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Bring Free Trade to the Far East


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We were cheered by President Obama’s commitment, at this week’s Asia-Pacific Economic Cooperation (APEC) forum, to the completion of the nine-nation Trans-Pacific Partnership (TPP) free-trade agreement — even if the geologic speed with which the president moved on Bush-era free-trade accords with Colombia, Panama, and South Korea gives us one reason to doubt that the goal of signing TPP next year will be met.

There are other reasons to doubt as well. An integrated Asian market has been a top desire of the U.S. trade community since the end of the Cold War, with only the small matter of China and Japan — the region’s two largest, and most intransigent, economies — standing in the way. Beijing has been cool at best and downright hostile at worst toward TPP — a reaction evinced by its pursuit of a competing agreement (within its ASEAN +3 bloc) that would do little to liberalize trade and, crucially, would exclude the United States — and our aversion to raising Chinese ire has kept us from bringing the ready and willing Taiwan into the fold.

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However, Taiwan aside, China’s indifference toward TPP may not be a bad thing. For all its exuberance, the People’s economy is not a modern international economy, and it is at present in no position to join a mature, robust free-trade area. TPP is not about China.

The news on the Japan front is considerably better, with Prime Minister Yoshihiko Noda agreeing to join the talks. Along with a similar pledge from Canadian prime minister Stephen Harper, Noda’s buy-in brings a major injection of economic might to a group that already includes Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. But the talks will mean little if Noda can’t convince his country’s powerful agricultural sector to budge on its protectionist policies. And while he has signaled a commendable willingness to take on his rice lobby, he would not be the first Japanese PM — or American politician, for that matter — to take on such a lobby and fail.

On the other side of the Pacific, it must be emphasized that American leadership, as ever, matters: The success of trade liberalization in Asia depends to a significant extent on the United States’ credibility as a source of power and stability there. During the summit, President Obama told CEOs that “the United States is a Pacific power, and we are here to stay,” but his foreign policy has been punctuated by strategic missteps, diplomatic rebukes, and a tendency to send the message that America is an unreliable friend. A related question, alluded to above, is whether the president has the appetite to take on powerful interests inside the United States and expend the energy necessary to make a deal happen.

Lastly, there are those who say that TPP is not the best means to a worthy end. The cause of free trade, they argue, is best advanced globally, through the mechanism of the World Trade Organization’s current — and long-stalled — Doha Round of negotiations; regional blocs hurt that cause. Others say that the difficulties facing both the Doha Round and a greater-Asian TPP call for the piecemeal adoption of bilateral trade agreements between the United States and its allies and friends. While both positions have merit, we think they offer a false choice.

The final goal of the United States should be a high-quality, pan-Asian free-trade agreement that includes Japan, and eventually China — the kind of agreement that can help bring poor Asian nations out of poverty even as it benefits consumers and creates jobs in the U.S. But pursuing this goal does not preclude us from pursuing others, and we should not be afraid to go both bigger — continued aggressive pursuit of the Doha round — and smaller. The TPP would be a major step toward the realization of free trade in the region, while the continued expansion and harmonization of our portfolio of bilateral trade agreements, on the model of our accords with South Korea, Australia, and Singapore, would be a sturdy hedge should TPP stall. None of these tacks are mutually exclusive.

Though the nitty-gritty of free-trade negotiations can be among the nittiest and grittiest features of relations among nations, the upshot of those agreements is bracingly simple: When it comes to free trade, the more the better. 



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