Political analyst:

Under Trump, US-China trade may suffer

News ID: 3874077 -
TEHRAN, Jan. 12 (MNA) – An international relations analyst has said Donald Trump’s coming to the White House would create uncertainties in the currents of global trade, where trade with China may suffer significantly.

Vahid Pourtajrischi of Mehr News International Service asked Mr. Kedar Keskar, an international relations analyst and an expert of Asian affairs about the possible reverberations of Trumpian politics toward China and the whole global trade; Mr. Kaskar believes the US-China ties had been crucial to the interests of both superpowers and any degree of deviation from the norms of trade would adversely affect the global currents of trade; however, he holds that Trumpian business politics should not dare to the wilderness in seeking to isolate China, since such acts would also backlash for the US trade as well:

President Obama nominated 21st century as Asian century and that’s why he signed TPP treaty. But now, Trump has declared that he will decline the mentioned treaty. Why has Trump adopted such approach?

Foreign policy of any country is based on pursuing and preserving its own national interests. President Obama’s decision to join TPP (Trans Pacific Partnership) is also the product of preservation of national interests. President Obama prioritized the TPP as the economic tool of pivot to Asia. One of the reasons for Obama administration to join the TPP was to isolate China economically from its neighboring countries. New issues such as environment, e-commerce, competition, government procurement, etc. regarding which TPP has detailed obligations are not covered under WTO. These issues are not in China’s interest. Hence there was no possibility of China joining TPP under existing format.

As far as President-elect Donald Trump is concerned, he has made it clear that he will scrap the Obama’s TPP decision on his very first day in Oval Office. He will focus more on bilateral trade deals rather than multilateral initiatives. “On trade, I am going to issue a notification of intent to withdraw from TPP, a potential disaster for our country. Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back on to American shores”, Trump said in a short video message.

There is a fundamental difference between Obama and Trump viewpoints in case of TPP. For Obama, TPP is a geopolitical and geo-economic tool to counter China. For him the actual miniscule benefits are not at all important. Instead somehow making China accept the global rules of trade was his ambition. Using multilateral trade groupings as a ‘soft power’ projection is his penchant ‘democratic’ style. But for Trump, TPP is a non-productive and non-profitable activity. Numbers are on his side. TPP will not help US to substantially increase its GDP. If the TPP goes through it would add only 0.15% GDP growth to the US by 2032.

Trump has declared that he will also reject NAFTA treaty and TPP also needs to be changed. Could we assume such decisions as his aversion into globalization of economy which fulfilled the US interests before all over the world?

Donald Trump in his campaign has pledged to break up trade deals such as NAFTA (North American Free Trade Agreement). This has adversely affected US’s financial ties with Latin American nations. Trump’s victory has almost sank the 12-nation TPP, which includes Chile, Mexico and Peru.

On the other hand, over the past 10 years China overtook US as the main trading partner in Latin America. But as Chinese demand for raw materials slowed down Latin American economies got a setback. China has already offered to strengthen existing free trade agreements with Chile, Costa Rica and Peru. Also China is in talks with Uruguay and Colombia for similar agreements. Hence, diplomatically and financially speaking, US is clearly losing ground in Latin America. And with dashed hopes of TPP, it may lose its leverage in Far East Asia.

We must understand that whether globalization exists or not; countries will continue to safeguard their national interests. Countries which hitherto spoke of globalization were also pursuing their national interests primarily. Take for example Obama’s support to TPP. Any expert of liberal approach will say that Obama belongs to Democratic Party. Hence he gives priority to the multilateral institutions such as TPP.

Regarding the mutual economic dependency in US-China relations, how do you evaluate the future relationship between the two?

We all are aware that American and Chinese economies are heavily dependent on each other. China has pumped money in US economy in the form of treasury bonds. China provides low-cost manufacturing facilities for American companies. Similarly US provides number of jobs to China. The US is a huge market for Chinese goods. The trade deficit between the two helps China more in given conditions. 

