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Mogherini visits China and India as Asia reacts to Trump

18 April 2017

Federica Mogherini visits China and India this week as Asian leaders still struggle to come to terms with the Trump phenomenon. The EU foreign policy chief will be concentrating on measures to improve EU-China and EU-India relations but her interlocutors, and others in the region, will be focused more on Trump’s tweets, especially as tension is mounting between the US and North Korea.

Based on her own good ties to senior officials in Washington, Mogherini should be able to reassure Asian leaders that Trump’s rhetoric is one thing – his actual policy another. In the past week Trump has flip-flopped on major foreign policy issues including the relevance of NATO and how to handle China. It is no longer a currency manipulator but a valued partner in helping to tackle the DPRK nuclear issue.

Before and after his inauguration, President Trump had numerous phone calls and meetings with leaders and business people from the Asia Pacific region. During the campaign he worried many Asian leaders with his threats to leave TPP, raise tariffs on Chinese exports and make Japan and South Korea be responsible for their own defence. He also called into question the long-standing ‘One China’ policy by making an early phone call to Taiwanese President Tsai Ing-wen. Business has also been rattled given the high uncertainty surrounding possible Trump policies in the trade and financial fields. More recently there are signs of a more moderate approach.

Japan

No country was more concerned about Trump than Japan. PM Abe was the first foreign leader to visit Trump even before his inauguration. His second visit on 10-11 February included some golf diplomacy in Florida at Mar-a-Lago, the Trump winter residence. This meeting coincided with new DPRK missile tests prompting Trump to state that ‘the US was 100% behind Japan.’ Abe seems to have formed a good working relationship with Trump helped by his offer of large-scale Japanese investment in US infrastructure such as high-speed trains and cyber security, joint development of robots and artificial intelligence, and cooperation in space exploration. According to some experts it could generate 700,000 US jobs. In a Kyodo News poll taken after the meeting, 70 percent of the Japanese public said they were satisfied with the talks between the two leaders.

South Korea

 

South Korea has been hit be the impeachment scandal surrounding President Park so there has been no high-level contact apart from a brief telephone call between Trump and the disgraced President Park. But VP Pence, Pentagon chief Mattis and Secretary of State Rex Tillerson visited Korea (and Japan) to provide security assurances; and discuss how to approach the DPRK’s nuclear threat.  South Korean Defense Minister Han Min-Koo welcomed the US statements and announced that Seoul was ready to deploy the THAAD missile defence system in response to the growing North Korean missile threat.

China

 

Trump lambasted China during the election campaign and then infuriated Beijing by questioning the US commitment to the “One China” policy. His team, which includes several notorious China policy hawks, had also threatened a much harder line against Beijing on issues such as trade and the South China Sea, where Trump accused China of building a ‘massive fortress.’ Trump argued that China was getting the better deal of trade arrangements, that it was not opening its markets to American products while manipulating its own currency to boost exports. China did not react to these provocations preferring to keep quiet and talk up the importance of US-China relations.

 

US-China bilateral trade is worth $659 billion and China is one of the US’ fastest growing export markets.  US investments in China are worth $75 billion and 328,000 Chinese students studied in US universities and vocational schools in 2015-16, bringing in $11 billion in revenue. Chinese tourists also spent $24 billion in the US in 2014. There are as a result ‘a growing number of stakeholders on both sides.’

 

The Trump-Xi meeting at Mar-a-Lago seems to have resulted in a much more positive tone on US-China relations. Both sides agreed to tackle trade irritants and the thorny question of DPRK nukes.

 

India and Pakistan

 

India is not economically dependent on the US, nor is it a military ally. However, the Modi government has prudently reached out to members of Trump’s team over recent weeks and the two leaders have had a fruitful telephone call. Modi was keen to remind Trump of India’s contributions to the high-tech sector and that Indian businesses actually create jobs in the US. But the Trump administration may be unwilling or unable to distinguish between low- and high-skilled immigration to the US, which may have important consequences for the Indian services sector.

 

Trump also spoke with Pakistan’s PM and said that he would maintain aid to Pakistan.

 

ASEAN

 

ASEAN leaders have been perplexed at events in Washington, especially his cancellation of US participation in TPP and his America First trade policy. The US-China relationship will also impact on ASEAN and many leaders in SE Asia are watching the great power contest and are hedging their bets. Thailand is among 16 countries that Trump singled out in an order calling for an investigation into the US trade imbalance. Thai Commerce Minister Apiradi Tantraporn rejected US allegations that the government was keeping the currency low for trade advantages. Other Thai leaders, however, have admitted weakness in IPR and standards in the fishing industry.

