Date of this Version
Yeutter Institute International Trade Policy Review, May 23, 2023
There is no doubt that the United States is losing out on market access. But one of the original goals of the Trans-Pacific Partnership (TPP) was for a rules-based trading regime in the Pacific, namely rules not written by China. Thanks to Australia and Japan that seems to be happening even with the U.S. no longer at the helm.
The Comprehensive and Progressive Trans-Pacific Partnership or the awkwardly nicknamed CPTPP is a Pacific trading bloc that consists of 11 countries, spanning the Pacific Rim, and includes Malaysia and Chile. The member countries represent 13% of world GDP. Once the UK officially joins, that figure jumps to 15% and the trade bloc will reach across the Atlantic.
The United States was key in drafting the text of the agreement, starting with the George W. Bush administration, which was clear in its commitment to openness. As China shifted back to a more state-controlled economy, the Obama administration underscored a key U.S. goal: for the United States and not China to write the trade rules for Asia. Key goals included modernizing countries’ rules on ecommerce and digital trade and establishing rules on state-owned enterprises. The Obama administration carried the Trans-Pacific Partnership (TPP) through right up to the finish line. President Trump took a sharp turn and withdrew the United States from the agreement, claiming the agreement would not be good for the United States.
Even though there are signs that the American public is open to more trade, the Biden administration and Congress have not pursued Trade Promotion Authority or any new trade deals that would lock in more market access abroad. The United States is no doubt missing out on market access in parts of the Pacific, especially agriculture. But thanks to quiet leadership by Australia and Japan a rules-based trading bloc in the Pacific not led by China is forming.