Foreign Policy: Balancing US-China Interest in the Trump–Xi era


December 11, 2017

Foreign Policy: Balancing  US-China Interest  in the Trump–Xi era

by David M Lampton, Johns Hopkins University

http://www.eastasiaforum.org

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The Asian Statesman,HE President President Xi Jinping–Economic Diplomacy

From 1945 to 2016 the United States used its economic, military and ideological power to build institutions, alliances and regimes that contributed to global economic growth and the avoidance of great power war. In doing so, it fostered the rise of a new constellation of powers, China notable among them, with which it must now deal. If the United States wants to see its interests met, Washington must win Beijing’s cooperation rather than try to compel it.

 

On entering office, US President Donald Trump put several contentious issues with China on the backburner in the hope of achieving his primary goal — North Korea’s denuclearisation. When that failed, the front burner of US–China relations became crowded with previously repressed issues.

Several of these — US freedom of navigation operations in the South China Sea, talk of steel and aluminium tariffs, weapons sales to Taiwan, threats to tighten technology and investment flows as well as secondary sanctions on Chinese entities — threaten to become serious problems if not managed in a more careful manner than the Trump administration is currently demonstrating.

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From Pivot to Asia to Divert from Asia–America First

So what might the United States usefully do? There are three issues on which Washington should focus: fostering an economic balance of power in Asia that promotes regional stability, achieving more reciprocity in US–China relations and addressing the North Korean nuclear and missile problem.

A central part of Xi Jinping’s geo-economic vision is the expansion of regional links and the promotion of urbanisation and growth on China’s periphery to make China the central node in this growing region. For Beijing, this means north–south connectivity — namely supply chains that originate in China and extend to the Indian Ocean, South China Sea, Andaman Sea, Bay of Bengal and beyond.

Unless Washington wants Asia to become a unipolar sphere of Chinese influence, it should become more involved in the construction of regional infrastructure to foster linkages that are not just north–south but also east–west from India to Vietnam through Myanmar, Thailand and Cambodia and on to Japan and the wider Pacific.

Turning to reciprocity, when China joined the WTO in 2001 its overseas trade and financial involvements grew enormously. So too did its global trade surplus and bilateral trade surplus with the United States. Beijing soon had the technology, capital and capacity to seize the opportunities of openness abroad without providing reciprocal domestic access to the United States and others.

From 2008 onwards, the pace of domestic economic, financial and foreign trade liberalisation slowed. China’s world trade partners came to realise that as China leapt outward to seize opportunities, it did not reciprocally open itself in areas where foreigners enjoyed comparative advantages. Consequently, the issues of ‘reciprocity’ and ‘fairness’ have moved to front and centre in US–China relations. US companies are now asking themselves why Chinese entrepreneurs should be able to freely acquire US service and technology firms when these areas in China are closed to foreigners.

While US feelings of resentment mount, finding ways to enhance reciprocity with Beijing that do not injure US workers or other bystanders is hard. Limiting Chinese investment into US employment-generating firms diminishes US job opportunities. On the other hand, ignoring the problem invites extremist proposals at home as well as contempt in Beijing.

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Finally, the issue of North Korea. Trump thought his predecessors had been right in pressing Beijing to put more pressure on North Korea and in their assessment that Beijing had sufficient means to do so. Where they had gone wrong, Trump believed, was in not making it worth Beijing’s while to apply the necessary pressure.

So President Trump suggested that Washington would give Beijing concessions in other areas — trade and Taiwan among them — in exchange for pressure on North Korea. Of all the reasons that this approach has not worked out (including the viability of some of Trump’s promised consessions) the most dominant is that Pyongyang resists following any external advice that it fears would be lethal to the regime.

Consequently, the Trump administration is left with the same stark choices as its predecessors, except that Trump has staked even more on the issue and North Korea is further down its deliverable nuclear weapons path.

It is time for Washington (in close consultation with its South Korean and Japanese allies) to acknowledge that North Korea has a modest nuclear deterrent, and that as a result the United States should shift its aim from denuclearisation to deterring the use and further proliferation of these capabilities.

The US–China relationship is fraught with problems and will be for the foreseeable future. The United States is no longer positioned to compel cooperation from China. Any policy changes from Beijing must be negotiated, and within this negotiation Washington must seek a balance of power and interests.

David M Lampton is Professor and Director of China Studies in the School of Advanced International Studies, Johns Hopkins University. His most recent book is Following the Leader: Ruling China, from Deng Xiaoping to Xi Jinping.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘China’s Influence’.

 

ASEAN needs to move to minilateralism


December 6, 2017

ASEAN needs to move to minilateralism

by Richard Javad Heydarian*

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RSIS Commentary is a platform to provide timely and where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies, NTU. These commentaries may be reproduced electronically or in print  with prior permission from RSIS and due recognition to the author(s) and RSIS. Please email your feedback to Mr Yang Razali Kassim, Editor RSIS Commentary at RSIS Publications@ntu.edu.sg.

Synopsis

To save the principle of ASEAN centrality, the regional body should transcend its consensus-based decision-making and embrace minilateral arrangements on divisive issues.

For four decades, ASEAN commendably established the foundations of a nascent security community in Southeast Asia, where the threat of war among neighbouring states has teetered on the verge of impossibility. In the past two decades, the regional body has tirelessly sought to create a broadly peaceful, rules-based and inclusive regional security architecture.

