Donald Trump–The Reluctant Multilateralist (?)


February 21, 2017

Donald Trump–The Reluctant Multilateralist (?)

by Barry Eichengreen

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Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History.–www.project-syndicate.org

FLORENCE – Donald Trump did not assume the US presidency as a committed multilateralist. On that, partisans of all political persuasions can agree. Among his most controversial campaign statements were some suggesting that NATO was obsolete, a position that bodes ill for his attitude to other multilateral organizations and alliances.

Last week, however, Trump stepped back, reassuring an audience at US Central Command in Tampa, Florida (the headquarters for US forces that operate in the Middle East). “We strongly support NATO,” he declared, explaining that his “issue” with the Alliance was one of full and proper financial contributions from all members, not fundamental security arrangements.

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This more nuanced view presumably reflects a new appreciation, whether born of security briefings or the sobering fact of actually occupying the Oval Office, that the world is a dangerous place. Even a president committed to putting “America first” now seems to recognize that a framework through which countries can pursue shared goals is not a bad thing.

The question now is whether what is true for NATO is also true for the International Monetary Fund, the World Bank, the World Trade Organization, and the Basel Committee on Banking Supervision. Trump’s record on the campaign trail and Twitter is not heartening. Back in 2012, he tweeted criticism of the World Bank for “tying poverty to ‘climate change’” (his quotation marks). “And we wonder why international organizations are ineffective,” he complained.

Likewise, last July, he mooted the possibility that the United States might withdraw from the WTO if it constrained his ability to impose tariffs. And he vowed repeatedly during the presidential campaign to withdraw from the Paris climate agreement. But the evolution of Trump’s position on NATO suggests that he may yet see merit to working through these organizations as he comes to recognize that the world economy, too, is a dangerous place.

Following the election, Trump acknowledged having an open mind on the Paris climate agreement. His position seemed less to deny the existence of global warming than to insist that policies mitigating climate change not impose an unreasonable burden on American companies.

The way to limit the competitive burden on US producers is, of course, by ensuring that other countries also require their companies to take steps to mitigate climate change, thereby keeping the playing field level. And this is precisely what the Paris agreement is about.

The real test of Trump’s stance on multilateralism will be how he approaches the WTO. Persuading the US Congress to agree on corporate and personal income-tax reform, a $1 trillion infrastructure initiative, and a replacement for Obama’s signature health-care reform won’t be easy, to say the least. Doing so will require patience, which is not Trump’s strong suit. This suggests that he will feel pressured to do what he can unilaterally.–Barry Eichengreen

The same can be said of the Basel Committee’s standards for capital adequacy. Holding more capital is not costless for US banks, as advisers like Gary Cohn, formerly of Goldman Sachs and now the head of Trump’s National Economic Council, presumably tell the president morning, noon, and night. Leveling the playing field in this area means requiring foreign banks also to hold more capital, which is precisely the point of the Basel process.

Trump may similarly come to appreciate the advantages of working through the IMF when a crisis erupts in Venezuela, or in Mexico as a result of his own policies. In 1995, the US Treasury extended financial assistance to Mexico through the Exchange Stabilization Fund. In 2008, the Federal Reserve provided Brazil with a $30 billion swap line to help it navigate the global financial crisis. But imagine the outrage with which Trump’s supporters would greet a “taxpayer bailout” of a foreign country or Mexican officials’ anger over having to secure assistance from the same Trump administration responsible for their country’s ills. Both sides would surely prefer working through the IMF.

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Jim Yong Kim–From Brown University to The World Bank

Trump can’t be pleased that the Obama administration rushed to push through the reappointment of its chosen World Bank president, Jim Yong Kim. But he clearly recognizes the benefits of development aid. While he has said that the US should “stop sending foreign aid to countries that hate us,” he has also observed that failure to help poor countries can foment instability.

This would appear to be an area where Trump will favor bilateral action, which would enable him to assuage his conservative critics by insisting that no US funds go toward family planning, while taking credit for any and all assistance. At the same time, minimizing the role of the US in the World Bank would create a vacuum to be filled by China, Trump’s bête noire, both in that institution and through the activities of the Chinese-led Asian Infrastructure Investment Bank.

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The real test of Trump’s stance on multilateralism will be how he approaches the WTO. Persuading the US Congress to agree on corporate and personal income-tax reform, a $1 trillion infrastructure initiative, and a replacement for Obama’s signature health-care reform won’t be easy, to say the least. Doing so will require patience, which is not Trump’s strong suit. This suggests that he will feel pressured to do what he can unilaterally.