 

Philippine President Duterte had a friendly call with Trump and said he was far better than his predecessor. He said Trump was ‘a very frank person’ and someone with who he could do business.

 

ASEAN is the fourth largest trade of the US worth about US$226 billion in 2015. And the US companies are the biggest beneficiaries of the grouping ’s prosperity and modern lifestyle. Therefore ASEAN is good for Trump’s America, as it has created jobs both in blue and red states. The US trade with ASEAN has already created 500,000 jobs for American people.

A key question is whether Trump attends the annual East Asia Summit (EAS) due to be held in the Philippines in the autumn. Will he favour the multilateral approach via ASEAN or the bilateral?

DPRK

Arguably the DPRK is the biggest threat facing the Trump administration. Trump and his team have made clear that they are not prepared to allow North Korea to develop nuclear weapons that could target the US. Ideally they would wish China to do more to prevent Kim Jong-un acquiring this capability but if this does not succeed then Trump has said that the US would go it alone.

 

The DPRK has made few comments about Trump but a spokesman did reiterate the usual criticism of the US and ROK holding joint military exercises. This was justification alone for the DPRK to develop its own nuclear weapons.

 

Australia

Australia has suffered most from Trump’s blustering style. In a contentious phone call with Australian Prime Minister Malcolm Turnbull, Trump called an agreement negotiated with the Obama administration to resettle about 1,250 refugees held by Australia ‘the worst deal ever’ and accused Australia of seeking to export the ‘next Boston bombers.’ Foreign Minister Julie Bishop has called on Donald Trump to deepen rather than reduce US leadership in Asia stating that the US was "the indispensable power throughout the Indo-Pacific."

Economic Engagement 

Asians have been left angered and confused by Trump’s immediate withdrawal from the TPP. This agreement was sold as a major element of the US pivot to Asia including the security dimension. It marks a huge letdown for Abe, who invested a huge amount of political capital betting on the deal’s success. It is also a disappointment for America’s other partners such as Singapore, Malaysia, Brunei, and Vietnam, which view the US as a counterweight to China.

American credibility rests on its ability to follow through on economic and security commitments. As Singaporean Prime Minister Lee Hsien Loong said  “If at the end of it all you let [Abe] down, which next Japanese prime minister is going to count on you — not just on trade but on security?” Lee also noted the implicit connection between American trade and security commitments: “If you are not prepared to deal when it comes to cars and services and agriculture, can we depend on you when it comes to security and military arrangements?”

 

The eleven TPP signatories minus the US have already met to try and salvage something from the TPP negotiations. But they will have to await the outcome of the power struggle over US trade policy to see whether the US wants any revised multilateral deal or prefers to strike bilateral agreements. Without economic statecraft the US is a less attractive partner for Asian countries, which will join alternative trade deals like the Regional Comprehensive Economic Partnership (RCEP).  

 

Expert Views

 

Scholars have offered Trump a fair bit of advice on dealing with Asia. In December the Asia Society issued a ‘briefing book’ titled Advice for the 45th U.S. President: Opinions from Across the Pacific, which brings together the view of analysts and former practitioners. The common thread in the commentaries was the need for the US to reassure its allies and partners in Asia of its commitment to the security of the continent in the face of a rising China. On the trade side the report said that two-thirds of the world’s economic growth is coming out of Asia, so [the U.S.] has to engage…We’re going to see at least 500 million additional people emerge in the middle class in Asia over the next 10 years, so if you want American manufacturing to turn into American exports, and then turn into consumption in Asia, you need to engage with Asia and trade with Asia. If the US does not show up then the trend of some countries (Cambodia and Laos, and to some extent Thailand, Brunei, and Malaysia) will move closer to China.

 

Conclusion

 

Trump’s meetings with Abe and now Xi will mitigate some of the criticism that he was not paying attention to Asia. The US-China relationship will remain crucial for all Asian countries and there remains much uncertainty despite the pleasant noises after the Mar-a-Lago meeting. Most Asian countries are more assured since the Trump administration’s decision to withdraw the United States from TPP doesn’t spell the end of free trade in Asia, but it does pose a setback to US strategic leverage in the region. However, the commonly heard idea that what the US loses with TPP, China will gain is not entirely accurate. Neither agreement is finalized.

 

In the meantime Mogherini can promote the EU as a standard bearer for multilateralism and seek to narrow the gaps between the EU and China, and the EU and India, on major foreign policy issues. If she can also give a push for the investment agreement with China and the FTA with India so much the better.