Bilateral trade agreements can be a good answer to Trump’s protectionist policies

By Hu Weijia Source:Global Times Published: 2018/7/18 23:38:40

Japan and the EU on Tuesday signed a wide-ranging free trade deal, which will be remembered in economic history for its contribution to the global free trade ecosystem amid headwinds.

US President Donald Trump's disdain for multilateral trade agreements is obvious. He pulled the US out of the Trans-Pacific Partnership (TPP) in his first week in office. His recently adopted unilateralist measures have dealt another blow to the multilateral trading system, driving it to the brink of bankruptcy.

The Japan-EU Economic Partnership Agreement (EPA) marks a new era of the global free trade ecosystem in which bilateral trade deals are likely to serve as the driving force for regional collaboration. The EPA promises to eventually eliminate 99 percent of tariffs between Japan and the EU, aiming to create the world's largest free trade zone at a time when Trump shuns multilateral trade deals.

The world is trying to find a way out of the economic doldrums created by Trump's protectionist policies. It seems the bilateral trade talks provide a good answer to the question. China is likely to gain more opportunities if bilateral deals become the forefront of the world's new measures to fight against protectionism and push forward free trade.

In 2009, when the US started to get involved in the TPP negotiations, some observers viewed the talks as a US strategic tool to contain China's rise, because Beijing might be isolated by Washington's circle of friends and lose out.

The US could decide who is allowed in its circle of friends and who is not, but Washington is unable to prevent its allies from making friends with the world's second-largest economy.

China is shifting its growth model to one relying less on investment and more on consumption. Many countries hope they could tap the potential of the Chinese economy and prompt China to further open its markets. China is expected to become a popular partner in further bilateral free-trade talks and shift the field's center of gravity away from the US.

What's more, bilateral deals are likely to help China gain more bargaining power in negotiations that see far fewer participants than multilateral trade agreements.

China must prepare to embrace the new era of regional collaboration, and we believe Beijing will be a staunch supporter of free trade. Bilateral deals will let progress on free trade continue without the participation of the US.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON ECONOMY

blog comments powered by Disqus