How Washington Will Lose Its Influence in Asia
If the Trump administration does not get the fast track authority act renewed and lets it slip away, then there is the possibility that none of the bilateral trade pacts will be negotiated. Many trade dependent countries in Asia Pacific-most of them are U.S. long-term allies, which have long aspired to sign the bilateral trade pact with the United States may lose their confidence in the U.S. leadership in the region. They may seek alternative paths in pursuing their trade and development.
There are two likely emerging trade blocs in the Asia-Pacific region in the near future; The “Hamlet without the prince” (CPTPP) is still the second best trade accord for many signatory as well for those countries which wish to join. After freezing the twenty clause of the original TPP which are mostly demanded by the United States on the intellectual property rights, investor-state dispute settlement (ISDS) mechanism, the CPTPP still is the highest quality trade accord ever. The China-led Regional Comprehensive Economic Partnership (RCEP) is more on liberalization on commodity trade, much less on the service trade, labor and environmental standard, which are WTO-extra. From the perspectives of developing countries, they may be better off by joining RCEP than the CPTPP.
As Christopher Dent at the University of Leeds has noted: if both CPTPP and RCEP are inked in the near future, then both trade blocs could be either Coca-Cola vs Pepsi if they are similar (a more or less even split of agreement utilization and influence between them prevails), or Microsoft vs Apple if they are different (depending on which agreement sets the “network standard” of trade/commerce rules and economic diplomacy in the Asia-Pacific). Given that there are seven overlapping member states in both trade blocs—Japan, Australia, Brunei, Malaysia, Singapore, Vietnam and New Zealand—there could be two different layers of trade liberalization in the Asia Pacific region in the near future. Which trade bloc will lead to the Free Trade Area of the Asia Pacific aspired by the APEC? It all depends on whether Japan or China takes the lead with a declining role of the United States to write the rules of trade regime in the region, and whether CPTPP or RCEP will expand their memberships for those outliers. Under such circumstances, no one will know for sure where the America First policy will stand.
Peter C.Y. Chow is professor of Economics at City University of New York. He would like to acknowledge constructive comments from Dan Ciuriak and Christopher Dent on an earlier version of this article.