US On the Sidelines
Trump took the US out of the Trans-Pacific Trade Agreement. Biden has no plans to join the regional accord.
But with the US out, China is now in. The new name is the Regional Comprehensive Economic Partnership.
With the U.S. on the sidelines, China and Other Asia-Pacific Nations Launch Trade Pact.
China joins U.S. allies including Japan and Australia in a new Asia-Pacific trade agreement that launches Saturday—with the U.S. watching from the sidelines.
The new Regional Comprehensive Economic Partnership, or RCEP, will eventually eliminate more than 90% of tariffs on commerce among its 15 member countries, in what economists say will be a boon to trade in the region.
It will also give China a more prominent role in setting rules of trade in the Asia-Pacific region at the expense of the U.S., according to some analysts.
“This will be a grouping of countries that will work together and try to develop new rules and new standards,” said Wendy Cutler, vice president of the Asia Society Policy Institute and a former U.S. trade official. “[The U.S. is] moving in the other direction.”
China had been excluded from an earlier trade agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which the U.S. had led to counter China’s influence in the region.
With RCEP members accounting for 30% of global population and gross domestic product, the partnership becomes the world’s largest regional trade agreement, exceeding the U.S.-Mexico-Canada Agreement and the European Customs Union.
In a Nov. 8 letter, 13 GOP senators led by Mike Crapo (R., Idaho), the top Republican on the Senate Finance Committee, urged Mr. Biden to get involved in new trade rule making in the Asia-Pacific region, saying the absence of the U.S. “encourages potential partners to move forward without us and ensures China will hold the reins of the global economy.”
Synopsis
- The US launched a regional trade agreement to rein in China.
- China was excluded membership.
- Trump took the US out.
- The remaining players allowed China to join.
- The US is now on the sidelines.
Rules of the Road
When the RCEP members unveiled the completion of their agreement in November 2020, then-President-elect Biden said the U.S. needed to “set the rules of the road instead of having China and others dictate outcomes because they are the only game in town.”
You don’t get to set the rules of the road when you are not a member of the pact. Ten of the fifteen members have already signed.
It true that the TPP was very flawed. But rather than attempt to change it, Trump pulled out and Biden agrees.
The Regional Comprehensive Economic Partnership will eventually eliminate more than 90% of tariffs. Biden, like Trump, would rather have trade wars and tariffs.
Under RCEP rules the signees will place tariffs on imports from the US but not each other. US exports are already disadvantaged thanks to nonsensical trade wars.
The world moves forward without the US. This is inflationary and not good for growth.
In nearly every way, Biden is keeping the worst of Trump’s trade decisions. He’s just more polite about it.
Please Subscribe!
Like these reports? If so, please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
The world moves forward without the US. This is inflationary and not good for growth.
The US will keep bluffing & blustering and pretending it is the boss and sets the rules.
If Biden shows any signs of reviving the TPP, then his party will suffer an even bigger defeat than they have already ensured for themselves by failing to pass the BBB (after pretending to be for its passage).