The regional body is increasingly suffering from a ‘middle institutional trap’. The type of decision-making arrangements that enabled it to reach its current stage of institutional maturity are insufficient to meet its newer challenges. In particular, the rise of China and its growing assertiveness are not only disturbing the regional security architecture but also undermining ASEAN’s internal cohesion and its quest for centrality in East Asian affairs.

Limitations of ASEAN Way

The ‘ASEAN way’, where consensus and consultation undergird decision-making regimes, is no longer up to the task. The regional body’s unanimity-based decision-making mechanism has unwittingly handed a de facto veto power to weaker links that are under the influence of external powers.

Moving forward, the body has two choices. It can modify its institutional configuration by adopting an ‘ASEAN–X’ or ‘qualified majority’ voting modality on politico-security affairs, or it can fall into irrelevance.

This is poignantly evidenced by the South China Sea disputes. After it failed to embrace wholesale institutional innovation, the only way forward is a constructive form of ‘ASEAN minilateralism’, where like-minded and influential countries in the region coordinate their diplomatic and strategic calculations vis-a-vis South China Sea disputes.

End of ASEAN Centrality?

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In 2016, the leaders of ASEAN displayed encouraging unity — or at least a semblance of it — during the Sunnylands Summit with former US President Barack Obama. At the end of the meeting, the two sides released a joint statement that called for shared ‘commitment to peaceful resolution of disputes, including full respect for legal and diplomatic processes, without resorting to threat or use of force, in accordance with universally recognised principles of international law and the 1982 United Nations Convention of the Law of the Sea’.

So both sides agreed that not only should the United Nations Convention on the Law of the Sea (UNCLOS) be a basis for resolution of disputes, but also mentioned ‘legal processes’, which could be interpreted as an implicit statement of support for the Philippines’ decision to resort to compulsory arbitration against China in accordance with Article 287, Annex VII of UNCLOS.

Both sides also emphasised the necessity of ‘non-militarisation and self-restraint’. This was particularly salient given China’s worrying deployment of surface-to-air missile systems, high-frequency radars and fighter jets to contested land features in the Paracel Islands as well as newly built facilities across artificial islands in the Spratlys.

But as the Philippines’ arbitration case reached its final stages, ASEAN suddenly began to lose steam. Things came to a head during the special foreign ministers meeting between ASEAN and China in Kunming when the Southeast Asian countries failed to release a joint statement, which forced frustrated officials in the Malaysian Foreign Minister’s Office (which initiated the high-level meeting) to release a draft joint statement.

A Minilateralist Solution

It did not take long for some ASEAN countries to shut down any hope of ASEAN centrality on the South China Sea disputes. Cambodian Prime Minister Hun Sen openly criticised the Philippines’ compulsory arbitration against China, dismissing it as a provocative act that is ‘not about laws’ and instead a ‘political conspiracy between some countries and the court’.

More disappointing, when it became clear that the Philippines scored a clean sweep victory against China (with the court nullifying China’s historic rights doctrine and much of its nine-dashed line) most ASEAN countries immediately called for patience and calm rather than compliance by claimant states to a binding decision.

 

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In a strange twist of events, the Philippine government under President Rodrigo Duterte has soft-pedalled on the issue, refusing to raise it in multilateral fora. During its 2017 chairmanship of ASEAN, the Philippines oversaw a joint statement that was ironically even less critical of China than in previous years.

It is highly unlikely that ASEAN will ever find a consensus or adopt a robust statement on South China Sea disputes. The much-vaunted code of conduct (COC) framework looks like a repackaged Declaration on the Conduct of Parties in the South China Sea, since dispute settlement mechanisms or any reference to relevant UNCLOS provisions (and Philippine arbitration) are excluded.

COC: New Hope or Mirage?

Looking at the outline of the COC framework, the ‘objectives’ of the document are ‘to establish a rules-based framework containing a set of norms to guide the conduct of parties and promote maritime cooperation in the South China Sea’. The operative term is ‘norms’, which denotes the absence of a legally binding nature. In the section on ‘principles’, this is quite clear: the document states that the final COC will not be ‘an instrument to settle territorial disputes or maritime delimitation issues’.

Key ASEAN countries like the Philippines, Vietnam, Singapore, Malaysia and Indonesia can bilaterally and individually release statements that communicate their disappointment with China’s activities in the area and relay their willingness to step up their ‘minilateral’ cooperation in the South China Sea.

ASEAN claimant states can also negotiate a parallel legally binding COC grounded in international law that can then serve as a framework for maritime delimitation. It can be more substantive and maximalist. It should call for an immediate freeze on reclamation activities, construction of military facilities, deployment of military assets and expansive illegal fishing in the area.

If ASEAN cannot embrace this minilateral approach, it runs the risk of complete irrelevance in shaping and managing potentially the most combustible conflict in the 21st century.

*Richard Javad Heydarian is a Manila-based academic, columnist and author who contributed this to RSIS Commentary. The article is partly based on a conference organised by Stratbase-ADR Institute (July 2016), and a joint workshop of the S.Rajaratnam School of International Studies (RSIS) of Nanyang Technological  University, Australian National University, and Stanford University at the Asia-Pacific Centre For Security Studies (APCSS) in October 2017.

 

https://www.rsis.edu.sg/wp-content/uploads/2017/11/CO17210.pdf

http://www.eastasiaforum.org/2017/12/05/asean-needs-to-move-to-minilateralism/

Fact-checking critics of Chinese aid


November 29, 2017

Fact-checking critics of Chinese aid

by Alvin Camba, John Hopkins University

http://www.eastasiaforum.org

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Pundits and journalists have often argued that Chinese loans are expensive and harmful to recipient countries. But they fundamentally misunderstand how Chinese aid and investment works across different countries.

