America Must Prioritize Trade Policy in Its Global Competition with China

I nstead of using trade policy to help counter China’s aggressive, malign influence across the globe, the U.S. has stood idly by while the rest of the world moves ahead rapidly along with Beijing.

China has joined the Regional Comprehensive Economic Partnership with 15 other countries in Asia, applied to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, proposed the Comprehensive Agreement on Investment with the European Union, and recently hosted members of the Gulf Cooperation Council to discuss the possibilities of a free-trade agreement (FTA).

The U.S., by contrast, let Trade Promotion Authority, which establishes the proper procedures for FTAs to be negotiated and considered by Congress, expire last year. The U.S. expends much effort attempting to convince other countries not to form new trade relationships or deepen existing ties with the Chinese, but it has yet to offer a real alternative.

While China’s Belt and Road Initiative (BRI) is using trade and infrastructure investments to buy influence around the world, the U.S. is going into this battle with one arm tied behind its back, because it lacks such an alternative. Although building secure and reliable supply chains is a top priority in Washington, many American policy-makers mistakenly see free-trade agreements in a negative light. As a result, strengthening America’s commercial interests abroad has sadly been deprioritized, hurting American companies and making it harder for the U.S. to achieve its geostrategic goals.

There is a misconception that the U.S. International Development Finance Corporation (DFC), the federal agency that finances investments in developing countries, can compete with the BRI. But the DFC is not a strategy in itself; it is a tool with limited capabilities. The DFC’s investment cap is only $60 billion; the BRI has accounted for global investments worth around $575 billion, although some estimate the total to be in the trillions. If we want to make up that massive difference in furtherance of our foreign-policy goals, we’ll need to leverage American enterprise through trade.

The U.S.–Mexico–Canada Agreement (USMCA) is the most bipartisan trade agreement in American history. The USMCA strengthens our supply chains, bolsters intellectual-property protections, promotes e-commerce and the digital economy, imposes strengthened labor and environmental protections on its signatories, and upholds anti-corruption standards. Unfortunately, neither side of the aisle in Congress seems interested in replicating this bipartisan achievement through FTAs with other countries.

Even though NAFTA included an accession clause — a mechanism by which non-signatory countries could join the agreement — the USMCA does not. This is a mistake, since the deal’s benefits should be available to countries beyond the U.S., Mexico, and Canada. The United Kingdom previously expressed interest in joining the USMCA, and an opt-in mechanism could also allow other countries in South and Central America — many of which already have a bilateral FTA with the U.S. or are on record as wanting one — to join up.

The Biden administration will have an opportunity to put trade on the agenda at the Summit of the Americas in June, and it should do so. Opening up the USMCA to new signatories could entice many Latin American countries to sign up, giving them access to North American markets. That access, in turn, could help limit illegal immigration to the U.S., promote anti-corruption efforts throughout the region, and increase economic growth within the Western Hemisphere — all of which would serve American interests.

In the Middle East, a sweeping “Abraham Accords FTA” could also further America’s foreign-policy goals. The historic 2020 Abraham Accords, which normalized diplomatic relations between Israel and three of its Arab neighbors — Bahrain, the United Arab Emirates, and Morocco — have created a perfect opening. The U.S. already has individual FTAs with Bahrain, Israel, and Morocco, as well as with Jordan, which signed a peace treaty with Israel in 1994. The United Arab Emirates, which does not have an FTA with the U.S., is still our 30th-largest goods-trading partner, accounting for an estimated $24 billion in annual two-way trade.

In 2021, the UAE and Israel did nearly $900 million in bilateral trade. They anticipate that annual bilateral trade will surpass $1 trillion over the next decade, and are currently negotiating a separate FTA to make sure their trade relationship continues to deepen. The U.S. should be included in those negotiations and, at minimum, ensure that they’re a success, because such an Abraham Accords FTA would provide other countries a powerful proof of the economic benefits of normalizing relations with Israel.

In June 2019, the Trump administration launched Prosper Africa to bolster two-way trade between the U.S. and African nations. Unveiling Prosper Africa in Mozambique, Mark Green — who was at the time the administrator of the U.S. Agency for International Development, and under whom I now serve at the Woodrow Wilson Center for International Scholars — made clear reference to China, declaring that the program would “help break the debt-trap[s], the trap[s] that authoritarian funders have planted like landmines in too many parts of this continent.” And it has done exactly that, bringing several federal agencies together to better coordinate and streamline efforts to give American companies footholds on the continent. All told, the program has helped close nearly 800 deals in 45 African countries, the combined worth of which is around $50 billion. We need to build on those gains.

While China’s authoritarian system allows it to move more quickly than the U.S. in spreading its influence abroad, it also means that that influence tends to be accompanied by higher levels of corruption and a neglect for the environmental consequences of development projects. The secrecy of China’s loans stipulations also remains a concern for borrowers, since China commonly uses high interest rates and mandates collateralization under its financing terms.

By contrast, America’s efforts to spread its economic influence abroad rightly emphasize its values, the rule of law, shared interests, and supporting allies in their desire to become more self-reliant.

It is time to prioritize trade in our foreign policy, because it can be one of the best tools we have for protecting our interests abroad and at home. To compete effectively across the globe, we need to use every weapon at our disposal; we can’t afford to hold anything back.