Is the Asia pivot coming apart on trade?

Is the Asia pivot coming apart on trade?

There has been a lot of commentary on the Obama administration’s “pivot” (or “rebalance”) to Asia here at Shadow Government. Most commentators have praised Secretary Clinton’s activism towards Southeast Asia, but pointed out that the rhetoric of the pivot will look hollow without a real trade strategy and adequate resourcing for our forward military forces. This past month it looks like the wheels may have started coming off on the trade strategy axle.

In early September regional leaders met at the Asia Pacific Economic Cooperation (APEC) leaders meeting in Vladivostok, sans Barack Obama who was unwilling to skip town in election season, and courtesy of Vladimir Putin who was unwilling to schedule the meeting at a time the U.S. President could attend. President Obama’s absence was not the end of the world: Bill Clinton skipped two APEC summits and managed to compensate the next year (for the record, George W. Bush missed none…but that was before we were “back in Asia” as the current White House likes to say). The real problem at Vladivostok was the hallway banter by the other delegates about TPP — the Trans-Pacific Partnership — that forms the core of the administration’s strategy for building a regional economic architecture that includes us and strives for WTO-consistent trade liberalization and rule-making. The overall critique in Vladivostok was that the U.S. side is playing small ball on TPP, to the frustration of multiple stakeholders. The U.S. business community is worried at the lack of market access in the negotiations; the Australians and Singaporeans are hedging with Asian-only negotiations because of what they see as incrementalism by USTR; and Japanese officials are dismayed by administration signals discouraging Tokyo from expressing readiness to join TPP.

This all matters because of the other summitry gossip that is coming out of Asia. On November 18-20, the Cambodians will be hosting the East Asia Summit, which President Obama joined with great fanfare last year and which the president will be able to attend this year because it is after the U.S. elections. The main deliverable on economics at that summit will be a decision within the region to proceed with the RCEP — an Asian “Regional Comprehensive Economic Partnership” that includes the ten ASEAN states, Japan, China, Korea, India, Australia and New Zealand — and does not include the United States. The Cambodians’ current plan for the November summit is to hold an RCEP inaugural meeting while President Obama waits outside the room cooling his heels with Vladimir Putin (since Russia is also not included in the regional trade deal). Stunningly, our allies Japan, Australia ,and Korea all appear to be on board with this scenario.

At one level this resembles the silliness of a junior high school prom, but at another level it could be the moment people start writing the obituary for the “pivot.” To prevent that, a returning Obama administration or a new Romney administration has to put more oomph into the current anemic U.S. trade strategy. The RCEP launch will be embarrassing, but since those talks have no prospect of hitting a WTO-compliant level of trade liberalization, the United States can retake center stage again by showing that it can form an even more impressive coalition of trade liberalizing states. This means getting Japan in to TPP; leveraging Canada and Mexico in the TPP process (which will also help us counter Brazilian efforts to separate South America from us); and beginning to move on a complementary trans-Atlantic FTA process. The “pivot” was never sustainable without like-minded allies in our hemisphere and Europe and now is the time to recognize that and develop a strategy accordingly.

The next administration will also have to demonstrate credibility by moving to secure trade promotion authority (TPA) from the Congress (just can’t get around Article One Section Eight of the Constitution). Finally, the administration had better start thinking about new ways to engage on economic issues within the EAS that keep us in the regional dialogue without requiring a high-standard FTA with countries like Laos or Burma. Bob Zoellick was a master of that art at USTR when he pioneered the Enterprise for ASEAN Initiative — a flexible framework that allowed a la carte participation by countries ranging from an FTA (Singapore) to establishing very basic economic dialogues (Cambodia).

In short, for trade to continue underpinning U.S. leadership in Asia, we will have to go global, be agile within the region, and give a shot of adrenaline to USTR. Otherwise, the “pivot” will be a minor footnote in the textbooks.