Asia’s Unstable Power Vacuum

Since coming into office, US President Donald Trump has signed multiple executive orders attempting to repeal the policies enacted by former President Barack Obama. These efforts have worried many foreign governments, who are painfully aware that the global power dynamic could change significantly over the next few months. Japan, in particular, has much at stake: Japanese officials are growing increasingly concerned over Trump’s immediate dismissal of the Trans-Pacific Partnership (TPP) and his twitter attacks on North Korea’s missile tests, not ready to maintain American support at the risk of worsening tensions with North Korea. At the same time, in January Japanese officials confirmed Prime Minister Shinzo Abe’s intention to continue “diplomatic normalization” with global heavyweights China and Russia. While Trump’s renouncement of the TPP threatens Japan’s immediate economic interests, it also sets the stage for Japan to build stronger alliances with China and Russia that can radically change the world order and displace the United States from the forefront of global geopolitics.

On January 23, just three days after his inauguration, Trump officially renounced the 12-nation strong TPP that the Obama administration had spent eight years brokering. This move ended the multinational free-trade zone that had ensured lower tariffs and the defense of patents and intellectual property for 40 percent of the global economy. The TPP would have created a free-trade zone with common environmental and labor legislation, adding an estimated $285 billion to the combined GDPs of all member countries by 2025. While Trump’s announcement was detrimental for all the nations involved in the partnership, it is particularly damning for Japan. Prime Minister Abe had heavily relied on the TPP to contribute to gains in the GDP, a crucial component of his plan to revive Japan’s stagnant economy. Abe had only recently received enough political support to ratify the TPP in December, and this ratification was a futile effort to convince President Trump of the merits of the treaty. Since the executive order, Japan has lost the opportunity to give its manufacturers tariff-free access to US markets, a huge blow to the automotive industry, one of Japan’s most successful export industries. Faced with declining growth rates and the residual aftermath of the Lost Decade,” a period of persistent economic stagnation and low growth in the 1990s, Japan now stands at a critical and volatile moment in its economic development.

Japan now has a few options at its disposal: It could continue the TPP with the remaining Western Pacific nations, broker a bilateral deal with the US (a contentious solution, considering the failure of similar one-on-one talks in the late 1900s), or expand trading schemes with other countries. While Australia wants to continue the TPP without the US, Japan is far more hesitant. Japan and the US were arguably the biggest economic players in the treaty, making up 75 percent of the total GDP. Without the US, access to the Western market is limited and private sectors gain little in exchange for constricting legislation. In reference to partnerships with other countries, Japan is also a part of the Regional Comprehensive Economic Partnership (RCEP), but this partnership lacks the same appeal as the TPP. While the RCEP is led by Beijing, the TPP was the first free-trade agreement that brought the economies of the United States and Japan together without China. Unlike the RCEP, the TPP would have reduced 18,000 tariffs and enforced regulations on government corporations. More importantly, Japan’s economic alliance with the US from the TPP would have opposed the rise of China’s economic and military influence. However, the uncertainty of US-Japanese economic relations has forced Japan to join forces with other global powers.

These relations reflect how Japan is cautiously navigating a desire to pursue economic growth while finding an appropriate and capable substitute for previous American cooperation.

Both China and Japan are starting to realize the consequences of Trump’s rejection of the TPP and general disinclination to form trade deals. Japan is at risk of losing its ally to counterbalance the rise of China’s economic power. China, on the other hand, stands to face large tariffs on its exports and more US protectionism. As the uncertainty of the Trump administration puts both their economies in jeopardy, Beijing and Tokyo have both started to consider the possibility of a more amicable relationship, ending the latent hostility that has characterized their fraught diplomatic history. To mark the 45th anniversary since the Treaty of Peace and Friendship of 1972, which established the two countries’ diplomatic relations, Japanese and Chinese lawmakers met at the Great Hall of the People in Beijing on January 5. While nothing substantial came from these talks, the bilateral meeting created a platform for Japan when pursuing and negotiating a new trade deal with China. The two global players realize that they would both suffer from US protectionism and understand the need to form a defense against any unpredictable US policies. These developments could, in turn, have significant consequences for US interests in the region.

