Asia prepares for Trump

Author: Editorial Board, East Asia Forum

This week Donald Trump departs for his first trip to Asia as president of the United States.

He is scheduled to visit Japan, South Korea, China, and Vietnam and the Philippines over 13 days, his longest trip yet.

US President Donald Trump speaks during a listening session with the Retail Industry Leaders Association and member company CEOs in the Rosevelt Room of the White House in Washington, DC, US, 15 February 2017. (Photo: Reuters/Joshua Roberts).

His trip starts in Northeast Asia where he will meet Prime Minister Shinzo Abe and President Xi Jinping — both of whom have just consolidated their political positions at home. In South Korea, President Moon Jae-in will be focused on repairing his relationship with Trump. In all three countries, the North Korean nuclear weapons program will be the top agenda item.

Trump will then attend the APEC summit in Da Nang in Vietnam with 20 other leaders from Asia Pacific economies, including President Putin of Russia. After that he will visit President Rodrigo Duterte in Manila, but it now appears he’ll skip the East Asia Summit leaders meeting in the Philippines to return home.

The objectives for Asian leaders will be to build or maintain working personal relationships with Trump, converge towards a diplomatic solution to the North Korean nuclear threat and to protect the global trading system on which the region so heavily depends. Alliance management, bilateral meetings and pronouncements on North Korea will grab most of the headlines but what is done or not done on international trade will perhaps be even more consequential for economic and political security in Asia.

If President Trump lands in Vietnam without Asian leaders having defined a strong, proactive and clear agenda on trade and economic cooperation, the risk is that Trump will define it for them. The global system was saved for the time being at the G20 by German Chancellor Angela Merkel drawing a line in the sand and mobilising the 19 other members of the grouping to keep President Trump in check on their stand against protectionism.

There are not many candidates to do a Merkel in Asia, and it will be difficult for the Vietnamese hosts to play that role given their beholden-ness to their special superpower guest. But unless collective leadership on trade prevails, the Asian way, the prospects for the region look grim. The last thing Asia can afford is the US president’s coming to Asia and undermining the global rules based order it created and underwrote for 70 years.

East Asia is now an indispensable engine of the global economy and, as Chatib Basri reminds us in this week’s lead essay, that’s thanks to its successful trade-oriented industrialisation. That was ‘made possible by conducive global economic growth and a relatively open global economy’. While the uneven and slow recovery from the global financial crisis 10 years ago has exacerbated problems in the United States and Europe, making it harder for them to continue to lead the liberal economic order, US openness to partnership with Asia in that endeavour remains the key.

China and Japan are the second and third largest economies in the world and share the third largest economic relationship globally, despite unresolved history, political tensions and regional rivalry. In fact many East Asian economies have put regional politics aside and committed to open economic policies with neighbours in pursuit of prosperity. They’ve been able to do so because of confidence in the rules of the global regime, determined multilaterally in the World Trade Organization and its predecessor the General Agreement on Tariffs and Trade.

That system works. Major trade disputes, such as the rare earth metal dispute between China and Japan have been resolved in the WTO. China accepted the ruling against it and the Asian powers avoided risking escalation into a trade war, or worse.

It is that system that Trump’s America threatens. Withdrawal of the United States from the Trans-Pacific Partnership (TPP) was a sign of the United States turning its back on multilateralism and on Asia and withdrawing itself as a leader and defender of the global economic system. Trump’s America wants to negotiate deals bilaterally, regional and global interests be damned.

There are immediate defensive priorities in Northeast Asia. Japan will try to avoid a bilateral economic agreement with the United States where all the leverage — including on non-economic issues — lies with Trump. The region needs to avoid China and the United States doing a G2 bilateral agreement that leaves other countries to pick up the pieces and may create systemic risks if done outside of the global rules. And South Korea needs to do whatever it can to stop Trump from tearing up the Korea–US Free Trade Agreement, KORUS.

But that will not be enough. The risk of major US protectionist measures are real and will only increase leading up to the US midterm elections next year. The President has fewer constraints on enacting foreign policy, including trade policy, than on domestic policy, even if it may not seem so given the daily turmoil of domestic politics in the United States.

US Trade Representative Lighthizer is effectively implementing Trump’s America First agenda on trade by openly white-anting the WTO and its dispute settlement body — the part of the WTO that still works — including by leaving 2 of the 5 appellate body seats vacant.

For Asia the best defence will be good offence. As Basri says, ‘ASEAN nations need to act immediately to preserve the economic order that gave East Asia such prodigious development’.

ASEAN is still the fulcrum of Asian economic cooperation. As Basri says the challenge is now for Asia to lead the way in restoring ‘trust in globalisation’ by highlighting the success stories but also pushing forward with practical regional cooperation on infrastructure, connectivity and capacity building. These issues are win-win for everyone including Trump.

Those measures can create momentum and make a difference to people’s lives across the region. But now is time for a bigger and bolder play.

President Trump’s landing in Asia to announcements of significant and credible progress on the TPP 11 (the 12 members less the United States) and the Regional Comprehensive Economic Partnership (RCEP) agreement could be Asia’s Merkel moments at the APEC and EAS summits. RCEP includes Australia, China, Japan, India, New Zealand, South Korea and is driven by the 10 ASEAN countries and has the economic and political weight to show collective leadership of a kind that can make a difference globally. Efforts will also need to be made to demonstrate that these regional agreements are consistent with US interests.

Neither the TPP 11 nor RCEP are likely to be delivered this year, but announcing progress and the landing zones for completion in 2018 will send a powerful but constructive message to Trump and around the world.

The EAF Editorial Board is comprised of Peter Drysdale, Shiro Armstrong, Ben Ascione, Amy King, Liam Gammon, Jillian Mowbray-Tsutsumi and Ben Hillman, and is located in the Crawford School of Public Policy in the ANU College of Asia and the Pacific.

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Bernard Collaery
30 October 2017 5:45 pm

Excellent Article-timely and restrained. EAF at its best

Jojje Olsson
30 October 2017 11:58 pm

13 days?! The trip is 9 days. Couldn’t be bothered to continue reading after the research of the trip if missed its length by 4 days.