Criticisms of Chinese aid suffer from four crucial problems. First, Chinese interest rates have been higher than comparable loans from other OECD Development Assistance Committee (DAC) countries because China lends to states with low investment grades. Interest rates vary across different donors but loan parameters depend on the recipient country’s investment grade and the donor state’s funding program. Put simply, DAC interest rates could have also been higher had these states funded similar projects.

Second, DAC countries follow one set of criteria for loans while China follows another. For the DAC, a loan becomes a concessional project when interest rates and the grace period are about 25 per cent cheaper than a comparable market loan. Although China’s concessional loans operate according to some DAC criteria, China’s Export–Import Bank often subsidises the interest of the project. As a result, the interest is charged to the Chinese government’s external assistance budget. In this loan agreement, the recipient country pays for the actual price of the project instead of the interest on the loan, departing from the DAC’s model. In other words, some of China’s loans are cheaper than the DAC alternatives.

Third, because the World Bank and other DAC countries have moved away from funding large-scale infrastructure while Japan has been wary of funding energy-intensive schemes, there are no other external funders willing to finance such projects in developing countries. China was the only willing financier of some crucial infrastructure projects in many sub-Saharan African and Latin American states. Those arguing that Chinese interest rates have often been higher fail to acknowledge that unless a similar offer was put forward by alternative funders, ‘base’ market rates cannot be used for comparison. It is misleading to compare Japanese, Chinese and World Bank loans directly because the funding parameters of these projects were calculated under vastly different conditions.

And last, for all the criticisms that China gets, Western countries have been equally guilty of sending developmental aid and investment when these actions suit their national interest. The United States sends aid to states with questionable human rights records, including Saudi Arabia, Israel and Pakistan. Similarly, when they need to acquire strategic resources or cheap labour, the French and British invest in the Western Sahara and former colonies despite their questionable human rights and governance records. Indeed, the West remains the biggest source of debt, aid and investment for African countries.

Despite all this, China has been disproportionally painted as a ‘bad investor’ by major Western newspapers while drawing the public’s attention away from the involvement of Western companies.

Rather than a downward impact on GDP per capita or nominal growth rates, China’s rise in the global economy has pushed more countries from the periphery into the semi-periphery. Chinese companies invest in developing countries that are ignored by other major investors and target key sectors that have been overlooked by Western aid. China’s participation often increases competition among investors for key development projects, allowing recipient countries to bargain more effectively for better returns.

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This is not to say that China is the saviour of the developing world. Chinese aid brings potential negative implications, but it is important for recipient governments and their constituents to recognise the evidence-based dangers rather than popular arguments with minimal empirics.

While pundits often misunderstand aspects of China’s economic engagements, academics and researchers have long recognised and debated three main dangers of China’s aid and investment.

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China has asked for political returns in exchange for debt forgiveness. Apart from territorial expansion, China has been interested in acquiring ports located in the participant states of the Belt and Road Initiative, including in Sri Lanka, Djibouti and Malaysia. China’s territorial interests and port acquisitions have and will continue to elicit responses from competing states.

Another danger of Chinese investments and deals lies in the multiple actors involved in the process. China is not a monolithic actor, but comprises multiple state departments, state-owned enterprises, private corporations and citizens. While Chinese foreign direct investment has funded key strategic infrastructure, it has also spurred de-industrialisation and environmental degradation. Chinese aid and investors can be good or bad depending on the type of Chinese actor and the recipient governments’ response.

Finally, Xi’s China presents host states with a greater risk of falling into a debt trap. In previous cases when developing countries could no longer repay loans, China has allowed debt forgiveness and loan restructuring or has asked for specific and negotiable political or economic returns. Ironically, this is distinct from the policies of the World Bank and Western countries that put much of the developing world in a vicious debt trap in the 1980s. But with China’s economic slowdown, changes of leadership and geopolitical ambitions, China may not be as forgiving in the future.

Alvin Camba is a doctoral candidate at the Department of Sociology, Johns Hopkins University. He also writes at the Alitaptap Collective.

 

Trump, Xi and the siren song of nationalism


November 28, 2017

Trump, Xi and the siren song of nationalism

A new generation of world leaders is embracing nationalist themes

by Gideon Rachman@www.ft.com

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I will not dignify any event that disrespects our soldiers. . . or our national anthem.” So said Mike Pence, the US Vice-*resident, after walking out of a football match  — when some players had “taken a knee” during the playing of the “Star Spangled Banner”. The Trump administration’s row with high-profile athletes might seem like an “only in America” moment. But similar arguments about national anthems are taking place in China, India and Europe.

These anthem rows are a symptom of a global ideological struggle between nationalist and internationalists. In the US, China and India, the militant defence of national hymns is justified by the new nationalists as simple, healthy patriotism. But a shrill focus on national anthems also has a disturbing side — since it often goes hand in hand with illiberalism at home, and aggression overseas.

Earlier this month, China’s National People’s Congress passed a law, making “insulting” the country’s national anthem an offence, punishable by up to three years in prison. The move is part of a growing vogue for displays of patriotism in China, as part of what President Xi Jinping calls the “great rejuvenation” of his people. It also reflects rising tensions between the government of mainland China and semi-autonomous Hong Kong. At recent football matches in Hong Kong, the Chinese anthem has been booed by anti-Beijing protesters.

