A DEMOCRATIC TRADE PARTNERSHIP: ALLY SHORING TO COUNTER COERCION AND SECURE SUPPLY CHAINS
International trade remains vital to global prosperity, and leading democracies should continue to support efforts to advance an open global economy. (via REUTERS)
VI. CHALLENGES AND OBSTACLES While the rationale for establishing a new trade and investment partnership along the lines of D-TEP is compelling, several obstacles and concerns must be seriously considered.
• D-TEP could further polarize the global order. One
significant concern is that, by fostering greater economic decoupling between democracies and China and Russia, D-TEP could further polarize the global order and play into a new Cold War dynamic. While this is an important factor to consider, the reality is that the global order is already polarized. Competition between democratic and autocratic powers is now an established feature of the current system, and the key question is whether democratic nations can find effective ways to organize for success. Still, even as they establish a framework for closer economic alignment, the United States and its allies should continue to engage with China—and Russia, subject to the state of the war in Ukraine—to seek cooperation on issues where they may still have overlapping interests, such as trade and investment
in non-sensitive sectors, global financial stability, and sustainable development, including through the United Nations and the G20.
• Economic decoupling from China and Russia could
prove counterproductive. A related concern is that, as the Chinese and Russian economies are further disaggregated from the West, Beijing and Moscow will have a freer hand to act more aggressively to challenge the rules-based order. This is also an important argument. Beijing is itself looking for ways to decouple in areas it considers critical, in order to reduce its own economic exposure to the West.86 And, untethered from the global economy, China and Russia may be able to take greater political and military risks without fear of economic retaliation. D-TEP, however, is not aimed at completely cutting off China and Russia from the global economy. Rather, it is focused on targeted industry sectors where democracies are more vulnerable to coercion. Trade would continue in other sectors (except where sanctions have been imposed), and the United States and its allies would continue to
86 “China Wants to Insulate Itself Against Western Sanctions,” Economist, February 26, 2022, https://www.economist.com/business/china-wants-to-insulate-itself-against-western-sanctions/21807805.
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ATLANTIC COUNCIL
