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Current Trade Deficit:    
Instead of Adding Japan, Scrap the Whole Trans-Pacific Trade Deal
Alan Tonelson
Friday, February 22, 2013
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Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
President Obama’s aim of securing Japan’s participation in the Trans-Pacific Partnership talks via his summit with Japanese Prime Minister Abe ignores the lessons of four decades of fruitless U.S. efforts to open Japan’s hermetically sealed import market.  

In fact, America’s lack of a credible strategy to address Asia’s pervasive nontariff trade barriers and predatory practices can only turn the misconceived TPP into a powerful engine for destroying U.S. jobs, boosting U.S. trade deficits, and plunging the American economy even deeper into debt.  Bringing gigantic Japan into the tent will only magnify these losses.

The President should abandon the Trans-Pacific Partnership and instead negotiate a series of bilateral deals with export-led Asian economies that use America’s overwhelming market power to guarantee full reciprocity for domestic American manufacturers and other producers and their employees.

The TPP represents the latest U.S. attempt to increase U.S. exports to Asia’s populous and increasingly wealthy economies by negotiating agreements to reduce these countries’ towering trade barriers. American leaders have displayed some ability to learn from these efforts.  They now understand that simply reducing or even eliminating visible trade barriers like tariffs and quotas is not even half the battle in trade diplomacy with Asia.  The region’s vast array of nontariff trade barriers, which have no U.S. counterpart, must be addressed as well.

As a result, TPP plans call for creating a truly level playing field by effectively tackling these nontariff barriers, and in particular conditioning the deal on considerable regulatory harmonization.  

Yet what President Obama and other TPP advocates ignore is how difficult even identifying these barriers can be, much less meaningfully monitoring and verifying their elimination.  The reason is simple:  The East Asian candidates for TPP overwhelmingly reject American-style principles of government, which emphasize black letter law, accountability, and transparency.  

Instead, East Asian governance generally consists of secretive bureaucracies conducting policy through a series of informal arrangements and decisions that are rarely even written down, and can be quickly formulated, implemented, and disguised.

This explains why the more free trade deals America negotiates with East Asian countries, the bigger its trade deficits grow.  Washington cuts or abolishes the remaining tariffs and quotas that provide some shielding for U.S. industries competing against predatory Asian rivals.  But the nontariff Asian barriers remain largely immune from American pressures.  

Washington’s new free trade agreement with Korea is a depressing case in point.  So is the failure of more than four decades of U.S.-Japan diplomacy and deals to increase significantly market access for U.S. exports and eliminate or even control Japanese industrial subsidies and other anti-competitive practices.

American industries have made meaningful progress in Japan and the rest of Asia only when American Presidents – chiefly Ronald Reagan – have imposed or credibly threatened U.S. tariffs on Asian products.

Greater sales to Asia’s markets would indeed be a huge prize for American domestic companies, their employees, and the entire U.S. economy.  But Washington needs an entirely new approach to achieve this goal.  President Obama should abandon the Trans-Pacific Partnership and instead negotiate bilateral deals with Asian markets that strictly condition their access to the U.S. market for full reciprocity, and enable Washington to evaluate compliance and authorize retaliation unilaterally.  

Because export-led Asian economies understand their vital need to sell to America to achieve adequate growth and employment, this hard-nosed exercise of U.S. leverage will be far more effective in promoting U.S. commercial interests than Trans-Pacific Partnership dreams.  



Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).