One thing he can do unilaterally is slap duties on imports, potentially in violation of WTO rules. We’ll soon find out whether those rules will deter him.

https://www.project-syndicate.org/commentary/trump-nato-reluctant-mulitlateralist-by-barry-eichengreen-2017-02

East Asia: Trade Regime critical for Economic Stability and Political Security


East Asia: Trade Regime critical for Economic Stability and Political Security

by  EAF Editorial Group

What the Trump Administration will ultimately do to the shape of the global trade regime is difficult to foretell but there’s no question that it will change it forever, even if there is strong global push-back against Trump’s threat to unravel trade agreements and carry a protectionist stick.

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The trade regime, and the way in which it encourages open trade and international interdependence among those who sign on to its rules, is not simply an instrument of economic policy strategy that can be changed without political consequence. For most countries, and certainly those in East Asia which are so dependent on open trade to sustain their basic livelihood, the trade regime is a critical instrument of political security.

Trump has already signed executive orders to withdraw the United States from the Trans-Pacific Partnership (TPP) and renegotiate the North American Free Trade Agreement (NAFTA). What appeared noisy campaign rhetoric has been transformed into concrete action.

Trump’s withdrawal from the TPP is no big deal in itself: with the exception of what it promised in terms of liberalisation of the Japanese economy, the economic effects of the deal that was on the table were oversold. Even renegotiation of NAFTA may have more limited economic consequences than have been threatened. But these steps, together with the threat of punitive tariffs on imports from China and Mexico, plus a total retreat from multilateral or regional trade agreements, tears at the core principles upon which the US supported postwar economic order had been built.

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POTUS Donald J. Trump and China’s President Xi

Anyone who says that a switch of this magnitude and direction in the trade policy strategy of the world’s largest economy and second-largest international trader is of little consequence is seriously delusional. The old certainties that brought prosperity and a significant measure of stability to world affairs for nearly three-quarters of a century after the Second World War are under serious threat.

A world in which the defining characteristic is a lot of bilateral trade agreements rather than one in which multilateral and regional frameworks are predominant imposes costs on business and consumers alike because of the need for compliance with different rules of treatment across different trading partners. It also injects a different tone into international politics. These concerns are what motivates the argument for regional and global trade regimes that govern international flows of goods and services through unified rules and standards.

The broader the framework within which trade can take place, the greater will be the scope for division of labour and the higher the gains from international trade. Bilateral trade deals can’t replicate the gains from regional and multilateral agreement, and they will unhelpfully cut across global and regional value chains. As the largest centre of production networks, East Asia has much at stake in the push back against an open, global rules-based trading system and the regional arrangements that support it.

While the direct economic costs of Trump turning America’s back on the TPP and other measures might be relatively small, the systemic costs are much larger.

As Shiro Armstrong and Amy King write in this week’s lead essay, Trump’s executive order to withdraw the United States from the TPP agreement in the Asia Pacific ‘is a strategic turning point in the open economic order. It is a blow to furthering reform for some members, a lost opportunity for the United States to write the rules of international commerce, and more worryingly a sign of the United States turning its back on the global economic system it helped create and lead’.

How can East Asia, which includes China and Japan — the world’s largest and fourth-largest trading nations — stand against the corrosion of a global trading order that is so central to their common economic and political interests?

The economies of East Asia must, of course, stand quietly firm in global and regional forums and in all their bilateral representations to the United States against the undermining of the global trading system, giving strength to those forces in America that can help to shape much better outcomes than the present circumstances threaten. But, through their own commitment to collective liberalisation and reform, they can also help to lead the system back from the brink.

With major multilateral trade deals at the WTO now too difficult and bilaterals only able to make slow and incomplete progress towards freer markets, Armstrong and King observe, all eyes now turn to Asia’s Regional Comprehensive Economic Partnership (RCEP) agreement. It is the most important initiative on the global trade scene.

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RCEP comprises the 10 Southeast Asian members of ASEAN as well as Australia, China, India, Japan, New Zealand and South Korea. Though, as Armstrong and King say, there are many misconceptions about the RCEP enterprise.

