Trump’s withdrawal from Asia trade deal a boon for China
PRESIDENT Donald Trump’s formal withdrawal from a longplanned trade deal with Pacific Rim nations creates a political and economic vacuum that China is eager to fill, offering a boost for beleaguered US manufacturing regions while damaging American prestige in Asia.
The move is a sledgehammer blow to former President Barack Obama’s attempt to re- center US foreign policy from the Mideast to Asia.
As the Trump administration retreats from the region by ending US participation in the Trans-Pacific Partnership, China’s Communist leaders are ramping up their globalisation efforts and championing the virtues of free trade. In an address last week to the World Economic Forum at Davos, Chinese president Xi Jinping likened protectionism to “locking oneself in a dark room” and signaled that China would look to negotiate regional trade deals.
China is advocating for a 16country pact called the Regional Comprehensive Economic Partnership that excludes the United States and lacks some of the environmental and labour protections Obama negotiated into the TransPacific Partnership. Xi and other Chinese leaders are also looking to fill the US leadership vacuum, taking advantage of Trump’s protectionism to boost ties with traditional US allies like the Philippines and Malaysia.
“The US is now basically in a position where we had our horse, the Chinese had their horse – but our horse has been put out to pasture and is no longer running in the race,” said Eric Altbach, vice president at Albright Stonebridge Group in Washington and a former deputy assistant US Trade Representative for China Affairs. “It’s a giant gift to the Chinese because they now can pitch themselves as the driver of trade liberalisation.”
Senator John McCain, an Arizona Republican who chairs the Armed Services Committee, ripped Trump’s decision. Obama’s last defense secretary, Ash Carter, once said that the Asia-Pacific trade pact would be more strategically valuable than another aircraft carrier battle group in the Pacific.
US withdrawal from the pact “will create an opening for China to rewrite the economic rules of the road at the expense of American workers,” McCain said. “And it will send a troubling signal of American disengagement in the AsiaPacific region at a time we can least afford it.”
Obama saw TPP as “much more than an agreement that would increase international trade,” according to Jack Thompson, a senior researcher at the Center for Security Studies in Zurich.
The pact was a crucial initiative “to build and maintain long-term relationships to reassure the other nations in the
The US is now basically in a position where we had our horse, the Chinese had their horse – but our horse has been put out to pasture and is no longer running in the race. Eric Altbach, vice president at Albright Stonebridge Group in Washington
region,” he said in an e-mail.
But Trump’s withdrawal “directly undermines all of this careful work and gives China yet another opportunity to demonstrate that it represents the future of the security and economic system in East Asia, and that the US is in decline and can’t be counted on to stick around,” Thompson said.
China’s 16- country RECP would include southeast Asia countries, as well as Japan, South Korea, Australia, New Zealand and India.
While it reduces tariffs, it wouldn’t require its members to take steps to liberalise their economies, protect labour rights and environmental standards or protect intellectual property. Developing nations within the agreement are also given more time to comply with regulations that do exist.
“It’s an opportunity for China to defer its own reforms and use its own system as a model to draw other countries closer to its orbit,” Dan Ikenson, the director of the Cato institute’s Herbert A. Stiefel Center for Trade Policy Studies, said in a phone interview.
Leaders from Australia, Malaysia, and other countries who had championed TPP quickly signalled, following Trump’s election, that they would shift their attention to the RECP. — WP-Bloomberg