Australia Is Worried About America’s Ability to Lead

Can the Indo-Pacific sustain its economic dynamism, the rules-based order under which it has prospered, while balancing a China’s rising strategic and geoeconomic power? And can it do so with an inward-focused and unreliable United States?  That, in a nutshell is the accurately assessed Pacific predicament a new Australian white paper on foreign policy — the government’s first in 15 years — seeks to address.

The white paper sees “a contested world” with rising nationalisms and competing visions of world order from authoritarian state-centered capitalism, amid rapid technological change. And it rather euphemistically describes the uncertainty of Washington’s regional role: a “US debate about the costs of sustaining its global leadership.” At the same time, it sees “major powers ignoring or undermining international law.” Generally, this is a back-handed reference to China, but in this case, one wonders.

The white paper grasps well the likely consequences of an “America First” policy toward Asia — notwithstanding President Donald Trump’s recent 12-day Asia trip aimed at underscoring continuity in U.S. policy: “Without a strong U.S. economic and security engagement, power is likely to shift more quickly” from West to East, it astutely points out.

To address these multiple challenges, the white paper suggests, in effect, a double-hedging strategy: Intensify cooperation with like-minded nations to sustain a rules-based order and shape Chinese behavior; work to keep the United States engaged in the region; and all with the hope that its cooperative efforts will cushion downside trajectories in regard to both the United States and China.

However, the magnitude of difficulty in realizing such an approach was underscored by the assault on the regional and global trading system articulated by Trump in his remarkable speech to APEC CEOs in Da Nang, Vietnam.

The region is still reeling from Trump’s rejection of the Trans-Pacific Partnership (TPP), considered a fundamental pillar of U.S. economic engagement in the region. But Trump went much further.  Seemingly oblivious to the reality that the global and regional trade regime he vilified has been key to Asia’s post-World War II economic success, Trump complained about unfair trading practices causing U.S. trade deficits, declaring: “we can no longer tolerate these chronic trade abuses … we are not going to let the United States be taken advantage of anymore.”

NAFTA and the South Korean-U.S. Free Trade Agreement may the next victims of this zero-sum view, one where the only measure of “free and fair” trade is whether the United States runs a bilateral deficit or not. Never mind that savings, investment, or consuming more than you produce are key factors in trade balances. While Trump has a point about the lack of level playing field, especially in regard to China — which accounts for roughly half of the U.S. global trade deficit — his remedy puts the world on a path back to the 1930s.

Thus, Trump appears at war with the entire regional and global trading system. “What we will no longer do is enter into large agreements that tie our hands,” and “surrender our sovereignty,” the president said at the APEC summit. Trump’s sovereignty reference is an attack on the multilateral system, and specifically, the crown jewel of the World Trade Organization — its dispute-settling mechanism. He whined that “we have not been treated fairly by the WTO.” Yet the United States has filed over 100 cases at the WTO, more than any other nation — and won a large majority of its complaints.

Instead, Trump offered the region bilateral trade deals. This fell on deaf ears in an Indo-Pacific where, increasingly, intraregional trade and investment continues to more deeply integrate countries, and where the dominant policy trend is for more multilateral trade regimes. Moreover, Trump’s go-it-alone rhetoric raised fears in Asia that Washington is, however inadvertently, offering an opening for Beijing to set the regional agenda. We now have Japan moving forward with TPP minus the United States, and China pushing the Regional Comprehensive Economic Partnership (RCEP).

Yet the white paper emphatically says that Canberra’s alliance with the United States is central to its strategy. In the realm of security, that appears a safe bet for the foreseeable future: Trump has enhanced the U.S. military presence in the region, ironically, fulfilling the security pillar of his predecessor’s “pivot” to Asia — where Obama was criticized for failing to provide sufficient resources to realize his objective.

In what appears a clear hedging strategy, the white paper calls for Australia to deepen more effective cooperation with “like-minded” (read: democratic) partners in the region, emphasizing Japan, India, South Korea, and Indonesia, in particular. In addition, the report rightly says we should “adapt the international system,” to accommodate the interests, “of the emerging powers like China, India, Brazil, and Nigeria.” Giving emerging powers greater weight in the international system, the position seeks to deepen their stake in a reformed rules-based order.

Yet China’s predatory industrial and trade policies and irredentist foreign policy do not inspire confidence in that logic. And if the United States is moving in an economic direction opposite that of the Indo-Pacific, will U.S. defense policies and America’s role as security guarantor be sustainable?

This points to the very problematic nature of the course proposed in the white paper. The challenges — economic, political, security, and technological — described therein are on target and the course prescribed to navigate them makes imminent sense from the perspective of Australian national interests.

But middle powers have a limited ability to control their fate. As the white paper argues, “without sustained US support, the effectiveness and liberal character of the rules-based order will decline.”

This is the Indo-Pacific predicament writ large. China is already the largest trading partner for every major economy in the region. And its Belt and Road Initiative promises large-scale infrastructure investment to further bind the region. Absent a dynamic, economically and strategically engaged, and enlightened U.S. leadership, can the Indo-Pacific balance an ambitious China and avoid a gradual, if not inexorable tilt toward a Sino-centric region?