America lays gauntlet for ASEAN, APEC summits

By Andrew Hammond

The global spotlight turns to Asia Pacific this week with world leaders, from Russia to Australia, and India to Canada, attending the ASEAN and APEC summits.

With states in attendance accounting for more than 50 percent of global GDP and nearly half of world trade, U.S.-Chinese rivalry will be center-stage in their respective attempts to shape the regional order.

With Donald Trump, surprisingly, skipping the events, his deputy Mike Pence will be pitching the U.S. case.

On Monday, before starting a trip taking in Japan, Singapore, Australia and Papua New Guinea, the U.S. vice president asserted that Washington seeks a region “where sovereignty is respected, where commerce flows unhindered and where independent nations are masters of their own destinies ... while some nations now seek to undermine this foundation, the U.S. is taking decisive action to protect our interests and promote shared success.”

While not acknowledging China explicitly here, Pence is primarily referring to Beijing which has its own ambitions to shape the regional order. To that end, President Xi Jinping and Prime Minister Li Keqiang this week will be promoting at ASEAN and APEC not just their Belt and Road plan, one of the biggest initiatives of its kind in history with a trillion-dollar price tag.

In addition, they will be doubling down on their visions for a Free Trade Area of Asia Pacific (FTAAP) and a pact known as the Regional Comprehensive Economic Partnership (RCEP).

FTAAP has assumed new importance for Beijing since the inception of the Trans-Pacific Partnership (TPP) which was originally promoted by the Obama administration.

According to Xi, the FTAAP would provide a significantly greater economic boost than TPP (which comprises Singapore, Australia, New Zealand, Japan, Canada, Brunei, Chile, Peru, Vietnam, Malaysia, and Mexico, but not the United States as was originally intended because of Trump's rejection of it).

And Beijing's push for FTAAP and RCEP (which comprises the 10 ASEAN members plus India, Australia, Japan, South Korea, and New Zealand, but not the United States) thus provides an alternative model for regional economic integration much more conducive to its national interests. This is not least because China will be explicitly part of the new economic agreements and shape their design by creating free trade areas with it potentially at the center.

And it is in this context that the United States will this week set out its own stall for the shaping regional order under three pillars. Promoting prosperity; enhancing security; and supporting transparent and responsive government, rule of law, and protection of individual rights.

Yet, despite the ambitions set out here, there are concerns among allies in Asia-Pacific that this is too little, too late by the Trump team, especially following its pulling out from TPP.

A key remaining question now, for U.S. allies, therefore is whether Washington will step up to the plate and develop a comprehensive and well-funded grand strategy to embed U.S. influence, as Obama had intended with TPP.

There have been some signs in the last few months that Trump is starting to wake up and smell the coffee. Last month, for instance, he signed a bill into law which will create a $60-billion new International Development Finance Corporation aimed at strategic investment in developing countries.

The new IDFC will move forward U.S. interests, in Asia-Pacific and beyond, including supporting U.S. firms in key developing markets to enhance U.S. geopolitical influence vis-a-vis China.

This latest step in Washington's response to China's growing influence builds on other recent announcements by U.S. Secretary of State Mike Pompeo.

In July, for instance, he committed some $113 million in regional investments focused on technology, energy and infrastructure as a “down payment” on future U.S. commitments to Asia-Pacific.

Extensive as these pledges are, however, there appears no overarching plan to bring them all together in a powerful, strategic way. And this perceived under-ambition has left allies anxious, especially given Trump's uncertain personal commitment to the region as underlined by his non-attendance this week.

History points to what may now be needed to fill this vacuum. In the postwar period, the United States has undertaken a global institutional-building project on a largely bipartisan basis, at least until the election of Trump, to encourage growth of democracy and open markets across the world.

From 1945, U.S. administrations helped create and nurture key bodies that exist to this day from the U.N., to the IMF and World Bank.

Inspired by this success, both the administrations of George H.W. Bush and especially Bill Clinton sought to respond to the collapse of Soviet communism by encouraging creation of a range of economic institutions including not just APEC, but also the WTO, and NAFTA too.

Yet, with Trump pulling the plug on U.S. participation in TPP, and possibly in other institutions such as the WTO, a vacuum exists that someone will fill.

And the danger for Washington is that, unless it now acts decisively, irresistible momentum could build for a regional architecture, including RCEP and FTAAP, which would allow Beijing to assume the upper hand, damaging U.S. influence not just with local allies, but potentially well beyond too.

Andrew Hammond (andrewkorea@outlook.com) is an associate at LSE IDEAS at the London School of Economics.