While China might lose an economic partner in the US, Beijing also stands to gain from the US’ withdrawal from the TPP, as it provides an opportunity to widen Beijing’s regional power through the removal of Western influence in East Asia. Contrary to popular belief, the US has already retracted its leadership advantage in Asia. China has quickly capitalized on the economic vacuum left by the American withdrawal from the TPP by furthering the RCEP as a substitute for the deal. Chinese President Xi Jinping has promised to focus on lowering tariffs within the region and supporting free trade, creating the possibility of a Western Pacific common market. Vietnam and Malaysia have also shifted their attention from the TPP to the RCEP. And although the TPP wouldn’t have significantly improved the US economy, leaving the Asian-Pacific economy could be detrimental for US exports in Japan. If the RCEP proves successful, the US could forfeit up to $5.3 billion annually to Chinese competition. The partnership also shows signs of expanding — China has invited Latin American nations, and more nations are aligning their economies with China over America. Over the past five years, World Bank data indicates that every member of the TPP, including Japan, increased imports from China and decreased imports from America. The emergence of the RCEP and the gradual detachment of US influence in Southeast Asia indicate America’s focus on national solipsism at the expense of economic pragmatism.

As Japan considers the possibility of a Chinese alliance, Abe is also looking to strengthen its relationship with Russia, committing to continue talks with Moscow in April. The Obama administration was vigilant regarding Abe’s cooperation with Putin, worried that this developing relationship would hinder any economic G7 sanctions on Russia. Trump, however, is happy to oversee an economic alliance between Japan and Russia. Russian Deputy Prime Minister Igor Shuvalov has already met with Japanese Minister of Economic Cooperation Hiroshige Seko with the intention of setting up a meeting between Prime Minister Abe and President Vladimir Putin. Putin had visited Japan last December for a successful two-day summit, where Japan and Russia agreed to 80 detailed cooperation projects. Shuvalov and Seko are also reportedly planning an eight-point bilateral economic cooperation plan related to this initiative. It is expected as well that these projects include a solution for the disputed Northern territories (South Kuril Islands). This deal would break the 70-year impasse in the Japan-Russia relationship, especially as these talks included the possibility of a Peace Treaty. While Japanese-Russian relations have not been powerful in the past, Japan has recognized the strategic importance of a Russian alliance in a geoeconomic region with China as a front-runner.

Russia, too, is interested the benefits of an Asian-Pacific strategic alliance and understands the significance of a strong Asian-Russian partnership in lieu of an Asian-US partnership. Moscow has repeatedly made clear its disapproval of the TPP and, since the RCEP was announced in 2012, has focused its efforts in promoting the RCEP over the TPP. While Putin has built a notorious camaraderie with Trump, his partnerships with the Association of Southeast Asian Nations (ASEAN) and its member countries indicate a shift of the Kremlin’s international economic agenda. With hints of a possible free-trade zone forming between ASEAN and the Eurasian Economic Union, there are few barriers to Russia joining the RCEP. Russia is slowly becoming an important stakeholder in the Asian-Pacific region, and Japan is looking to capitalize on this opportunity before the Kremlin limits its cooperation to China and other Asian countries. If Japan is keen on pursuing amicable relations, Russia’s previous passive foreign policy with Japan must be amended, especially as their cooperation holds great economic potential for both countries.

Japan’s approach to Russia abandons its traditional reluctance to deeply engage with rivals of the United States. But with the international backlash against Donald Trump’s election, Japan has begun to distance itself from its ally. Japanese policymakers are also concerned about the possible retraction of America’s “nuclear umbrella,” which protects Japan from the threat of nuclear attack. The retraction would not only leave Japan vulnerable, but could also result in nuclear proliferation in Asia, destabilizing the fickle relations between China, Japan, and North Korea. With a powerful China at the forefront of Asian geopolitics, Japan may be looking towards Russia to counterbalance this influence. Japan is walking a fine line in developing these unexpected relations, trying to establish economic alliances while ensuring neither becomes too influential in the region. These relations reflect how Japan is cautiously navigating a desire to pursue economic growth while finding an appropriate and capable substitute for previous American cooperation.

The theme behind Trump’s executive orders is clear: The United States is changing its tune from an interventionist approach to one that solely protects immediate US interests. Trump’s withdrawal from the TPP underscores the belief that trade deals should prioritize conservative national economic interests, regardless of whether they undermine global stability. Since the Cold War, the US’ presence in Asia has helped to oppose a Russian or Chinese sphere of influence. The new power vacuum in Asia now seems to lay the groundwork for a different world order, changing the Japan-China-US power trio to a new superpower axis, one that possibly includes Russia and definitely includes China and Japan.

 

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