‘The first misconception is that RCEP is China-led. But China is a spoke and ASEAN is the hub of the arrangement. RCEP was built to consolidate ASEAN’s five separate free trade agreements with China, South Korea, Japan, India and Australia–New Zealand. And the RCEP idea and its guiding principles were crafted not in China, but in Indonesia. ASEAN centrality has ensured that RCEP has incorporated Asia’s other large power — Japan — and reflects Japanese preferences as much as those of China. Originally, China wanted to limit core membership of Asian cooperation to ASEAN plus China, Japan and South Korea. Japan wanted a larger membership, involving Australia, New Zealand and India, to help provide a counterweight to China’.

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In the end, ASEAN centrality and the interests of Australia and India in the region meant a broader and representative group ideally placed to take the lead collectively on global trade.

‘With the world trading system under threat’, as Armstrong and King conclude, ‘it is time for leaders in Asia to step up and push for opening markets and deepening reforms to enhance economic integration, not just with each other but with Europe, the United States and the rest of the world’.

*The EAF Editorial Group is composed of Peter Drysdale, Shiro Armstrong, Ben Ascione, Ryan Manuel, Amy King and Jillian Mowbray-Tsutsumi and is located in the Crawford School of Public Policy in the ANU College of Asia and the Pacific.

http://www.eastasiaforum.org/2017/02/20/east-asias-agreement-to-keep-the-world-economy-open/

De-coding New Yorker Trump in The White House


February 18, 2017

De-coding New Yorker Trump in The White House

by Bunn Nagara@www.thestar.com.my

On Wednesday, February 8, a US Navy spy plane and its Chinese counterpart each tempted fate, flying within 300m of each other over the disputed Scarborough Shoal in the South China Sea.

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Both were quad-prop surveillance aircraft on airborne patrol. The near-miss, the first this year after two incidents last year, showed the high-risk “great game” of the two major powers in this region.

US-China relations were already strained after President Donald Trump questioned Washington’s One China policy and wanted China to quit the disputed islands it already occupies ( he subsequently reaffirmed that his administration  would abide by the existing US 1-China Policy would remain much to the relief of China) .

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There was also speculation on a “trade war”. An aerial collision between their military aircraft over disputed territory would have sharpened prospects of conflict.

Within hours, Secretary of State Rex Tillerson persuaded Trump to go easy on China rather than flirt with reviewing the One China policy. The result: a long and “very cordial” phone conversation between Presidents Trump and Xi Jinping, the first after Trump’s inauguration and the second since his election. Warm mutual greetings were exchanged with mutual invitations to visit each other’s country.

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President Donald Trump and Secretary of State Rex Tillerson–Go  Easy on 1China Policy

Trump had his moment as the master of brinkmanship. Now it is Xi’s turn to shine, if he does, as a master strategist – if he is one.

China’s chances here are uncertain. It has been slow and flat-footed in the diplomatic stakes with Washington so far. In contrast, Japan and Israel moved quickly to engage Trump early. When it did not seem clear if Trump would favour Japan or Israel in any way, their leaders sought to engage him first.

Prime Ministers Shinzo Abe and Benjamin Netanyahu correctly read Trump, when reasonably managed, as a highly impressionable person with very impressionistic views. Whoever engages him first gets a head start in good relations.

Now Trump may be better disposed to Japan and Israel than he might otherwise have been. Diplomatic engagements are basically a political investment.

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Towards Better Relations with China?

But the media focus on US-China ties has obscured the poor state of US-Japan relations. Abe needs to invest in the Trump presidency.Trump had swiftly dumped the TPP that Japan was counting on. He has also accused Japan of suppressing the value of the yen and not paying enough for its own defence, while threatening Toyota with high taxes on vehicles from new Mexican plants rather than US ones.

Japanese manufacturers, including Toyota, then pledged more production, and jobs, at US plants. Abe may also want to “position” Japan favourably over China in strategic terms to Trump.

Last September, Netanyahu met Trump and Hillary Clinton separately in New York. He reportedly spent a long 90 minutes at Trump Tower.

When Trump received flak for wanting a wall on the border with Mexico, Netanyahu signalled approval by referencing his own fence projects on the borders with Egypt and Palestine. Trump duly reciprocated.

Now Israel’s barrier builder, Magal Security Systems, wants to build Trump’s wall with Mexico. Beyond just a business deal, it would be a political investment to cement Israel’s controversial schemes.

