Originally launched in 2012, negotiations between China, Japan, South Korea, Australia, New Zealand, India and the 10 member states of the Association of Southeast Asian Nations have languished for much of the agreement`s history, but intensified in 2017 when the United States withdrew from the Trans-Pacific Partnership Agreement. At the same time, China was trying to build deeper ASEAN supply chains as an alternative to a fragmented economic relationship between the US and China. India`s withdrawal from the RCEP negotiations at the end of 2019 paved the way for the agreement to be concluded on 15 November 2020. Other agricultural products such as maize, pork, cotton, wheat and sorghum exceed or even exceed the targets of the first phase. Nevertheless, some of these export successes are likely to have little to do with purchase obligations. For example, after losing the World Trade Organization`s disputes over its policies on corn and wheat, China increased its imports of these products from the rest of the world, not just U.S. farmers. Similarly, the Outbreak of African Swine Fever in China has devastated its domestic pig herd, leading China to significantly increase its pork imports from farmers outside the United States. New Zealand`s Minister of Trade is aware of the challenges ahead. “It was February 2017 and President Trump`s first speech to a joint session of Congress,” said Tim Groser, who served as New Zealand`s trade minister (2008-15) and ambassador to the United States (2016-18). When the president announced the U.S. withdrawal from the Trans-Pacific Partnership, I thought of a conversation I had with a particularly astute Asian ambassador. He suggested to me that if ever a book was written about the decline of American influence in Asia and the Indo-Pacific – and he hoped that would never be the case – his first chapter would be an account of the US withdrawal.
China`s economy has recovered more strongly in 2021, with recent forecasts putting this year`s GDP growth at around 8%. However, China`s first-phase purchase commitments have also been postponed, with more expansionary spending on U.S. exports forecast for 2021, more than 50 percent more than in 2020. From January to October 2021 alone, U.S. exports to China increased slightly from 2020, to 61% of the proportional target for 2021 (see Bown 2021, Figure 2). But despite the improvement in its economy, China has not been able to catch up. Trump`s trade policies, particularly tariffs on steel and aluminum, are costing many manufacturing workers their jobs. Tariffs have also caused companies listed on the U.S. stock exchange to lose an estimated $1.7 trillion in market value, according to a study by Mary Amiti, an economist at the Federal Reserve Bank in New York, and Columbia University economists Sang Hoon Kong and David Weinstein.
The first was to quickly reintroduce a “targeted tariff exclusion process” to waive the tariffs imposed by President Trump on certain U.S. companies hit hard by the trade war. Tai said the decision was motivated by “what we hear from our businesses, especially our small and medium-sized businesses, which are certainly affected by the tariffs.” The U.S. maintains the tariffs imposed by President Trump, which cover more than $135 billion — or 93 percent — of input imports from China. Tariffs on these parts and components increase costs for U.S. companies that want to compete not only for U.S. consumers` business, but also around the world and in China through exports. The Trump administration has granted some product exclusions, but most of the waivers have expired. Some agricultural products have not recovered from the effects of the trade war. U.S. exports of raw hides and skins account for less than one-third of the expected target. After being hit by Chinese tariffs, U.S.
lobster exports remain only half the expected level. Under the agreement, China has committed to purchase as much as $63.9 billion of covered goods from the United States by the end of 2020 compared to these 2017 baselines. The definition of the baseline for 2017 using Chinese import statistics implies a purchase target of $173.1 billion for 2020 (red in panel a). Defining the baseline for 2017 using U.S. export statistics implies a target of $159.0 billion for 2020 (in blue in panel a). Withdrawing the U.S. from the Asia-Pacific trade pact, which aims to advance U.S. economic and strategic interests vis-à-vis China, will go down in history as one of the worst decisions made by a U.S.
