How to Support Trade While Opposing China

Protectionists have a magic word, a word of talismanic power. The word is “China.” So potent is its spell that it shuts down any argument for free trade, however tangential the connection to the dreadful regime in Beijing (about which, for the avoidance of doubt, I am more hawkish than most).

China makes politicians lose all sense of proportionality. Never mind that U.S. manufacturing has risen in value from $1.5 trillion to $2.5 trillion since China joined the World Trade Organization in 2001; or that the sectors exposed to Chinese competition have created jobs faster than the rest of the economy; or that the few factory jobs lost in those sectors have been replaced by more, and better-paid, jobs in design, research, and marketing; or that China has a better record of compliance with WTO rulings than the U.S. has.

In the current climate, none of this matters. Voters put imagined security before real prosperity, sometimes, as we saw during the lockdowns, to a catastrophic degree. Democrats and Republicans know how to stoke, as well as to reflect, their electorate’s anxieties. President Joe Biden has, at huge cost to American businesses and consumers, imposed tariffs on Chinese electric vehicles, solar panels, batteries, and semiconductors. Donald Trump wants to go even further.

Free traders know better than to swim against this current. Try to argue that China should be contained by military rather than economic means, or that the supposed economic deterrence does more harm to the U.S. than to its intended target, and people will take you for a gullible leftie. So, for sound tactical reasons, the dwindling band of economic liberals in the U.S. focuses on trade deals that might be acceptable to Trump — such as the bilateral deal with Britain that he pursued as president.

The trouble is that such a deal may no longer be on offer. Britain’s Labour Party, which is currently 20 points ahead in the polls, is more interested in getting back into bed with the European Union than in a deal with the U.S. In any case, doing a deal “with Trump,” as the British media would frame it, is politically unattractive. Are we destined, then, always to have our political cycles out of sync, the Rhett and Scarlett of international commerce?

Not necessarily. There is a way to significantly improve the terms of trade between Britain and the U.S., though that would be an almost incidental benefit. The main benefit would be to contain China in the Pacific through economic engagement rather than through retreat.

How? By joining the Pacific trade pact, currently known, in an absurd genuflection to Justin Trudeau’s sensibilities, as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. CPTPP brings together key Western allies, including Australia, New Zealand, and Japan, in a deal that covers 11 countries and 13% of global output.

Ah, you say, but there is no chance of Trump joining. He campaigned against CPTPP in 2016, partly because he is a protectionist, and partly because it had been negotiated by Barack Obama. When he took office, he pulled the U.S. out of negotiations that had been more or less expressly designed around U.S. interests, both economic and strategic. Why would he want to go back in?

Well, things have moved on since 2016. The CPTPP has come into force, albeit without the U.S., and is succeeding. China, seeing America’s withdrawal as a strategic opportunity, was quick to submit a membership bid, followed by Taiwan.

But the existing members, searching for a strategic counterweight to China in place of the U.S., instead admitted Britain (which qualifies as a Pacific state by virtue of owning the Pitcairn Islands). In short, CPTPP is shaping up as exactly the kind of trade deal that conservatives should support, pursuing mutual recognition rather than harmonization, and emphasizing free exchange rather than environmental standards, workers’ rights, or other noncommercial policies.

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Others have noticed. Six states have asked to join, and another five (including South Korea) have expressed an interest. Here, in short, is a ready-made alliance, waiting for the U.S. to resume its place at the helm. And now for the best bit. Instead of costing anything — even from a protectionist point of view, it is hard to deny the damage of retaliatory Chinese tariffs, especially on American farmers — it would open new markets for U.S. business.

Sure, CPTPP needs a new name to reflect new realities: Pacific Pact would be my choice. But here, if they win, is a chance for Republicans to be pro-farmer, pro-enterprise, and anti-CCP. They should grab it with both hands.