Israel’s right-wing now wants Netanyahu to drop the two-state solution altogether. But Netanyahu will not have it easy, since just days before his arrival, Trump openly opposed his settlements policy.

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Reaffirming US -Israel Relations

In September, candidate Trump used the meeting to project his image as a prospective world leader. Now Netanyahu is using Friday’s meeting with President Trump to draw dividends as Israel receives flak for illegal settlements in Palestine.

Yet, compared to other countries, the US and China have more to talk about: from economics to diplomacy to security. As two hulking, intertwined economies, and as permanent members of the UN Security Council, their range of interests and concerns is global.

Enter the low-profile second track diplomacy China has been pursuing with the US since late last year. This is led by State Councillor Yang Jiechi, an ambassador to the US before serving as Foreign Minister when Secretary of State Clinton announced the US “pivot” to Asia.

An alumnus of the London School of Economics, Yang is fluent in English and understands the US better than his contemporaries in Beijing. He is often described as China’s “top diplomat” who outranks Foreign Minister Wang Yi.

This second track is vital and befits “ChinAmerica”, ties between the two major powers that make for the world’s most important bilateral relations today. However, how far Xi or Beijing ultimately listens to Yang remains to be seen. A lacklustre first track diplomacy remains very much in evidence.

The hesitancy and passivity of Track One, notwithstanding standard shrill reactions to issues like Taiwan, seem to be a timid international response to the Trump era.

There are vocal Trump opponents, there are visible Trump supporters, and there are others like China gingerly treading water and keeping their distance. But there are also others like Japan and Israel who seize the moment without hesitation.

Much of the hesitancy seems to be caused by internal US politics rejecting someone who is wilfully politically incorrect. This sense is consistently projected by Western mainstream media, as if the issues they cover are necessarily universal.

They include Trump’s decision to scrap Obamacare, state-sponsored abortions and special toilets for transgender people. Given the extreme views at both ends, the middle way Trump prefers begins to look like moderation.

Meanwhile, an opposition-fuelled media has been tweaking news about Trump policies in an unfavourable light, carrying negative emotions with it.

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Case in point: travel restrictions into the US, pending new measures to screen out potential terrorists. What Christiane Amanpour on CNN (pic above) and some others call a “Muslim ban” is nothing of the kind.

The restrictions comprise three components suspending entry regardless of race and religion: by all refugees for four months, by Syrian passport holders indefinitely, and by passport holders of six other countries for three months.

If the restrictions are defined as a Muslim ban, they have to be definitively a ban on Muslims which they are not. Protesters argue that since the seven are Muslim-majority countries, there is a Muslim ban.

But if a majority count determines definition, then since the majority of the world’s 49 Muslim-majority countries (2010 data) are unaffected, there is no Muslim ban. How effective such restrictions can be in keeping out potential terrorists is another matter.

Protesters forget that Barack Obama had earlier listed these seven countries as being “of concern”. Trump only used the list for restrictions for a limited period.

The US has had several immigrant and citizenship restrictions going back a century. Some of these came together in the Immigration and Nationality Act (1952), parts of which remain today.

These restrictions survived Republican and Democratic administrations alike. Yet they were not controversial before, or the media did not make them appear so controversial.

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A real concern, however, is Trump’s intention to scrap the Iran nuclear deal. He and his advisers fail to realise that it is more than a nuclear deal, being also a face-saving measure for all eight signatories, including Iran.

Nobody can know if Iran ever wants to develop nuclear weapons. The only possible agreement is the present deal that puts any such plan on hold.

Undoing the deal will open a can of worms, starting with emboldening Iran’s hardliners over its moderates. Learning superpower politics on the job can be so hazardous.

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

Singapore’s George Yeo on Trump, Xi and The Future of US-China Relations


Singapore’s George Yeo on Trump, Xi and  The Future of US-China Relations

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In a recent speech in Hong Kong, former Singapore foreign minister George Yeo gave an expansive view of US-China relations amid uncertainties about how President-elect Trump would handle the relationship. This is an edited version of his remarks.

The Chinese have no wish to play the US’ role in the world. The Chinese view is that you can be an Islamic theocracy, you can be a Sultan, you can be Salafi, that’s your problem so long as you don’t hurt me. If you hurt me, I may have to hurt you. But I have enough problems looking after my own family. How can I interfere in your family’s matters? I got enough headaches of my own.–George Yeo

Sino-US relations are probably the single most important set of relations in the world today, and they are complex.

