Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Trump’s Asia Strategy, Goals and Realities

Politics / GeoPolitics Nov 20, 2017 - 02:01 PM GMT

By: Dan_Steinbock

Politics

Trump’s critics claim he lacks a comprehensive approach to Asia. In reality, his current approach is aligned with moderate “America First” goals. But what did Trump really achieve in Asia?

If President Obama’s pivot was based on multilateral trade agreements, which were mainly geopolitical and predicated on exclusionary politics against China, Trump’s interest is in bilateral trade deals, which are fueled by US exports, foreign investments in US jobs and foreign purchases of American military weaponry.


That’s what Trump was after in the grueling 12-day Asia tour.

Deals with Japan

Outside of North America, Japan is America’s third-largest export market and second-largest source of imports. Japanese firms are the second-largest source of foreign direct investment (FDI) in the US, and Japanese investors are the largest foreign holders of US treasuries. After Trump withdrew from the Trans-Pacific Partnership (TPP), the White House’s focus has been on a redefined bilateral trade deal with Japan that would also include significant arms deals.

Abe pursues controversial strategic initiatives, including re-militarization, the US-style security legislation, and re-nuclearization. However, the share of Japanese trade covered by free trade deals or economic partnership agreements remains less than a third now (and would only rise to 34% even with the EU deal), which is half of that of South Korea (68%). Also, Japan lacks deals with its largest trade partners, China and the US, as well as India.

With his quest for a bilateral trade deal with Japan, Trump wants more US exports and arms sales to Tokyo, and Japan’s military buys from Pentagon. Abe seeks a trade deal to assist support structural reforms at home and US security assurances against China.

Tensions with South Korea

Since the 1950s, the Mutual Defense Treaty has allowed the US to dominate South Korea’s defense. However, after the Park impeachment, South Korea opted for a strategic U-turn in economy and strategic relations. Elected in May 2017, President Moon Jae-in supports the US anti-missile system (THAAD) and sanctions against North Korea, but only as long as it may bring Pyongyang to the negotiating table.

South Korea is the US’s seventh-largest trading partner and the US is South Korea’s second-largest trading partner. The two economies are joined by the Korea-US Free Trade Agreement (KORUS FTA). While Trump has stated its intent to review and renegotiate the deal, it has not specified what it would like to amend.

During his visit, Trump offered strategic security assurances in return for deals that would generate more jobs in the US and reduce the bilateral trade deficit. South Korea is likely to purchase advanced strategic assets, including nuclear-powered submarines and reconnaissance assets.

Strategic patience with China

In East Asia, Trump's priorities are secondary to his China agenda. In 2016, US-China trade amounted to $579 billion, while Trump’s focus is on the $368 billion trade deficit. Yet, merchandise trade is only one aspect of the bilateral economic relationship. China is America’s fourth largest services trading partner, third-largest services export market, and US has a major services trade surplus with China.

The combined annual US-China investment passed $60 billion in 2016, and China remains the second-largest foreign holder of US Treasury securities ($1.2 billion as of August 2017), which help keep US interest rates low.

In Beijing, Trump’s more moderate approach toward China paid off, as evidenced by the historic $254 billion deals. Some of these buys, including Boeing’s $37 billion aircraft order, were negotiated previously, while other pacts extend over long periods, including a 20-year shale gas and chemical project in West Virginia. Nevertheless, the volume of bilateral deals will ease tension between Washington and Beijing for some time to come.

Tributary deals with the ASEAN

Trump seeks to renegotiate many of the existing trade deals. So several Association of Southeast Asian Nations (ASEAN) countries that were not included in the current tour sought to preempt pressures.

During a recent visit, Premier Najib Raza announced that Malaysia’s national pension and provident funds would invest several billion dollars in equity and infrastructure projects in the US. Prime Minister Prayut Chanocha promised Thailand would buy Blackhawk and Lakota helicopters, a Cobra gunship, Harpoon missiles and F-16 fighter jet upgrades, plus 20 new Boeing jetliners for Thai Airways.

