America First = Giving Up, China First = Assuming World LeadershipPosted: January 25, 2017
Is that a joke that the US abandons TPP on its own and willingly cedes leadership of TPP to China instead of containing China by excluding it from TPP?
Reuters says in its report “After U.S. exit, Asian nations try to save TPP trade deal” today, “Japanese Prime Minister Shinzo Abe has touted it (TPP) as an engine of economic reform, as well as a counter-weight to a rising China, which is not a TPP member.”
Now, according to Reuters, “Australia and New Zealand said on Tuesday they hope to salvage the Trans-Pacific Partnership (TPP) by encouraging China and other Asian countries to join the trade pact after U.S. President Donald Trump kept a promise to abandon the accord.” No wonder, without Chinese leadership, there are no hopes for such salvage.
Abe is shrewder than leaders of other TPP potential members. As soon as he learnt personally from Trump that Trump would withdraw from TPP, he began to curry favor with Chinese President Xi Jinping and asked him to send Premier Li Keqiang to attend the trilateral talks in Japan to facilitate the establishment of ASEAN plus 3 (Japan, China and South Korea) free trade area.
By scrapping TTP, Trump has given up US economic leadership in Asia Pacific. China, though does not pursue such leadership, willingly accept the gift Trump gives China free of charge.
Trump believes that world economic leadership, especially in Asia through TPP, does not benefit the US as the US has lost lots of jobs to Asian countries. He regards China as the top culprit, but China does not steal jobs from the US. Most goods China exports to the US are made by cheap labor, whose jobs cannot be taken back to the US as no American people are willing to take such low-wage jobs.
Taking jobs from Japan and South Korea is much more practical as wages in Japan and South Korea are comparable to Americans’ and American managers and workers are well capable of doing such jobs.
Japan and South Korea are now major exporters of goods that need the technology China lacks to produce. The US is in good position to take those jobs from Japan and South Korea for export to China as the US has even better technology.
Moreover, Trump will encourage US enterprises to create jobs in the US with tax incentives and simplification of regulations. Japanese, South Korean and other Asian-Pacific countries will have great difficulties to compete with US enterprises in US market. Their exports to the US will suffer greatly.
The US will become increasingly unpopular in those countries. As a result, the US will lose not only its economic leadership but also its military and cultural leadership.
South Korea has already had free trade area with China and is not much interested in TPP while Japan has placed great hope on TPP for revival of its economy.
With the developments described above, Japan has to place great hope on Chinese market. With Japan taking the lead, all other potential TPP members will regard China as their economic leader and China may even become their military and cultural leader when the US has lost its leadership while China has grown even stronger and richer.
Chinese leadership is especially welcome in poor Asian countries as the transfer of Chinese labor-intensive industries will create lots of jobs there; therefore, both the leader China and those Asian countries lead by China will be benefited by China’s leadership.
Interesting, the US wants to take away while China wants to give jobs. Who will be more popular? The answer is obvious.
Trump’s America first means for Asian-Pacific countries that the US gives up its leadership there and in addition takes away jobs and market share from them, a zero-sum consequence.
China’s China first, however, means China assuming leadership there that benefits both China and those countries, a win-win consequence.
Comment by Chan Kai Yee on Reuters’ report, full text of which is reblogged below:
After U.S. exit, Asian nations try to save TPP trade deal
By Charlotte Greenfield and Stanley White | WELLINGTON/TOKYO Tue Jan 24, 2017 | 6:36am EST
Australia and New Zealand said on Tuesday they hope to salvage the Trans-Pacific Partnership (TPP) by encouraging China and other Asian countries to join the trade pact after U.S. President Donald Trump kept a promise to abandon the accord.
The TPP, which the United States had signed but not ratified, was a pillar of former U.S. President Barack Obama’s policy to pivot to Asia.
Japanese Prime Minister Shinzo Abe has touted it as an engine of economic reform, as well as a counter-weight to a rising China, which is not a TPP member.
Fulfilling a campaign pledge, Trump signed an executive order in the Oval Office on Monday pulling the United States out of the 2015 TPP agreement and distancing the United States from its Asian allies.
