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  December 25th, 2017 | Written by

Economic Security and National Security

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  • Trump’s notion of tying economic prosperity to national security misses the big picture.
  • Trump wants to enter into bilateral trading relationships to reduce the US trade deficit.
  • Focusing on deficits as a matter of trade policy is wrongheaded.
  • Trump thinks the US can muscle its way to trade surpluses by dealing with one nation at a time.

President Donald Trump, in a speech during his recent trip to Asia, equated economic security with national security. He reiterated the same concept during a foreign policy speech last week.

But Trump’s notion of tying economic prosperity to national security misses the big picture. Trump’s concept is to enter into bilateral trading relationships with countries around the world in an effort to reduce the US trade deficit. The Secretary of Commerce, Wilbur Ross, spends his time figuring out where United States exporters can sell more.

That’s not a bad thing in itself—although focusing on deficits as a matter of trade policy is wrongheaded—but the world is a complicated place and world leaders like the president of the United States need to juggle with more than one ball in the air at the same time. The president’s notion of bilateralism suggests that the US can muscle its way to trade surpluses by dealing with one nation at a time. That power-based approach is a departure from the rules-based system of trade that emerged in the aftermath of World War II and which the US has championed ever since. By the way, no country has accepted Trump’s invitation to negotiate a bilateral trade deal.

With the collapse of the Soviet Union and end of the Cold War, the US emerged as the sole superpower on the world stage and sought to mold the world in its image through the promotion, not only of free trade, but also of democracy and transparency.

The Trans-Pacific Partnership was an example of that effort. Many will remember that former President Barrack Obama championed that deal, but it was actually originally proposed during the George W. Bush administration, a testament to what was once a bipartisan approach to international trade and world affairs.

The advantages of TPP were many. It was a geopolitical instrument to contain the influence of an emerging China in the Asia-Pacific region and it cemented US trading ties with the eleven TPP partners, allowing the Asian countries among them to diversify their economies in a way that was less dependent on China. All this would have contributed to US economic and national security, but it was all thrown away when Trump consigned TPP to the trash heap on one of his first days on the job.

There have been reports that the NAFTA renegotiation is in trouble, not a big surprise considering Trump’s antipathy for multilateral agreements, and his reported desire to withdraw from that deal earlier this year. One of the sticking points is the US insistence that the agreement be renegotiated every five years, a condition that Canada and Mexico will not accept. It doesn’t make sense from a business perspective either, because companies need more than a five-year horizon to plan investments and supply chains.

Lately, it seems that there are strains over the bilateral US-Korea Free Trade Agreement (KORUS), with the US calling for a special negotiating session, all in the name of reducing the bilateral trade deficit. Commerce Secretary Wilbur Ross told an audience at the Atlantic Council in Washington recently that in his estimation, the US could and should be selling more cars and agricultural produce to the South Koreans.

But the South Koreans are worried that the collapse of KORUS will also mean the weakening of the US-South Korea security alliance, and if that happens South Korea will inevitably be drawn into China’s sphere of influence. The Chinese are seeking regional hegemony with activities in the South China Sea and the Belt and Road initiative, among other things. The US was once the bulwark against Chinese influence, but in the space of a year since Trump took office, the US has retreated from a leadership position in Asia and China has entered the vacuum to emerge as a regional as well as global leader.

So there is a definite connection between economic security and national security, but it’s not quite the notion that Trump espouses. One of the points of TPP was to eventually draw China into a US-led international system based on democracy, transparency, open economies, and international standards. That effort, at least for now, is over.

Luckily, the remaining eleven TPP members have decided to continue without the United States. This provides Japan—which considered itself the main US partner in TPP until Trump came along—with the opportunity to assert its own influence in the Asia-Pacific. It also provides a framework for the US to rejoin the organization if Trump ever comes to his senses on the issue—not likely—or further down the road, when the Trump era is over.

Peter Buxbaum is web editor of Global Trade.