The U.S. is Losing by Retreating From Economic Engagement

Wendy Cutler on Bloomberg

Wendy Cutler Bloomberg January 2018

On January 23, 2018, ASPI Vice President Wendy Cutler appeared on “Bloomberg Daybreak: Asia” to discuss the Trans Pacific Partnership (TPP), NAFTA, and U.S.-China trade, making the case that the United States is making a mistake by retreating from economic engagement.

With the remaining 11 TPP countries finalizing a separate deal without the United States on Tuesday, Cutler expresses concern about the United States’ decision to exit the agreement last year. Relaying a key finding from a new Asia Society Policy Institute paper Cutler notes that “as the U.S. is retreating from economic engagement in Asia, the rest of Asia is moving forward aggressively to conclude deals among themselves.” This, according to Cutler, “is going to hurt the United States, it’s going to hurt our companies and our workers who will not have preferential access to these markets, and we also lose… a seat at the table to really try and help shape the rules of Asia”.

Regarding recent U.S. tariffs imposed on the import of solar panels and washing machines, Cutler’s view is that by embracing certain U.S. sectors’ wish for protection, we might be seeing a troubling precedent encouraging other companies to ask for the same. The benefits of such actions are complex. As Cutler points out, “it’s very complicated because if you help the steel industry, by definition you may be hurting the auto industry, so these decisions are very complicated."

According to Cutler, the key action to watch for is the Section 301 investigation and the U.S. administration’s actions toward China. Based on recent events, Cutler thinks “the administration is laying the ground work for some strong actions against China because of its unfair trade practices on intellectual property protection.” Although she does not think we are seeing a trade war yet, as that would not be in anyone’s interest, Cutler does “think we are going to see increasing friction with an administration that has the view that there are a lot of unfair actors in the international trading arena, and we are going to go after them.”

Cutler ends by emphasizing her support of NAFTA, arguing that if the United States withdrew “that would backfire against the United States, against our economy, against our companies and against their workers.” (8 min. 42 sec.)

Watch the full video.