Australian Prime Minister Malcolm Turnbull said he had held discussions with Abe, New Zealand Prime Minister Bill English and Singapore Prime Minister Lee Hsien Loong overnight about the possibility of proceeding without the United States.
“Losing the United States from the TPP is a big loss, there is no question about that,” Turnbull told reporters in Canberra on Tuesday. “But we are not about to walk away … certainly there is potential for China to join the TPP.”
In Beijing, Foreign Ministry spokeswoman Hua Chunying did not say directly whether China would be interested in joining the TPP but that at a time of economic uncertainly the Asia-Pacific should make its own contributions to growth with openness.
“We think that in the present situation, no matter what happens, all should keep going down the path of open, inclusive, continuous development, seeking cooperation and win-win,” Hua told a daily news briefing.
Obama had framed the TPP without China in an effort to write Asia’s trade rules before Beijing could, establishing U.S. economic leadership in the region as part of his “pivot to Asia”.
China has proposed a counter pact, the Free Trade Area of the Asia Pacific (FTAAP) and has championed the Southeast Asian-backed Regional Comprehensive Economic Partnership (RCEP).
Hua said efforts on FTAAP should be stepped up, adding China hoped talks on RCEP could be concluded at an early date.
New Zealand’s English said the United States was ceding influence to China and the region’s focus could switch to alternative trade deals.
“We’ve got this RCEP agreement with Southeast Asia, which up until now has been on a bit of a slow burn, but we might find the political will for that to pick up if TPP isn’t going to proceed,” English said.
Malaysia’s trade minister said negotiators from the remaining TPP countries would be in “constant communication” to decide the best way forward.
“Notwithstanding the current position of the new U.S. administration on (TPP), we will continue to engage with our American colleagues to strengthen our bilateral trade and economic relations, given the U.S.’s importance as our third-largest trading partner and a major source of investment,” Mustapa Mohamed said in a statement.
The TTP, which has been five years in the making, requires ratification by at least six countries accounting for 85 percent of the combined gross domestic product of the member nations.
Australia held open the possibility of China, the world’s top exporter, joining a revised deal.
“The original architecture was to enable other countries to join,” Australian Trade Minister Steven Ciobo told the Australian Broadcasting Corporation on Tuesday.
“Certainly I know that Indonesia has expressed interest and there would be scope for China if we are able to reformulate it.”
Japan has led the push for the partnership, which includes Brunei, Canada, Chile, Malaysia, Mexico, Peru and Vietnam.
“There is no change to our view that free trade is the source of economic growth,” Japanese Economy Minister Nobuteru Ishihara told reporters.
When asked whether Japan would be open to negotiating a bilateral trade pact with the United States, Ishihara said it was uncertain whether U.S. trade officials would start such negotiations.
Japanese Deputy Chief Cabinet Secretary Koichi Hagiuda said separately that Japan was not considering moves with other TPP members based on a lack of U.S. involvement.
“As Prime Minister Abe has made clear, TPP without the United States is meaningless and the balance of interests would crumble,” he told a news conference, adding Japan would keep explaining the benefits of the pact for America.
Abe had made TPP a core of his economic growth policies and along with the Obama administration, viewed it as strategically vital in the face of a rising China
Trump took office on Friday and pledged to end what he called an “American carnage” of rusted factories and crime. He vowed to bring jobs back by renegotiating what he called bad multilateral trade deals in favor of bilateral ones.
New Zealand Trade Minister Todd McClay said he had talked with a number of TPP-member ministers at the World Economic Forum in Davos last week and he expected they would meet in coming months.
“The agreement still has value as a FTA (Free Trade Agreement) with the other countries involved,” McClay said in an emailed statement to Reuters.
(Additional reporting by Swati Pandey in SYDNEY, Ami Miyazaki and Linda Sieg in TOKYO, Liz Lee in KUALA LUMPUR and Ben Blanchard in BEIJING; Editing by Lincoln Feast, Robert Birsel)