Stepping Up Trade Leadership
New trade policies are being implemented without the U.S. at the table, which undercuts U.S. leadership and threatens U.S. interests around the world.
The world has seen fundamental shifts in economic activity and demography. As these trends continue, they will impact trade flows and U.S. trade leadership for decades to come.
- East Asia & Pacific
- Europe and Central Asia
- Latin America
- Middle East and North Africa
- North America
- South Asia
- Sub-Saharan Africa
- GDP data from the International Monetary Fund
- Population data from the U.S. Census Bureau
Rapidly expanding populations are driving growth in some of the world’s fastest emerging economies and shifting the global middle class towards East and South Asia.
- 2010
- Total GMC $29.5 trillion
- represents $6 billion
GMC data from Kharas (2019). The Brookings Institution.
Rapidly expanding populations are driving growth in some of the world’s fastest emerging economies and shifting the global middle class towards East and South Asia.
In 2010, households in East and South Asia accounted for 26.6% of the global middle class.* By 2030, that figure will rise to 55.3%. Over that same period, North America and Europe’s share is estimated to drop from 53.2% to 29.1%.
*Global middle class (GMC): households that spend between $11-110 per day in 2011 purchasing power parity.
Regional Connections
As these changes are occurring, trade negotiations - and therefore rulemaking - have shifted away from institutions like the WTO where the U.S. is an established leader.
Of the 303 Regional Trade Agreements (RTA) currently in force, 86% of them entered into force after the WTO was established in 1995.
Each circle represents one RTA. Circles sized by number of signatories.
- 2 signatories
- 40 signatories
RTA data from World Trade Organization
Emerging Trade Regimes
The EU, China, and other economies in Asia are expanding their RTA networks through large multilateral agreements. If the U.S. does not act, it risks being left out of regional rulemaking and preferential commercial relationships in the fastest growing parts of the world.
CPTPP
CPTPP* includes eleven countries that collectively represent nearly 15% of global GDP and 10% of global middle class consumption.
Had the U.S. not withdrawn from the agreement’s predecessor in 2017, nearly 40% of the global economy and almost 25% of global middle class consumption would have been covered by a single agreement.
*Comprehensive and Progressive Agreement for Trans-Pacific Partnership
RCEP
Countries like China are moving ahead with other large regional agreements, including RCEP*, which covers 30% of global GDP and over 35% of global middle class consumption. RCEP’s rules are less comprehensive than those found in U.S. RTAs, but the agreement still establishes common trade rules for 15 countries in the Asia-Pacific.
*Regional Comprehensive Economic Partnership
EU-Japan
The European Union is making inroads in Asia as well. Its cutting-edge agreement with Japan entered into force in 2019 and locks in EU standards and regulatory preferences at odds with U.S. objectives.
- GDP data from the International Monetary Fund
- Population data from the U.S. Census Bureau
- GMC data from Kharas (2019). The Brookings Institution.
The United States faces two challenges:
- A shrinking share of the global economy, while China, India, and others grow
- The growth of new trade rules and agreements
without U.S. involvement
These developments threaten to undermine U.S. leadership and interests. Amid these challenges, the CSIS Trade Commission on Affirming American Leadership is developing recommendations to strengthen U.S. competitiveness and bolster U.S. leadership for the 21st century.
