The Asia-Pacific Economic Cooperation (Apec) summit at the weekend saw the global spotlight turn to the region with world leaders — from Russia to Australia, and India to Canada — attending the summit. With states in attendance accounting for more than 50 per cent of global gross domestic product and nearly half of world trade, US-Chinese rivalry was centre stage in their respective attempts to shape the regional order.
With United States President Donald Trump, surprisingly, skipping the Apec and earlier the Asean [Association of Southeast Asian Nations] events as well, the US Vice-President, Mike Pence, pitched the US case. Before starting a week-long trip taking in Japan, Singapore, Australia and Papua New Guinea, Pence 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 US is taking decisive action to protect our interests and promote shared success”.
While not acknowledging China explicitly here, Pence was primarily referring to Beijing, which has its own ambitions to shape the regional order. To that end, Chinese President Xi Jinping and Prime Minister Li Keqiang last week promoted at Asean and Apec not just their Belt and Road Initiative, one of the biggest plans of its kind in history with a trillion dollar price tag. In addition, they doubled 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 US — 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 US) thus provides an alternative model for regional economic integration, which is much more conducive to its national interests. This is not least because China will be explicitly a part of the new economic agreements and shape their design by creating free trade areas with it potentially at the centre.
And it is in this context that the US set out last week 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 US allies, therefore, is whether Washington will step up to the plate and develop a comprehensive and well-funded grand strategy to embed US influence, as former US president Barack Obama had intended with TPP.
There are some signs in the last few months that Trump is starting to wake up to smell the coffee. Last month, for instance, he signed a bill into law which will create a $60 billion (Dh220.68 billion) new International Development Finance Corporation (IDFC) aimed at strategic investment in developing countries. The new IDFC will move forward US interests, in Asia-Pacific and beyond, including supporting US firms in key developing markets to enhance US geopolitical influence vis-a-vis China.
This latest step in Washington’s response to China’s growing influence builds on other recent announcement by US 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 US 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 at Apec and Asean.
History points to what may now be needed to fill this vacuum. In the post-war period, the US has undertaken a global institution-building project on a largely bipartisan basis, at least until the election of Trump, to encourage growth of democracies and open markets across the world.
From 1945, US administrations helped create and nurture key bodies that exist to this day — from the United Nations, to the International Monetary Fund and World Bank. Inspired by this success, both the administrations of former US presidents 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 World Trade Organisaton (WTO) and Nafta.
Yet, with Trump pulling the plug on US participation in TPP, and possibly in other institutions such as the WTO, a vacuum exists that either the US or others 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 allows Beijing to assume the upper hand, damaging US influence not just with local allies, but potentially well beyond too.
Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.
