CNBC – Published Thu, Dec 3 20201:37 AM EST Yen Nee Lee@YenNee_Lee
Negotiating a new and improved trade deal with Asia-Pacific countries would help the U.S. to reassert its leadership in the region while countering China’s growing dominance, said think tank Peterson Institute for International Economics.
Frayed U.S. ties with Asian allies is an issue that President-elect Joe Biden should work to reverse “perhaps sooner rather than later,” said Jeffrey Schott, PIIE’s senior fellow. That’s especially if tensions with China escalate and the U.S. needs a “concrete” joint response with its allies, Schott wrote in a Monday report.
“The incoming Biden administration’s domestic policies to strengthen US output and employment and to support the most vulnerable in society should not deter it from attending to the dramatic changes in the Asia-Pacific region,” he said.watch nowVIDEO03:35US will push to renegotiate TPP in the wake of giant Asia trade deal: S&P Global
Over the last few years, countries in Asia-Pacific have moved on without the U.S. while deepening ties with China, said Schott, an expert on international trade policy. That can be seen in the signing of the 15-member Regional Comprehensive Economic Partnership (RCEP) that included China, he said. China is also negotiating new trade deals and upgrading existing agreements with countries in the region, he added.
Biden has said he wants to consult with traditional U.S. allies in Asia and Europe “so we can develop a coherent strategy” in dealing with China, according to a New York Times column published Wednesday.
Several analysts have raised the possibility of the U.S. joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) mega trade deal as a counter to RCEP. CPTPP is the renegotiated and renamed version of the Trans-Pacific Partnership (TPP) led by the Obama administration — but abandoned by President Donald Trump in 2017.
But “simply acceding to the CPTPP would not suffice,” said Schott. The TPP was widely criticized domestically in the U.S., even though the renegotiated CPTPP now “largely resembles” the United States-Mexico-Canada Agreement that Congress passed with bipartisan support, he added. watch nowVIDEO04:22What is TPP 11?
“The name TPP still evokes bad memories among critics, and CPTPP isn’t much better,” he said.
A rebranded and restructured Asia-Pacific initiative would allow the U.S. to build on the CPTPP, said Schott. The biggest improvement the U.S. could make to the trade pact is on environment, he said.
“A new pact could make a dramatic improvement over the TPP (and USMCA) by adding a new chapter on trade and climate change, with provisions that encourage the development and distribution of renewable energy resources, ban fossil fuel subsidies, and promote cooperative green growth initiatives to reduce greenhouse gas emissions,” the senior fellow said.
“Such a chapter could become a hallmark of Biden era trade accords that contribute to regional cooperation on climate policies.”