The Implications of President Trump’s Economic Failures in the Pacific

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 It was announced on Sunday that fourteen pacific countries had signed a free trade agreement with China. Eight years of diplomacy produced a symbolic online economic coming together dedicated to increase trade among the countries. Japan, New Zealand, South Korea, Australia, and the Philippines signed with China and eight other countries.

Expert economists can be counted on to study the nuances and long run implications of what is called the Trans Pacific Partnership, TRP. Here are some preliminary reactions.

1. Trump’s ham handed bullying may have damaged America’s long-range economic position in the Pacific.

2. President-elect Biden now faces a serious diplomatic and economic problem.

3. Fair trade appears to be the wave of the future with Trump’s policies of trade tariffs being an example of what not to do in the international economy.

4. China plays the long economic game better than we do. Mariana Mazzucato in her book, The Value of Every Thing points out that tariffs from Nationalist politicians focus more on immediate prices then on the investment needed to create long run growth. In fairness, when our country was founded the tension between tariffs and free trade was already a matter of conflict. Do we protect companies, for example with steel import restriction aimed at China or engage in free trade tying us to other trading partners? Our experts will have to answer that important question.

5. Are there any military implications linked to our economic ties to other countries? There are. Trade with the Philippines makes it easier to have bases like Subic Bay and Clark air force base.

6. On the selling side of international trade, sellers will be drawn to non-tariff free trade countries especially in competitive markets. That happened in China’s dominance of solar energy. The issue is always prices versus greater sales.

7. What our government does economically will affect all of our people who are already hurting. We should be concerned that politics so dominates our government decision making (read “sources of contributions”) that we will lose great influence in the Pacific.

8. Senator McConnell has frequently over the years favored free trade. Now that the President is leaving perhaps, President Biden and Senator McConnell can have lunch.

9. What will be the union positions? Unions have always had a big say on the question of trade.

10. Finally, the rest of the world is not waiting while the American government and especially our Senate tries to make government function.

 Copyright 2020 James J Brosnahan 

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