Russian President Vladimir Putin and Chinese leader Xi Jinping arrive to pose for a photograph during their meeting in Beijing, on February 4, 2022. (Alexei Druzhinin/Sputnik/AFP) 

In light of Ukraine's devastation and the consequences of the West’s economic entanglement with China and Russia, now is the time to reform the world economic order and exclude our chief adversaries, writes Hudson Senior Fellow Thomas Duesterberg in The Wall Street Journal. 

See Tom's key recommendations below, and join us next week for a discussion on U.S. strategic competition in the Indo-Pacific with Congressmen Joe Courtney (D-CT) and Rob Wittman (R-VA).

Key Recommendations

1. Go Around the WTO to Discipline China

Given China’s failure to abide by the trade rules it agreed to when it joined the World Trade Organization (WTO) in 2001, combined with China’s support of Russian aggression and Xi Jinping’s determination to establish economic independence and global dominance, trade reform ought to work toward a new system that excludes China. What should this new architecture look like, and can the WTO help shape the new order?

The unfortunate reality is that the WTO remains paralyzed by longstanding differences. For four years, the U.S., European Union and Japan have tried to craft better subsidy rules to discipline Chinese practices, but Beijing and other state-dominated economies can easily block any substantive improvement, as major changes in most areas require full consensus.

2. Revisit New TPP Deal to Counter China

Some of Ms. Yellen’s ideas, especially funding increases and governance modernization for the International Monetary Fund (IMF) and World Bank, risk increasing Chinese influence. Governance reform implies—and China will insist on this—making China’s voting rights commensurate with its proportion of the global economy. The experience of Chinese influence at the World Health Organization ought to counsel against this. America’s interests, and those of its democratic allies, would be better served by a new economic order without Chinese participation.

The best way forward on a new trade architecture starts with “plurilateral trade agreements” among American allies. A first step would be for the U.S. to rejoin what started out as the Trans-Pacific Partnership (TPP)... The 11 members of the successor agreement include U.S. allies Japan, Australia, Canada and emerging economic powers in southeast Asia such as Vietnam and Malaysia, which China is trying to woo into its own economic sphere. With some work on rules to prohibit imports of products made with parts largely sourced in China, the U.S. ought to rejoin this partnership and help recruit other countries, especially Indonesia and technology powerhouses South Korea and Taiwan.

3. Establish a "Five Eyes" Free-Trade Agreement

Another early goal of a reworked trade framework ought to be a free-trade agreement with the U.K. A more ambitious variation might be such an agreement between the “five eyes” group—the U.S., U.K., Australia, Canada and New Zealand—or even working to include these traditional allies in the U.S.-Mexico-Canada Agreement. Such an initiative would create a zone for what Ms. Yellen calls “friend-shoring.” As the U.S. tries to establish more resilient supply chains, the mineral resources of Canada and Australia and specialized technologies of the U.K. could be crucial. These resources would allow the U.S. to avoid relying solely on subsidized domestic production of rare-earth metals, green technologies or semiconductors.

Quotes may be edited for clarity and length. 

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