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ASEAN adapts to a less-engaged US

Nikkei forum highlights shift in focus from TPP to China's Belt and Road

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China's Belt and Road Initiative was the talk of the conference.   © Reuters

TOKYO The 23rd International Conference on The Future of Asia focused on the region's new landscape, one in which U.S. influence is on the wane. The anxiety was palpable, as political leaders and economic experts discussed the struggle to adapt.

Some touched on the future of the Trans-Pacific Partnership, now that the U.S. has pulled out. Southeast Asian countries remain noncommittal over the so-called TPP 11, which Japan has been pushing since Trump made the decision to withdraw in January.

Indonesian Vice President Jusuf Kalla maintained his characteristically composed manner but offered a blunt assessment of what's left of the trade pact. "Without the U.S., we feel the benefits on the trade front for Indonesia aren't that big, and we have lost interest," he said in an interview.

A pro forma agreement on another multilateral trade framework -- the 16-nation Regional Comprehensive Economic Partnership -- is expected to be reached at a summit in November, celebrating the Association of Southeast Asian Nations' 50th anniversary. Le Luong Minh, the bloc's secretary-general, said ASEAN is in the "driver's seat" on the proposed deal. Yet, the accord would offer only a loose structure for free trade, compared with the TPP.

In any case, China's Belt and Road Initiative turned out to be the real talk of the conference -- not the TPP, nor the U.S.

Almost all of the speakers referred to the massive Chinese infrastructure plan and spoke of its potential. Thai Deputy Prime Minister Somkid Jatusripitak called it something "that will eventually become a new platform supporting global free trade."

Thailand's military government, which is drawing closer to Beijing, is not wrong to take that view. If China uses its huge trade surplus and ample foreign exchange reserves to develop ports, roads, railways and electric power plants across Asia, all the way to Europe, ASEAN stands to benefit as goods and services travel through the bloc.

The initiative will also be a boon to a China that is grappling with excess industrial capacity. The country will be able to meet more of the world's demand with its steel, cement and other materials, as well as electrical equipment, machines and still more products.

Another benefit: The initiative will contribute to the internationalization of the yuan, making it more of a settlement currency.

Plus, if materials and people are transferred in connection with construction work under the initiative, China will be able to take the lead in setting rules for smooth trade and investment, such as the standardization of tariffs, customs clearance procedures, technological standards and legal systems.

As Somkid said, "No one can deny that this is a grand and innovative concept that encourages countries to collaborate."

Another way to look at it: The prime candidate to replace the U.S. in harmonizing trade and other international conventions is a country that does not necessarily respect freedom or democracy.

Future of Asia conference participants discuss regional challenges and opportunities. (Photo by Kosaku Mimura)

The two-day conference served as an opportunity for Japan to recognize this cold reality. At a banquet on June 5, Japanese Prime Minister Shinzo Abe did an about-face regarding the Belt and Road undertaking. He even paid it a huge compliment: "The 'One Belt, One Road' initiative," he said, "holds the potential to connect East and West as well as the diverse regions found in between."

Tokyo subsequently announced it is negotiating with Beijing for reciprocal visits by the two countries' leaders. Meanwhile, calls are increasing in Japan to participate in the Asian Infrastructure Investment Bank, the regional lender established by China.

Future historians may look at this year's Future of Asia conference as a milestone in relations between Japan and China.

Goh Chok Tong -- the former prime minister of Singapore, long a champion of free trade alongside Japan and the U.S. -- compared Trump's America to China and prodded slow-moving ASEAN leaders to get behind China. "Is the Belt and Road another hub-and-spokes strategy?" he asked. "Chinese leaders have made it clear that is not their intention."

Goh quoted Chinese President Xi Jinping in answering his own question and refrained from making his personal stance clear. His remarks suggest he has high hopes for China but still harbors concerns about it attempting to reign over Asia.

Leaders who took part in the conference seem to have sensed that ASEAN can prove its raison d'etre if it deals skillfully with China -- winning economic cooperation from Beijing but deterring its aggressive moves in the South China Sea.

Japan also has some delicate China diplomacy ahead of it. Instead of confronting it as a regional rival, Japan's task is to ensure that China goes about developing Asia in a fair manner.

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