Beijing’s security policy in East Asia has always been constrained by this economic interdependence with US. With Trump’s victory this mutual bond of commerce is about to break.

Along with this trade war Trump administration may impose more restrictions on Chinese investments in the US. It is possible that restrictions will be imposed on Chinese acquisition of American technologies and companies because of the fear of national security and job losses. US-China Bilateral Investment Treaty will also receive a blow.  This will affect Chinese economy badly.

                 

Trump made a direct contact to the Taiwanese President after 37 years. Many of experts evaluated this action as violating the ‘One China Policy’. Why did Trump acted like this?

In last 37 years, none of the US presidents ever had an official telephonic conversation with Taiwan’s President. And here a President-elect Donald Trump sent the shockwaves across Pacific Ocean by picking up call made by Tsai Ing-wen, the President of Taiwan. This act of Trump hints that he has the skill of brinkmanship. This will either compel China into making concessions and it will eventually accept the rules-based global order or this may lead to war that no one wants.

China claims the sovereignty of the self-governing small island nation of Taiwan. In January 2016, Tsai Ing-wen of Democratic Progressive Party decisively won the presidency and the legislature. Tsai is considered as anti-chinese leader and her party is pro-independence. Relations between Taiwan and China are deteriorating rapidly. Hitherto Washington has carried out ‘One China Policy’ delicately. It maintains balance by having official ties with Beijing but also honoring its commitments to Taiwan’s security. Thankfully Trump-Tsai phone call has not yet threatened One China Policy. But it’s quite possible that Trump will undermine this policy as a President and will support Taiwan openly to test the patience of China.

Growing trade deficit between US and China is not the only reason behind such actions of Trump. Chinese dragon’s menacing plans of worldwide expansion, famously termed as ‘One Belt, One Road’ which includes two megaprojects (Silk Road Economic Corridor and 21st Century Maritime Silk Road) has created a major havoc. It hampers interests of many states. Plus illegal Chinese construction of artificial islands in South China Sea to erect fortifications is being considered as the act of aggression by the nations in Asia-Pacific region.

How do you evaluate the future of ‘Pivot to Asia’ strategy in Trump’s era?

President Barak Obama’s Pivot to Asia strategy could not achieve its goals. And now as new leader rises in US, this strategy is on its way to exit. Trump will have his own version of Pivot to Asia. He is almost threatening US’s traditional allies in Asia (such as Japan, South Korea) by reiterating reduction in American security commitments to them. Xi Jinping may get emboldened in such situation to challenge US supremacy in South China Sea. But it actually does not mean that Trump intends to turn friends into foes. His real intention is only to make them pay more for their own security. Trump is a businessman first and he has written a book titled ‘The Art of The Deal’. Hence it seems that he will use his hard bargaining tactics for preservation of US national interests.       

The escalating trade war between US and China will increase the risks of military conflict. Beijing may further ramp up its naval activities such as building military facilities and oil excavation. As more than $5 trillion worth of commerce transits through South China Sea, a military conflict or acceptance of China’s de facto control of area will have spiraling effects.

Trump has decided to nominate Rex Tillerson as new Secretary of State. He is chairman and CEO of ExxonMobil. But more importantly Rex has close rapport with Russian President Vladimir Putin. Trump himself is big fan of Putin. This indicates that Trump will try to develop good relationship with Russia and will try to foster animosity between China and Russia. This will ensure that there will not be any anti-US alliance by Beijing and Moscow.  

In my opinion Iran, India and Indonesia are the Three ‘I’s of Asia. They should come together to form an alliance to effectively build a stable balance of power in Asia. As the New Great Game has already begun, the World and Asia in particular will have to make choice between China on one hand and US on the other. The world is increasingly getting divided between the camp of Eagle and the camp of Dragon, reminding the similar division and groupism before the World War I. Therefore the duty of the middle powers such as Iran and India increases. We must cooperate with each other to protect our interests and to maintain peace in the region.   

Kedar Keskar is Assistant Professor and S.P College affiliated to University of Pune in India

Interview by: Vahid Pourtajrishi   

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