In an increasingly interconnected world, where countries across continents have come together to collaborate and knit closer ties, the move to focus, and concentrate economic resources and energies could turn out to be regressive.
In a strategic shift, U.S. President Donald Trump has formally withdrawn the United States from the Trans-Pacific Partnership trade deal, thus giving China’s influence more space in the region.
The move fulfilled a campaign pledge to end American involvement in the 2015 12 nation TPP pact.
Trump’s policies focus on boosting U.S. manufacturing. He has stated he would seek one-on-one trade deals with countries which could allow the U.S. to terminate them within 30 days “if somebody misbehaves.”
“We’re going to stop the ridiculous trade deals that have taken everybody out of our country and taken companies out of our country,” said Trump in the White House’s Roosevelt Room in front of union leaders.
The TPP pact, which was backed to the hilt by U.S. business, was negotiated by former U.S. President Barack Obama’s administration. It however was never approved by the U.S. Congress.
The pact was part of a strategic U.S. move, dubbed as a “pivot to Asia” which essentially establishes U.S. economic leadership in the region before Beijing can. The TPP pact excluded China.
To counter the move, Beijing has proposed a Free Trade Area for Asia Pacific regions while championing the Southeast Asian-backed Regional Comprehensive Economic Partnership.
Trump’s move has sparked worries in U.S. allies in the Asia Pacific, including Japan. During the campaign trail Trump had demanded that its U.S. allies contribute more for their own security.
Trump’s trade stance has nurtured a growing perception among Americans that his moves will ultimately hurt the U.S. job market. Even Republicans have long held the view that trade must be free.
“It’s going to be very difficult to fight that fight, Trump is reflecting a trend that has been apparent for many years,” said Lanhee Chen, a Hoover Institution fellow who was domestic policy adviser to 2012 Republican presidential nominee Mitt Romney.
As per Harry Kazianis, director of defense studies at the Center for the National Interest, a think tank in Washington, Trump must now find an alternative route to reassure its allies in Asia.
“This could include multiple bilateral trade agreements. Japan, Taiwan and Vietnam should be approached first as they are key to any new Asia strategy that President Trump will enact,” said Kazianis.
Trump’s protectionist rhetoric has spooked the USD, which fell to its seven-week low against a basket of other major world currencies on Monday.