We have on January 20, a new United States President. I think Mr Donald Trump has to be taken seriously, despite all the jokes made about him and some of his remarks.

So you get remarkable comments like that made by (Secretary of State nominee) Rex Tillerson that the US should prevent China from accessing what China takes to be her islands in the South China Sea – which must lead to war. I don’t think he’s that ignorant, or that unreasonable.

His remarkable achievement was not in defeating Hillary Clinton. It was in defeating a whole line of Republican candidates, many of whom were pretty credible. But one after another they were toppled, and that’s because he was able to plumb deep and tap upon a deep undertow of dissatisfaction and disaffection.

But that’s American politics. He has assembled an impressive group of people to help him. And right now they speak with divergent voices because they’ve got to clear US Senate approval and everyone has to play to the gallery.

So you get remarkable comments like that made by (Secretary of State nominee) Rex Tillerson that the US should prevent China from accessing what China takes to be her islands in the South China Sea – which must lead to war. I don’t think he’s that ignorant, or that unreasonable.

Donald J. TRUMP: Not be disregarded

Image result for Take Donald J Trump seriouslyThe Saber Rattling Trump–Posturing for Global Attention

We do know that Mr Trump has certain deep instincts. He sees a lot of problems in American society. He wants to reinvigorate it. So trade has to be fair, in his mind. I’m not sure it’s going to help just by arm twisting automobile companies to manufacture in the US, because the global economy is much more complicated than that.

But it does win him applause from the gallery, and some things we must expect him to do for political reasons. As he himself has said, he’s from Wharton, so he can’t be stupid. And he’s not. To think that he is would be a serious miscalculation.

He says, ‘Look, we got to deregulate’. He wants to simplify the tax code and reduce the general level of taxation. He wants to revamp infrastructure in America, much of which has gone to disrepair. And that’s the right direction to go. He wants to control the borders better. Again, he may have made outrageous remarks, but the deep intention is, ‘We’ve got to have a handle on illegal immigration, and also to control conduits which may bring in radicals and terrorists’.

But there are two things which are troubling. One, it is easy to spend, it’s easy to reduce taxes, people would cheer you. But how do you cover the deficit?

The other area which is a bit troubling is what appears to be a very deep conflict between Mr Trump and the intelligence agencies. He has become very distrustful of them. And he takes a practical approach towards international security. Must we interfere in Syria? Was it right – Iraq, Libya, and the cornering of Russia? Maybe this is driving them into the arms of China. Does it make sense?

There are many people whose entire careers are formed on certain perspective and he’s challenging them. It’s important to get past the common criticisms against Mr Trump, quoting him against him, laughing at some of his inanities, and ignoring his deep purposes. I think it’s much more important to look at his deep purposes because he’s not a man to be disregarded.

XI Jinping: Restored Leadership Authority

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President Xi Jinping ,China’s Brilliant Internationalist and Global Networker–Do Business, Not Make War

On the Chinese side, President Xi Jinping has been absolutely remarkable. He could not have done what he did without (his predecessor) Hu Jintao refusing to stay on in the Central Military Commission for two years. His enemies already showed their hand before he took over.

So with the People’s Liberation Army (PLA) behind him, he cracked down on the internal security apparatus. Having subdued that quadrant, he turned back to tackle corruption within the PLA itself. And after that, he set about cleaning up the Communist Party Youth League. In less than four years, he has done much to restore the moral authority of China’s leadership.

China is a very unusual country. It has always been governed as an administrative state, one where all lines report to the emperor – for administration, for intelligence, for policing, for military matters, water control and so on. So they have developed a bureaucratic class of people, very smart people, who are rotated around, so that their loyalties are never to the provinces they come from, but to the centre.

When China’s core is healthy, the management, the governance of the country is a matter of administration, almost like a company. It’s logical – what are the problems, what are the needs, you draw a plan, you find the money, you have control measures, and you implement.

Today, it is the only major country which can exercise a national will. They have already built more high-speed rail infrastructure than the rest of the world combined. They want to double it. And 80 per cent of Chinese cities will be linked by fast rail. It’s completely transformed the sense of distance, on a continental scale.

And they’re now using big data for governance. If you read the Economist, it says it’s just a way of controlling the lives of individuals. Yes, it could also do that, for political control. But it is much more than that. What they are in fact doing is to use the revolution in IT to govern human society in a way which has never been done before.

