1. In China's shadow, US hunts new trade partners, and finds them wary
For East and South Asian countries worried about China’s growing regional dominance and looking for an alternative for economic partnership, consider your old friend the United States.
That’s the message Secretary of State Mike Pompeo has tucked in his portfolio as he travels to Malaysia, Singapore, and Indonesia this week to unveil the Trump administration’s vision for the US in what it calls the Indo-Pacific region.
It won’t be an easy sell. And not because countries like Vietnam, Thailand, and the Philippines have any desire to see the US fade from the region. On the contrary.
But as Mr. Pompeo unsheathes his blueprint for US involvement there, the leaders and officials he meets with will be wondering if the US is a reliable partner or a retreating power.
Indeed, if President Trump’s second secretary of State is to succeed in deepening and reinvigorating US involvement in a region that encompasses more than half the globe’s population, he will have to overcome doubts about America's commitment sown by the last administration and reinforced during the 18 months of the Trump administration.
In addition to bilateral meetings in the three countries he’s visiting, Pompeo will be meeting in Singapore with his counterparts from the 10-nation ASEAN (Association of Southeast Asian Nations) regional group.
Some in the region felt burned by Mr. Trump pulling the US out of the Trans-Pacific Partnership, or TPP, the 12-nation trade deal negotiated by the Obama administration.
The TPP has since gone into effect without the US, even as the US touts Trump’s preference for bilateral trade deals over multilateral agreements – an approach that leaves smaller countries particularly wary.
Alternative to China
Moreover, many countries in the region are going to want to know first how they might be affected by the Trump administration’s escalating trade war with China, regional and trade experts say.
But at the same time, many countries in the vast Asia-Pacific region are so keen to fortify their economic, investment, and security arrangements vis-à-vis a rising and increasingly dominant China that they are likely to lend an attentive ear to whatever Pompeo has to lay on the table, these analysts say.
“The countries in the region other than China are very anxious to keep the US in the neighborhood, they don’t want to be in debt to China or for China to be the only game in town,” says William Reinsch, a longtime Washington expert on international trade now at the Center for Strategic and International Studies. “But it strikes me that what the administration is proposing is minimal at best and isn’t about to convince anyone that we are serious about our role” in the region.
“Any proposal from [the US] will be welcome,” he adds, “but what they’re talking about is peanuts compared to what the Chinese have announced.”
China is busy implementing its trillion-dollar Belt and Road project, which aims to link East and Central Asia through massive infrastructure development and investment. But already some countries are finding that the Chinese investment model under the plan is leaving them in debt to the regional behemoth in exchange for scant economic benefit.
US pullback feared
Countries keen to see the US presence in the region fortified are also concerned that if economic ties are not strengthened, American security engagement in the region could wane as well.
Some in Washington in regular contact with officials from across the region say those officials are convinced the Trump administration aims to draw back from the Asia-Pacific region – especially militarily – and that this conviction is prompting countries from Australia to Japan and South Korea to plan for a day when a US military presence balancing China is history.
In particular, these countries worry that a major piece of any successful denuclearization deal with North Korea will be a steep reduction or even full withdrawal of US troops from the Korean Peninsula.
In Washington Monday, Pompeo was joined by a number of other cabinet-level officials as he unveiled a $113 million plan to foster public-private partnerships in infrastructure, energy, and technology across the Indo-Pacific – a region the Trump administration defines as stretching from the Philippines to India and from Korea to Australia.
Calling this first initiative a “down payment” on a much broader strategy, Pompeo told his audience at the US Chamber of Commerce in Washington that the Trump administration is expanding US engagement in the Indo-Pacific region – and that regional governments and businesses welcome the expanding American role.
And while he didn’t mention China by name, Pompeo hinted that the region is hungry for an alternative to China’s development and investment model.
“Thanks to [our] history of economic and commercial engagement, America’s relationships throughout the Indo-Pacific today are characterized by mutual trust and respect,” he said. “American friendship is welcomed, and American businesses are recognized for their ingenuity, reliability, and honesty.”
A familiar ring
All true, experts in the region say. But one hurdle Pompeo will face is a sense of “once burned, twice shy” across the region as countries that negotiated the TPP with the US – some at great political cost at home – now hear a new pitch from the administration that pulled the plug on US participation in TPP.
“There’s a real wariness,” says Philip Levy, who served as senior economist for trade under President George W. Bush. “This is a region that feels jilted by the US.”
First the Obama administration promised regional leaders that if they made tough concessions on a trade agreement, it would deliver approval of the deal back home. That didn’t happen, as Mr. Levy notes. Then Trump arrived and withdrew the US from the deal.
“So the feeling across the region is that ‘When you offer sweet nothings, we swoon – and then you say, Oops, sorry, we have another place to be,’ ” says Levy, now a senior fellow on the global economy at the Chicago Council on Global Affairs.
Pompeo arrives in the region touting an American vision of economic partnership based on such attributes as transparency, democracy, shared prosperity, free and open trade, and rules-based commerce – all qualities that the Obama administration also cited to promote creation of a vast regional trade pact. “It all has a familiar ring to them” in the region, Levy says. “It leaves them quite skeptical of the Trump administration.”
But one way in which Trump is different is his preference for bilateral diplomacy and trade deals over big multilateral talks and accords – an option Pompeo continued to emphasize in public comments in the run-up to his trip.
Reinsch at CSIS says countries in the region are “not necessarily opposed” to bilateral deals with the US. But he says they are turning wary given the rough experiences other countries are already having with the US in trade talks. “They see what’s going on with Mexico and Canada and Japan, and they’re saying, ‘Why do we want to go through that?’ ”
Mixed feelings about trade war
Beyond that, there are mixed feelings over the growing US trade war with China. For all the satisfaction some countries may feel at seeing the US push back on China over trade, there are also concerns over the regional impact if the war deepens or drags on.
“I don’t think there’s much celebrating in the region, despite widespread concerns over Chinese behavior,” says Levy. “The bottom line is that trade in the region is built on intricate supply chains” frequently involving Chinese companies at some point in production, he notes. “So actually there’s a lot of alarm that what hits China ends up affecting all.”
Yet for all the concern over issues of the moment, like the US-China trade war and bilateral versus multilateral diplomacy, what underlies it all are the doubts over the long-term US commitment to the region, analysts say.
“The big question in the region is, can the US come up with a strategy for its engagement and stick to it,” says Levy. “Pompeo is to be congratulated for taking a vision and something concrete to the region,” he adds, “but it’s hardly enough to even begin to address the concerns about the long-term US commitment.”