This is the first piece in a two-part special series on US President Donald Trump’s trip to Asia.
US President Donald Trump recently kicked off his 12-day tour of Asia.
This will be the longest tour of Asia undertaken by any US President since President George H.W. Bush in 1991. His trip will encompass Japan, South Korea, China, Vietnam and the Philippines. Trump will also attend the Asia Pacific Economic Cooperation Summit (APEC), US-ASEAN Summit and East Asia Summit.
This trip comes at a critical juncture for US ties with Asia on many fronts. In particular, one of the main items on the agenda for President Trump is to re-establish trade links with Asian countries.
In the lead-up to Trump’s visit, critical economic developments have been taking place that set the backdrop for this tour.
US withdrawal from the Trans-Pacific Partnership (TPP)
As part of his protectionist “America First” agenda, one of the first moves by President Trump upon entering the Oval Office was to scrap the proposed Trans-Pacific Partnership (TPP). This partnership was the centrepiece of former President Barack Obama’s plan concerning the US’ pivot to Asia, establishing trade ties between the US and 11 other Asia-Pacific nations in a bid to strengthen American ties with the Asian region and balance the economic influence of China.
The move ruffled a few feathers within the countries who were meant to be involved in the trade deal. It was a particularly crushing blow to Japan, where Prime Minister Shinzo Abe had exercised considerable political capital to get the Japanese parliament on board with the agreement.
This disappointment is further evidenced by the mettle in the remaining member countries to push on with the agreement, creating a “TPP minus one”. Hours after the executive order was signed, Chile announced its intention to rope in China and South Korea in a meeting with the remaining TPP countries to advance this trade agreement without the US. Similarly, Singapore, Malaysia and Mexico declared that they would explore ways to establish the TPP amongst the remaining members.
Also read: Explanatory Review of Obama’s Pivot to ASEAN
Currently, the remaining 11 member countries of the TPP are expected to meet to declare their commitment to the trade agreement on the sidelines of the APEC Summit.
Regional Comprehensive Economic Partnership (RCEP): China’s answer to the TPP
A further blow to US ambitions was China’s swift move to fill the economic vacuum created by the dismantling of the TPP.
A day after the US’s withdrawal from the TPP, China declared that they would “forge ahead with the negotiation of the Regional Comprehensive Economic Partnership (RCEP)”. The RCEP, which aims to establish a trading bloc between ASEAN countries, and 6 other states in the region—South Korea, New Zealand, Australia, China, India, and Japan, has been widely interpreted as China’s version of the TPP. Five years in the pipelines, the US’ withdrawal from the TPP has added a sense of urgency to the RCEP negotiations, with further calls for a “swift conclusion” and to turn “policy commitments into actions”. RCEP negotiations are now expected to be finalised by the end of 2017.
Also read: How Far Can The RCEP Ship Sail?
Five years in the pipelines, the US’ withdrawal from the TPP has added a sense of urgency to the RCEP negotiations, with further calls for a “swift conclusion” and turn “policy commitments into actions”. RCEP negotiations are now expected to be finalised by the end of 2017.
China’s growing economic dominance in Asia
In addition, following the US’ withdrawal from the TPP, both Singapore and Malaysia have said that they would be looking to deepen trade ties with China. This move echoes the predictions of Victor Shih, an expert on China’s political economy at the University of California, San Diego. He predicted that the US’ withdrawal would be damaging to America’s image in the region, causing them to be seen as “an unreliable partner both economically and perhaps in the security arena”, causing some Asian countries to look to China instead.
Combined with China’s increased investments in infrastructural projects within ASEAN countries, as part of the “One Belt, One Road” initiative, China is set to increase its economic dominance of the region, inching the US out in the process.
Trumponomics: bilateral over multilateral
In his Asia tour, President Trump will likely engage in bilateral trade negotiations with the various Asian countries due to his disdain for multilateral negotiations, which he deems damaging to American workers.
He has made numerous statements about Asian countries stealing American jobs, and is set to continue to make this sentiment clear during his trip.
In his visit to Japan on Monday, he called out Japan on their $69 billion trade deficit with the US, what he called “not fair” and suggested that it was not “too much to ask” of Japan to build their cars in the US instead. Such sentiments were rehashed in China where he said that the trade between China and the US in recent years “has not been…very fair for the US”. Though interestingly, in the latter incident, he had put the blame on US predecessors instead of China. He brought the point up again at the APEC Summit in Da Nang, Vietnam, by declaring that the US would only make bilateral deals on the basis of “mutual respect and mutual benefit”, with no tolerance of trade abuses.
Also read: The Biggest Challenges for ASEAN in 2018
President Trump’s ability to successfully negotiate such bilateral deals during his trip will reveal the influence that the US would hold in trade within Asia for the rest of his presidential term.
To date, President Trump has struck deals with both Malaysia and Singapore during the respective Prime Ministers’ visits to the White House. The former resulted in a contract between Singapore Airlines and US aircraft manufacturer, Boeing; while the latter resulted in commitments for Malaysian Airlines to purchase 33 planes from Boeing as well as investments into Silicon Valley.
While President Trump has been seen as proactive in attempting to create more bilateral trade agreements, it is questionable how large an influence bilateral trade agreements would accord to the US in terms of trade, given that China looms in the background.
The contrast between the speeches made by President Trump and China’s President Xi Jinping at the APEC Summit already seem to foretell this diminishing economic influence of the US in Asia’s economy.
While President Trump’s speech was focused on setting boundaries for trade within Asia-Pacific to fulfil his “America First” protectionist agenda, President Xi’s positioned China at the other end of the spectrum. President Xi declared globalisation to be an irreversible trend and voiced strong support for multilateral trade deals.
Also read: Obama’s Legacy in Asia
By setting additional criteria and boundaries on trade with Asia, President Trump has made the US a more difficult partner for trade. This puts the US at a disadvantage when compared to China’s enthusiastic courting of Asian trade partners.
The stark contrast between the two countries’ approaches to free and open trade that APEC champions is telling of the keenness with which the US and China aim to engage with Asia economically and rather revealing of who is likely to dominate trade in Asia for the foreseeable future.
The future of trade in Asia
The future for US’ continued economic dominance and influence in Asia seems uncertain.
While the US has been scrambling to form bilateral economic ties with countries in the region, China is already a major power-player in both the Asian and ASEAN economies, and is set to become a more significant economic superpower in time.
Should the US intend to preserve its economic interests in the region, President Trump would critically need to capitalise on his trip to Asia to establish significant trade cooperation between the US and Asia.
As it is now, however, it seems that China has already taken the initiative and the lead in economic and trade dominance in Asia, and there is not a lot that can be done to stop the rise of the Middle Kingdom.
Joelle is currently an undergraduate at the University of Sheffield, pursuing a Double Major in Politics and Sociology. She believes that more focus needs to be put on youth engagement and empowerment in social and political issues, and passionately involves herself in such efforts. She can be contacted at email@example.com.
You can read the second part (Trump in Asia: Goodbye America, Hello China?) of this special series on President Donald Trump’s visit to Asia by clicking here.
Disclaimer: All opinions expressed in this article are the author’s own and do not necessarily reflect the views of the ASEAN Economic Forum.