Trump’s gift to China

The Star Early Edition - - OPINION & ANALYSIS -

More car­toons on­line at Shan­non Ebrahim is the For­eign Editor for In­de­pen­dent Me­dia

AS ONE of his first moves as US pres­i­dent, Don­ald Trump handed China a gift on a sil­ver plat­ter. By sign­ing an ex­ec­u­tive or­der this week that scrapped US par­tic­i­pa­tion in the Trans-Pa­cific Part­ner­ship (TPP) he has in ef­fect paved the way for China to write the rules on global trade. The gen­eral con­sen­sus is that this is a huge win for China, which is set to play a greater lead­er­ship role in Asia and the world.

One has to won­der whether Trump has any con­cep­tion of global power pro­jec­tion. It seems that his only con­cern as pres­i­dent is to make him­self the cham­pion of Amer­i­can work­ers, and to en­sure that big busi­ness in Amer­ica scores big.

As China steps out, the US re­coils. This pro­tec­tion­ism on the part of the US was likened to “lock­ing one­self in a dark room” by Chi­nese Pres­i­dent Xi Jin­ping at the World Eco­nomic Fo­rum in Davos this month. With the US prov­ing it­self to be an un­re­li­able part­ner in East Asia, China has po­si­tioned it­self as the fu­ture of the se­cu­rity and eco­nomic sys­tem in the re­gion.

Trump’s bullish move has re­versed a free trade strat­egy adopted by pres­i­dents of both par­ties dat­ing back to the Cold War. The TTP was the cor­ner­stone of for­mer pres­i­dent Barak Obama’s strat­egy to re­assert Amer­i­can in­flu­ence in Asia and counter China. The Obama ad­min­is­tra­tion saw the trade pact as a way to per­ma­nently tie the US to East Asia and cre­ate an eco­nomic bul­wark against China.

It rep­re­sented Obama’s sig­na­ture trade achieve­ment af­ter eight years of ne­go­ti­a­tions. With the stroke of a pen, Trump suc­ceeded in un­rav­el­ling that legacy this week, which iron­i­cally will re­duce Amer­ica’s power and in­flu­ence in the world.

If the US had any mean­ing­ful lev­er­age in East Asia to be­gin with, the aban­don­ment of the TTP has largely de­stroyed that. Recog­nis­ing the TTP as a ve­hi­cle through which to fur­ther US in­ter­ests in the re­gion, Obama’s De­fence Sec­re­tary Ash Carter noted that “the TTP would be more strate­gi­cally valu­able than an­other air­craft car­rier bat­tle group in the Pa­cific”.

Erst­while US al­lies like Ja­pan are no doubt ex­tremely frus­trated by the US’s aban­don­ment of the 12-na­tion trade pact which Ja­panese Prime Min­is­ter Shinzo Abe had lob­bied hard for, man­ag­ing to get it rat­i­fied in the Ja­panese par­lia­ment just last Fri­day. Trump’s re­cent barbs against what he claims are Ja­pan’s un­fair trade prac­tices also do not bode well for fu­ture re­la­tions. Trump has taken is­sue specif­i­cally with the auto-trade with Ja­pan, say­ing Ja­pan charges too much tax on US prod­ucts.

This may have the ef­fect of push­ing Ja­pan to­wards join­ing China’s al­ter­na­tive to the TTP – the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship (RCEP).

China is seek­ing to unite 10 mem­bers of the As­so­ci­a­tion of South East Asian Nations (Asean) with Ja­pan, South Korea, Aus­tralia, New Zealand and In­dia. This can be seen as China’s chance to tilt the geo-po­lit­i­cal bal­ance in Asia in its favour.

Trump’s elec­toral vic­tory had al­ready seen the Philip­pines, Sin­ga­pore and Malaysia shift to­wards RCEP. Even coun­tries like Aus­tralia, which had cham­pi­oned the TTP fol­low­ing Trump’s elec­tion, have now sig­nalled that they will shift at­ten­tion to RCEP. This 16-na­tion trade pact could pos­si­bly reach a deal by the end of the year and po­si­tion China as the driver of trade lib­er­al­i­sa­tion. The ob­jec­tives of RCEP will be to keep mar­kets open, deepen eco­nomic in­te­gra­tion and nar­row the de­vel­op­ment gap among mem­bers.

While the TTP would have been a free trade zone for 40% of the world’s econ­omy, RCEP will cre­ate a mar­ket that ac­counts for 30% of the global econ­omy. While re­duc­ing tar­iffs, it will also re­di­rect trade China’s way. As more coun­tries grav­i­tate to­wards China, the US will look in­creas­ingly iso­lated as it makes bi­lat­eral trade agree­ments the cor­ner­stone of its strat­egy go­ing for­ward. With the US left out of an Asian trade pact, it will also be­come more dif­fi­cult for US com­pa­nies to pen­e­trate Asian sup­ply chains in the fu­ture.

Trump has ap­pointed a lead­ing China critic – Peter Navarro – as Trade Coun­cil di­rec­tor, and given the rhetoric al­ready be­ing used, it could po­ten­tially lead to a trade war with China down the line.

If this tran­spires, the US will be go­ing up against a ma­jor power that has sig­nif­i­cant economies in its camp.

Per­haps the most sig­nif­i­cant as­pect of RCEP in terms of the in­ter­ests of de­vel­op­ing coun­tries is the fact that the part­ner­ship will take on board the de­vel­op­ment con­cerns of its mem­bers. This could ul­ti­mately lead to RCEP be­ing a model for in­te­grat­ing the least de­vel­oped coun­tries with de­vel­op­ing and de­vel­oped economies. This is a key as­pect of fur­ther­ing the agenda of the global south that would not have been a con­cern of the TTP.

Pres­i­dent Don­ald Trump shows the Ex­ec­u­tive Or­der with­draw­ing the US from the Trans-Pa­cific Part­ner­ship af­ter sign­ing it in the Oval Of­fice of the White House in Wash­ing­ton, DC, US, on Mon­day.

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