The U.S. Needs To Rejoin The TPP To Meet The China Challenge

The trade deficit is also caused by the mercantilist practices of China and other nations. Instead of selling Vietnam vehicles made in Detroit, Ford (F) has an assembly plant there to avoid tariffs that range up to 70%.

Long-run drag on economy

Consuming more than we produce raises U.S. living standards in the short run but costs America dearly in lost high-tech sales, R&D budgets, growth, and future resources to finance government services, social benefits and the military.

China captured leads in 5G and solar-panel technology by offering firms such as Huawei generous subsidies and limiting foreign competitors’ access to its domestic market.

Had the United States permitted Huawei to become a near monopoly global supplier of 5G by not blocking sales here and persuading the U.K.CanadaIndia and others, China’s national champion would have been in a position to de facto set global standards for components and software for internet backbone devices such as routers, smartphones, microprocessors and operating systems.

The modern world trading system was conceived as a system to link market economies, but China has abused more-open trade to great advantage. Its trade surplus with the United States is in part responsible for its faster growth and stock of dollars it uses to finance its military, Belt and Road Initiative and other instruments of soft power.

TPP was intended to contain China

President Barack Obama conceived of the TPP to contain China and improve U.S. market access in Asia, but Donald Trump withdrew the United States. Along with Biden’s disinterest, that leaves the field open to China.

China has formed the Regional Comprehensive Economic Partnership, a more limited arrangement in Asia that only lowers tariffs, and is exploring membership in the TPP. As a member, China could force smaller states to acclimate to its state-directed capitalism through how TPP rules are interpreted and enforced. and could block American participation.

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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

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