And that is breathtaking. Using big data now, they are monitoring the health, of say, Peking University, or a province in China, or an ethnic group, or a generation of people. There are just too many Chinese for anybody to monitor individually. But they get a shape of what is healthy and what is not.

The Future of US-China Relations

Last July, RAND Corporation published a report called ‘War with China: Thinking through the unthinkable’. It said that if there’s a war today, the US would be bloodied but China would be pulverised.

In a war 10 years from now, however, the US will also be bloodied. There must be strategic thinkers who say, ‘Look, it’s better to fight now, better not to wait’. The Chinese know that, but they are saying: “Must we be in this Thucydides Trap, where big power relations are a zero sum game?” They say no. Prepare for the worst, but let’s work on a new pattern of big power relations.

The US fears that China will behave in the same way when it becomes the biggest economy on Earth. A clash then becomes inevitable, in the way that there was an inevitable clash between the US and the former Soviet Union.

But China is not like that. This is a civilisation which has deep instincts of its own past and of its own nature. And because of that, China will never harmonise with the rest of the world. Whether we’re talking about cyber space, cultural policy or capital markets, China will never harmonise with the rest of the world.

Yes, there will be normal traffic, but there’s always a semi-permeable membrane, which ensures that what is good gets in, and what is considered subversive cannot get in. And because it cannot harmonise with the rest of the world, for that is in the nature of the Chinese civilisation, a large part of the US’ worry about China is not justified.

The Chinese have no wish to play the US’ role in the world. The Chinese view is that you can be an Islamic theocracy, you can be a Sultan, you can be Salafi, that’s your problem so long as you don’t hurt me. If you hurt me, I may have to hurt you. But I have enough problems looking after my own family. How can I interfere in your family’s matters? I got enough headaches of my own.

So they take a very detached approach to the internal policies of other countries. The Western view is, ‘Hey this is amoral’. But does the West really want China to be a proselytising power, a missionary power? Because if it is, it’s going to purvey a different set of values. And this leads to an inevitable clash.

The Chinese are very serious when they talk about a new pattern of big power relations, though this has been pooh-poohed by many commentators. The problem is a lack of understanding about the nature of Chinese civilisation.

Many people say it’s just a matter of time before the renminbi will be internationalised. It’ll never be completely internationalised. Because if it’s completely internationalised, China will lose control of its own economy. I don’t believe anyone governing China would ever allow this loss of control over its own financial system.

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Jared Kushner and Henry Kissinger

So does Trump understand any of this? I don’t know. But he consults (former US Secretary of State Henry) Kissinger, and Kissinger understands. And I’ve been told that he has asked Kissinger to tutor Jared Kushner (the son-in-law and confidante of Mr Trump), which cheered me, because I think Kushner would play an important role within the inner circle. And if on the important issues he has regard for Kissinger’s views, then the risks would be managed.

If there’s a miscalculation, if there’s an escalating series of accidents which get out of control, and there’s a major conflict between China and the US, I think all of us here will have a miserable time. The injuries on both sides of the Pacific would be almost beyond imagination.

There is therefore a huge incentive for all of us, in ways small and big, to help build little bridges that promote understanding.

http://www.todayonline.com/commentary/trump-xi-and-shape-us-china-relations-come-george-yeo

Shock End to TPP from Trump


January 25, 2017

Mr. Trump don’t antagonise the rest of us with new unilateral tariffs and thuggish threats

by Philip Bowring

http://www.asiasentinel.com/econ-business/shock-end-tpp-donald-trump/

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HE Prime Minister Hun Sen and HE President Xi of China–Partnership for Peace and Development

Buy Korea, buy Japanese, buy Taiwanese, buy Australian, buy Singaporean, buy Thai, buy Vietnamese, even buy Chinese. Forget about Apple, McDonalds, Goldman Sachs, Citibank, Ford, Boeing – there’s always an alternative.

That is the message that President Donald Trump has sent around the world and most of all to America’s supposed allies in Asia. The withdrawal from the Trans-Pacific Partnership, the 12-nation omnibus trade pact under development for the past seven years, was expected but the manner in which it was done in Trump’s first full day in office was salt on the wounds for the countries that had done so much themselves to push the idea of this extension of trans-Pacific cooperation.

