As the EU and the U.S. distance themselves from China, Beijing pivots toward Asia.<\/b>
\nTrade patterns are shifting and profoundly so. The European Union (EU) and the United States have agreed to advance their decoupling from China. Meanwhile, agreements in Asia have opened the door to considerably more trade between the dominant economies of that region, South Korea, Japan, and China \u2014 substantively, if not immediately. The United States and the European Union recently reached an understanding that excludes China and could set the tone for still more such agreements. Washington has lifted the tariffs on steel and aluminum that Donald Trump imposed on the EU, while both sides have joined in the creation of what their press release describes as a \u201ca global arrangement on sustainable steel and aluminum\u201d production. By adding that the agreement encompasses trade \u201camong like-minded nations,\u201d these partners have made clear their aim to exclude China. EU Trade Commissioner Valdis Dombrovski highlighted how the agreement would \u201crestrict market access for non-participants.\u201d President Biden was blunter, if less elegant. \u201cThese agreements,\u201d he said, \u201c[will] restrict access to our markets for dirty steel from countries like China and other countries that dump steel on our markets.\u201d If the EU and the U.S. have joined hands on this matter, the westerners still share some hard feelings among themselves. Europeans are miffed that the Biden White House refuses to lift Trump\u2019s claim that the tariffs were a matter of national security. Practically speaking, the designation may mean little, but it nonetheless does not sit well with European leaders. Nor has Biden simply lifted the tariffs. A duty of 25 percent will remain on any European steel shipments to America in excess of 4.4 million tons. This cap, too, has little practical effect, since European steel sales in the U.S., according to the European steel group Eurofer, has never exceeded 4.1 million tons. Nonetheless, the condition still bothers the Europeans, who take it as a sign that Washington is less than fully committed. As the White House and Brussels, despite their differences, have managed to conspire against China, Beijing has signed some attractive trade deals in Asia. The basis of new trade arrangements was actually laid late last year when China and the ten members of ASEAN \u2013 including Japan, South Korea, New Zealand, and Australia \u2013 signed what they have called the Regional Comprehensive Economic Partnership (RCEP). This pact established the first ever free trade agreement (FTA) between China and Japan and between Japan and South Korea. Prior to signing, trade among these economic giants was governed entirely by the most favored nation (MFN) standard of the World Trade Organization (WTO). Under that earlier arrangement, trade among these nations was relatively limited. According to International Monetary Fund (IMF) figures, China had captured a modest 23 percent of Japan\u2019s or South Korea\u2019s imports, while Japan captured a mere 22 percent of China\u2019s imports and an only slightly larger 25 percent of South Korea\u2019s. Now China has committed to vast cuts in tariffs on Japanese products. At last measure, a mere 7.8 percent of Japanese goods flowed into China tariff free. Japan has been more open, allowing some 60 percent of Chines product to enter the country tariff free. But under the new agreement, both countries have committed to gradual tariff reductions so that eventually some 85 percent of Japanese product will enter China tariff free, and some 88 percent of China\u2019s product will enter Japan tariff free. These shipments will include minerals, textiles, chemicals and metals from Japan and plastics, rubber products, textiles, and chemicals from China. Similar arrangements were made between Japan and South Korea as well as South Korea and China. On balance, intra-Asian trade should expand significantly as a result, perhaps enough to replace what China might lose in the west. But there is still no telling how matters will work out. The agreement calls for the most gradual of adjustments. Planned tariff reductions will occur in stages at the 11 th,16 th, and 21 st years of the effectiveness of the RCEP agreement. That is a long time and leaves plenty of room for readjustment and renegotiation before these countries approach any of the agreement\u2019s ambitious goals. Still, with the west\u2019s apparent effort to exclude China, the future would seem to hold a Chinese trade pivot toward Asia.<\/p>\n