US Withdrawal from TPP: Geopolitical and Geoeconomic Gift for China?

Withdrawing from TPP may offer China some geopolitical benefits, but more aggressive policies on Taiwan, the South China Sea, and bilateral trade weaken China’s geopolitical position.
January 25, 2017 • Commentary
This article appeared on The Diplomat on January 25, 2017.

On Monday, in his first major action related to U.S. trade policy, President Donald Trump issued an executive order withdrawing the United States from the expansive Trans‐​Pacific Partnership (TPP) agreement. In addition to liberalizing trade among 12 Asia‐​Pacific economies, the TPP was the major non‐​military pillar of the Obama administration’s “pivot to Asia.” Indeed, in recent years the TPP’s importance was framed not in terms of its economic value, but as a signal of American leadership and commitment in East Asia. President Trump frames his opposition to TPP through a domestic economic lens, but many in the Washington foreign policy establishment are more concerned about the strategic consequences of abandoning TPP.

A common lament associated with Trump’s decision revolves around the geopolitical advantages that China reaps from a TPP sans America. The basic line of argument is that the reputational hit from abandoning such an expansive and long‐​negotiated agreement will diminish U.S. leadership. This in turn will create a vacuum that China will rush to fill with its own trade agreements that exclude the United States in a bid to write new rules of the road in the Asia‐​Pacific. The ultimate result of this one‐​two punch would significantly improve China’s economic and political position at the expense of the United States.

As my colleagues at Cato have argued, withdrawing from the TPP is a “senseless act of wanton destruction” that will damage free trade and America’s reputation. However, the idea that withdrawing from TPP will lead to a geopolitical win for China gives short shrift to additional factors at play in the U.S.-China relationship that work against Chinese interests. Any benefits that China might reap from the United States leaving TPP must be weighed against the sea change in America’s approach to U.S.-China relations that is likely under the Trump administration.

If scrapping U.S. participation in the TPP is good news for China, it seems to be the only good news since Trump’s election. Trump’s statements as president‐​elect signaled an antagonistic shift in the U.S.-China relationship. On the Taiwan issue Trump said that he would consider dropping the long‐​standing One China policy. He appointed Peter Navarro, an intensely anti‐​China economist, to head the new National Trade Council. Finally, in his only press conference as president‐​elect, Trump said that China “has taken total advantage of [the United States]” economically and in the South China Sea.

Trump’s pick for Secretary of State, Rex Tillerson, said in his confirmation hearing that China’s island‐​building in the South China Sea must stop and China’s “access to those islands also is not going to be allowed.” Tillerson’s comment did come after some five hours of testimony and could have been considered a mistake. However, on the same day that Trump withdrew from TPP, White House press secretary Sean Spicer said in a press briefing, “The U.S. is going to protect our interests [in the South China Sea]… we’re going to make sure that we defend international territories from being taken over by one country.” President Trump wants to back up his “peace through strength” foreign policy with an expanded U.S. Navy and U.S. Air Force.

Of course, none of the statements or actions mentioned above amount to a definitive change in U.S. policy, but the consistency of statements that push against Chinese security interests indicate that future policy changes are more likely than not. Withdrawing from TPP may offer China some geopolitical benefits, but more aggressive policies on Taiwan, the South China Sea, and bilateral trade weaken China’s geopolitical position.

There is great risk associated with pushing hard against Chinese security interests while scrapping multilateral agreements like the TPP that emphasized U.S. soft power in the Asia‐​Pacific. In Foreign Policy, Hunter Marston spells out the danger of Trump’s hard power approach to U.S.-China relations, “Bereft of trade incentives and heavy on military posturing, a Trump strategy of peace through strength will only empower Chinese hard‐​liners and increase the chances of a superpower conflict.”

The hand‐​wringing over how withdrawal from TPP will improve China’s geopolitical position vis‐​à‐​vis the United States is not without merit, but the militarization of U.S. regional leadership carries much greater risks and potential downsides for the United States. Leaving the TPP is not a geopolitical gift for China; it is a worrisome omen of an Asia‐​Pacific increasingly dominated by military balancing and hard power at the expense of economic and diplomatic influence. Any geopolitical victories China scores from the United States leaving TPP will likely be offset by the Trump administration’s policies on regional security issues.

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