Trump and the End of the Trans-Pacific Partnership

If U.S. President Donald Trump is really serious about taking on China, he should re-consider his opposition to the Trans-Pacific Partnership, the massive trade pact that offers the United States its best opportunity to stay ahead in Asia.

President Donald J. Trump’s negative moves on China have created considerable excitement among critics of the U.S.’s decades-old China engagement policy. Citing developments like Trump’s precedent-setting telephone conversation with Taiwanese President Tsai Ing-wen on Dec. 2 and his subsequent remarks questioning the need for continued American fealty to the “one China” policy, critics have suggested that Trump may finally be ready to turn the corner on more than four-decades of rapidly expanding Sino-American trade, and start pushing back against growing Chinese military and political power in East and Southeast Asia.

Taiwan boosters in particular have been cheered by the possibility that 38 years after the U.S. shifted its recognition from Taipei to Beijing, they might soon see a new and more balanced American presence in the western Pacific — a presence that could even move to leverage Taiwan’s strategic advantages in containing Chinese power.

There is much to be said for this Taiwan-friendly point of view. The Trump-Tsai telephone conversation was undoubtedly an important event, not least because it was the first time a senior American leader is known to have spoken with Taiwan’s president in almost four decades. So too, for that matter, was Trump’s declaration on the U.S.’s possible abrogation of the “one China” policy, under which the U.S. acknowledges Beijing’s position that Taiwan is part of China. It is no wonder that China-wary observers in Taiwan and elsewhere are so excited about the prospect of a Trump presidency.

The truth however, is that this kind of optimism can only be justified if Trump’s actions are aligned with an overarching vision of how to deal with China over the long run. A strong dose of caution is in order here precisely because Trump himself is so ignorant of geopolitics and so prone to empty pronouncements. Intellectually incurious to an alarming degree, he says he trusts in his instincts, which is all well and good, always assuming one takes his instincts seriously. But at least on the basis of his self-absorbed personality, that seems a dangerous bet, particularly when one considers his obsession with self-interested deal-making and his penchant for breaking promises.

The TPP Template

All of which brings us to Trump’s decision on Jan. 23 to formally turn his back on the Trans-Pacific Partnership (TPP), the gargantuan commercial compact that seeks to deepen economic ties among 12 Pacific nations, and not coincidentally, push back against Chinese influence throughout the region. Negotiated over a 10-year timeframe and only completed in early 2016, TPP links the U.S., Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. Taken together, those countries already account for 40 percent of world trade. Had the deal been ratified, that proportion might even have increased, not least because it envisioned cutting tariffs on some 18,000 industrial and agricultural items and ushering in a new era of cooperation in the fields of workers’ rights, intellectual property rights and policies.

Analyses of its impact on individual countries’ growth prospects varied, but some estimates said it could have added as much as one percent annually to the GDP of the countries involved. Critics contended it could also undermine employment prospects in the U.S., but that contention has yet to be proven.

It is in the field of geopolitics that TPP could well have had its greatest impact. Though countries like the United States and Japan have never admitted as much publicly, they clearly saw it as the critical piece in a broader effort to push back against expanding Chinese influence in East and Southeast Asia. That effort was first unveiled in 2011 when then-Secretary of State Hillary Clinton told an ASEAN security summit in Singapore that after years of sustained neglect, Washington was once again interested in raising its Asian profile, largely because it believed that its post-World War II role as the dominant power in the region had to be maintained.

At least at first. This so-called “Pacific pivot” — which former president Barack Obama enthusiastically embraced — focused on a heightened American military profile, including the deployment of 2,500 U.S. Marines to the northern Australian city of Darwin, the dispatch of new American naval assets to strategically important Singapore, and the expansion of already substantial security cooperation between the United States on the one hand, and Japan, South Korea, and a handful of Southeast Asian nations on the other. Over time however, it eventually became clear that its main emphasis was to be on trade, and that the vehicle for this was to be a new commercial pact to rival the European Union in importance. This pact was the TPP, which had started out as a relatively modest agreement between Brunei, Chile, New Zealand and Singapore in 2006 and taken off from there.

It is important to note that Chinese participation in the TPP was never explicitly ruled out, neither by the U.S., Japan, nor any of the other prospective TPP nations. But it was clearly understood by all the countries in the region that such participation was very much a long shot, not least because the liberalizing spirit of TPP regulations would badly undermine the heavily subsidized state-owned enterprises that have long formed the core of the Chinese economy.

