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COMMENTARY

A veto that heralds prolonged US-China strategic rivalry

THE recent "veto" clause in the United States-Mexico-Canada Agreement (USMCA) sets a worrying precedent for potential US (re)negotiations of free trade pacts with allies and partners, while more fundamentally reflecting a new era of Sino-US strategic rivalry. Designed to allow a US veto of any of its trade agreement partners' other trade deals with a "non-market country" (namely China), the clause has been described by US Commerce Secretary Wilbur Ross as a "poison pill".

Various commentaries have homed in on one fundamental pillar of the Sino-US strategic rivalry as lying in a bilateral competition over innovation and technology. I believe that a second pillar lies in control of a wider global narrative - and of competing strategic visions for the world order. If not well-managed, this strategic rivalry risks drawing false dichotomies in the future of the international order.

First, it must be clarified that this new era of strategic rivalry bears little similarity to a Cold War-esque, polarised, bipolar world order. The present-day international system has become more multipolar vis-à-vis the early 1990s triumphalist view of American supremacy. Even the United States can no longer afford to act unilaterally. As such, this new era of geopolitical rivalry will feature attempts to control the global narrative, and influence the international community, rather than harder, more confrontational and exclusionary doctrines such as containment.

As part of this, the USMCA's 'veto' clause goes beyond economic implications - such as curbing Chinese attempts at using Mexico and Canada as a backdoor to the US market. It ties into the strategic vision that the Trump administration has for the global (economic) order, sparked (at least in part) by a resurgence of China's triumphalist rhetoric and expressed global ambitions in recent years. The jury is still out on what the Trump administration's larger strategic vision is; but I argue that it seeks a new era of US-managed global protectionism - centred on the developed world, overlapping closely with America's political/military alliances, and in an unabashed defence of American global preeminence. The crucial assumption to this hypothesis is that the US-led liberal international order is to a large extent contrived, crafted as a legitimising force for the global narrative of American leadership and dominance.

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Throughout the larger trade war, China has often been caught wrong-footed. Indeed, in recent years, despite continued growth in China's global economic clout, military power, and to a lesser extent even cultural influence, the counter-reaction to China's very public ambitions and grandiose visions has often exceeded the purported benefits of China's growing international role.

These developments are prescient. Moving forward, the new era of Sino-US strategic rivalry hinges on control of a global narrative. Convincing the international community, in an increasingly multilateral world order, of the legitimacy of pursuing their respective national interests. Ultimately, both sides seek wider acknowledgement for their actions - painting their foreign policy, if not fair, then at least as justified.

As such, the economic implications of China's continued status as a non-market economy paints an incomplete picture. This label has the added effect of delegitimising, to an extent, China's continued economic rise.

In addition, amidst the trade war's headwinds, recent tariffs are a tactical measure well-utilised by the Trump administration. They are reflective of US attempts to paint its defence of its global economic preeminence as a justified, tit-for-tat response to China's calculated, and ultimately "unfair" rise to global economic preeminence in recent years.

However, regardless of strategic rivalry, the distinction of China, as the second largest economy in the world, still being labelled as a non-market economy, is dangerous in the long run. In chasing its strategic vision, the Trump administration (or any successive administrations) runs the danger of losing control of the process, painting themselves into a corner and being forced to take increasingly escalatory stances, such excesses being ultimately detrimental to US economic wellbeing. For example, White House advisor Peter Navarro's recent remarks essentially laid out a zero-sum game in the economic competition and strategic rivalry with China. He stated that if China successfully captured emerging industries based on rapidly developing technologies, America would have no economic future.

It is dangerous to peddle these dichotomous narratives. Such narratives are often useful for public messaging and government legitimacy - they certainly play well to domestic audiences. However, they are a bad gamble in the long term, both for the international system as a whole, and for the national interests of either side. While recent media coverage has focused predominantly on escalatory US trade measures, and as such is the focus of this piece, the same principle nevertheless applies to China's foreign policy actions in recent years as well. Ultimately, the Trump administration's strategic vision may be based on a sound appraisal of national interests, but the public sentiment that carries it has the potential to spiral out of control.

In sum, the recent trade war and 'veto' clause in the USMCA are indicative of a more fundamental, prolonged period of strategic rivalry. This rivalry isn't solely about trade imbalance, innovation competition, technology theft/sabotage, or even military competition. Rather, current US economic and trade policy is based on larger national interests, and competing Chinese and US strategic visions. In such a high-stakes gamble, however, both sides must tread carefully in avoiding false equivalences: Competing strategic visions do not necessarily equate to mutual exclusivity, nor a zero-sum game for both sides.

  • The writer is a Master of Arts student in the Regional Studies-East Asia (RSEA) Program at Harvard University.
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