In 2016, Donald Trump came to power on the back of a populist movement characterized by a dislike for liberalism and globalism. Upon becoming president, he swiftly implemented protectionist policies, such as imposing tariffs on imported goods and withdrawing from the Trans Pacific Partnership trade bloc.
Although President Biden has reversed many of the decisions taken by Trump, to everyone’s benefit, his administration has continued to drop the ball on international trade, instead choosing to pursue mercantilism.
Trump recently announced that, if he were to be elected president again, he would impose a tariff of 10 percent on all goods entering the U.S. This would be a disaster for the U.S. and global economy, and ordinary working people would suffer most.
But Trump’s rhetoric offers an opportunity for Biden to draw a clear line between the Democrats and Republicans on international trade and economic competence.
When Trump withdrew the U.S. from TPP, the bloc reinvented itself as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Biden can distance himself from the Republicans and deliver a blow to Trump’s legacy by committing to joining CPTPP. And he should do so for three main reasons.
First, it makes economic sense. The trade bloc now comprises some of the fastest growing economies on the planet. Even the United Kingdom has joined. It has a combined GDP of over $14 trillion. Joining would give U.S. producers tariff-free access to over half a billion people, all eager to get their hands on U.S. goods. This would boost profits for U.S. firms, meaning more jobs and higher wages for Americans.
It would also help to tackle inflation, as it would make it easier and cheaper for American companies to import goods from around the world. Again, this would boost profits for firms and support jobs for workers while lowering the price of groceries for American families.
Second, it would signal to the world that the U.S. is outward-looking and believes in promoting freedom and capitalism around the world. The U.S. and its allies have led the free world in standing up against Russian aggression in Ukraine. But the feeling in the UK, Europe, and much of the rest of the world is that America under Biden really does not care about free trade or the international rules-based system.
This was certainly the impression I gained when I was working for the British government’s Secretary of State for International Trade. When it came to the negotiations between the UK and America for a Free Trade Agreement, the U.S. team under Biden obviously seemed more realistic and certainly less bombastic than its predecessors. Unfortunately, they were also far less enthusiastic. The feeling was that there was no real appetite on the American side for a trade deal with Britain or anyone else for that matter.
Given that free trade and the rules-based order which underpins it has lifted countless people out of poverty and has helped to deter aggression, the rest of the world is often dismayed to see America retreat in this regard.
Joining the bloc would send a powerful message to America’s allies and enemies that it takes its role as the most powerful nation on Earth incredibly seriously. Joining the bloc could just be the start of a process which sees the World Trade Organization being reformed and free trade promoted in a way that benefits the U.S. and the rest of the world.
Third, by joining the group, the U.S. would more effectively challenge China. The Chinese government has already stated that it wishes to join the bloc. This is unlikely to happen while the UK and Japan remain members, but it would be almost impossible if America were to join.
American membership would also massively increase the bloc’s size, making it a formidable economic force. This would greatly reduce China’s influence in the Asia-Pacific region and force it to play by the rules when it comes to trade and international relations.
Biden committing to sign up to CPTPP will not only be a wise move politically, as it distances the Democrats from the Republicans on trade, but it will also be a humiliating blow to the Trump legacy as one of his flagship policies is reversed.
It would also bring significant benefits to the U.S. economy while helping American workers and companies to thrive. Finally, it sends an important message to the world: not America First, but rather, America is Back.
Ben Ramanauskas is a research fellow in economics at Oxford University and associate fellow at Bright Blue. He is a former adviser to the UK’s Secretary of State for International Trade.
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