Trump’s Asia trip shows U.S. at risk of be­ing side­lined

Lead­ers have not pur­sued ne­go­ti­a­tions or given con­ces­sions.

Los Angeles Times - - FRONT PAGE - By Don Lee

WASH­ING­TON — For all of Pres­i­dent Trump’s ef­forts to build per­sonal re­la­tions with lead­ers and to re­as­sure al­lies dur­ing his first Asia trip, the most sig­nif­i­cant thing that has hap­pened may have been what did not hap­pen:

From Tokyo to Seoul to Bei­jing, the Amer­i­can pres­i­dent has been feted with max­i­mum cer­e­mo­nial hon­ors — a “state visit-plus,” the Chi­nese called it. Asian lead­ers lis­tened po­litely to his de­mands that they ac­cept what he con­sid­ers fairer trade terms and that they buy more Amer­i­can goods.

Nowhere in Trump’s tour, how­ever, have any of those lead­ers en­tered into se­ri­ous ne­go­ti­a­tions or made sig­nif­i­cant con­ces­sions.

“Quite frankly, in the grand scheme of a $300- to $500-bil­lion trade deficit, the things that have been achieved thus far are pretty small,” Sec­re­tary of State Rex Tiller­son told re­porters in Bei­jing on Thurs­day, re­fer­ring to the U.S. trade deficit with China. “In terms of re­ally get­ting at some of the fun­da­men­tal el­e­ments be­hind why this im­bal­ance ex­ists, there’s still a lot more work to do.”

In­stead of of­fer­ing con­ces­sions, both of the United States’ his­tor­i­cal al­lies, Ja­pan and South Korea, as well as China, its most se­ri­ous Pa­cific ri­val, sig­naled that they had taken Trump at his word: His “Amer­ica First” pol­icy means the United States will be­come less and less a player in the fastest-grow­ing and most dy­namic re­gion in the world.

That re­al­ity was un­der-

scored Thurs­day when trade min­is­ters from the so­called TPP-11, the sig­na­to­ries to the Trans-Pa­cific Trade agree­ment mi­nus the U.S., said at a meet­ing in Viet­nam that they had agreed on how to re­vise the agree­ment to pro­ceed with­out Wash­ing­ton. The Obama ad­min­is­tra­tion’s ef­fort to push the agree­ment through Congress failed last year, and Trump of­fi­cially with­drew U.S. agree­ment to the pact shortly af­ter he took of­fice.

“When you sit out the game, the rest of the world moves on,” said Deb­o­rah Elms, ex­ec­u­tive direc­tor of Sin­ga­pore-based Asian Trade Cen­ter, a re­search and con­sult­ing firm. Asian na­tions are en­thu­si­as­ti­cally cut­ting trade deals with each other and with Euro­pean coun­tries, she said.

With Wash­ing­ton aban­don­ing the sweep­ing Asi­aPa­cific trade deal and more gen­er­ally pulling back from the mul­ti­lat­eral eco­nomic or­der that it es­tab­lished and nur­tured for decades, China is press­ing to be­come the dom­i­nant player in the re­gion.

Its small neigh­bors, among them Malaysia and Sin­ga­pore, are sim­i­larly pro­ceed­ing to act alone, with­out their long­time big brother at their side.

Ja­pan has moved from its tra­di­tion­ally pas­sive role and has ex­erted greater lead­er­ship on trade. It was Tokyo, for ex­am­ple, that took the lead in push­ing for­ward on the TPP with­out the United States.

An­a­lysts say Prime Min­is­ter Shinzo Abe, who had spent con­sid­er­able po­lit­i­cal cap­i­tal to have TPP ap­proved at home, hopes the U.S. will reen­ter the agree­ment some­day.

“Ev­ery­one talks about a vac­uum in lead­er­ship and ev­ery­one talks about China fill­ing that vac­uum,” said Wendy Cut­ler, a top Obama ad­min­is­tra­tion trade ne­go­tia­tor who worked on the TPP. “In this in­stance, it’s Ja­pan fill­ing that role.”

“You have these mul­ti­ple paths to es­tab­lish­ing the rules of trade and bet­ter in­te­gra­tion of trade within Asia, and then you have the U.S., the out­lier,” said Robert Hol­ley­man, a Wash­ing­ton at­tor­ney and for­mer deputy U.S. trade rep­re­sen­ta­tive.

Hol­ley­man was in Viet­nam re­cently for meet­ings ahead of the Asia-Pa­cific Eco­nomic Co­op­er­a­tion summit Fri­day in Da Nang, which Trump will be at­tend­ing. What Hol­ley­man said he kept hear­ing was a “con­sis­tent theme from other APEC economies that said, es­sen­tially, ‘Now that the U.S. has left Asia, we need to step for­ward and do this on our own.’ ”

“As an Amer­i­can, I hated to hear those com­ments. They were say­ing it as a mat­ter of fact,” he said.

An eco­nom­i­cally side­lined U.S. in Asia would al­most cer­tainly weaken Amer­i­can com­pa­nies and hurt ex­ports, par­tic­u­larly of farm goods, as well as the prospects for re­turns on the ex­ten­sive in­vest­ments U.S. firms have made through­out the re­gion over the last 35 years, trade ex­perts say. U.S. firms may face higher du­ties and other more oner­ous bar­ri­ers than they would have if trade agree­ments that in­cluded Amer­ica were in place.

