So far, so good for Duterte

The decision of US President Donald Trump to discontinue participation from the Trans-Pacific Partnership (TPP) trade pact will leave the door open for China to take a stronger leadership position.

The TPP is supposed to be a comprehensive agreement that would boost exports and remove tariff barriers, open market access and promote transparency in trade. Obama had strongly pushed for the TPP, with negotiations extending for seven long years, and signed the agreement before he left office. A major argument for the TPP is that it would remove more than 18,000 tariffs that have prevented American companies from exporting their products to other countries.

However, it was not ratified by the US Senate, with many legislators resisting it, including Democrats like Vermont Senator Bernie Sanders (the strongest rival of Hillary Clinton for the Democratic Party nomination for president) who said he was “glad the Trans-Pacific Partnership is dead and gone.”

“For the last 30 years, we have had a series of trade-deals – including the North American Free Trade Agreement, permanent normal trade relations with China and others – which have cost us millions of decent-paying jobs and caused a ‘race to the bottom’ which has lowered wages for American workers,” Sanders said, echoing in large part the argument made by Donald Trump in scrapping the trade deal.

My associates tell me the US withdrawal will be like a sledgehammer to some of the biggest economies in Asia, including Japan, Australia and Singapore which are all signatories to the TPP. Vietnam also stood to gain most from the deal since it has since become a major manufacturing hub for numerous products, with its GDP projected to surge 11 percent by 2025.

Critics of Trump say the withdrawal from the TPP will undermine all the work that has been put into creating an agreement that is suppose to increase international trade, and build, as well as maintain long-term relationships, to reassure other nations – most especially US allies – in the Asia-Pacific region.

Republican Senator John McCain also voiced his disagreement, likening the move to a “giant gift for the Chinese because they can now pitch themselves as the driver of trade liberalization.” The withdrawal, he stressed, “will create an opening to China to rewrite the economic rules of the road at the expense of American workers,” warning that it will send a “troubling signal of American disengagement in the AsiaPacific region at the time we can least afford it.”

Following the US withdrawal, Australia, Malaysia and other countries that have supported TPP indicated interest in the alternative trade pact being pushed by China – the Regional Comprehensive Economic Partnership or RCEP which encompasses close to half of the world’s population and 40 percent of global trade with the 10-member Association of Southeast Asian Nations (ASEAN) as a core mover.

There’s a possibility that scrapping the TPP could seriously undermine US influence with Asian leaders miffed at the fact that after putting so much effort (and political capital) in pushing for the deal, they are being “abandoned” by an unreliable US not only in terms of trade, but also in military relations. (There is talk that Singapore may just spearhead moves to push for the TPP ratification even without the participation of the United States, believing that a weakened TPP is better than no TPP at all.)

Certainly, China stands to gain from the US withdrawal from the trade pact because it will now have an opportunity to occupy the position of economic leader in the region. Obviously, economic power is a big factor in maintaining a country’s political influence.

The way I see it, the isolationist economic policy of Trump seems at odds with the recent statements of White House spokesman Sean Spicer regarding the South China Sea, saying that if the disputed islands are in fact international waters and not part of China, then the US will protect its interests and make sure to defend international territories from being taken over by one country. The US military certainly believes American presence in Asia-Pacific is still important to US national security, and they are not about to give up their influence in the region.

China had warned the US against interfering in the South China Sea issue, although its foreign minister also said China is willing to dialogue with the US and increase mutual trust and cooperation to promote healthier China-US relations for their mutual benefit. Of course, China is the largest trade partner of the US with total commerce in 2015 estimated at over $626 billion.

Whether by design or accident, guided by a vision, just pure luck or super intelligence on the part of President Duterte, the Philippines – to a certain extent – stands to gain in light of the recent developments with the TPP and the emerging prominence of RCEP. The President’s new independent foreign policy seems to be paying off with China and Japan now boosting their relations with the Philippines through increased economic cooperation.

Finance Secretary Sonny Dominguez announced during his visit to Beijing that China and the Philippines would roll out $3.7 billion worth of anti-poverty projects. It can be recalled that President Duterte obtained $15 billion worth of loans and investment pledges during his state visit to China, while Japan pledged close to $9 billion worth of investments particularly on infrastructure for the next five years. The government has adopted an ambitious, P8-trillion infrastructure program for the next five years which is projected to boost the economy and attract more investments into the country. It looks like “so far, so good” for President Duterte.

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