The U.S. cedes power on trade
In the space of a few hours Tuesday, what had been increasingly obvious became all but official: The United States no longer leads the world economy.
The U.S. withdrawal was signaled by the Trump administration’s announcement of new tariffs on solar panels and washing machines. Dispiriting as this choice may be — not to mention bad for U.S. workers and consumers — it’s good news that the 11 remaining members of the Trans-Pacific Partnership have stepped into the void.
With their agreement to move forward without the United States, they are serving their own interests and the world’s. With luck, it also will be a model for trade liberalization more broadly.
The agreement had been in doubt. It was intended to take effect only if countries accounting for 85 percent of the region’s output signed on — a threshold impossible to reach without the U.S., the plan’s main architect.
In November, after Washington dropped out, the remaining members said they hoped to go ahead, but Canada and others expressed reservations so sticking points remained. Talks in Tokyo apparently have resolved those issues. Canadian Prime Minister Justin Trudeau saluted the agreement as “the right deal.”
The partnership matters because, by U.S. design, it is a new kind of trade deal. Its provisions aren’t about tariffs but focus instead on protecting intellectual property, promoting data-based commerce and maintaining high standards of labor and environmental protection. The goal, in short, is to facilitate new kinds of trade.
A revived TPP should increase the members’ bargaining power and make it easier for them to resist further U.S. lurches toward protectionism. And it needn’t stop there. South Korea, Taiwan, Thailand, Indonesia and the Philippines aren’t membersbut have expressed interest. According to the Peterson Institute for International Economics, this larger TPP would yield gains of roughly $500 billion a year forits members — more than the original deal.
It’s sad that U.S. trade policy, for now, is no longer guided by enlightened ambition. But a Pacific partnership that keeps moving forward can hope to eventually welcome America, under new management, back into the fold. In the meantime, its members can exercise the leadership on trade that the United States no longer cares to.