Pacific Money

America’s Undiminished Power of Attraction

The possibility of free trade agreements such as TAFTA and TPP could change the game of world politics.

President Obama has nominated two representatives who will lead United States trade talks over the next two years: Michael Froman, former White House economic aide as U.S. Trade Representative and Penny Pritzker, Hyatt scion and Chicago fund raiser as the new Secretary of Commerce. Together their appointments signal America’s new focus on increasing international trade as a stimulus to the domestic economy. The two representatives will deal with proposals for a customs accord with the European Union (TAFTA and an investment agreement) and a commercial union with Pacific nations in the Trans-Pacific Partnership. But the new stress on trade represents a more profound reorientation than just a new way of seeking economic development. It underscores America’s undiminished power of attraction to other countries in both international politics and economics.

Many have speculated that the (relative) decline in U.S. GDP compared with rising Asia (only partly offset by the recent inclusion of new investment indicators in GDP measures) could inaugurate a new era of global uncertainty and instability. These critics have correctly pointed out that rising countries frequently get into conflict with established hegemonic powers as Germany did with Britain in 1914 and as Russia did for a considerable time with America after 1950. Harvard’s Joseph Nye and others have countered that America’s “soft power” partly mitigates this decline. A country’s “soft power” offered a global example of effectiveness in its society, democracy, or culture which other countries might be tempted to emulate.

More important, however, is the political and economic attraction which flows from America’s soft power as well as from trade arrangements the U.S. is consummating with Europe and Asia.

In the past great theorists like Machiavelli and later Hobbes never understood that the balance of power could be transformed internationally. They did not realize that the world was not condemned to endless balance of power rivalries. Every now and then “powers of attraction” would create a stunning overbalance of force in which joining parties would emerge satisfied. In Europe it did so for a half century after 1815. The Cold War came to an end because the United States had created an overbalance of power that made Soviet resistance counterproductive and ultimately attracted Moscow to begin (the still unfinished) process of political and economic reform.

Today, the United States stands athwart Asian and European worlds. It offers trade and investment to both continents. The attractive force of America’s open invitation to join a greater economic unit can change the game of world politics. If TAFTA and an investment agreement are negotiated, the U.S. and the EU would then represent an economic unit of $32 trillion, about half of world GDP (of $61 trillion). If TPP emerges, it would combine an additional $2.3 trillion; if Japan, Canada and Mexico join, as seems likely, another $7.9 would be inputted into the growing commercial enterprise, rendering a total of over $40 trillion.

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Those who center attention on the U.S.- China rivalry and its potential consequences do not fully observe the attractive force of customs unions in this process. China’s $8 trillion GDP could not stand against or balance such a combination of economic strength. An overbalance of power would be concerted that China would then have to join. Where else could it sell its goods? Where else could it get the revenue to continue to import the largest share of energy on the planet? The balance of power would then yield to overbalance, and Beijing, perhaps ineluctably would be drawn into a more cooperative trading unit in world politics. China may of course have other short term ideas, but in the longer run, its own economic development will depend upon sturdy economic connections with the West, Japan, and free Asia. An overbalance will then begin to assert itself.

Richard Rosecrance is an adjunct professor at the Harvard Kennedy School, where he is director of the Belfer Center’s Project on U.S.-China Relations. He is author of the forthcoming book Resurgence of the West (Yale University Press, 2013). This piece original appeared on the Harvard Kennedy School Power and Policy Blog.