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The Indian version of this dispute was triggered by a supreme court ruling last year, directing that the national anthem be played before any film shown in a public theater. Supporters of the ruling argue that the anthem is an important glue in a multi-religious country that speaks hundreds of languages. Indian liberals worry that it reflects a rise in intolerant nationalism under Prime Minister, Narendra Modi — which is making life tougher for religious minorities and critics of the government. They also point to incidents of vigilantism in which cinema-goers, who failed to rise for the anthem, have been attacked.

A different kind of anthem controversy took place in France, when Emmanuel Macron celebrated his election victory, last May. The background music when the new president strode on stage was not the Marseillaise but Beethoven’s “Ode to Joy” — the EU’s anthem. This was a deliberate rebuke to his defeated opponents in the nationalist and anti-EU, National Front.

The fact that Mr Macron and Mr Trump have taken very different positions in the anthem rows is significant. For the US and French presidents are currently the two most important spokesmen for rival visions of international politics.

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In his speech at the UN in September, Mr Trump made the case for an international order based around “strong sovereign nations” — a phrase that he used repeatedly. The US president has also often attacked “globalism”, defined by his campaign as — “An economic and political ideology which puts allegiance to international institutions ahead of the nation state.”Ten days after Mr Trump’s speech, Mr Macron offered a very different worldview. In a lecture in Paris, he said that — “We can no longer turn inwards within national borders; this would be a collective disaster.” The French president saw his enemies as “nationalism, identitarianism, protectionism, isolationism.”

It would be easy to assume that Mr Macron’s internationalist message has more global support. But the Trumpian vision also has international adherents — from a network of politicians and intellectuals that can be termed the “nationalist international”.

Mr Trump’s nationalism is fired by a sense that America is in decline and can only recover, by getting tough with the outside world. Mr Xi’s nationalism is fuelled by a sense that China is on the rise, and can finally avenge historic humiliations. Those two rival visions could easily lead to US-China clashes in the Korean Peninsula, the South China Sea or at the World Trade Organisation.--Gideon Rachman@www.ft.com

In a recent article , Eric Li, a Shanghai-based commentator, argued that Xi’s China and Trump’s America, “have more in common than it appears”. Both leaders emphasise national sovereignty and are intent on pushing back against an “overly aggressive, one-size fits all universal order”. Mr Li argues that Mr Xi and Mr Trump have many potential soulmates in the anti-globalist camp — including leaders such as Vladimir Putin in Russia, Rodrigo Duterte in the Philippines, Viktor Orban in Hungary, Mr Modi and Abdel Fattah al-Sisi in Egypt, as well as Britain’s Brexiters. It is quite a list — underlining the extent to which nationalism is resurgent. The new nationalists argue that “strong sovereign nations” should be the basis of a stable, international order that rolls backs the excesses of a utopian and elitist “globalism”.

But there is something a little naive about the idea of peaceful coexistence between nationalists. Strongmen leaders may have a shared contempt for international bureaucrats and human-rights lawyers. But nationalism is often associated with disdain for the views and interests of foreigners. So, sooner or later, rival nationalisms are liable to come into conflict — and that is particularly the case with the US and China.

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The New China 7 Leadership

Mr Trump’s nationalism is fired by a sense that America is in decline and can only recover, by getting tough with the outside world. Mr Xi’s nationalism is fuelled by a sense that China is on the rise, and can finally avenge historic humiliations. Those two rival visions could easily lead to US-China clashes in the Korean Peninsula, the South China Sea or at the World Trade Organisation.

In his Sorbonne speech, Mr Macron warned that rising nationalism could “destroy the peace we so blissfully enjoy”. Sadly, it seems unlikely that anybody in Washington or Beijing was paying much attention.

gideon.rachman@ft.com

A Rejoinder: The View From Seoul: Trump’s Visit and the ‘Illusion of Achievement’


November 23, 2017

A Rejoinder: The View From Seoul: Trump’s Visit and the ‘Illusion of Achievement’

 

https://thediplomat.com/2017/11/the-view-from-seoul-trumps-visit-and-the-illusion-of-achievement/

U.S. President Donald Trump’s brief visit to Seoul, the shortest leg on his East Asia tour, and his address at the South Korean National Assembly has led to various positive news accounts. Media reports extolled revamped U.S. policy toward the so-called “Indo-Pacific” as well as an apparent newfound flexibility on the part of Trump toward a diplomatic solution with North Korea. However, as Van Jackson, senior lecturer in International Relations at Victoria University of Wellington, noted in an email exchange: “The theme that I see emerging from the trip is ‘Illusion of Achievement,’” and “every seemingly positive story coming out of the trip is artificial and vastly overstated.”

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In fairness, Jackson continued, such trips usually “involve a bureaucratic scramble for deliverables, many of which were already in the works even if the trip never happened.” Trump’s apparent achievements in Seoul represent just that, namely, agreements already underway. Moreover, the visit did nothing to address and, indeed, highlighted various dilemmas faced by Seoul in relation to their American ally.

