A Line Down the Pacific? The Stakes for U.S. Engagement in the Asia-Pacific Region

No priority facing our nation is more important than putting Americans back to work. The U.S. Chamber of Commerce estimates that 20 million jobs must be created in this decade to replace the jobs lost in the past three years and to meet the needs of America’s growing workforce.

With this challenge in mind, the Chamber in September 2009 called for a national goal to double U.S. exports within five years. The rationale is clear: We cannot rely on domestic consumption to generate more demand for the goods and services we produce, and the federal government faces unsustainable budget deficits for years to come.

Meanwhile, outside our borders are markets that represent 73% of the world’s purchasing power, 87% of its economic growth, and 95% of its consumers.

The resulting opportunities are immense, and nowhere are they greater than in Asia. Some 2 billion Asians have joined a middle class that accounts for more than one-half of the continent’s population—up from just one-fifth in 1990.

Asia today generates a third of global GDP and purchases a quarter of U.S. exports—shares that are bound to rise in the decades ahead.

However, the United States also faces major challenges in Asia. The U.S. share of Asia’s international trade has actually declined by 9% since 1990 as Asian nations have negotiated preferential trading agreements among themselves.

Intra-Asian trade now accounts for half of the region’s total international commerce—-up from just a quarter in 1985. As Asian production chains have expanded to meet booming regional demand, U.S. suppliers of intermediate goods are being left behind. Many U.S. manufacturers and farmers are being displaced by local competitors or firms based in the EU or Australia, which are forging their own preferential trade deals across the region.

In short, Asian nations are designing a new architecture for trade in the global economy’s most dynamic region—threatening to draw "a line down the middle of the Pacific."

However, the United States has three critical opportunities in 2011 that could deliver significant economic gains for American workers, farmers, and companies and ensure that the United States remains a major strategic player in the Asia-Pacific region.