While the United States already is pursuing a free-trade agreement with Asia, it should seek a bilateral accord with China, says Maurice Greenberg, former CEO of AIG who has a long history of dealing with the Asian giant.
"The relationship between China and the U.S. is unarguably the most important in the world today," Greenberg, now CEO of C.V. Starr & Co., and Fred Bergsten, a senior fellow at the Peterson Institute for International Economics, write in The Wall Street Journal
"To ensure that it remain so, the U.S. needs to act now to secure a free-trade pact between the two countries."
The nations are moving apart on key financial and security issues, the duo says. "Both countries need to refocus on ways to strengthen mutual ties and work to resolve the issues that divide them."
U.S. exports would rise almost $400 billion a year, and 1.7 million export-related jobs would be created over 10 years through a bilateral trade agreement, according to a Peterson Institute study. In addition, U.S. national income would rise more than $100 billion a year.
Further, U.S. consumers would enjoy lower prices and a wider selection of products, Greenberg and Bergsten write.
For China, its national income would increase by more than $300 billion annually.
, a specialist in Asian trade and finance for the Congressional Research Service, identifies some of the problems in a recent report.
"Despite growing commercial ties, the bilateral economic relationship has become increasingly complex and often fraught with tension," he writes.
"From the U.S. perspective, many trade tensions stem from China's incomplete transition to a free market economy. While China has significantly liberalized it's economic and trade regimes over the past three decades, it continues to maintain (or has recently imposed) a number of state-directed policies that appear to distort trade and investment flows."
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