president in the past 50 years, according to trade and foreign policy analysts. Now that China has applied to join the Comprehensive Progressive Trans-Pacific Partnership, Donald Trump`s decision looks even worse than in 2017. The poor performance of the manufacturing industry is due to major U.S. exports such as airplanes and cars. Together, these sectors accounted for nearly 28% of U.S. goods exports covered by the agreement. Their exports to China were destroyed in 2018 and 2019. U.S.
exports of these products have not yet recovered, and without them, China has little hope of meeting all of its purchase commitments. U.S. auto exports to date are also estimated at more than $18 billion, reaching only 39 percent of the proportional target. Before the trade war, China was the second largest U.S. export market for vehicles. Trump imposed a 25% tariff on auto parts imported from China in the summer of 2018, and China immediately retaliated with a 25% tariff on U.S. auto exports. Rising costs and the resulting uncertainty have made it difficult for U.S.-assembled cars to compete in the Chinese market. Companies such as Tesla (California) and BMW (South Carolina) have shifted production destined for China in the United States to other foreign markets. U.S. auto exports have fallen and have not recovered since.
In her announcement, Tai said she would “soon discuss with China its performance under the Phase One agreement. China has made commitments that benefit certain American industries, including agriculture, that we must enforce. A key part of the deal called for China to buy an additional $200 billion by the end of 2021, not only for U.S. agriculture, but also for manufacturing, energy and services exports. Law enforcement is crucial as China is on track to buy just over 60% of the promised goods. Soybean exports to China will remain at only 63 percent of the deal`s proportional target until October. With oilseeds accounting for nearly 60% of the value of agricultural exports covered by the Phase One agreement, data from the last two months of 2021 could improve the sector`s performance. Soybean exports are currently estimated at $13 billion, although China can make significant purchases, as November and December are historically among the largest shipping months of the crop. Background: President George W. Bush proposed a trade deal with like-minded Asia-Pacific countries in 2008.
“While President Barack Obama was quick to welcome the TPP [Trans-Pacific Partnership] and reach an agreement between the parties, in 2014 he fatally delayed pressure on the congressional trade promotion authority,” wrote Matthew P. Goodman, senior vice president of economics at the Center for Strategic and International Studies. And in one of his first disastrous acts as president, Donald Trump pulled the US out of the unratified TPP – without understanding that it was one of the most powerful tools he had to compete with his arch-enemy, China. U.S. agricultural exports are also not on track to meet the commitments of the first phase, although they have performed relatively well. In October 2021, agricultural exports accounted for 83% of the proportional targets, compared to 82% in the middle of the agreement (Figure 3). As in the manufacturing sector, U.S. agricultural exports to China were devastated in 2018 and 2019 due to the trade war. Contrary to its policy of denying production aid, the Trump administration compensated farmers with billions in subsidies, resulting in a net income from agriculture that was 5% higher in 2019 than in 2017. Federal subsidies continued; Net farm income was even 20% higher in 2020 and is expected to be 20% higher in 2021. Will China be included in the trade pact?: China is preparing to join the CPTPP, although the criteria and its poor relations with some of its members make the country`s membership less than certain. “Despite concerns over its inward-looking `circulation strategy`, China has spent the past few months reducing barriers to trade and investment to facilitate the negotiation of its accession to the 11-member Trans-Pacific Trade Pact,” writes Henry Gao, associate professor of law at Singapore Management University and author of a National Foundation for American Policy analysis of a proposed U.S.
strategy to address the China`s trade problems in the world. Trade Organization (WTO) and Weihuan Zhou, Research Director at the Herbert Smith Freehills CIBEL Centre at the UnsW Sydney School of Law and Justice. Assessing progress towards the objectives of the first phase of trade in goods requires information from both U.S. export statistics and Chinese import statistics, as stated in Article 6.2.6 of Chapter 6 of the Agreement: “Official Chinese trade data and official U.S. trade data will be used to determine whether this chapter has been implemented.” One implication is that there are two monthly data sets that need to be tracked (Chinese imports and US exports). .
