Count me among those business leaders who thought the Trans-Pacific Partnership (TPP) was on the right track last year and would have brought significant benefits to all nations, including the United States.
Before President Trump withdrew the United States from the TPP trade negotiations, I had argued it would have unified the world’s most dynamic economic region—bringing together developed and developing countries that collectively represent 825 million consumers and 40% of the world’s economic output.
TPP would have eased crossborder trade and simplified international supply chains by eliminating tariffs, increasing transparency, and instituting stronger protections for intellectual property, labor, and the environment.
Another practical outcome would have been pressure on China—the world’s second largest economy—to eventually join. So sweeping was the TPP in its scope, with member nations including Japan, Singapore, Vietnam, Australia, as well as the United States, Mexico, and Canada—that China would have had little choice but to at least harmonize its trading practices with TPP countries, if not eventually join as a full-fledged member.
Fast-forward to today. With President Trump having kept his campaign promise to withdraw the United States from the TPP, the pact is considered all but dead. But beyond that, continued rhetoric from the Trump administration indicates a reluctance to embrace multilateral free trade deals and to move toward a more protectionist “U.S. first” trade policy.
This is a mistake, on a number of fronts. First, in an increasingly interconnected world, free and fair trade is mutually beneficial. With respect to the United States and China, our economies are already inextricably linked. The two countries are each other’s second-largest trading partner, with bilateral trade reaching $519 billion last year. And this trade is on an upward trajectory.
In the electronics industry, nearly 20% of IPC’s member companies are Chinese, and those firms and many of their foreign partners depend on predictable and open trade rules to help secure their supply chains. Why would we erect new barriers to trade with China, or skip the opportunity to lower existing barriers?
To read the full version of this column which appeared in the May 2017 issue of The PCB Magazine, click here.