Japan is increasing its defense budget, and the United States is beefing up a marine regiment on Okinawa. The Philippines has given the American military access to four additional bases. The United States is increasing the number of its bombers and fighter jets in Australia. A new deal will see the United States jointly produce weapons with India. That has all happened in the past few weeks.
As tensions with China rise, President Biden has pursued an aggressive Indo-Pacific strategy to shore up old alliances and build new security partnerships. What’s missing is the other important pillar of an Asia strategy, and the one many Asian countries care a great deal about: a trade policy.
Without a trade component, many Asian officials and analysts have groused, the U.S. strategy to counter China in the region amounts to all guns and no butter. It’s a fair criticism.
A decade ago, under the Obama administration’s “pivot” to Asia, the economic leg of the Pacific strategy was supposed to be the Trans-Pacific Partnership, or TPP, the mammoth 12-nation trade agreement that Mr. Biden was involved in crafting as vice president. Mr. Obama hailed the TPP as the centerpiece for achieving America’s geopolitical goals in the Asia-Pacific region and the best way to meet the rising challenge from China.
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But by 2016, big, comprehensive trade deals such as the TPP had become politically toxic, blamed for hollowing out U.S. manufacturing. On the campaign trail, both Donald Trump and Hillary Clinton trashed the TPP — even though Ms. Clinton had earlier championed it. Mr. Trump kept his campaign pledge and withdrew from the deal on his first full day in office — something he was able to do because Congress never ratified the treaty. “That sound you hear is the clinking of champagne glasses in Beijing,” tweeted Tufts University professor Daniel W. Drezner at the time.
Mr. Biden’s new initiative to add an economic element to his Asia policy is the Indo-Pacific Economic Framework, or IPEF, unveiled last spring. It sets standards for the digital economy, labor rights, supply chain resiliency and clean energy, among other things. But it has no provisions for increasing market access or lowering tariffs, both important goals for Asian countries.
In fact, the IPEF is not even an agreement at all, but more like an outline to begin talks about possibly reaching an agreement sometime down the road. Small wonder the reception in Asia was largely cool.
In proposing a plan so limited in scope, Mr. Biden is likely bowing to domestic political considerations. Large multicountry trade deals are easy targets for criticism, from Republicans as well as elements in the Democratic Party.
But China isn’t waiting. Beijing — whose one-party regime doesn’t have to worry about domestic opposition — has been aggressively pushing ahead on the trade front. The Regional Comprehensive Economic Partnership, or RCEP, which came into force last year, is a free-trade pact among 15 countries, including China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations, or ASEAN. It covers some 30 percent of the world’s population and about a third of global gross domestic product. China was an early champion of the RCEP, and its premier hailed the signing in 2020 as a major “victory.”
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An opinion piece in the Hong Kong newspaper South China Morning Post last October carried the headline: “RCEP allows East Asia to step out from under US hegemony.” The two authors, both independent researchers, wrote, “The RCEP is emblematic of the decline of the United States’ economic clout in East Asia. … Despite the US’ continued engagement with players in the region, they have been purposefully security-focused, failing to solidify economic partnerships.”
China has also applied to join the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, which is the successor to the TPP after the U.S. withdrew. Its chances are slim, because Beijing’s state-run economy clashes with some provisions of the pact. The irony is that Beijing is now trying to join a largely American-created trade bloc that Washington walked away from.
One of the stated goals of these trade pacts is to boost cross-border investment. That’s already happening as many multinational companies, including American firms, are moving to end their overreliance on China and geographically diversify their factories and supply chains. Many are going to Southeast Asia and India.
They were spurred by China’s three years of covid lockdown, as well as growing U.S.-China trade tensions and the rising cost of doing business in China, where wages are rising and the population of factory workers has been steadily declining.
When Mr. Biden unveiled the IPEF plan, his trade representative, Katherine Tai, faced bipartisan criticism on Capitol Hill for failing to include market access. Sen. Maria Cantwell (D-Wash.) asked, “Why can’t we be for opening market access right now and getting rid of tariffs?” Sen. Mike Crapo (R-Idaho) said, “Why take the carrot of market access off the table?”
The timing is opportune for the United States to actively pursue a comprehensive trade policy for Asia. For the right kind of deal, with the right safeguards, there might be more bipartisan support than the administration thinks.