In terms of achievements already secured, most revolved around measures taken to strengthen the U.S.-ROK alliance’s defense and war-fighting capabilities. In line with last week’s security and military meetings in Seoul, Trump hailed plans for increased rotational deployment of U.S. strategic assets as part his Reaganesque effort to secure “peace through strength,” including recent deployment of three U.S. Nimitz-class supercarriers and a nuclear submarine to regional waters. In addition, Presidents Moon and Trump agreed “to push forward our cooperation at an unprecedented level to bolster Korea’s self-defense capabilities.” Again, this directly follows the 49th ROK-U.S. Security Consultative Meeting’s (SCM) Joint Communique. During the Trump-Moon Summit, both sides finalized the earlier decision to lift limits on the payload of ROK missiles. They also agreed to immediately begin negotiations on Seoul’s development and acquisition of the most advanced U.S. military surveillance assets and, potentially, nuclear-powered submarines. The latter are currently prohibited under the U.S.-ROK 123 Nuclear Agreement.

Now for the dilemmas, the first being trade. Similar to his statements in Tokyo, Trump proclaimed Seoul would order billions of dollars worth of U.S. military equipment, which “for them makes a lot of sense and for us mean jobs and reducing our trade deficit with South Korea.” Nevertheless, it is dubious that such orders will lead to an appreciable increase in jobs (so much as greater profits for a select few weapons manufacturers). Moreover, whatever the effect on the deficit, Trump’s desire to rework the KORUS FTA, a deal he said “has been quite unsuccessful and not very good for the” United States, likely will not abate. In fact, as Donald Manzullo, president of the Korea Economic Institute (KEI), notes, it seems Trump sees U.S. support for ROK security as leverage for pressure on trade, which “makes the KORUS even more fragile.” For Trump, such transactional bargaining makes sense and may also be perceived as a kind of victory at a time of historically low approval numbers, ongoing FBI investigations, and legislative difficulties at home.  Meanwhile, for Seoul, forced to make concessions to Trump’s economic nationalism in exchange for security, it appears a blithe disregard for their difficult position.

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President  Donald J. Trump– A Triumphant Pose on Visit to Asia

Next, another goal of Trump’s Asia trip is to tighten security cooperation between the United States and its allies, both to confront North Korea’s nuclear program but also promote a “free and open Indo-Pacific region.” One key element of is the enhancement of trilateral U.S.-ROK-Japan missile defense efforts as part of the larger U.S.-led regional ballistic missile defense (BMD) system. However, while strengthening such cooperation is “taken for granted in Washington,” it is not so in Seoul. Although Japan officially joined the U.S.-led system in 2006, just last week ROK Foreign Minister Kang Kyung-wha told National Assembly lawmakers the ROK was not considering any more deployments of the U.S. THAAD system, would not participate in the U.S.-led regional BMD networks, and sees trilateral cooperation solely through a peninsular lens, not as a trilateral military alliance extending beyond the North Korean threat or Korean Peninsula. In an interview last Friday, Moon reiterated Kang’s position and indicated the two rationales behind it.

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Golfing Buddies–Abe-San and Trump-San

First, Seoul views Tokyo’s moves to take on a bigger role in international security with skepticism. Moon does not want to see Japanese Prime Minister Shinzo Abe use the North Korea threat as “an excuse for military expansion.” As I previously noted, Pyongyang’s provocations have led to greater functional cooperation, but fears of Japanese militarization, historical animosity, and antagonistic nationalist discourses remain important obstacles. Second, and related, Seoul hopes to maintain and improve its relations with Beijing, its largest trade partner and key diplomatic partner vis-à-vis North Korea. On October 30, Seoul and Beijing agreed to move past their year-long stand-off over THAAD, with Seoul stressing it is not aimed at any third country beyond North Korea. Seoul’s insistence on not joining the U.S.-led BMD system, as well as limiting THAAD deployments and security ties with Tokyo, is part of Moon’s intention to “pursue balanced diplomacy” between the U.S.-ROK alliance and China. By enhancing the U.S.-ROK alliance but keeping it strongly focused on North Korea, Moon hopes to carve out space for solid relations with Beijing.

Officially, the United States welcomed the apparent settlement of the Seoul-Beijing THAAD dispute. Yet there are signs that Kang’s comments may have upset U.S. Forces Korea Commander General Vincent K. Brooks, who remarked after a meeting with Kang, “We have an alliance relationship and we should look very closely at the words said by the foreign ministry.” Simply stated, U.S. officials view the alliance as derivative of and embedded within a wider strategic setting; Seoul’s concerns, understandably, are narrower. This leads to the final and most importantly dilemma: the fundamental difference between Seoul and Washington’s order of preferences vis-à-vis North Korea’s nuclear weapons.

As Jackson remarked: “The press has made a big deal of Trump’s musing that it makes sense for North Korea to negotiate, but he’s made comments like that before and Kim Jong-un has no interest in negotiations if the goal is denuclearization. For those who wish for a diplomatic solution in Korea, Trump’s temperament is less important than the objective of U.S. North Korea policy.” What is the objective? The first U.S. priority has been repeatedly stated: the complete, verifiable, and irreversible denuclearization of North Korea. According to Trump and his aides, Pyongyang’s possession of nuclear weapons, particularly the capability to miniaturize and deploy warheads on ICBMs capable of reaching the U.S. mainland, is unacceptable and will not be tolerated. The problem: North Korea already has nuclear weapons, will not give them up, and appears intent on developing just such capability.

On the contrary, while Moon listed denuclearization of the Korean Peninsula as a key priority, it is not the primary one. Speaking from the same National Assembly podium a week before Trump, Moon laid out his five principles for a peaceful peninsula. The first principle and top priority “is to maintain peace on the Korean Peninsula. Thus, armed conflict must be avoided under any circumstance.” Although Moon reiterated the need to sternly respond to any North Korean provocation within a firm U.S.-ROK alliance as the fifth principle, from Seoul’s perspective, Pyongyang’s mere possession of an enhanced nuclear and ICBM capability does not in itself justify war.

