A nation must think before it acts.
Politics and Policy of East Asia’s Economic Future
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The Trans-Pacific Partnership is the most recent, and a highly ambitious, step along a familiar road of international economic liberalization and integration through multilateral trade-plus pacts. It promised to deepen and extend openness through commitments on trade in goods and services, investment, harmonization of national regulation on a wide range of economics-related matters labor and the environment, and robust protections for intellectual property and processes for transnational dispute resolution.
After the U.S. TPP “Opt-Out”
Shortly after taking office, President Trump announced that the U.S. would be opting out of the TPP. The Trump administration has been skeptical of U.S. trade agreements more generally, and has recently turned to imposing trade and related sanctions with a significant potential impact on China and East Asia. Although less prominent in the U.S. and elsewhere in the West, domestic political pressures and policies favoring greater protectionism have been on the rise in some East Asian states as well, fueled by concerns about “hollowing out” of domestic industry, the risks of dependence on a politically assertive and economically illiberal China, and so on.
At the same time, the China-centered alternative to the once-U.S.-led TPP—the Regional Comprehensive Economic Partnership—persists. And the remaining members of the TPP have determined to go forward without the United States. All of this has been occurring against the backdrop of the WTO’s fading as a force for global economic liberalization.
What do these developments portend for economic relations within East Asia and U.S. economic relations with the region? Liberalization without the United States? A turn toward greater economic conflict and protectionism? A return of the U.S. to its traditional role of supporting liberalization and engagement? Something else?
Looking to the Future
The politics of international economic policy have created much uncertainty. But this is far from the only, or potentially the most disruptive, force in play. Technological transformation, the “Fourth Industrial Revolution” and kindred developments pose additional challenges and impetuses for change. These shifts are potentially especially significant in East Asia. The region is home to many of the world’s most dynamic economies, has long been a hub of technological innovation, and now faces the consequences of China’s ambitious agenda to create an “innovation economy.” The East Asian regional economy also has been characterized by deep integration into a global manufacturing supply chain that may be a poor template for the regional and global economy of the future.
What do these trends and possible future developments portend for economies in East Asia? How are they adapting, and well equipped are they to adapt? What are the impacts on the regional economy? On economic relations with the U.S.? Is the U.S. prepared to adapt?