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What A Tentative Trade Deal Between China And 14 Other Countries Means For The U.S.


China, Japan, South Korea and a dozen other countries say they have reached an agreement on a big trade deal. The agreement, which would cover nearly a third of the world's economy, was announced today at an international summit in Thailand. President Trump was not in attendance, and the U.S. is not part of the deal. Critics call this another sign the U.S. is losing influence in the region and creating a vacuum that China is all too happy to fill.

NPR's Scott Horsley joins us now to talk more about this. Hey, Scott.


CHANG: So what's in this agreement with the other countries?

HORSLEY: It started with a group of countries in Southeast Asia, including Indonesia, Malaysia and the Philippines. It grew to include Australia, New Zealand, Japan and South Korea. India was part of the negotiations but dropped out at the last minute. China did jump in, though, and Fred Bergsten of the Peterson Institute for International Economics says China played a big role in pushing this agreement close to the finish line.

FRED BERGSTEN: This is a big deal. The countries involved represent a large share of the world economy. It indicates that the rest of the world is moving ahead to open markets and liberalize trade in the face of U.S. protectionism and withdrawal from global economic leadership.

HORSLEY: Ailsa, at a time when the U.S. has been launching trade wars against some of these same countries, the 15 parties to this pact say it demonstrates their collective commitment to an open trade environment in Asia.

CHANG: Now, the U.S., as we said, is not a party to this agreement. Is that going to be a problem for American exporters, you think?

HORSLEY: Well, it could be. The countries in this pact are agreeing to lower trade barriers, and that means U.S. exporters could find themselves at a disadvantage in these Asian markets if they're facing lower tariffs against one another but higher tariffs against the United States. That's been the case in China. It's also been the case with the so-called Trans-Pacific Partnership, or TPP, that President Trump dropped out of as soon as he took office.

Now, Commerce Secretary Wilbur Ross downplays that threat, though. Ross told Bloomberg Television this new deal is pretty modest in its ambitions.


WILBUR ROSS: It's not anything remotely like TPP, nor anything remotely like our separate arrangements with Japan and with South Korea. So I don't think you want to blow that out of proportion. It's a very low-grade treaty.

HORSLEY: Some of the trade experts I talked with today agree this agreement is pretty limited in its scope. Their big concern is not so much that, say, the U.S. loses ground in, for example, the Cambodian market for animal feed, but rather the signal this sends about U.S. engagement in what is a very fast-growing and highly competitive part of the world.

CHANG: Well, speaking of signals, Secretary Ross was in Thailand for this summit meeting, but President Trump wasn't. So what signal is that supposed to send?

HORSLEY: Some analysts say it's a signal of disengagement. Matthew Goodman of the Center for Strategic and International Studies paraphrased Woody Allen. He said, you know, 80% of success in this area is just showing up.

But President Trump really dislikes these big international gatherings. He prefers to negotiate with other countries one-on-one. He feels like that's the best way to use American leverage. The signal this deal sends, though, is the rest of the countries might not wait for the United States. They'll craft their own deals. And if the U.S. is not at the bargaining table, Bergsten says China's all too happy to take its place.

BERGSTEN: China is trying to dramatize its willingness and ability to fill some of the leadership vacuum in Asia that has been left by the United States.

HORSLEY: And you see this not only in trade but with things like the Paris climate accord, which the U.S. administration served notice they're pulling out of. When the U.S. steps back, countries look elsewhere for leadership.

CHANG: That's NPR's Scott Horsley. Thanks, Scott.

HORSLEY: You're welcome.

(SOUNDBITE OF RADIOHEAD SONG, "HIGH AND DRY") Transcript provided by NPR, Copyright NPR.

Scott Horsley
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.