Several years ago, when Pulitzer Prize-winning columnist Tom Friedman was asked to choose which rising Asian nation, China or India, he’d bet the farm on, Friedman didn’t hesitate to pick India.
The reason, he explained, was that while both nations were on an expressway to the future, India, the world’s largest democracy, had an open road in front of it and China, the world’s largest communist nation, would hit a wall he called liberty.
Today, American farmers see only one wall, export-pinching tariffs, as they prepare to sell what the White House says will be US$50 billion in American ag exports over the next two years to cash-and-carry China.
But as the U.S. and China continue to hammer out what the Trump administration calls Phase 1 of a bigger trade deal, the still communist China is hedging its bets through the 15-nation, Asia-centred trade deal named the Regional Comprehensive Economic Partnership, or RCEP.
Unlike the Trans-Pacific Partnership (TPP) that recently went into effect and pointedly excluded China, this one is driven by China.
That’s not good news for American farmers because, under RCEP the U.S. “would first need to reach a free trade arrangement with Asean (the Association of Southeast Asian Nations) then apply to join,” Bloomberg news service notes.
Why the years-long manoeuvre to join this massive, new trade group that already includes key American food buyers like China, Mexico, and Japan?
Mostly because the Trump administration pulled out of the nearly completed TPP just days after taking office in 2017. Choosing to be on the outside of TPP back then put the U.S. on the outside of RCEP now.
Two other facts about the soon-to-come, China-centric deal make it particularly troubling in today’s period of American-led trade tension.
First, India was a key part of RCEP but pulled out at the last minute.
China, rather benignly, accepted India’s withdrawal and noted it will warmly welcome it back into the group when circumstances change — diplomatic talk for when Prime Minister Narendra Modi departs.
The quick acceptance and even quicker forgiveness of India’s unforeseen move signals a new, almost unprecedented Chinese willingness to use diplomacy rather than muscle to broaden its regional and global influence.
Equally troubling is that U.S. Secretary of Commerce Wilbur Ross, who attended the Nov. 4 meeting of RCEP member-states, described the deal as “a very low-grade treaty” that “lacks the scope of the TPP.”
How’s that for nerve: The Trump administration dumps on a new trade pact by comparing it to another trade deal it dumped without hesitation more than two years ago.
That lack of forethought didn’t stop TPP; it’s in effect today — without the United States.
Now China is putting the finishing touches on an even bigger trade deal with all of Asia that also excludes the U.S.
Meanwhile, the go-it-alone White House is hoping to get China to buy U.S. farm goods at about the same level it was buying before the costly, price-busting tariff war began 18 months ago.
So, as the White House openly panders to its rural voters, China, wall or no wall, continues to play the long game. RCEP will supplant U.S. influence — and, perhaps, U.S. food — throughout Asia for years to come.
The U.S. and its farmers, however, just continue to get played.