- Third Annual Transatlantic Business Works Summit
ACTION: The Chamber supports moves to complete the ongoing negotiations for trade agreements with the UK and Kenya; to consider whether there is a path to re-engage with the countries that proceeded to implement the Trans-Pacific Partnership; and to seek out new trade agreement partners in other regions.
The Chamber has strongly supported efforts to negotiate a high-standard free-trade agreement with the UK reflective of the importance of the “special relationship” and the substantial commercial ties that uphold it. The Chamber also supports the negotiation of a high-standard free-trade agreement with Kenya, which may serve as a model for future trade and investment engagement with Africa. These initiatives deserve a favorable assessment by the Biden administration, which can easily continue these negotiations where the Trump administration has left off.
Where else should U.S. negotiators turn their eyes? The booming Asia-Pacific region is a logical focus. According to a report by the Organization for Economic Cooperation and Development, Asia will represent 66% of the global middle-class population by 2030, doubling its share in 20 years. U.S. workers, farmers, and businesses need access to those lucrative markets if they are to share in this dramatic growth.
However, U.S. companies are falling behind in the Asia-Pacific. While U.S. exports to the Asia-Pacific market have steadily increased in recent decades, their market share has been shrinking in relative terms. One reason is that a number of countries maintain steep barriers against U.S. exports. A typical Southeast Asian country imposes tariffs that are five times higher than the U.S. average while its duties on agricultural products often soar into the triple digits. In addition, a web of nontariff and regulatory barriers block market access in many countries.
Trade agreements are crafted to overcome these barriers. However, Asia-Pacific nations are clinching preferential trade deals among themselves that have left the United States on the outside, looking in. According to the Asia Regional Integration Center of the Asian Development Bank, Asian countries have implemented 165 bilateral or regional trade agreements, and a huge new one was signed in November 2020: The Regional Comprehensive Economic Partnership (RCEP) includes China, Japan, and Korea as well as the 10 ASEAN countries—but not the United States.
Against this backdrop, re-engaging with the 11 countries of the Trans-Pacific Partnership may be the best chance for the United States to secure a level playing field for trade in the Asia-Pacific region. Its comprehensive, high-standard disciplines not only eliminate tariffs but also introduce new rules to cut through the non-tariff barriers that at times loom even larger than tariffs and quotas. The TPP was largely written by U.S. trade negotiators and reflects U.S. priorities in many ways.
The United States should also seek out new trade agreement partners in other regions. The list of prospective partners includes emerging markets such as Turkey, Brazil, and a number of countries in Africa as well as Southeast Asia. In a number of these prospective partner countries, diverse obstacles will have to be addressed before formal negotiations can be launched, but even in such cases, addressing even these initial obstacles brings benefits.
In sum, the rest of the world has not been standing still on trade. If America is to avoid being left behind, we need to be on the field.