As EU and Japan bolster trade ties, United States risks losing its voice
LONDON — In the master plan advanced by President Donald Trump, an unabashedly aggressive United States is supposed to reclaim its rightful perch as the center of the commercial universe, wielding its economic dominance to dictate the rules of global trade.
As it turns out, the rest of the planet has its own ideas.
Major economies show no inclination to accept U.S. designs on trade — an attitude on display Thursday as the European Union and Japan agreed to the broad outlines of a free trade deal before a summit meeting of world leaders. If completed, the deal would further the exchange of goods and services between their two markets while, in relative terms, diminishing opportunities for American companies.
These two trading powers, both bedrock U.S. allies, are effectively proceeding with plans to bolster globalization just as the United States is retreating into protectionism. Large areas of the global economy are on divergent paths, creating more uncertainty for multinational companies.
Last fall, Canada and the EU struck a mammoth trade deal, establishing the rules for a significant chunk of commerce across the Atlantic. The bloc’s latest deal tethers its fortunes closer to Asia and to Japan, which has the world’s third-largest economy.
Meanwhile, the United States debates the merits of erecting a wall along its southern border, argues about the legality of barring immigrants from several predominantly Muslim nations, and contemplates imposing tariffs on steel imports.
“We were able to demonstrate a strong political will to the effect that Japan and the EU will hoist the flag of free trade high amidst protectionist trends,” Prime Minister Shinzo Abe of Japan said at a news conference in Brussels announcing the agreement. “This is an achievement we should be proud of which also sends a strong message to the world.”
The EU and Japan are placing a bet on global integration as a source of enhanced prosperity — economic ties that come with geopolitical benefits.
For Japan, the deal would strengthen its relationship with Europe and reinforce economic links in an era in which Tokyo is obsessed with adjusting to China’s rise as a global commercial power. Japan is particularly eager to forge stronger alliances as protection against China’s naval-backed territorial claims.
For the EU, the deal reinforces the power of its single marketplace stretching from Ireland to Greece while delivering proof of its global aspirations. This, just as Europe contends with Britain abandoning the bloc in a step that will diminish its size.
In the Trump view, the United States is best served by striking bilateral trade arrangements, which are confined to two participants. With the world’s largest economy, the United States owns the advantage in any such deal, enabling Washington to demand favorable terms.
In taking this approach, the United States risks having less of a voice in the global trade discussion as other economies take their own paths.