The American Interest, Autumn 2006

Article Excerpt: If China, aware of U.S. conventional military supremacy, is seeking advantage on other fronts such as economic diplomacy, how should the United States respond? One instrument should be Comprehensive Economic Partnership Agreements (CEPAs) with countries such as Japan and others in the region that share democratic and open-market values.

CEPAs stand on four pillars: trade liberalization, regulatory convergence, economic precedents for the international system, and trade security. A CEPA with Japan would raise the U.S. profile in East Asian economic integration and stimulate high-quality growth. An informal grouping of CEPA participants, which could include China when it is ready, would help nudge China toward transparency and accountability. In the meantime, CEPAs could blunt China’s effort to use economic diplomacy to isolate the United States in East Asia.