Last month—January 23 to be exact—marked the five-year anniversary of President Trump’s decision to withdraw the United States from the Trans-Pacific Partnership (TPP) trade agreement. The country has been paying for it ever since.
Comprised of the United States and eleven other Pacific Rim countries—including economic heavyweight Japan—the TPP was found by a 2016 Cato analysis to result in net trade liberalization. A study by the U.S. International Trade Commission calculated a real U.S. GDP increase of $42.7 billion through 2032 as a result of TPP membership while a Peterson Institute for International Economics (PIIE) working paper foresaw gains to U.S. real incomes of $131 billion through 2030.
But the United States withdrew from the TPP, and those gains never happened.
The TPP, however, was aimed at more than just lowering trade barriers. It was also an attempt by the United States—along with like-minded allies—to help shape the rules governing trade in the Asia-Pacific region. As Asia’s center both geographically and economically, China is already assured of having a significant say in such matters. The TPP was meant to ensure the United States had a prominent seat at the table when such rules were being hammered out—before it opted to push away.
In other words, U.S. losses from its TPP withdrawal have not just been economic but geopolitical. And if the TPP was deemed a useful tool in countering China’s influence during the years it was being negotiated, it would be even more of an asset now given the bilateral relationship’s increasingly acrimonious nature.
Other countries have been less short-sighted in their trade policies. Following U.S. withdrawal, the remaining TPP members went back to the negotiating table and struck a new deal: the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). As a result, these countries often have easier access to each other’s markets than what Americans enjoy. That’s a boon to consumers and businesses in CPTPP members who enjoy cheaper imports and expanded export opportunities.
Indeed, the CPTPP has proved so alluring that China and Taiwan have both applied to join while South Korea has taken initial steps toward becoming a member. Even the United Kingdom wants in.
Other notable trade liberalization initiatives have taken place in recent years as well. In late 2020, 15 countries of the Asia-Pacific region concluded the Regional Comprehensive Economic Partnership (RCEP). Entering into force on January 1 of this year, the RCEP—which notably includes China—contains tariff reductions and regulatory harmonization measures meant to spur trade between member countries. And in 2018, Japan and the European Union signed a trade deal that took effect the following year.
Amidst such trade integration, the United States has largely been left on the outside looking in. This means that not only has the country foregone the TPP’s projected benefits but the competitiveness of U.S. firms has been eroded owing to the lack of preferential market access enjoyed by their foreign counterparts.
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