US President Donald Trump’s rejection of multilateral trade agreements in the Asia-Pacific region in favor of one-on-one deals is “doomed to failure,” a US trade expert said on Thursday.
The Trump complaint that the US gave up too much in the Trans-Pacific Partnership (TPP) — the regional deal he scrapped immediately after taking office — defies the evidence, said Jeffrey Schott of the Peterson Institute for International Economics.
The institute, a long-time free-trade advocate, created the benchmark study on the TPP which estimated the benefit to the US economy at more than US$100 billion by 2030.
Schott said that while the TPP could be improved upon, trading partners are unlikely to make as many concessions in a bilateral deal since the US market already is largely open to them.
“Trump’s TPP critique is flawed, and the bilateral strategy to replace it is flawed and doomed to failure,” Schott said at a forum to present his policy paper on the subject.
Schott and other international economists also warned of the cost of a US retreat from Asia, ceding influence in the region to China.
“China’s regional dominance will grow very, very fast,” said former South Korean minister of strategy and finance Il Sa-kong, who is head of the Institute for Global Economics in Seoul.
Fred Bergsten, a founder of the Peterson Institute and a former US Department of the Treasury official, said: “The US cannot absent itself from Asia and turn it over to China.”
Schott argued that the 12-nation pact pried greater concessions out of participating nations than would be possible in bilateral deals.
“The US got paid not once, but twice,” he said, with concessions in each market and better investment in intellectual property rules “for helping them get better access via the TPP to the Japanese, Vietnamese and other markets than they would have been able to get on a bilateral basis.”
Schott recommended the Trump administration “go big,” and negotiate an even bigger regional trade deal, improving on some areas, including enforceable rules on currency manipulation, which Trump and his economic advisers have repeatedly raised.
“Trump should take a mulligan, and tee up a new and bigger and better Pacific trade deal,” Schott said.
He recommended adding South Korea and Colombia to the accord, since they already have bilateral trade deals with the US, as well as Taiwan.