In 2015, Donald Trump was unequivocal in describing his thoughts on the Trans-Pacific Partnership, or TPP.
“The Trans-Pacific Partnership is an attack on America’s business,” he tweeted at the time. “This is a bad deal.”
Trump went on to repeat the sentiment many times on the campaign trail. Soon after he landed in the White House, he issued a memo calling for the United States to permanently withdraw from the landmark trade agreement, signed by his predecessor less than a year before Trump took office, and which carries a number of mechanisms intended to make trade between its 12 signatories easier and more economically beneficial. (Trump argues that it destroys American jobs.)
The remaining countries have since agreed to revive the partnership without the U.S.
So where does that leave global trade? Are multilateral agreements dead?
“I don’t think so,” said former U.S. Secretary of Commerce Penny Pritzker at the 2017 Fortune Global Forum in Guangzhou, China. “I think there’s a yearning for multilateralism.”
The TPP helped “knit together 40% of world’s GDP,” she added. It helped shape trade in Asia, a place where much of the economic action in the 21st century is expected to take place. President Trump may prefer bilateral agreements because they give the U.S. more power in that negotiation, Pritzker said, but America’s move away from multilateralism “leaves a void that allows for the lowering of standards in the region.”
Andrew Robb, the former Australian minister for trade and investment, agreed.
“The most destabilizing influence in the region is the fact that the United States pulled out of TPP,” he told Fortune’s Nina Easton before a room of executives. “The United States said for years that this is a demonstration of its commitment to the region…the small countries in Asia feel that no one has got their back. They like the balance of two big powerful groups.”
The U.S. under Trump has an obsession with containing China, Robb added with a tinge of frustration. It’s the wrong approach.
“The world is going to change…and the U.S. better get used to it,” he said. “We need to find ways to share power in the years ahead and do so in a peaceful, stable matter.”
Zhang Xiaoqiang, CEO of the China Center for International Economic Exchanges, extolled regional cooperation on top of bilateral agreements. Speaking through a translator, he said that China and the U.S. should continue to work together on global trade—particularly as China becomes the world’s biggest trade partner. In the meantime, China won’t hesitate to forge regional agreements in Asia.
Pritzker put it in geopolitical terms. “The United States and China need each other,” she said. “We have a lot of issues we’re dealing with, like North Korea, where we have common interest.” So it’s important to engage on trade and economic issues—and the U.S. needs market access in Asia.
Robb and Pritzker agreed that many levels of American government are engaging in multilateral activity even as the federal level shuns it. TPP is “the most ambitious trade agreement that’s ever been put on the table in the world,” Robb said. With so many smaller Asian countries involved, “it just shows you how the rest of Asia is liberalizing trade” at a time when the U.S. is moving to isolationist policy. And small countries aren’t big enough to negotiate fairly with big ones like China or India.
“The U.S. left the stage in Asia, in a geopolitical sense,” Robb said. “at the moment, [small countries in Asia] feel that America’s turned away.”
In the meantime, look out for China’s One Belt One Road Initiative. A development strategy proposed by Chinese president Xi Jinping that focuses on connectivity and cooperation between Eurasian countries, it underscores China’s desire to be the center of gravity for global affairs through infrastructure that stretches from Asia to the Middle East to Africa.
“One Belt One Road will be a big mechanism for global trade,” Zhang said. It’s meant to enhance communication, trade, finance and help developing countries that need the support and resources of larger ones. “This is a free trade concept that we’re promoting,” he said. “And we’re connecting people—exchanging education, technology, science.”
“It’s the Marshall Plan all over again, but bigger, because it respects the sovereignty of countries,” Pritzker said.
Said Zhang: “This is the direction we’re heading. This is a global world.”