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Economy

America's 'East of Guam' moment?

TPP pullout signals possible return to spheres of influence

It marked the end of an era when British Prime Minister Harold Wilson announced in 1968 that British forces east of Suez would be withdrawn in 1971. The U.K. was no longer willing and able to sustain its overseas role. It is still too early to draw such a conclusion, but U.S. President Donald Trump's rejection of the Trans-Pacific Partnership on Jan. 23, his first full day in office, seemed to have a whiff of that to it. Not by design, as in Britain's case, but by default.

Defense Secretary James Mattis's reassurances about U.S. security commitments to South Korea and Japan were an important step toward assuaging alarm and skepticism about the trajectory of U.S. Asia policy in his initial meetings last week in Seoul and Tokyo. TPP had been portrayed by the administration of former President Barack Obama as a foundation of its "rebalance" to Asia. It was to be the underpinning of a deepened U.S. economic role in the Asia-Pacific region and a renewed U.S. commitment to it. Complemented by an enhanced U.S. military presence and more active partnerships and alliances, it sent a strong message that the U.S. role was durable. Obama's Defense Secretary Ash Carter called TPP "as important to me as another aircraft carrier."

Yet Trump's scrapping of TPP (with no hint of a comparable alternative) raised anew Asian doubts about U.S. credibility in one sweep of a signature. Australia's ambassador to the U.S., Joe Hockey, observed that "By ratifying the TPP, the United States will ensure it will continue to have a major leadership role in the Asia-Pacific region. ... The cost of failure may well be too great to imagine."

He is not alone in his disillusionment. Last August, Singapore's Prime Minister Lee Hsien Loong said, "For America's friends and partners, ratifying TPP is a litmus test of your credibility and seriousness of purpose." In an October interview with Time magazine, he went on to say, "the one big thing which you have done is to settle the TPP. ... Now you say, 'I will walk away,' that 'I do not believe in this deal.' How can anyone believe in you anymore?"

We have heard similar views from across the region, from ASEAN to Japan. President Trump is committed to a 355-ship navy and boosting the U.S. military presence in Asia, a part of the "rebalance" that many felt was not adequately resourced. That will be widely appreciated in the region. But given that the business of Asia is business, how can the U.S. sustain its leading role?

The logic of "America First" is that no longer will the U.S. fight others' wars: Every foreign policy action must bring demonstrable benefits to the U.S. Will a security guarantor role be sustainable, when we are getting less economic benefits as Asia increasingly trades and invests within itself while the U.S. looks inward? The fear is that for many in Asia, "America First" sounds a lot like, "You're on your own." If Trump wants to sustain a leading U.S. role in the Asia-Pacific region, he has a steep hill to climb to undo the blow to American credibility.

Asia-Pacific 'rebalance'

Negotiations for an Asia-Pacific free trade area began under President George W. Bush and were expanded into TPP by the Obama administration. TPP represented the critical economic element in the Obama administration's "rebalance" to the Asia-Pacific region, a recognition of its strategic importance to American prosperity and security in the 21st century.

The region's economy remains one of the fastest-growing in the world, with an annual growth rate of 6.8% in 2014, accounting for about 40% of global economic expansion. In 2015, U.S. trade with Asia totaled over $1.5 trillion. In 2014, U.S. exports to the Asia-Pacific region represented 27.8% of total exports. In 2012, 32% of U.S. export-related jobs, or 1.2 million American workers, were employed in trade with the region, an increase of 52% over 2002. In 2011, 68% of all congressional districts exported more than $500 million to the region, with 39 states sending approximately 25% of their exports to the region. Moreover, the U.S. has some $778 billion of direct investment in Asia; Asians have $513 billion in the U.S.