Herein lies the crucial and seemingly widening gulf between Seoul and Washington. Historically, for the United States, the standoff on the Korean Peninsula has been one of extended deterrence, meaning deterring an attack against its distant Korean ally. Yet, with Pyongyang’s dogged pursuit of nuclear equipped ICBMs, the confrontation is transforming into one of immediate deterrence, putting U.S. territory directly at risk. This does not, in essence, change the existential nature of the North Korean threat for Seoul, but it does change the strategic dynamic for Washington, which has demonstrated it does not respond well to real or even perceived threats. Indeed, the qualitatively new reality has already produced an ever-growing drumbeat of war, with U.S. policy elites calling for preventative strikes based on distorted historical analogies and an apparently unmitigated faith in surgical U.S. strikes.

The bottom line: Trump’s hyperbolic rhetoric aside, articulated U.S. policy and the growing support for precipitous military actions among the DC beltway crowd is sufficient enough evidence for Seoul to wonder whether or not, when push comes to shove, it will be sacrificed to save Seattle.

 

East-Asian Regionalism — A Bulwark Against a “Post-Liberal” International Order?


November 18, 2017

East-Asian Regionalism — A Bulwark Against a “Post-Liberal” International Order?

http://www.jpi.or.kr/eng/regular/policy_view.sky?code=EnOther&id=5325–www.eastasiaforum.org

By  See Seng Tan (RSIS, Nanyang Technological University)

In his January 2017 address to the World Economic Forum in Davos, Switzerland, Chinese President Xi Jinping positioned himself—unusually for the leader of Communist China—as a defender of globalization and free trade. Without a doubt, Xi’s remarks were directed at incoming US President Donald Trump, whose campaign rhetoric stressed resistance to globalization and promised the likelihood of an increasingly nationalist, isolationist, and protectionist America. Trump is not alone in wanting to reverse the tide of globalization the current pro-Brexit UK government has been singing a similar tune.

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This paper makes three interrelated points. First, the rising nationalist cum protectionist tide in the West is not a foregone conclusion due to mitigating factors that impel the great powers to cooperate, if only instrumentally and in the short term. Second, the history of East Asia from the Cold War to the present has been one where an emphasis on the preservation and protection of neutrality has given way in the post-Cold War period to so-called open regionalism, a broad-based preference for extensive and deep engagement with external powers and access to outside markets and resources. Third, East Asia’s shared commitment to open regionalism makes East Asian Regionalism, despite the present uncertainty surrounding regional trade deals like the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), an important counter-narrative and alternative model to the isolationist and protectionist zeitgeist.

Is the World Turning Protectionist?

Should Trump and other anti-globalists have their way, how might their behavior impact the liberal international economic order? According to a Brookings Institution report, despite holding the largest share of world trade and foreign capital, the US, relative to its size, is not as globally integrated as other countries.1) What could prove detrimental, however, is if other countries retaliate against US protectionist policies this fact serves as the basis for concerns that Trump could precipitate a trade war. Yet while retaliatory trade behavior might only be a short-term issue, the more fundamental risk is if countries repudiate global norms and institutions that underpin the globalized economy. This is possible if they feel that the US is no longer committed to upholding the liberal economic order and shouldering its burden—a worry that predates the Trump presidency but has since been reinforced by it.2)

Additionally, there is concern whether China, despite President Xi’s performance at Davos 2017, will honor the commitments it has made. These include accepting imported manufactured products and services as well as fully implementing TRIPS (the Agreement on Trade-Related Aspects of Intellectual Property Rights) as China promised to do when it joined the World Trade Organization (WTO) in 2001.3) Finally, there is also concern about various types of “covert” protectionism (i.e., the so-called behind-the-border barriers) rampant in China and other emerging markets that are challenging to address.4)

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Recent developments suggest that Trump has been forced by unanticipated events to delay or defer the pursuit of his anti-liberal agenda. The Trump administration has made a series of abrupt reversals in foreign policy, such as revising his earlier opinions about NATO, US involvement in Syria, burden sharing by US allies, the One China policy, US involvement in the South China Sea, and the US Export-Import Bank. It has also retreated from intended protectionist moves toward China because Chinese cooperation is sorely needed to manage a recalcitrant North Korea. Consequently, Trump has gone from accusing China of being the “grand champion” of currency manipulation to declaring they have not manipulated the China’s currency in months. Additionally, since initially proposing a 45 percent tariff on Chinese goods for allegedly hollowing out US manufacturing, the administration has gone quiet (whilst at the same time threatening to impose a 20 percent tariff on Canadian lumber). Crucially, Trump has also expressed strong support for bilateral free trade deals.5)

Whether this retreat from protectionism and isolationism is a temporary or expedient move remains to be seen. After all, there is evidence to suggest that, despite these reversals toward what some observers see as a more traditional US foreign policy,6) Trump appears to persist in his preference for transactional approaches.7) This was apparent during the Trump-Xi summit, where both leaders reportedly deliberated with “a cold calculation of interests” as they mutually exacted concessions from one another while still acknowledging their interdependence.8) In other words, the reversals merely reflect the Trump administration‟s pragmatic response to evolving international conditions that require corresponding changes in reciprocity. These are the quid pro quos that embody transactional diplomacy. Still, by acknowledging mutual dependence, even if only on a transactional basis, a slide towards full-blown protectionism and unadulterated solipsism has been kept at bay.9)

East Asia: From “Neutrality” to “Open Regionalism”

Image result for East-Asian Regionalism -- A Bulwark Against a “Post-Liberal” International Order?

