Courtesy Reuters

We Are All Geoeconomists Now

By C. Fred Bergsten

Robert Blackwill and Jennifer Harris (“The Lost Art of Economic Statecraft,” March/April 2016) argue that the United States no longer uses economic instruments to accomplish geopolitical objectives. Nothing could be further from the truth. In fact, most major U.S. international economic initiatives from World War II until today were undertaken primarily for foreign policy reasons.

In 1993, for example, U.S. President Bill Clinton signed the North American Free Trade Agreement mainly to prevent Mexico from becoming a failed state; as former U.S. Representative Bill Frenzel told me in 2007, General Colin Powell, who served as the chairman of the Joint Chiefs of Staff during the first Clinton administration, had argued that rejecting the bill might make it necessary for one of his successors to put five U.S. divisions on the U.S.-Mexican border.

The U.S. government supported China’s admission to the World Trade Organization, which was finalized in 2001, in part because it believed that China’s integration into the world economy would reduce the risk of geopolitical conflict.

The administration of U.S. President Barack Obama negotiated the Trans-Pacific Partnership, the most important trade agreement in U.S. history, to “avoid ced[ing] the [Asia-Pacific] region to China,” in the words of Lee Kuan Yew, the former prime minister of Singapore. And the United States is currently negotiating the Transatlantic Trade and Investment Partnership with the EU to solidify U.S.-European ties, much as the Kennedy Round of free-trade talks did a half century ago.

What’s more, aggressive economic sanctions brought Iran to the table for the nuclear deal and are weakening the Russian economy. Inexplicably, Blackwill and Harris never mention any of these cases, nor do they cite any specific issues that they would have handled differently.

What has changed dramatically over the postwar period is the increasingly pervasive impact of globalization on the U.S. economy. This means that foreign economic policy initiatives must promote, or at least avoid hurting, U.S. economic interests and win the support of key domestic groups. This may be frustrating for past and present diplomats, but it is the reality of today’s world.

Foreign economic policy inherently combines foreign policy and economic policy. The real issue is how to mesh the two in ways that promote both sets of U.S. interests. Fortunately, open markets and international cooperation almost always make for good foreign policy and good economics.

C. FRED BERGSTEN is Senior Fellow and Director Emeritus, Peterson Institute for International Economics.