And the winner of the US election is … Shinzo Abe?
Christmas came early for Shinzo Abe. Maybe 10 years early.
With the election of Donald Trump, the stage is set for Japan to assume a leadership role in the bloc of Asian states confronting but not quite containing the People’s Republic of China.
Trump has declared himself no friend of China, or for that matter Japan. He’s an America-first unilateralist, which translates into a preference for bilateral engagements, and a disdain for overarching multilateral legal and security regimes that require the US to invest its power, money, and prestige into efforts that might benefit the global commons but require the United States to defer or even sacrifice its own more narrowly defined national interests as needed.
The chances that Trump can or even wants to run US foreign policy according to his inclinations are pretty slim. The Trump transition team is scrambling to assemble a borderline-credible administrative presence by January 20 and, with Trump’s limited foreign policy time and attention probably to be dominated by the issues of “Islamic terrorism” in the Middle East, it seems likely that Asian policy will be run on something approaching autopilot for as long as possible.
If Trump does start a trade war with China, he can look forward to bad things happening to Apple, which has replaced Boeing and American wheat farmers as the crucial hostage/pampered pet in US-PRC trade frictions. Apple, in addition to being a big, influential mega-corp with a market cap of over US$550 billion, accounts for 14% of the value of the NASDAQ 100 and, in 2015 at least, about half of growth recorded by the index. If Apple has a bad day, in other words, America has a bad day, and so does global capitalism.
There are a lot of incentives for Trump to tread lightly in Asia, but business as usual comes with one important exception: TPP.
TPP — the Trans Pacific Partnership trade pact — is a dead duck in the lame duck months of President Obama’s administration, and just as dead for President Trump, who made his opposition to its anticipated horrors a centerpiece of his electoral campaign.
That’s a wrenching development for the United States, because President Obama had envisioned the TPP as a crucial, enduring institution placing America near the heart of the Asian economic miracle — and excluding the PRC.
In August of this year, The Washington Post evangelized for the TPP, stating:
The TPP was to be the anchor, symbolic and substantive, of a reinvigorated US presence. The next president cannot simply leave a strategic vacuum in its place.
Well, Japan hopes to fill that vacuum, not “quixotically” as some say, but strategically.
On November 4, in a special session of the Diet that appeared to be coordinated with the US elections, Abe’s LDP jammed the TPP agreement through the House of Representatives. Without further action by the House of Councilors by December 9, the agreement is ratified by Japan.
The TPP requires ratification of 85% of the signatories by GDP to enter into effect, so it would appear that without US ratification, TPP is going exactly nowhere.
According to the SCMP, the Trumpshock caused the cancellation of a postelection press conference in Washington where ambassadors of Singapore, Japan, Australia and New Zealand would try to ride the momentum of the Clinton victory to advance the fortunes of the TPP in the US Congress during the lame-duck session.
Notwithstanding, Abe has announced his determination not to abandon the TPP.
A look at context is useful.
[D]uring an interview on November 9 after the US presidential election result, Australian Minister for Foreign Affairs Julie Bishop confirmed that, while “we see TPP as an important economic manifestation of the United States’ presence in our region, should not go ahead, then the vacuum that would be created is most likely to be filled by RCEP.”
There’s that “vacuum” again, this time clarifying that in the absence of the TPP it will be filled by the RCEP — the Regional Comprehensive Economic Partnership — the PRC’s alternative to the TPP that is under negotiation with a variety of Asian countries, and doesn’t provide a seat at the table for the United States.
The PRC is aggressively capitalizing on US disarray to present itself, not without some merit, as the one remaining superpower that is firmly and consistently committed to the multilateral regimes — not just trade but also climate change and regional investment — that the smaller and more vulnerable nations of Asia-Pacific rely upon.
As a researcher at Australian National University put it (difficult to hear, I imagine, over the gnashing of teeth of pivoteers infuriated by China presuming to snatch the soft-superpower mantle from the United States):
“Active Chinese trade diplomacy of this kind is now crucial to keeping global trade diplomacy on course.”
Malaysia’s International Trade and Industry Minister signaled his country was ready to abandon ship:
Mohamed said that if the US decides that they will not ratify the TPPA, Malaysia will discuss with the other members on the next course of action … “Our focus now is on the Regional Comprehensive Economic Partnership (RCEP) involving 10 ASEAN countries and 6 major trading partners in the Asia Pacific region, including China.”
The PRC is putting a full-court press on Singapore to give up on the TPP trade bloc it had originally midwifed. Global Times turned the screws:
If Singapore continues clinging to the TPP, the country is expected to fall deeper in its economic slide. To avoid that situation, Singapore needs to attach more importance to the Regional Comprehensive Economic Partnership (RCEP) negotiations.
As for another conflicted ally, Australia, torn between defense sector China hawks& economic sector China doves, the headline in Australia’s Financial Review tells us China names Australia as key ally in push for new trade bloc.
Yes, on top of everything else, China has rolled out a second trade bloc to cement its claims to leadership in global trade diplomacy.
