The US wants to Impose a New Economic Paradigm on the World

It is “Globalization 2.0.” Indeed, this is how US officials led by Katharine Tai, the US Trade Representative, define the ‘new’ US Economic and Trade policy. “Globalization 1.0.” is said to have its limitations and that “Globalization 2.0” will overcome these limitations for Washington. In a testimony to the US Senate in March 2022, Tai described “Globalization 2.0” as a “worker-centered Trade Policy” – a policy that supposedly puts workers at the center of trade and seeks to enhance labour standards. In reality, the so-called “Globalization 2.0” involves a concerted US effort to rewrite the rulers of the way trade happens across the world. This politics of rewriting trade patterns was given an official articulation in the National Security Strategy published in October 2022. As the document highlights, notwithstanding the umpteen benefits that globalization has offered to the United States, it does need some “adjustment.”

The underlying reason, according to the document, is the emergence of China “as both our most consequential competitor and one of our largest trading partners.” The so-called “adjustment” thus has an anti-China bias, as it also prefers to tie target countries to the US in ways that gives the latter an undue leverage and puts it in a position to protect its own national and global interests at the expense of its so-called allies.

To do this, the US wants to end the era of traditional free trade agreements and begin a new era of trade via new sorts of “economic arrangements” that also include “universal rights of all individuals – political, civil, economic, social and cultural.”

The document advances this vision as a progressive one in opposition to the “less free” one adopted by other countries. But the fact that this new economic model includes an array of vaguely defined set of rights means that the new US economic policy is less related to economics and more to the way polities work around the globe. More than economics, this ‘new’ economic framework is just another means to justify long term US interventions in the target countries to be able to cast them in its own image – something that “Globalization 1.0” seems to have failed to do, as countries like China not only continue to rise and challenge the US hegemony but they are able to do that by sticking to their own styles of politics.

But while the US wants to impose a new paradigm on the world, a closer look at its major manifestation i.e., the Indo-Pacific Economic Framework (IPEF), reveals that this is only an ad hoc arrangement that lacks seriousness, commitment, constancy, and credibility.

The IPEF is not a treaty. Not sure of the Republican support, the Biden administration is offering the IPEFs only as Executive agreements with partner countries. In addition, these agreements will not be legally enforceable without a Congressional approval. What this simply means is that these agreements – the so-called ‘new’ globalization paradigm – is nothing more than an experiment that can be reversed in the future by any president.

For the nations Washington seems to be targeting in the Indo-Pacific to tackle China’s massive rise, this is stark reminder of the way the Trump administration simply pulled Washington out of the Transpacific agreement. Could a post-Biden Democratic and Republican president do the same? This is also reminder of how inconsistent the US been. Starting from the Obama administration’s “Asia Pivot”, the Biden administration’s ad hocism seems to be continuation of discontinuities that are seriously short of anything substantial and long-term.

Indo-Pacific nations are, therefore, skeptical to the extent that the newly appointed Australian ambassador to the US described the US “grand strategy” for the Indo-Pacific lacking a clearly defined economic component. Rudd further argued that current U.S. trade and economic policy was detrimental to curbing Chinese influence in the region because Washington is “happy to throw some of its allies under a bus.” This must have as a rude shock from an otherwise friendly country tied to the US security paradigm via the AUKUS treaty. This must have also come as reminder that a US policy that falls short of substantial – and mutually beneficial – trade pact is unlikely to pay the dividends the US might be seeking.

What is wrong with this ‘new’ paradigm that has made US allies so uncomfortable? Apart from the fact that the ‘new’ agreements are not legally enforceable and do not have longevity, they do not provide the Indo-Pacific nations market access [to the US] as well. For these states, therefore, IPEFS are nothing more than a new form of protectionism the US is implanting. For them, the US’ Indo-Pacific not only does not have a viable economic policy, but what it offers actually seems to be a misfit.

Consider this: the Indo-Pacific region of today is perhaps one of the most integrated regions in the world. The recently concluded Regional Comprehensive Economic Partnership and the under negotiation Comprehensive and Progressive Agreement for Trans-Pacific Partnership are two of the biggest free trade agreements shaping trade and economic in the region. The US thus is selling non-traditional agreements in a region that does not have many buyers.

And since there are no serious buyers of what the US is offering, the US presence in the region is likely to remain limited, falling seriously short of cutting across the dense network of multilateral free trade agreements that define the region’s geography of trade.

Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook.

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