US Trade Policy Options in the Pacific Basin: Bigger Is Better

Jeffrey Schott

No PB17-7, Policy Briefs from Peterson Institute for International Economics

Abstract: As promised throughout the campaign, one of the first acts carried out by President Donald Trump was to order the US Trade Representative to withdraw formally from the Trans-Pacific Partnership (TPP)—a megaregional trade agreement between the United States and 11 other countries. The administration instead plans to pursue new bilateral trade pacts in the Asia-Pacific region. Schott explains why a regional deal like the TPP is far more likely to yield larger US gains with fewer US concessions than the administration’s favored bilateral approach. He reexamines the TPP deal and recommends ways it could be improved, including by adding enforceable currency manipulation provisions to the main trade deal and omitting the investor-state dispute settlement provision. A revamped, enlarged, and probably renamed Asia-Pacific pact that includes Korea, Colombia, and Taiwan, among others, would significantly expand the value of the original TPP deal, achieve greater regional integration, and expend less US political capital than a country-by-country bilateral approach.

Date: 2017-02
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