many economies in the region are export dependent. Improving trade ties with these countries will be vital for the US to build its standing in the region where China’s influence is growing, officials said during a panel discussion on Wednesday at The Economist’s Asia Trade Week.
In recent years, Asia-Pacific countries have signed two mega-trade deals excluding the US – suggesting the region won’t wait for Washington, said Wendy Cutler, a former US trade negotiator.
“Asia is just moving on with its trade deals,” said Cutler, who is now the vice president of the Asia Society Policy Institute think tank.
“As Biden talks about improving and strengthening ties with allies and partners, and working in multilateral institutions, our trading partners in Asia will certainly be asking about trade issues,” she added.
The two mega-trade deals excluding the US are the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) signed in 2018 and the Regional Comprehensive Economic Partnership (RCEP) signed last year.
CPTPP is a renegotiated and renamed version of the Trans-Pacific Partnership that the Obama administration sought with 11 countries in the Asia-Pacific region. But former President Donald Trump pulled the US out of the deal and let the remaining countries form the CPTPP.
RCEP is now the world’s largest trade agreement and includes China and 14 other economies in the Asia-Pacific region. The deal covers a market of 2.2 billion people and a production of 26.2 trillion US dollars – around 30% of the world’s population and economy.
Ironically, RCEP was “in a way” conceived as China’s answer to the then-US-led TPP, said Charlene Barshefsky, who was US trade agent under former President Bill Clinton from 1997 to 2001.
But the U.S. eventually shut itself out of the region when it pulled out of the TPP, said Barshefsky, who is now a Senior International Partner at the law firm WilmerHale.
“We helped create this system in Asia, the fastest growing region in the world, the place of economic power from which we exclude the US, not because Asia excludes us – we excluded ourselves,” she said.
What’s next for US-Asia relations?
The lack of US business like RCEP means it won’t be present when major economies in Asia Pacific meet, Cutler said.
She said that heads of state and government from TPP countries met at events such as the summit of the Association of Southeast Asian Nations (ASEAN). RCEP participants will instead be involved in such meetings, she said.
“We will not be there, we will not be invited. And you are not just talking about the agreement itself, you are also talking about new topics, you are talking about new challenges – and we are not going to be at the table for it,” said Cutler.
Some observers said the US could Building a new trade deal with Asia Pacific countries – or even joining the CPTPP – to strengthen its position in the region. But the Biden government has said several times that they want it invest primarily in American workers and infrastructure before signing new trade agreements.
Joining the CPTPP will also be politically difficult as the Americans have a “clouded view” of their predecessor, Barshefsky said. The TPP was widely criticized in the US and never approved by Congress. Critics said the deal would accelerate the decline of US manufacturing and hurt American workers.
However, the US may feel the urgency to participate if key partners like South Korea, UK and the European Union want to participate in CPTPP, she added.
“That could mean a very significant jolt for the United States, positively losing ground to the countries they want to depend on. And I think that could change the equation,” Barshefsky said.
Until then, Biden could close closer deals that focus on specific sectors, Cutler said. In many cases, such deals may not require Congressional approval and could be easier to negotiate, she added.
“I don’t think the CPTPP is the only way for the US to get involved in the Asia-Pacific region,” Cutler said, adding that the Biden administration is initially focusing on issues such as climate change, digital commerce and improving security of supply chains.
“I think this is how we should look at the region now because I think it is a way of getting us back there without trying to reach a big, comprehensive deal that we are not ready to make for domestic reasons,” she said.