Free Trade with or without the United States

President Donald Trump intends to punish other nations for "snatching" the United States into commerce. Their governments do not exactly match. They are starting to promote trade and leave the United States behind.

This week, countries from Asia and Europe showed that they could work to develop the trade by themselves. In Tokyo, the leaders of Japan and the European Union signed an agreement to create one of the largest free-trade areas in the world, covering 30% of world production and nearly 40% of world trade. In Bangkok, negotiators from 16 countries, including China, Japan, Australia and India, resumed talks on the Global Regional Economic Partnership (RCEP) in order to settle the most possible from here the end of autumn. attacks on the multilateral trading system. Neither one nor the other includes the United States

True, no pact is very ambitious. They are narrow and outdated free trade agreements, largely focused on reducing tariffs. The EU's agreement with Japan will take years to arrive gradually. Tariffs are already low, so the benefits will not be dramatic: a recent study predicts a gain of 0.2% per year over 10 years of Japan's gross domestic product, and less than 0.1% for the EU

Any final agreement of the RCEP may be even less ambitious, given India's opposition to lower tariffs on goods and South-East Asian countries. Is to liberalize services. Neither of these two covenants includes the 21st century standards set out in the original Trans-Pacific Partnership, whether it's working or environmental conditions or data flows that have become critical for modern economies.

better than no gains – and far better than the losses that will result from the measures taken by the United States to curb trade. For particular industries, the benefits will be substantial. European vine growers, cheese makers and pig farmers will have reduced tariffs on their exports; Japanese automakers will have new access to European markets. The EU estimates that exports of processed foods to Japan will increase by 180%; Japanese Government Expects Pact to Lead to Nearly 300,000 New Jobs

In both cases, simpler rules of origin will make life easier for businesses, especially smaller ones, looking to export to many markets. Even limited progress in areas such as e-commerce and data protection is valuable, as the global rules governing digital commerce have hardly been updated before the Internet is popularized. And each new trade pact preserves the momentum towards greater openness on a global scale. The EU now hopes to enter into agreements with Australia and New Zealand, as well as with the Latin American countries.

Like the TPP, which the other 11 signatories revised and relaunched after Trump withdrew from the pact, the United States loses its value when new trade rules are written without its participation. In the shorter term, higher US tariffs increase costs and disadvantage many US producers. More American protectionism will accelerate, while Asia and Europe will lower their barriers to each other, the less competitive US-based production will become. This is not a formula for raising the standard of living in the United States.

Editor-in-Chief of Bloomberg View editorials: David Shipley at
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