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China will capitalize from Trump’s TPP fiasco

President Donald Trump signs an executive order on Monday to withdraw the U.S. from the 12-nation Trans Pacific Partnership trade pact agreed to under the Obama administration. With his rejection of an Asian trade pact, Trump has started tackling policy changes that could inadvertently give China room to assert itself as a regional leader and worsen strains over the South China Sea and Taiwan.
President Donald Trump signs an executive order on Monday to withdraw the U.S. from the 12-nation Trans Pacific Partnership trade pact agreed to under the Obama administration. With his rejection of an Asian trade pact, Trump has started tackling policy changes that could inadvertently give China room to assert itself as a regional leader and worsen strains over the South China Sea and Taiwan. Associated Press

If President Donald Trump had set out to deliberately create a vacuum in Asia that would allow Chinese influence to grow and wreck the American position in the region, he couldn’t have done a better job than by canceling U.S. participation in the Trans-Pacific Partnership, the 12-nation trade measure.

The measure, which was awaiting ratification in the Congress, was the most carefully negotiated trade agreement the U.S. has ever put together. Among a wide range of provisions, it would have cut tariff and non-tariff barriers for U.S. goods, particularly agricultural and industrial products, added to copyright protections, and provided standards for labor that protected U.S. workers and offered environmental protection in signatory countries.

The U.S. has no trade agreement with China, and as much as anything the pact was designed to present a common front against Beijing. While withdrawal from the TPP was widely expected, the abrupt departure, on the president’s first full day in office, has to have shocked the countries that had spent seven years negotiating it.

Where we go from here is unknown. But one thing is known. Since the elevation of Xi Jinping to the Chinese presidency, Beijing’s “Go Out” policy – investment and policy expansion across the globe and especially in Asia – has expanded dramatically. With the U.S. now having pulled back on trade policy and with Trump’s secretary of State pick Rex Tillerson banging the war drums over Chinese-claimed islands in the South China Sea, China is set to expand its influence dramatically.

China’s policy initiative is called OBOR, or “one belt, one road,” to redefine and expand the famed Silk Road, the medieval trade route from China to Europe, with $40 billion in investment. Beijing is setting the stage so that, as all roads led to Rome 2,000 years ago, all roads will now lead to China. Southeast Asia is responding enthusiastically. Former President Barack Obama’s “tilt” to Asia is being eclipsed and badly.

In addition to the real possibility of retaliation that could wreck the world trading system the U.S. has put in place since World War II, the people who are going to pay for this are U.S. businessmen, who look likely to be frozen out of major trade deals, and U.S. workers who manufacture exports for them. Including, as The Bee reported on Jan. 24, a wide range of California and West Coast businesses, including Boeing. Other interests, including the European Union (read Airbus) are going to eat America’s lunch.

The rocket rattling by Tillerson, who is threatening military action in the South China Sea, is going to have an equally deleterious effect on U.S. military and diplomatic alliances. With Malaysia, Cambodia, Thailand the Philippines growing closer to China, that leaves Vietnam and a few other states in the U.S. orbit. This is a time for careful diplomacy, not policy that veers in different directions, seemingly with little thought behind it but demagoguery.

China is no longer weak enough to be frightened into submission by the U.S., and the U.S. may well face retaliation that is going to hurt American consumers. Rough and ready policy by the incoming administration, aimed at Beijing with little thought of the consequences, is not just going to discomfit Asian partners. The TPP signatories appear likely to go ahead with it. Australia is urging that the 11 trading partners pull together. Mexico has ratified it, as has Japan, despite Prime Minister Shinzo Abe’s statement that without the U.S. it would be meaningless.

So instead of China being frozen out of a trading organization that covers 40 percent of world gross domestic product and a third of world trade, it looks likely that it is the U.S. that will be frozen out. It is certain that Beijing right now is seeking ways to capitalize on what appears to be a blunder of monumental proportions.

John Berthelsen recently retired as editor of the Hong Kong-based Asia Sentinel, a regional news agency covering 23 countries across Asia. He now lives in Sacramento and can be contacted at jberthelsen@asiasentinel. com.

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