During a visit to the White House last Friday, Prime Minister Shinzo Abe of Japan reportedly discussed two opportunities with President Obama that should be high on his broader second-term foreign policy agenda: A massive multinational trade deal and access to America’s newly abundant shale gas. Abe hopes that improving U.S.-Japanese ties will help his country win negotiating concessions on the trade deal and new energy supplies.
Whatever the direction of Washington’s relations with Tokyo, Abe’s interest should make clear for the president that these are two of America’s most formidable assets in re-establishing U.S. influence around the world.
Obama scored notable victories in the war on Al Qaeda during his first term, but he also began to move U.S. security policy beyond counterterrorism toward a focus on making the country more secure by making it more prosperous. With this in mind, Secretary of State Hillary Clinton laid the groundwork for a new form of economic statecraft, one guided by recognition that expanded trade and investment ties have never been more important for national strength and resilience.
Obama must translate this vision into policies that extend U.S. influence abroad and spur economic growth at home. The two most important tools now at his disposal are the proposed Trans-Pacific Partnership and the opportunity to expand the export of America’s newly abundant supply of liquefied natural gas. These tools, products of U.S. faith in market-driven capitalism and the innovation it enables, should be central components of the president’s second-term foreign policy.
There are two reasons why Pacific partnership is so important. First, trade will be crucial for U.S. growth, and this deal is as big as they come. Negotiations now include the United States, Canada, Mexico, Chile, Peru, Australia, New Zealand, Vietnam, Singapore, Malaysia and Brunei. If Japan joins the talks, the group would represent 40 percent of world trade and 40 percent of global G.D.P. It is a geostrategic game-changer.
Second, the Pacific partnership is the right answer to China’s state-driven capitalism. China’s rise has created important challenges for the United States and its economy, in particular by empowering a system of state capitalism that gives political officials a powerful role in directing market activity. By using state-owned companies, state-run banks, and privately owned but politically reliable national champions to achieve political goals, China has made it much more difficult for U.S. and other foreign companies to compete.
The Trans-Pacific Partnership can help counter the growth of state capitalism and extend U.S. influence in the Pacific in much the same way that potential E.U. membership once encouraged reform in former Warsaw Pact countries, states that might otherwise have followed a familiar path of least resistance back toward state-run economics and authoritarian rule.
This trade pact is not an attempt to contain China or stunt its growth. Instead, it is an enormous investment in the future of free markets — and an invitation to China’s neighbors to share the benefits of free trade while deepening their political and security relationships with Washington. It is also a signal that America intends to remain in Asia as a stabilizing force, even as China becomes a more influential economic and security player, in the region and beyond.
Hurdles must be cleared on regulatory and agricultural issues if Pacific partnership members are to complete talks by their stated October deadline, and Obama can provide crucial momentum. By publicly highlighting his prioritization of the Pacific partnership and personally pressing Abe to join the bargaining, he will signal to both current and potential members that he is ready to spend political capital at home to make the partnership a reality.
Washington will have to compromise on key provisions of the deal, but the Pacific partnership will provide the United States with something it badly needs: A secure and lasting foothold for liberal trade, investment, and regulatory principles in the world’s most economically promising region, one that might otherwise remain frozen in China’s lengthening state capitalist shadow. With a parallel agreement brewing with the European Union, Obama has a golden opportunity to reshape the global trade and investment landscape to better serve U.S. interests and enhance growth prospects at home.
The shale revolution creates a similar opportunity. The unprecedented growth in U.S. gas production brought about by changes in drilling and extraction technology has triggered a battle in Washington over who should benefit. Refiners, manufacturers and consumers want the benefits of cheap energy for the domestic economy. Producers want to profit from access to new markets both at home and abroad. Under U.S. law, the Department of Energy must find that exports of liquefied natural gas, or L.N.G., are in the public interest before approving a project. U.S. allies in Europe are hoping for a surge on L.N.G. exports from America that will ease dependence on countries like Russia and Iran.
By giving our friends what they want, the president can promote free-market principles, add significant downward pressure on global gas prices that benefit all consumers, and blunt the market power of Russia and Iran. A decision to green light L.N.G. exports could be written into the Trans-Pacific Partnership, which would create U.S. leverage for its partners, especially Japan, which has long pushed for access to more U.S.-produced energy.
Perhaps the best reason for Obama to do these things is that they are doable. On questions of budgets and borrowing, immigration reform, gun control, and a dozen other hot topics, Democrats and Republicans stand miles apart. But if the president will devote time, energy and political capital to a trade deal that defines the United States as a permanent Pacific power and an energy policy that both redefines America’s market potential and tightens the bonds that bind America and its allies, he will have enough votes from the two parties — and the support he needs from U.S. business leaders — to make both happen.
He will also have established a foreign policy legacy worthy of the name.
Ian Bremmer is president of Eurasia Group and author of “Every Nation for Itself: Winners and Losers in a G-Zero World.” David Gordon is head of research at Eurasia Group and former director of policy planning at the State Department.
© 2013 The International Herald Tribune
