Panelists Worried US Developing Reputation as Unreliable Trading Partner
Consultants and associations that support international trade in Africa, Asia, Western Europe and the Western Hemisphere agreed that the shift in trade policy in the U.S. has trading partners questioning whether America will meet its commitments, or, in the words of the German Marshall Fund's Heather Conley, enter a "nationalistic economic crouch" that will be difficult to end. The panel spoke at a Washington International Trade Association event Feb. 12.
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Kurt Tong, managing partner of The Asia Group and former U.S. consul general to Hong Kong, said that trade in Asia is marked by a shift to national security prerogatives that are "tearing at a supply chain fabric … that was primarily designed around cost efficiency and premised on ever more open borders to trade and investment."
He said that both China and the U.S. have complicated feelings about the other country's economic success, and that in some sectors, they don't want the other side to be successful at all.
"Derisking is the name of the game for governments, and now, increasingly, for corporations as well."
While the U.S. talks about friend-shoring, in reality, it's more complicated, Tong said, saying major allies in the region -- Japan, South Korea and Australia -- have "varying degrees of sympathy" about derisking Chinese-based supply chains.
However, despite U.S. policy on China, which he called a "mishmash of incoherent and inconsistent statements" and priorities, "lots of companies are still making tons of money" on trade with China.
Eric Farnsworth, vice president of the Council of the Americas, said anchoring supply chains in the Western Hemisphere benefits supply chain resiliency and mitigates irregular migration from the region. He also said addressing climate change is impossible without cooperating with Brazil. "Why haven’t we already proposed a free trade agreement in the Western Hemisphere for environmental goods and services?" he asked. "If we want more of something, we tax it less."
Farnsworth criticized the Americas Partnership for Economic Prosperity, which he said has had little momentum, and said countries in APEP aren't sure it will yield there any economically significant results. "We need to show it’s a real deal -- and frankly, the region is getting a little tired of getting mandates without benefits," he said.
Farnsworth said he thinks the 2026 sunset review of USMCA is the "next action-forcing event in trade." He said he hopes it's a review, not a renegotiation, and said that if the three countries use it as a way to create a process for other countries to accede to it, that could remake supply chains and slow or reverse the economic shift toward trade with China in South America.
But, he said, countries in Latin America right now aren't sure that the U.S. is a reliable partner. "Are we able to meet the commitments we’ve already made?" he asked rhetorically. "It’s not a partisan comment at all; it pertains to both parties," he said.
Conley said Europeans are also worried about whether commitments are going to be kept. (Former President Donald Trump had just said he would not defend a NATO ally if that country were attacked by Russia and was "in arrears" to NATO.)
Corporate Council on Africa CEO Florizelle Liser struck a more optimistic note, saying that even though trade with Africa is less than 2% of U.S. trade, she believes that the U.S. can move beyond the current African Growth and Opportunity Act.
"Hopefully, a year from now, we’ll be talking about the fact that we extended the African Growth and Opportunity Act for a significant length of time that will make it useful for U.S. companies," she said, and that trade talks with Kenya will move from the current framework to a negotiation that would provide market access to Kenya for U.S. exporters and vice versa. "Don’t think that it won’t happen," she said.