While TPP had its flaws and room for improvement, its logic was that of expanding U.S. access to these booming economies in sectors like digital commerce and services, where the U.S. is most competitive, while advancing a rules-based trading order and enhancing legal protection for intellectual property and investment. Since 1945, U.S. diplomacy has sought to build international acceptance of a rules-based order with great success. TPP represented an Asia-oriented extension of that historic U.S. interest, one that has underpinned prosperity for seven decades.

Ambassador Michael Froman, the lead U.S. official for TPP negotiations, defined the pact as "a critical part of our overall Asian architecture. It reflects the fact that we are a Pacific power and that our economic well-being is inextricably linked with the economic well-being of this region." TPP's significance is not just economic; it is strategic -- as a means of embedding the U.S. in the region. Across the region, political as well as military leadership shared this strategic understanding -- as did Beijing, which initially characterized TPP as a central element in a containment strategy directed at China, but more recently, showed an interest in joining it.

Rejecting TPP outright, rather than seeking to revamp it, the Trump administration is facing a serious credibility crisis of its own making with respect to U.S. engagement with the world and Asia over the next four years.

If TPP reflects a retreat from U.S. economic leadership, will the withdrawal presage a similar strategic retreat from Asia -- our "East of Guam" moment? Is Trump's TPP rejection the first step away from a U.S. leading role in stewarding the global order? If the logic of "America First" is that the current global order has not been, or is not now, in the U.S.'s best interests, we may be headed toward a sphere-of-influence world resembling the 19th century.

Rise of China

Proponents of off-shore balancing have long advocated withdrawing to Guam, Hawaii or even the West Coast. Yes, our allies and the region survived the Nixon shock (suddenly going off the gold standard) and the Guam Doctrine, but it was a much different world then.

In the 1970s, China was still in the throes of the Cultural Revolution, irrelevant to the world economy. Today, China stands as the world's second-largest economic power. It is challenging the postwar, rules-based, open international order and U.S. leadership in the Asia-Pacific region. China is the largest trading partner of every U.S. ally and partner in East Asia.

President Xi Jinping has broken the code of the U.S. secret of success in Asia and is now offering to provide "public goods" to advance China's interests. This gets at the flaw of the current "America First" approach. The U.S. did not fashion the Bretton Woods institutions and an economically open rules-based system out of altruism. It was based on the calculation that after the economic disaster of the 1930s and World War II, such a system was in the best interest of the United States. Leading that system was not putting U.S. interests second, but the best way to advance U.S. interests.

And make no mistake, that liberal, rules-based order is now under challenge by Moscow in Europe and by Beijing in Asia -- see Crimea, Ukraine, and China's trashing rejection of the Permanent Court of Arbitration's ruling on the South China Sea.

Over the past decade, Beijing has advanced a series of institutions that for the most part were aimed at excluding the U.S. and challenging U.S. economic and security leadership -- The Shanghai Cooperation Organization; the initial proposal for the East Asian Summit; the Asian Infrastructure Investment Bank; the "Asia for Asians" security concept laid out by Xi; the One Belt One Road Initiative and the Regional Comprehensive Economic Partnership; the last a counterpoint to the TPP.

The demise of TPP has opened the door to Beijing's assuming a leadership role in advancing regional economic integration more on its own terms.

The challenge for the U.S. and the Trump administration will be as demanding over the next four years as it was when defined by Secretary of State Hillary Clinton in 2011, when she wrote in Foreign Policy:

"Beyond our border, people are wondering about America's intentions -- our willingness to remain engaged to lead ... whether we can make -- and keep -- credible economic and strategic commitments, and whether we can back those commitments with action." Asia and the world are looking for a vision of international leadership beyond "America First," one that updates and modernizes the post-WWII system.

The alternative is something more like the pre-WWII world of sphere-of-interest geopolitics and protectionist trade policies. We know how that turned out.

Robert A. Manning is a senior fellow at the Brent Scowcroft Center on International Security at the Atlantic Council. James Przystup is a senior fellow at the National Defense University, Institute for National Security Studies; his views are his own.

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