At the APEC meeting, China hustles
to replace the TPP free-trade agreement with its own versions.
US President-elect Donald Trump has
been disparaged as a fan of Russian President Vladimir Putin. But when it comes
to “giving away the farm,” he appears more intent, perhaps by inattention, on
conferring favors upon China by handing Chinese President Xi Jinping leadership
of Asian trade diplomacy. In threatening to
sabotage the Trans-Pacific Partnership by opposing US ratification
of the 12-nation pact, Trump is, in effect, stepping aside to allow China to
control trade and investment in the Asia Pacific region.
Abandoning the TPP not only runs
contrary to Trump’s reported desire to limit China’s influence in the region,
but also implies that the United States can expect considerable diminution in
its power to shape the architecture of Asian commerce and trade. Trump likewise
has signaled expectations for greater responsibility from allies in providing
and paying for security.
All this raises questions on the
wider roles to expect from Japan and China in the Asia Pacific region.
Outgoing US President Barack Obama
represented the United States at the meeting of Asia-Pacific Economic
Cooperation leaders, in Lima, Peru, but Trump’s signaling a new approach to
Asia undermines the twin-track policy of supporting the TPP and underwriting
Asian security.
The policy shift could confer upon
Japan the role of US proxy in Asian security matters. Trump met Japan’s Prime
Minister Shinzo Abe in New York on November 17. Details of the discussion were
not disclosed, but Trump was expected to encourage Japan to take a more active
role in Asia.
With support for the TPP uncertain,
even though Japan’s main house of Parliament already ratified the deal, Abe may
find himself outmaneuvered by Xi in terms of economic initiatives.
China pushed its own “free trade
agenda” at the Lima meeting of APEC, with China Daily reporting Vice-Foreign
Minister Li Baodong as saying the region needs a free-trade agreement as soon
as possible. “Trade and investment protectionism is rearing its head, and the
Asia-Pacific faces insufficient momentum for internal growth, and difficulties
in advancing reforms,” Li was quoted as saying. “China should set a new and
practical working plan to establish a free trade area in Asia-Pacific at an
early date.”
China has supported the concepts of
a Free Trade Area of the Asia Pacific, or FTAAP, and of a Regional
Comprehensive Economic Partnership, RCEP, both viewed as competitors to the
US-led TPP. Li suggests that such a free-trade area could serve the interests
of China, the United States and other smaller economies.
The FTAAP was originally raised in
2006 among members of APEC, which is not a formal free- trade arrangement
itself. FTAAP was a loosely defined concept until China proposed that it take
the form of the RCEP. At that point, the US and Japan responded by promoting
the 12-member TPP.
So China’s plan for economic
partnership and a free trade area for the region may proceed. The RCEP will
cover trade in goods, services, investment, economic and technical cooperation,
intellectual property, competition, dispute settlement and other issues. It
broadens and deepens existing cooperation among members of the Association of
Southeast Asian nations, although it is not as comprehensive as the so-called
“high level” TPP. The RCEP plan includes the 10 ASEAN member states – Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand
and Vietnam – as well as six countries with ASEAN free trade agreements
including Australia, China, India, Japan, New Zealand and South Korea. Other states
joining require approval of all ASEAN member nations, and if individual ASEAN
members conclude bilateral agreements with non-member states, the goods they
import from those states would not be entitled to ASEAN-wide concessions and
would be subject to “rules of origin in determining tariffs.”
The RCEP agreement excludes the
United States, which has a leading role in the TPP. Reports suggest the Obama
administration has suspended efforts to win approval from the US Congress and
that the fate of TPP now rests with the Trump administration.
Without the TPP to underpin the US
commitment to Asia, and with Trump having threatened to impose punitive tariffs
on goods imported from China and other countries determined to pose unfair
competition to the United States, the notion of cooperating with Washington at
Beijing’s expense could prove unattractive.
Philippine President Rodrigo Duterte
recently cemented closer ties with Beijing, at the apparent expense of those
with Washington, while Malaysian Prime Minister Najib Razak’s subsequent
meeting with Chinese leaders appeared also to bind Kuala Lumpur closer to
Beijing. Both nations are ASEAN members.
Peru’s President Pedro Pablo
Kuczynski has meanwhile suggested to Russian media that Pacific Rim countries
could forge a new trade deal, including China and Russia, to replace the US-led
TPP.
Other TPP proponents are more
ambivalent. Vietnam’s Minister of Trade Tran Tuan Anh, for example, noted, “the
world will have to wait and see if the new US administration will really
reverse the TPP. We have a persistent stance and policies regarding deepening
the global integration and the TPP is part of that.”
China is confident that TPP is not
moving forward, with China Daily noting, “US president-elect Trump had
repeatedly blasted the TPP trade deal on the campaign trail, saying it would
hurt American workers. He has vowed to cancel the agreement, regarded by Obama
as a major part of administration’s legacy and essential to his pivot toward
Asia.”
If Trump does renounce the TPP agreement,
with the approval of a Republican-controlled US Congress, Japan must confront
choosing between RCEP and a network of bilateral trade accords with other TPP
members, including the US.
Tokyo is certainly not eager to
renounce the TPP. Abe regards the TPP as being key to his Abenomics economic
strategy, and Bank of Japan Governor Haruhiko Kuroda has described TPP as a
“landmark deal [which] if signed, would be a huge positive for Japan’s
economy.”
Also during the election campaign,
Trump promised to demand bigger contributions from US allies – including Japan
and South Korea – for the cost of keeping US forces on their soil.
The US has around 800 military bases
in more than 160 countries, and a 2013 Senate Committee on Armed Services
report puts the cost of supporting the overseas bases at more $10 billion
annually. Nearly 70 percent of this was spent in three countries: Germany,
Japan and South Korea. A substantial part of the cost is borne by host
countries. Japan budgeted ¥190 billion, or $1.7 billion, to host US military
bases during fiscal 2015, as part of the costs necessary to station some 54,000
US personnel in the country.
Sources advised Reuters that Trump
wants to authorize construction of new US warships. That and an end to budget
sequestration, imposing limits on US spending since 2013, would “send a message
to China, as well as to Japan, South Korea and other nations that the US is
intent on being in [Asia] for a long time,” the report said.
Trump’s stances on economic and
security issues are already affecting decisions being made East Asia and the
broader region even before his formal inauguration in January. For sure, he
will need to do some deft maneuvering if he is to square an anti-TPP stance
with his apparent desire to keep an assertive and competitive China at bay.
*Anthony Rowley is a former business
editor and international finance editor of the Far Eastern Economic Review and
is currently field editor (Japan) for Oxford Analytica and Tokyo correspondent
of the Singapore Business Times. During a long career in journalism, Rowley has
written extensively on issues of economic and financial development in Asia and
elsewhere and his books include Asian Stock Markets – the Inside Story
published by Dow Jones Irwin in 1986 as well as The Barons of European
Industry, published by Croom Helm in 1973.
No comments:
Post a Comment