Image for US on Outside Looking in at World’s Largest Free-Trade Bloc

International trade, of keen importance to Oregon and Washington, has been a subject sorely missing in the presidential election debate. President Trump provoked trade wars. It’s not clear what a successor Biden administration may undertake. The direction of Asia-Pacific trade is clear. 

The Regional Comprehensive Economic Partnership is an emerging trade deal led by China that includes 15 Asia-Pacific nations. If this sounds vaguely familiar, it is. The RCEP supplants the Trans-Pacific Partnership (TPP), which the Obama administration orchestrated, but was dumped when Trump became President in favor of bilateral trade deals compelled by tariffs.

Even though the United States withdrew, 10 member-state signatories continued to press on to initiate the Comprehensive and Progressive Trans-Pacific Partnership, which notably excluded China. There may be an avenue under the Biden administration to rejoin.

The RCEP, a 512-page agreement that has been approved virtually, lowers tariffs and trade barriers to stimulate intra-Asian economic growth. More troublesome from an American perspective is China’s role, which stepped in and effectively replaced the United States as the big player at the high-stakes Asian trade table.

Equally troublesome is what the RCEP doesn’t do. Unlike the TPP, the RCEP doesn’t require signatory nations to liberalize their economies, defend labor rights, adhere to environmental standards or protect intellectual property. Those provisions in the TPP were hailed by Obama as the ingredients of a 21st Century trade agreement. Domestic critics, both from the political right and left, said those assurances weren’t enough to stem further erosion of US manufacturing.

Largely because the United States stepped aside, the same nations that signed up for the TPP now will have a lower bar for trade and investment in Asia, as American businesses will be increasingly looking through the window at a region with 30 percent of the world’s population and GDP.

Instead of liberal trade and investment rules traditionally championed by the United States, China expects its trade partners increasingly to play by its rules. Australia, one of the signatories of the RCEP, learned that the hard way when it was punished for investigating the origins of COVID-19. China blocked Australian wine, barley and cotton exports and let $3 million worth of Australian rock lobsters rot while awaiting Customers inspection.

Lots of faces, none American, working on an Asia Pacific free-trade bloc that would be the largest in the world and was brokered by China.

There is a backdoor solution. After the Trump administration withdrew from the TPP, which was activated in 2018, seven of the 11 signatories, including Japan, Vietnam and Australia, soldiered on in what is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. President-elect Joe Biden has signaled an interest in rejoining the CPTPP, but it would require some fancy political footwork to navigate all the domestic opposition, including from organized labor.

India is another wild card in this international trade version of Risk, the board game. India was positioned to sign the RCEP, but it pulled out fearing the deal would enable China to flood Indian markets with cheap exports while failing to ensure access for Indian services and investment in the vast Chinese marketplace.

Based on its economic and military strength, India is viewed by US foreign policy experts as a critical counterbalance in Asia to growing Chinese influence. Indian Prime Minister Narendra Modi enjoyed a warm, personal relationship with Trump. Biden will try to emulate that relationship as part of a more nuanced geopolitical approach to US-Sino relations that relies less on confrontation and a trade war. The United States also is interested in an expanded trade relationship with India.

Largely because the United States stepped aside, the same nations that signed up for the TPP now will have a lower bar for trade and investment in Asia, as American businesses will be increasingly looking through the window at a region with 30 percent of the world’s population and GDP.

Since its independence, India has avoided alignment with other nations. That could change with a stronger Indo-US relationship as key to its economy and security. Modi also can’t overlook the Indian ancestry of Vice President-elect Kamala Harris, though his Hindu-centric policies may not meet as much tolerance from Biden and Harris as from Trump.

The RCEP evolved from an effort by the Association of Southeast Asian Nations (ASEAN) to harmonize bilateral trade agreements. With China’s involvement, it now could be the largest free trade bloc in the world.

Trade-dependent states such as Oregon and Washington rely on foreign markets to export commodities, specialty products, professional services and manufactured goods. They also have a large installed base of ports, railroads, barges, dock workers and trade services that depend on a free flow of goods.

The Portland Business Alliance reports international commerce is growing in Oregon, with nearly $30 billion of goods produced and exported annually, accounting for 12 percent of the state’s total Gross Domestic Product. Exports to Vietnam, for example, rose 432 percent since 2010. Exports to South Korea and Singapore increased by 50 percent, with Japanese exports not far behind. PBA says 88 percent of Oregon exporters are small and medium-sized companies with fewer than 500 employees. Trade accounts for almost 77,000 jobs in the Portland area.

Washington’s stat line is equally impressive, with $60 billion in exports in 2019, almost $9 billion of which went to China, $7.2 billion to Japan, $2.6 billion to Taiwan and $2.5 billion to South Korea.