One of the explicit goals of the Obama administration’s policy of “rebalancing” to the Asia Pacific region is elevating economic statecraft as a pillar of foreign policy. Completion and ratification of the Trans-Pacific Partnership (TPP) and a precedent-setting U.S.-China bilateral investment treaty would contribute substantially to that objective, but they are not enough to reverse a worrisome erosion of U.S. economic leadership in Asia and the world. China has been quick to take advantage of this trend.
The political-economic imperative facing U.S. policymakers on Asia has three elements: (1) strengthening the bilateral economic component of the rebalance with key countries, thereby boosting the credibility of the U.S. commitment to Asia; (2) supporting high-standard regional economic integration in Asia and across the Pacific while successfully managing U.S.-China rivalry; and (3) restoring and strengthening the global institutions responsible for international trade and financial governance, which have a direct bearing on Asia.
These three challenges need to be addressed simultaneously and urgently, as U.S. and Western economic leadership and associated postwar institutions are increasingly under siege.
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