The Intracies of International Trade Policy

Sometimes international trade policy is not just about international trade policy. Take the Trans-Pacific Partnership (TPP) being negotiated between the U.S. and 11 other nations, for example. While the deal may increase U.S. exports, the economic benefits to the U.S. will be fairly small. However, the deal’s true importance lies in its geostrategic effects.

China has been flexing its muscles in the region, both economically and militarily. For example, China has initiated unprecedented island reclamation projects, declaring sovereignty over those and other islands that have been contested by nations such as Japan, Vietnam and the Philippines. China has also extended its reach in international waters, declaring a wider swath of the sea belongs within its territorial boundaries. This too has alarmed its neighbors.

On the economic front, China successfully founded the Asian Infrastructure Investment Bank, much to the chagrin of the United States, which furiously lobbied its allies not to join. Unfortunately most joined anyway. The U.S. is concerned that this new bank will help China exert undue influence in the region due to its economic heft.

U.S. policymakers fear they are losing sway in the region. As a result, they hope a successful TPP will solidify American influence in the region by reasserting its economic leadership and extending its security umbrella to more nations. Sometimes a trade deal is more than a trade deal.

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