It was accompanied by more generalised threats of new unilateral tariffs and thuggish threats against US companies which invest abroad for export to the US, with Mexico first in the firing line. Quite how much of this 180-degree reversal of bipartisan US trade and foreign policies will become reality remains a matter for conjecture.

Meanwhile, conspicuous by its absence is a roar of outrage from the US business community in Asia which for years has been pressing for more open trade and always quick to condemn Asian governments for backsliding on trading and investment commitments.

AMCHAMS: explain your silence. Are your business leaders so dominated by Republican loyalists that you now treat as dispensable the values you have been preaching for decades? For the US to have gripes against specific countries or products is one thing. They can be addressed on a case by case basis. But Trump is waving a sword which cuts indiscriminately.

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It may be true that the US originally gave China too easy a ride into its markets and the WTO and got inadequate access in return under the illusion that economic success would make China more liberal and democratic, as well as more open to US products. But that was then. Now crude anti-China measures simply endanger the very global trading system that the US has, mostly to its benefit, wrought over the past 60 years. If the US can treat its TPP friends in that way he has done, one shudders at what he may want to do with China.

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Retaliation is premature but at least must be considered for the not so distant future. Australia, perhaps surprisingly, has made a good start by urging that TPP go ahead anyway without the US. The key now must be to prevent US protectionism from becoming generic. That does not mean no retaliation but that any retaliation is specific. Meanwhile individuals can have their own trade policies, starting with any business named after Trump or which supplied any of the leading figures in his administration.

The US could start by getting away from the fantasy that its economic problems are the fault of its trade deficit. Once the US-owned brand and intellectual property costs, and returns on its investment in overseas manufacture, are factored into the overall trade picture, the deficit shrinks. The official current account deficit is only about 2% of GDP, very much less than countries such as Australia and the UK have been exceeding for decades. Include all the profits of thousands of US-owned companies, held in offshore tax havens and there may well no current account deficit at all.

The delusions about trade are even more marked in the case of China. The domestic value added in China’s exports to the US averages only about 65 percent compared with 85 percent in exports from Japan. In cases of items such as electronics the Chinese component is significantly less due to high value components from Japan and elsewhere. The US would be crazy to assume that labour-intensive, low value products like toys and sneakers, where the China valued-added percentage is highest, have a place in the US goal of reviving manufacturing employment.

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But now that the US electoral system has brought to power someone as detached from reality as Trump, craziness seems set to triumph, at least for a while.

 

Post Obama Era: Time for Americans to come together


January 25, 2017

Time for Americans to come together and get down to serious business

by Bunn Nagara@www.thestar.com.my

Now that the US presidential inauguration is over, all parties need to reconcile themselves with the Trump Presidency regardless of preferences and inclinations.

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AFTER all the hype and hoopla of Donald J. Trump’s inauguration as the 45th US President, the opportunity now exists to reconcile political differences and begin to rebuild a more unified United States.

The opportunity at least is there, whether or not all parties choose to seize it. From all indications, personal, ideological and partisan ill will still rankles.

According to Gallup, Trump’s public approval rating rose from 34% to 42% following his election win. However, his 40% last Tuesday is the lowest historically going into a presidential inauguration.

It had been a rough and bruising campaign, and an unprecedented degree of bitterness lingers. And much of it comes from the anti-Trump side of the fence, from libellous false news to boycotts of the inauguration to protest rallies on the streets.

Trump’s pugnacious style alienates many, including conservative institutions and liberal interest groups. In the US context, dissent swirls around such issues as racial and gender equality, abortion, conflicts of interest and the future of healthcare provisions.

Trump has no gift of a smooth persona, soothing public relations in self-promotion, or even an appreciation of the need for good PR. His grating bluntness signals an uncompromising, open and direct character.

In taking Establishment sacred cows head-on, he displays no Establishment slyness, deception or double-dealing. How he handles political expediencies as they filter through his aides later remains to be seen.

His is a love-or-hate, take-it-or-leave-it position on issues that offers no room for fence sitters. Appropriately, he finds fence-sitting awkward, feeble and uncomfortable.

The US remains the most powerful and influential country in the world. Naturally, other countries need to understand the Trump Presidency to avoid mistakes and make the best of their bilateral relations.

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There is no need to project forward on the basis of a Trump assassination before the inauguration. When independent analysts do this it is rejected as conspiracy theory, but when CNN did it two days before the inauguration it was accepted as healthy media fare.