In the event, the TPP was signed by its 12 member states in February of 2016, pending ratification by national legislatures or other appropriate bodies. Which is precisely where it began running onto problems, particularly in the U.S., without whose participation the pact was not possible, on both legal and practical grounds. Very early on in his presidential campaign, Republican Party aspirant Trump announced that he was firmly opposed to it, largely because he saw it as just another in a long line of international trade deals that hurt American workers and weakened the American economy. Indeed, along with tightening U.S. borders to stem the flow of illegal immigrants, opposition to free trade became the major focus of the Trump presidential campaign. In the end it was this opposition that helped propel him to victory, largely because it resonated favorably with formerly Democratic Party voters in a number of key states — Wisconsin, Michigan, Ohio and Pennsylvania among them — which had been particularly hard hit by the departure of their manufacturing bases to lower wage countries beginning in the 1970s.

Trump’s Abiding Skepticism

In the wake of electoral victory, Trump gave little or no indication that he intended to walk back his original TPP skepticism, and on his fourth day in office, his formal announcement that the U.S. would not be joining it neatly reflected the nationalist trade policies that will almost certainly form the basis of his international economic approach. While it is true that his prospective cabinet contains a number of free traders, the center of gravity among his closest economic advisers is firmly tethered to protectionist thinking. One key figure here is Peter Navarro, named by Trump to head a newly established White House office on trade and industry. Navarro is a long-time critic of China’s discriminatory tariffs and has taken the Chinese leadership to task for what he charges is its consistent pattern of artificially depressing the value of the renminbi.

Another protectionist figure is Washington lawyer Robert Lighthizer, the U.S. Trade Representative-designate, who over the past 20 years has won a fearsome reputation for litigating disputes on behalf of American steel makers, many of whom feel their businesses are being threatened by cheap foreign imports. Between the two of them, there is more than enough skill and determination to keep the protectionist banner flying high — high enough at any rate so that at least in its present form, the Trans-Pacific Partnership could never see the light of day.

Which for anyone holding out hope that the U.S. is serious about confronting Chinese power in East and Southeast Asia is quite disturbing news. This is because the Obama administration long made it clear that TPP participation was the anchor of the entire American strategy in Asia, even allowing for America’s longstanding defense arrangements with Japan and South Korea, and its tightening bilateral ties with countries like Vietnam and Singapore. Japanese Prime Minister Shinzo Abe has been especially outspoken in criticizing Trump’s anti-TPP stance, seeing it as a dangerous abrogation of America’s political and economic responsibilities to the region. Abe and other Asian leaders know full well that in the absence of the TPP, China’s sway will increase dramatically at their own expense, if only because China is so militarily powerful, and has made pushing the envelope on key Asian security issues like open access to the South China Sea a central part of its emerging security doctrine. The United States may say it is hewing to its traditional role as these countries’ self-proclaimed security guarantor, but as time goes on they will become increasingly skeptical about Washington’s willingness to come to their aid when the chips are really down. Indeed, Philippines leader Rodrigo Duterte has already turned his back on the United States, putting the kibosh on an alliance that had once seemed unbreakable, precisely because he doubts America’s long term ability to stand up to Chinese threats.

the Obama administration long made it clear that TPP participation was the anchor of the entire American strategy in Asia

Next in line may well be South Korea, which is now coming under immense Chinese pressure to renege on its commitment to install a cutting edge U.S. anti-missile system (the THAAD) that is strongly opposed by Beijing. The Chinese foreign ministry has recently begun threatening large South Korean conglomerates with dire commercial consequences if THAAD is installed on South Korean territory, telling them in no uncertain terms that their China business futures will be fatally compromised if they fail to convince the South Korean government to change its mind on THAAD. At least for the time being the South Korean government is holding firm, but with Trump having so forcefully turned his back on the signature symbol of America’s once proudly proclaimed Pacific Pivot, it could have second thoughts, and move in Beijing’s direction.

Implications for Taiwan

All of this of course has huge implications for Taiwan, which has pinned such great hopes on Trump’s apparent willingness to take on Chinese power and recognize Taiwan’s usefulness. It was clearly a step forward that the American president-elect chose to speak to President directly on the telephone, and even more a step forward that he subsequently raised the possibility of ditching the U.S.’s adherence to the decades-old “one China” policy — even if he did appear to be treating Taiwan like a mere bargaining chip in the process.

But at the end of the day it is American participation in the TPP that would have been the truest indication of Trump’s future China policy. Without that participation, none of his other moves matter very much. Standing up to China requires a carefully thought-out strategy, and that has yet to be seen, at least on the basis of Trump’s pronouncements to date. Until he states his willingness to re-consider TPP membership, he should not be taken seriously as a harbinger of change for Taiwan and other Asian countries. On the contrary, it is better to treat him with caution.

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