LIMA, Peru — A toxic political war over money, jobs and globalization killed the vast and complex trade deal that was supposed to be a signature legacy of President Barack Obama. But the deal, between the United States and 11 Asian and Pacific nations, was never just about trade.
The agreement, the Trans-Pacific Partnership, was conceived as a vital move in the increasingly tense chess match between China and the United States for economic and military influence in the fastest-growing and most strategically uncertain part of the world. The deal, which excluded China, was intended to give those 11 nations more leverage in that strained match by providing them with a viable economic alternative. And its defeat is an unalloyed triumph for China, the country that President-elect Donald Trump castigated repeatedly over trade.
Obama, in comments just before meeting his counterparts, who laboriously negotiated the pact, made no reference to its near certain burial.
“This is always a useful occasion for us to get together and examine how we can make sure that we’re creating more jobs, more opportunity and greater prosperity for all of our countries,” Obama said. “So it’s wonderful to see all of you again, and I look forward to a constructive discussion.” Obama will find that his counterparts are already getting pulled deeper into China’s economic riptide because of the pact’s demise.
In remarks during a bilateral meeting Saturday between Obama and President Xi Jinping of China, Xi said the relationship between their countries was at “a hinge moment” and added that China would work with others to ensure a successful summit meeting.
“I hope the two sides will work together to focus on cooperation, manage our differences and make sure there is a smooth transition in the relationship, and that it will continue to grow going forward,” he said.
Australia said on Wednesday that it wanted to push ahead with a Chinese-led trade pact that would cover Asian nations from Japan to India but exclude the United States. Peru has opened talks with Beijing to join the agreement as well. Even U.S. business leaders are positioning themselves for the potential opportunities in Asia.
“Two-thirds of what we do there ends up in another country,” said John G. Rice, General Electric’s vice chairman for international operations. “So if they’re going to lower tariffs and trade barriers within that region, we’ll find ways to do more there.”
For the United States, such trade ties have geopolitical undertones.
Much of Asia has for decades quietly accepted U.S. security guarantees while also running large trade surpluses with the United States, turning them into prosperous manufacturing powerhouses. But China is now the largest trading partner for most of the region, while at the same time making territorial claims against many of its neighbors.
The neighbors fear they could soon face a stark choice among money, pride and place: Accede to China’s security demands, or lose access to China’s vast market.
“The long-term question is whether America pulls back from Asia and makes it easier for China to force countries in the region to make a choice between China and the United States,” said Richard Bush, a senior fellow at the Brookings Institution.
When it comes to Asia, the shift in U.S. policy is likely to be among the most pronounced in the new administration.
Born in Hawaii, in the middle of the Pacific Ocean, and raised partly in Indonesia, Obama has, since his earliest days as president, pushed Asia as his nation’s best opportunity for growth. Other than efforts to end two wars begun by his predecessor, Obama’s principal foreign policy goal was to shift the nation’s attention and military resources away from an aging Europe and an unproductive rivalry with Russia and toward the fast-growing Asia-Pacific region.