This was the same CNN embroiled in controversy over reproducing false news from such sources as Buzzfeed to malign Trump in a familiar partisan broadcast. Trump supporters say CNN’s projection only encourages assassination attempts in an already emotionally-heated environment.

The fact remains that no country in the world is able, anxious or inclined to attack or undermine the US. Trump knows this, however much his opponents in the US may try to demonise Russia and implicate Trump to delegitimise his Presidency.

Such attempts at casting guilt by association to already presumed guilty parties have only a limited effect. It saw the departure of Trump campaign chairman Paul Manafort, who allegedly acted as consultant to Ukraine before President Viktor Yanukovych was toppled in a pro-Western coup.

Beyond US borders, three issues stand out: will Trump actually proceed with a wall on the border with Mexico, will he really restrict Muslims entering the US, and how many undocumented immigrants will he deport?

These issues were controversial when they were first aired during the campaign, but they have since been modulated by Trump himself.

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The US-Mexico border already has a fence as most borders do. Trump has said parts of the border may remain a fence, since the objective is to keep illegals out effectively.

He first said travel restrictions would be placed on Muslims from troubled countries like Iraq and Syria. This was followed by restrictions to be placed on individuals linked to suspect groups.

Would Trump deport as many as two million or so illegal immigrants as he said? Al Jazeera reported that Obama had already deported 2.5 million people, more than the total deported by all previous presidents throughout the 20th century.

The prospect of a meeting between Trump and Putin has already been floated. It will be a first, and the mainstream media are already poised to spin it to vindicate their allegations of Trump’s “allegiance” to Putin.

Clearly both men share certain attributes: a “take charge” personality with a penchant for grandstanding, no patience for time-wasters, and little respect for established practice just because it is established.

But that is not the same as one being beholden to the other. By their very character, neither is given to being beholden to anyone or anything else.

Trump’s earlier comment about possibly lifting sanctions against Russia has now been revised to exchanging it for a cut in Russian missiles. Whatever the practicalities of such a deal, he is suggesting a quid pro quo with Moscow instead of a blank cheque.

For international strategists, Trump’s dismissive comments about NATO remains an issue. However, his Defence Secretary James Mattis holds the opposite view that is set to dilute if not neutralise his own.

The Trump Administration’s approach to China is actually more nuanced and interesting. Ultimately, it may also be more significant for China, East Asia and the larger Asia-Pacific.

At its crudest, it takes the shape of cudgels in China-bashing over Beijing’s alleged financial and economic improprieties. Much of this comes from anti-China hawks among policy advisers like Peter Navarro.

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On another level, it is about reacting to provocations from Beijing. When China scolded Trump for “consorting” with Taiwanese President Tsai Ing-Wen over her congratulatory phone call to him, he reciprocated.

China’s weakness remains a dogged misreading of Trump. By continuing to press the wrong buttons, Beijing may well “succeed” in provoking him into a trade war of sorts that both sides say they reject.

So far, the negative exchanges have not dwelt much on China’s contested actions in the South China Sea. If Beijing remains as wooden in mishandling Trump, he will easily adopt the Pentagon’s position on the issue to China’s own detriment.

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Heinz the Survivor and US Foreign Policy Iago

Much of what prevails in US relations with China and Russia over the next four years at least may result in the quiet campaigns of one individual: Henry Kissinger.

The former Secretary of State and pioneer of US-China relations has both been hailed and criticised as a pro-China dove. The reality may be more complex.

Kissinger has lately been active in three areas: renewing ties with China, promoting relations with Russia, and getting close to Trump. Some observers see his efforts as eventually distancing China from Russia.

In recent years, Russia and China have been working more closely over a range of issues outside the ambit of the US. Kissinger may regard this as a strategic challenge to Washington.

If driving a wedge between China and Russia is Kissinger’s current objective, it is not new. The US opening to China in the early 1970s that he led was already an attempt to distance Beijing from Moscow.

Given Trump’s personality and character, he is more likely than not to attend the ASEAN Summit in Manila in November. His host is admirer President Rodrigo Duterte, who has been likened to Trump.

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With Duterte’s Philippines chairing ASEAN, it is virtually a foregone conclusion that Trump will be in the region. Only his absence will be in doubt.

Trump and his ASEAN counterparts will have to work out what to say in their diplomatic exchanges by then. But well before that, ASEAN leaders need to understand the implications for the region in “make America great again.”

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.