The new trade bloc in question is a further elaboration of the RCEP, the Free Trade Area of the Asia Pacific (FTAAP), which Xi Jinping will promote at an APEC summit in Peru in late November.
In China Daily, Douglas Paal, a US diplomat and China realist with decades of experience, made the rather jaw-dropping suggestion that the proper place for the United States might be in the PRC’s trade regime, and abandon hope for now of stitching together an “anybody but China” TPP:
And since the Trans-Pacific Partnership Agreement is in a coma, China should remind Trump of the potential to unlock opportunity with the Free Trade Area of the Asia Pacific, originally an American idea, now championed by Beijing.
Adam Smith on a broken bicycle!
Abe, who is flying to New York for an urgent meeting with President Trump on November 17 to get a reading on what’s really in store for Japan (and, perhaps, check in with his neoconservative allies at the Hudson Institute to strategize concerning the baffling Trump phenomenon), also prepared for the contingency of bending his knee to the RCEP, telling the Diet:
“It’s safe to say that we will shift focus to RCEP should the TPP not go ahead.”
With TPP circling the drain, it seems logical for Asian economies seeking economic integration to gravitate toward the RCEP and the PRC, presenting something of a geostrategic dilemma for Japan — as the PRC’s Global Times was happy to point out:
Abe’s attempts to save this fragile agreement are somewhat weird … Abe’s enthusiasm for the pact is partly due to the TPP’s isolation of China in economy and trade … [O]ne thing is almost certain … any moves toward isolating China in trade will be almost impossible and have little chance to last long.
It would therefore appear that the anti-China forces are in disarray and the PRC is going to pull all the nations of Asia into its economic orbit.
That is, safe to say, not Prime Minister Abe’s ambition nor is it the desire of the US diplomatic, trade, and security professionals and pivoteers struggling to maintain their footing during the Trump earthquake. And it is probably not the preference of the smaller Asia-Pacific economies, which would prefer to deal with the Chinese goliath from a position of relative collective strength and not individually.
Now that America is out of the picture, the logical nucleus for a trade bloc of Asian interlocutors with the PRC is its biggest economy, Japan. And the best platform is still the TPP which, through years of grinding negotiations, generated the notorious 6000-page secret agreement.
Prime Minister Abe undoubtedly expected President Hillary Clinton to continue pumping US diplomatic, military, and economic power into Asia for the next few years in the quest to make this “America’s Pacific Century.”
But then came President Trump.
And with him an opening to exercise Japan’s leadership in Asia.
I believe this unexpected opportunity fits in with Prime Minister Abe’s long term ambitions for Japan to re-emerge as a fully-fledged regional power, one ready and able to take flight if the US betrayed Japan either by pivoting to China (as already happened once with the epochal “Nixon shocks” of 1971-2, which included sudden PRC recognition) or marginalizing itself in Asia through inattention, incapacity, or internal crisis (the incoming Trump administration may hit the trifecta here).
And you know who’s begging him to exercise leadership in Asian trade diplomacy? The Americans.
The Brookings Institution went on record imploring Abe to save Asia from Donald Trump by taking the lead on trade policy and even trying to keep TPP alive until some combination of circumstances allows its resuscitation in the United States.
Mireya Solís, a Senior Fellow at Brookings’ Center for East Asian Policy Studies, urged Asian signatories to arrange a fiddle to the ratification clause that would allow the TPP to survive a US pullout:
[A] revived TPP will also help Japan position itself more effectively vis-à-vis China in the ongoing negotiations to create [the RCEP]… by refusing to bury the TPP, Japan and the remaining countries will also keep open the option for a future American return to the trade grouping.
The vital ingredient in this plan is Japanese leadership, as Solís concluded:
[A scaled back TPP] can be a beacon of light at a time when the prospects for a liberal economic order are uncertain. But the ultimate success of the TPP will rest on leadership from Japan — the largest remaining economy in the TPP.
Lest Solís be regarded as an outlier, Jeffrey Schott of the Peterson Institute also stated his support for a “provisional” TPP that keeps the flame burning until the US hopefully gets its act together.
And it’s not just desperate pivoteers.
According to Bloomberg, a Japanese parliamentarian, the president of Peru, and the Economy Minister of Mexico have also urged exploring “TPP-lite” if the US can’t show up.
In other words, TPP may be persona non grata in the Trump White House and the US Congress, but the trends and forces supporting a collective non-China trade regime have not completely evaporated together with the TPP’s ratification prospects in the United States.
Abe, I believe, is pushing TPP because he always saw the treaty as a potential asset and bargaining chip in his regional and PRC diplomacy, its value perhaps paradoxically enhanced now by the US collapse that leaves Japan as the indispensable player in regional trade diplomacy vis a vis China, albeit a decade earlier than he expected.
It looks like the inevitable response to the Trump crisis will be America ceding a vital share of leadership of the East Asian democracies (+ Vietnam) to Japan — which is where Prime Minister Abe always thought it should be.