US foreign policies – in a flux and risky

25 March 2017
As appeared in The Star Online

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Photo credit: AP

IN the course of a few days last week, United States Secretary of State Rex Tillerson varied American policy on North Korea and China three times.

First, during his debut visit to East Asia, he threatened in Seoul that all options, including military, were being considered by the US against North Korea for its belligerent nuclear weapons development programme, and intimated that China was not doing enough to warn Pyongyang.

Next, after a meeting with his counterpart Wang Yi in China, the emphasis was on combined diplomatic efforts by the two countries to get North Korea in line – with no reference at all to military action.

Finally, following a meeting with Chinese leader Xi Jinping, Tillerson seemed to have fallen into – for? – Beijing’s warm embrace, with references to a “win-win” and a relationship of “mutual respect” with China.

Immediate remarks on Twitter mostly took these turns as a kind of Chinese diplomatic victory, especially the reference to “mutual respect” which is Chinaspeak for recognition of its “core interests”, extending from Tibet to Taiwan to the South China Sea.

There were also knee jerk reactions from US Congressmen that this concession was appalling and could not be countenanced.

More considered subsequent commentaries, however, argued the Obama administration’s acceptance of a “new type of major power relationship” – another Chinese phraseology for parity – had already made the concession to China. So there’s not anything new.

This is a moot point as, at least on the South China Sea, there was never acceptance by America that it was a Chinese lake, evidenced by freedom of navigation (FON) activities by the US navy – which have continued under the Trump administration.

Therefore, despite Tillerson’s twists and turns in just over three days, there is really nothing to be excited about. His reference to a “historic moment” in relations with China and expectations of a grand deal are too much hype.

US policy on China has not formed since Trump’s outlandish assertions and threats during the presidential campaign. In the White House – it does not look like the State Department will have much say even if properly staffed – there are two diametrically opposing views for the President’s ear on how to treat with China.

When Trump meets Xi Jinping next month, there will emerge greater clarity in US-China relations, but do not expect any kind of finality.

It is unlikely Trump would accept China’s fait accompli in the South China Sea. How he would challenge it is less clear. His preference would be the East China Sea situation where Beijing cannot get its way because Japan is no pushover, certainly with clearly committed US support.

With the South China Sea, Asean certainly is a pushover. More so the four individual member states with territorial disputes with China. Trump might ask of Asean and its member states, as Stalin asked of the Pope: how many divisions does this regional organisation have?

By temperament, Trump is not a person who would stand for being taken for a ride, which has been China’s way of gaining domination of the South China Sea. But he might also have a sneaking admiration for how China has pulled it off.

Unless Asean can show some backbone, and only if Japan, India and Australia can effectively get in the mix, it is not unlikely that Trump might leave the South China Sea alone for the grand bargain with China that accords absolute freedom of navigation for America, and the guarantee of non-interference with the free flow of commercial shipping and overflight.

If this were to happen, it would only confirm Asean’s already defeated attitude on the South China Sea. Affirmation of China’s de facto control should make China happy as Beijing is not interested in any legal basis for its claims under international law – which had been blown apart by the United Nations Convention on the Law of the Sea arbitral tribunal ruling last July.

Such a grand bargain, however, is threatened by the animus that could be implanted by the issue of trade between the two countries.

Already, at the multilateral level, Trump’s treasury secretary Steven Mnuchin, on his maiden outing to the G20 finance ministers meeting in Hamburg last Saturday, insisted that there be no reference in the joint statement to “avoid all forms of protectionism”.

“America First” has been sounded. America against the rest – in this case the other 19 – is on. To quote Michel Sapin, the French finance minister: “I regret our discussions didn’t end in a satisfactory manner….there wasn’t a G20 disagreement. There was disagreement within the G20 between a country and all the others.”

G20 leaders meet, also in Hamburg, in July. With respect to China, Trump has already made known his views on its trade practices and what he would like to do about it.

His nominee as US Trade Representative (USTR), Robert Lighthizer, has said he would strongly enforce trade laws: domestic, World Trade Organisation and remedy laws, committing further to squeeze China from operating excess capacity, particularly in steel and aluminium.

Even before his confirmation the USTR office, which is part of the White House, had two weeks ago come out with its 2017 report to Congress which was clear on “America First” trade policy and on almost total emphasis on bilateral deals. It even went on to say WTO directives on enforcement against America had no validity in the US.

(With regard to Asean, it was mentioned withdrawal from TPP did not signal US retreat from the region. However, in trade, the US will only deal with Asean member states on a bilateral basis.)

On China, this report referred to the USTR 2016 report to Congress on the PRC’s WTO compliance, which was of course prepared under the Obama administration. Largely factual, the report records the phenomenal growth in US-China trade, but also looks to hold China to WTO commitments, including in key areas like intellectual property rights enforcement and protection of trade secrets; China’s industrial policies and support for state-owned enterprises; services market access; agricultural policies and transparency.

It does not only review commitments under the WTO, but also under the bilateral relationship, especially commitments made through the US-China strategic and economic dialogue.

The Trump administration’s China trade policy is evolving. There are any number of hawks in the White House. Congress is onside.

WTO figures showing China remains one of the least open major economies are being bandied about.

It maintains a most-favoured nation tariff of 9.6% on imports, compared with 5.3% in the European Union and 3.5% in the US, exceptionally low as Trump no doubt would point out.

China’s non-tariff barriers, subsidising local businesses and forcing foreign firms to turn over technology to Chinese partners, are being identified as common practice.

There are, further, limits on the number of branches financial companies can open and imposition of ownership restrictions.

It is being pointed out China not only is failing to disclose measures that may violate WTO rules, but it is refusing to even discuss them.

The scene is thus being set for a robust representation on trade with China when Trump meets Xi Jinping. While he cannot treat Xi Jinping as he treated Germany’s Angela Merkel in Washington last weekend, it is not likely Trump will come out a weed either.

The Chinese are being careful about the US-China summit next month, and have not confirmed it. They obviously want to get down to its detailed choreography.

The divergent interests – and Trump’s promises to the American people – however will not be able to obscure what is going to be a trying relationship.

Tensions and conflicts are most probable, if not quite trade war. On security issues in Asia-Pacific, there might be some surprises for Asean, and greater amiability on the South China Sea than generally expected.

Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.