A More Engaged and Assertive Japan under Prime Minister Shinzo Abe

It is worth noting that the emergence and evolution of East Asian Regionalism (EAR) did not occur outside the liberal international order but within it. If anything, EAR has sought to complement rather than compete against liberalism. When former Malaysian Premier Mahathir bin Mohamad’s idea of an East Asian Economic Grouping (EAEG)—later amended to an East Asian Economic Caucus (EAEC)—was proposed in 1990, the assumption then was that the EAEG/EAEC would form a Japan-led regional bloc that could serve as a counterweight to emerging—and potentially rival—regionalisms in Europe (such as the European Union, or EU) and North America (such as the North American Free Trade Area, or NAFTA). However, EAR would take a back seat to Asia-Pacific regionalism with the formation of the ASEAN Regional Forum (ARF) in 1994. Together with the earlier formation of the Asia-Pacific Economic Cooperation (APEC) trade forum, the emergence of ARF—with ASEAN as first its midwife and subsequently its anointed custodian—marked a strategic shift in the way ASEAN viewed the involvement of great and regional powers within Southeast Asia. For the ASEAN countries, the Cold War perspective of the great powers as outsiders seeking to intervene, exploit, and divide the region and who therefore must be checked—as embodied in the 1971 ASEAN declaration of the Zone of Peace, Freedom and Neutrality (ZOPFAN)—was gradually replaced by a post-Cold War perspective of those same powers as external actors with whom Southeast Asians ought to actively engage through multilateral diplomacy, among other means.

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Cambodia and China–Strategic Partners in Development

Far from exclusivist, the new regionalism that emerged in the early post-Cold War years in the Asia-Pacific is what some have termed open regionalism. This concept argues for cooperation across national borders in a region to reduce transaction costs through the collective involvement of governments in “trade facilitation,” or the expansion of open trade.10)

Second, open regionalism is meant to be inclusive in that it seeks to incorporate outside powers such as the US and other eastern Pacific Rim countries into APEC and ARF.11) Belief in such inclusivism—coupled with the perceived need to construct a stable regional balance of power by including outside groups to counter possible hegemonic ambitions—led to a push to enlarge the membership of the East Asia Summit (EAS) to include countries beyond the 10+3 of ASEAN plus Three (APT).12)

Third, open regionalism encourages groups to make their enterprises compatible with institutional arrangements and practices in other parts of the world, including world bodies. For example, the architects of ARF made it clear that the forum is not meant to replace the San Francisco system of military alliances. Instead, it serves as a supplementary mechanism for dialogue and consultation. Likewise with the Chiang Mai Initiative (CMI) reserve currency pool, an institutional expression of EAR and APT, was launched against the backof the crippling Asian financial crisis of the late 1990s. Speculations that the CMI—along with its multilateral component, the CMI Multilateralization (CMIM)—would surpass the International Monetary Fund (IMF) as the region‟s first port of call for financial assistance in times of crisis were put to rest when it became clear that regional countries either prefer IMF assistance or bilateral swap agreements that had no IMF links.13)

This is also evident in how ASEAN and its suite of regional offshoots have avoided asserting themselves as the region‟s savior organizations when troubles hit by limiting their aim and remit. As in the case of the CMI/CMIM, Asian countries involved in territorial disputes have looked to world bodies such as the Hague-based International Court of Justice (ICJ)—as in the cases of the Indonesia-Malaysia dispute over Sipadan and Ligitan, the Malaysia-Singapore dispute over Pedra Branca, and the Cambodia-Thailand disputes over Preah Vihear and its promontory—the Hamburg-based International Tribunal for the Law of the Sea (ITLOS), or the Hague-based Permanent Court of Arbitration (PCA) for UNCLOS Annex VII arbitrations—activated recently in the case of the China-Philippines dispute over the South China Sea (SCS). Alternatively, they rely on bilateral means of dispute settlement rather than ASEAN-based dispute settlement mechanisms.14)

Reinforcing the Liberal Message Though EAR

Since the knee-jerk reactions in the immediate aftermath of the US withdrawal from the TPP—in particular, Japan’s insistence that a TPP without the US would be “meaningless”—Australia and Japan have emerged as the loudest voices in favor of an 11-member TPP trade deal sans the US, without ruling out the possibility of the latter’s return to the fold.15) Meanwhile some are hoping that RCEP will launch by the end of 2017, though the best possible outcome is likely to be a framework agreement.16) Much was made at the RCEP Kobe meeting in February 2017 about an inclusive agreement that ensures roles for all stakeholders. The argument by RCEP Trade Negotiating Committee Chief Iman Pambagyo, for example, that RCEP balance the needs of both developed and developing nations implies that progress is likely to be slow and by no means guaranteed.17) APEC supports a third trade pact, the Free Trade Area of the Asia-Pacific (FTAAP), but it remains at the consultative stage despite receiving strong support from China when it chaired the 2014 APEC summit.18)

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Open regionalism inherently and intuitively liberalizes trade and refutes protectionism. Or it tries to. Despite the uncertainty surrounding TPP-11 and RCEP, they remain key reference points for any defense of trade liberalization. There is a longstanding debate over whether regional trade agreements compete with the world trade system.19) But, as we have seen, the ways in which open regionalism has hitherto been conceptualized and practiced in both the economic and security domains in East Asia render EAR a key political counterpoint to the anti-globalization fever that has seized the geo-economic cum geopolitical imaginations of the West. This is perhaps the most important role that EAR can and hopefully will play in the future, namely, as a bulwark against the anti-globalization tide through reinforcement of a liberal message.