To be sure, many in Asia as well as Amer­ica still see the U.S. as an eco­nomic su­per­power in the re­gion, and they may have found some en­cour­age­ment in the way Trump has toned down his trade rhetoric dur­ing his trip thus far.

Asian lead­ers will be closely lis­ten­ing to the speech Trump is sched­uled to give Fri­day be­fore Amer­i­can busi­ness lead­ers ac­com­pa­ny­ing him on his tour. The pres­i­dent is ex­pected to use the speech to out­line U.S. in­volve­ment in the Indo-Pa­cific re­gion, a ref­er­ence that is meant to in­clude In­dia, the world’s largest democ­racy.

The U.S. Cham­ber of Com­merce, which has clashed with the Trump ad­min­is­tra­tion on the North Amer­i­can Free Trade Agree­ment and trade pol­icy more gen­er­ally, said it took heart from the fact that the pres­i­dent re­garded Asia as im­por­tant enough to make a visit last­ing nearly two weeks — the long­est of any Amer­i­can pres­i­dent in more than a quar­ter-cen­tury.

But cham­ber of­fi­cials also worry that Trump has yet to ar­tic­u­late a strat­egy for com­mer­cial en­gage­ment in the re­gion. All that he has es­poused is a con­sis­tent line that the U.S. wants fair and re­cip­ro­cal trade to re­duce Amer­ica’s large trade deficits with Asian coun­tries and that he prefers ne­go­ti­at­ing bi­lat­eral deals rather than mul­ti­lat­eral ones.

But no other coun­try is lin­ing up to sit down and bar­gain with the U.S. on trade.

Ja­pan’s Abe, for ex­am­ple, re­galed Trump by tak­ing him golf­ing at a swanky coun­try club and treat­ing him to ham­burg­ers. He lis­tened to Trump’s ex­pected crit­i­cisms of Ja­pan’s large trade deficit with the U.S. and his calls for Ja­pan to make more cars in Amer­ica and buy more U.S. mil­i­tary equipment. But Abe took no new ac­tions.

“We had a lot of pro­nounce­ments, but there was not a move to­ward ini­ti­at­ing for­mal bi­lat­eral trade ne­go­ti­a­tions. Prime Min­is­ter Abe again de­flected, talk­ing about a regional frame­work be­ing best,” said Mireya So­lis, a Ja­pan ex­pert and co-direc­tor of the Cen­ter for East Asia Pol­icy Stud­ies at the Brook­ings In­sti­tu­tion.

There were a lot of sym­bolic ges­tures in China as well. Pres­i­dent Xi Jin­ping wel­comed Trump by shut­ting down the For­bid­den City to give him a pri­vate tour and, for the first time for any Amer­i­can pres­i­dent, an of­fi­cial din­ner in­side the sto­ried palace. As they’ve done in past pres­i­den­tial vis­its, the Chi­nese also an­nounced bil­lions of dol­lars in deals with Amer­i­can com­pa­nies, in­clud­ing Gen­eral Elec­tric and Smith­field Foods, a Chi­nese-owned com­pany based in Vir­ginia.

But some of those deals were al­ready in the pipe­line, and Xi did not offer con­ces­sions on sub­stan­tive is­sues on Trump’s trade agenda, such as Chi­nese steel pro­duc­tion or re­moval of bar­ri­ers to U.S. im­ports to China. Tiller­son, in his com­ments to re­porters, said the “Chi­nese ac­knowl­edge much more has to be done.”

Xi, too, will be giv­ing a speech in Viet­nam, and it could offer a stark com­pet­ing vi­sion in which the Chi­nese, not the Amer­i­cans, will be por­trayed as cham­pi­oning eco­nomic in­te­gra­tion and en­gage­ment with the world, some­thing con­sid­ered un­think­able not long ago.

“I don’t think the Chi­nese have to do very much. They’re gain­ing strate­gic im­por­tance and geopo­lit­i­cal in­flu­ence in the re­gion by virtue of the fact that the United States is per­ceived [as], and to some ex­tent is, with­draw­ing from the re­gion,” said Ni­cholas Lardy, a China econ­omy spe­cial­ist at the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics.

Trump, he said, “can talk about Indo-Pa­cific, blah, blah, blah, but we’re not en­gaged in trade, we’re not ne­go­ti­at­ing any new trade agree­ments with any coun­try in the re­gion.”

The big worry for busi­ness lead­ers and trade an­a­lysts here and around the world is that Trump will even­tu­ally fol­low through on his threats to take puni­tive mea­sures against trad­ing part­ners he be­lieves have acted un­fairly.

That could in­clude im­pos­ing broad tar­iffs on Chi­nese im­ports, if only to in­flict some pain to win con­ces­sions. To date, how­ever, Trump has not matched his tough lan­guage with such tough ac­tions.

Ar­tyom Ivanov/Tass TNS

CHI­NESE PRES­I­DENT Xi Jin­ping, left, and U.S. Pres­i­dent Trump in a pub­lic event Thurs­day in Bei­jing.

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