Singapore's Prime Minister Lee Hsien Loong showcased Singapore Airlines’ deal with Boeing for buying 39 B787 and B777-9 aircraft.

That is the regional way to offer dollar-tribute to the US hegemon.

“Strategic partnership” with Vietnam

While Obama’s goal was to push a “strategic partnership” with Vietnam, Trump’s objectives are more economic. Following the post-1986 Vietnamese economic reforms and US extension of normal trade relations (NTR) status in 2001, bilateral trade soared from $220 million in 1994 to $45 billion in 2015, which has turned Vietnam into the 13th-largest source for US imports (but only 37th-largest destination for US exports).

According to Trump, the US got a $12 billion order from Boeing, but critics claim that the deal with Vietnam’s VietJet airline was a result of Obama visit in 2016.  Nevertheless, Trump sees Vietnam as a deficit risk and the latter sees the US as captive of agricultural interests. 

Obama and his Pentagon dreamed of permanent US military installations in Vietnam. Trump might concede –if the price is right.

Strategic continuity with the Philippines

During the Aquino III years (2010-16), increasing cooperation with the US resulted in the Enhanced Defense Cooperation Agreement (EDCA), the return of US forces, rearmament supported by the Pentagon and the escalation of maritime conflicts with China. However, close US ties also coincided with deep strategic dependency on US, economic polarization within the country and the spread of drugs, corruption and alleged “narco ties” with the pre-2016 regime.

With Duterte, the US-Philippines relationship has been subject to a recalibration and, in the end of the Obama era, alleged US efforts at destabilization. Duterte’s sovereign foreign policy maintains US security guarantees but benefits from economic ties with China. Now the Philippines is linked to China’s One Road One Belt (OBOR) initiative, which supports the government’s infrastructure program to triple the Philippine per capita incomes in the next 25 years.

Concurrently, US-Philippines tensions have been eased as Duterte has developed more constructive personal ties with the Trump White House.

Free trade prospects

Trump also attended the Asia Pacific Economic Cooperation (APEC) Summit in Danang, Vietnam, followed by the 50th Anniversary of ASEAN. While trade ministers from 11 countries announced they would push ahead with a TPP without the US, the latter is a shaky TPP lite that will serve as a face-saving measure to Japan and as a hedge option to other nations.

The best APEC may hope for is long-term US-Chinese cooperation for the Free Trade Area of Asia-Pacific (FTAAP), which focuses on trade and investment and has room for both the US and China.

In effect, the ASEAN nations’ integration plan AEC 2025, which would be undermined by a "America First" policies, stands to benefit from China’s OBOR plans, and the Asian Infrastructure Investment initiative (AIIP).

New risks, new opportunities             

Except for China, Trump’s Asian tour was largely a hard sell of military assets across the region. While the conventional wisdom is that Obama achieved America’s pivot to Asia, the reality is that the pivot was mainly military and sought strategic gains.

This is why: During the Obama military pivot to Asia, Asia/Oceania received most of global imports (43%), according to SIPRI. US continues to dominate imports to its key security allies in Australia, Japan, and South Korea. But while the Obama pivot contributed to maritime conflicts in the region thus fueling demand for weapons, Pentagon did not cash the profits. Instead, today Russia accounts for most arms deliveries to Asia and Oceania (37%), followed by the US (27%) and China (10%).

What about the economic realities? Trump said that the Asian tour generated “at least $300 billion worth of deals,” which will more than “triple in a fairly short period of time.” Yet, the bottom line is $253 billion from deals with China and perhaps a total of $300 billion – if ASEAN deals that were negotiated prior to the tour are included. That may be far more than any post-Cold War US administration – including Clinton, Bush and Obama – ever achieved in Asia.

If US-Chinese economic ties prevail, China’s rebalancing and the rise of emerging Asia could contribute to far greater economic gains with the US and in the region.

Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/

© 2017 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules