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Barack Obama got the United States into a trans-Pacific trade agreement, Donald Trump opted out and now Joe Biden must decide whether he wants back in.
China just made his decision more urgent and more complicated. On Sept. 16, it formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the 11-nation deal that was finalized in 2018 after the U.S. pulled out.
China’s path to membership won’t be easy. It will have difficulty complying with rules on data privacy, labor and state-owned enterprises.
Still, the mere possibility of Chinese entry should be enough to prod the U.S. into action. The trading bloc was originally conceived as a counterweight to Chinese economic influence in the Pacific; it could instead help China extend that influence to the detriment of the U.S.
For the U.S. to remain outside a trade alliance it helped design makes little sense. “When Trump pulled out, it was one of the biggest strategic blunders of the past 20 years,” said Jeffrey Schott, senior fellow at the Peterson Institute for International Economics.
Schott thinks the U.S. could join the CPTPP more easily than China — or, for that matter, Taiwan or Britain, which have also applied. “The U.S. would have a fast track to get back in,” he said. “It was an original negotiator, and most of the deal is based on U.S. law and practice.”
To get in, though, we have to apply. Biden is concentrating on his domestic agenda, and may not want to complicate it with a divisive debate on trade. Several progressive Democrats opposed the original Pacific pact, and Republicans who supported past trade deals are still in thrall to Trump.
To gain support among Democrats, Biden could ask CPTPP nations to strengthen the agreement by, for example, adding language on climate change. China’s application, however, may have made that process tougher.
“The Chinese would say you’re moving the goalpost, you’re raising the bar,” Schott said. “The current members will be a little bit more restrained in supporting proposals for upgrading the agreement for fear they would be seen as trying to block China’s admission.”
The Biden administration could just sit back and assume that one or more of the pact’s current members will block China’s application. The admission process will be a long one, Schott said, and China will need the other nations to either waive some rules or allow a long transition period.
China does have leverage over the CPTPP nations. All except Canada and Mexico do more trade with China than with the U.S., and China represents more than one-fifth of total trade volume for members such as Australia, Chile and Japan. They won’t want to anger a major trading partner by rejecting it outright.
The longer the U.S. waits to signal interest in rejoining, the more time China has to use its leverage. If China manages to eventually join, the U.S. would find itself on the outside looking in at a deal encompassing 30% of global trade.
“Then they’re in the deal that we put together, and they could keep us out of it,” Schott said. “Obama said a long time ago that we want to write the rules, we don’t want the Chinese to be writing the rules.”
Biden has been reluctant to make a dramatic break with his predecessor on trade policy. In a part of the world so vital to U.S. interests, however, getting in the game is less dangerous than sitting on the sidelines.