Footnotes:

1) Brina Seideland Laurence Chandy, “Donald Trump and the future of globalization”, Brookings, 18 November 2016,
https://www.brookings.edu/blog/up-front/2016/11/18/donald-trump-and-the-future-of-globalization/
2) Kati Suominen, Peerless and Periled: The Paradox of American Leadership in the World Economic Order (Stanford, CA: Stanford University Press, 2012), p. 243.
3) Douglas Bulloch, “Protectionism May Be Rising Around The World, But In China It Never Went Away”, Forbes, 12 October 2016,
https://www.forbes.com/sites/douglasbulloch/2016/10/12/protectionism-may-be-rising-around-the-world-but-in-china-it-never-went-away/#359ae9bc73da
4) “Protectionism: The Hidden Persuaders”, The Economist, 12 October 2013,
http://www.economist.com/news/special-report/21587381-protectionism-can-take-many-forms-not-all-them-obvious-hidden-persuaders
5) Geoffrey Gertz, “What will Trump‟s embrace of bilateralism mean for America‟s trade partners?” Brookings, 8 February 2017,
https://www.brookings.edu/blog/future-development/2017/02/08/what-will-trumps-embrace-of-bilateralism-mean-for-americas-trade-partners/
6) David Ignatius, “Trump moves slightly toward pillars of traditional foreign policy”, USA Today, 13 April 2017,
https://www.usatoday.com/story/opinion/columnists/2017/04/13/trump-moves-slightly-toward-pillars-traditional-foreign-policy/100413776/
7) Greg Jaffe and Joshua Partlow, “Trump phone calls signal a new transactional approach to allies and neighbors”, The Washington Post, 2 February 2017,
https://www.washingtonpost.com/world/national-security/trump-phone-calls-signals-a-new-transactional-approach-to-allies-and-neighbors/2017/02/02/dcb797fa-e989-11e6-b82f-687d6e6a3e7c_story.html?utm_term=.97755b835303
8) Lexington, “A coldly transactional China policy: Donald Trump‟s first meeting with Xi Jinping was all about business”, The Economist, 8 April 2017,
http://www.economist.com/blogs/democracyinamerica/2017/04/coldly-transactional-china-policy
9) Robert Kagan, “Trump marks the end of America as world‟s „indispensable nation‟”, The Financial Times, 20 November 2016, https://www.ft.com/content/782381b6-ad91-11e6-ba7d-76378e4fef24
10) Ross Garnaut, Open Regionalism and Trade Liberalization: An Asia-Pacific Contribution to the World Trade System (Singapore: ISEAS Yusof Ishak, 1996).
11) Amitav Acharya, “Ideas, Identity, and Institution-building: From the „ASEAN Way‟ to the „Asia-Pacific Way‟?”, The Pacific Review, Vol. 10, No. 3 (1997), pp. 319-346.
12) Malcolm Cook and Nick Bisley, “Contested Asia and the East Asia Summit”, ISEAS Perspective, No. 46, 18 August 2016.
13) Hal Hill and Jayant Menon, “Asia‟s new financial safety net: Is the Chiang Mai Initiative designed not to be used?”, Vox, 25 July 2012, http://voxeu.org/article/chiang-mai-initiative-designed-not-be-used
14) See Seng Tan, “The Institutionalisation of Dispute Settlements in Southeast Asia: The Legitimacy of the Association of Southeast Asian Nations in De-securitising Trade and Territorial Disputes”, in Hitoshi Nasu and Kim Rubenstein, eds., Legal Perspectives on Security Institutions (Cambridge: Cambridge University Press, 2015), pp. 248-266.
15) WSim, “Australia, Japan lobby for TPP-11”, The Straits Times, 21 April 2017, http://www.straitstimes.com/asia/east-asia/australia-japan-lobby-for-tpp-11 “’TPP 11′ to Washington: We’ll keep your seat warm”, Nikkei Review, 16 May 2017,
http://asia.nikkei.com/Politics-Economy/International-Relations/TPP-11-to-Washington-We-ll-keep-your-seat-warm
16) Shefali Rekhi, “Will RCEP be a reality by the end of 2017?” The Straits Times, 23 April 2017,
http://www.straitstimes.com/asia/se-asia/will-rcep-be-a-reality-by-the-end-of-2017
17) Eric Johnston, “16-nation RCEP talks resume in wake of TPP‟s demise”, The Japan Times, 27 February 2017,
http://www.japantimes.co.jp/news/2017/02/27/business/16-nation-rcep-talks-resume-wake-tpps-demise/#.WR1RaU21v3g
18) Mireya Solís, “China flexes its muscles at APEC with the revival of FTAAP”, East Asia Forum, 24 November 2014.
19) Parthapratim Pal, “Regional Trade Agreements in a Multilateral Trade Regime: A Survey of Recent Issues”, Foreign Trade Review, Vol. 40, No. 1 (2005), pp. 27-48.

* This is a presentation manuscript in the panel “Regionalism After Liberalism”, Jeju Forum, 31 May 2017.