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Trade

Is the US retreat from Asia drawing China, Japan and South Korea closer together?

William Pesek says the Apec meeting saw the Trump administration strike a blow against its own relevance to Asian trade, while possibly convincing Seoul, Tokyo and Beijing to tone down their feuding for mutual gain

PUBLISHED : Thursday, 16 November, 2017, 11:47am
UPDATED : Thursday, 16 November, 2017, 7:18pm

Historians will one day agree on the exact place and moment Donald Trump lost Asia: Da Nang, November 2017.

There, the US president looked the other way as the 11 remaining Trans-Pacific Partnership members made a deal, cementing his “America first” misadventure. It also may be remembered as the catalyst that brought East Asia’s biggest economies together.

The past several years have seen China, Japan and South Korea pushed further apart by territorial disputes, nationalist tendencies, mercantilist trade policies, you name it. Xi Jinping’s coronation last month, pundits said, would give the powerful Chinese leader greater scope to marginalise Japan. Shinzo Abe’s October 22 election win was his ticket to revising the war-renouncing constitution in ways that enrage Xi. South Korean President Moon Jae-in’s liberalism made an incompatible addition to strongman-heavy North Asia.

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But Xi and Abe met on the sidelines of the Asia-Pacific Economic Cooperation forum, generating optimism for detente. Abe said he’ll “strongly promote” better relations; Xi talked of “positive developments”. A 40-minute summit between Xi and Moon was another milestone after 16 months of brawling over US missile-defence systems.

The force pushing these leaders together is Trump’s erratic presidency. In just 12 months, America has journeyed from reliable growth engine to deal-wrecker. After the TPP, Trump reneged on the Paris climate-change accord and tore up the five-year-old Korea-US free-trade agreement.

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Xi and Abe feel more confident domestically than ever. Moon, meanwhile, has a reasonably clean slate to heal a traumatised nation amid North Korea’s threats and following the impeachment of his predecessor. With the US courting rogue-nation status, Abe and Xi are giving each other a second look – and perhaps even pulling Moon into the mix. Clearly, we’ve seen fleeting detente moments before.

The difference is a White House pivoting away from Asia, forcing regional powers to hedge risks.

Trump has three years left, assuming scandals and investigations don’t bring his administration to an end. It’s dawning on Xi, Abe and Moon that they may all be in power after Trump vacates the Oval Office.

Xi is making the most of the Trump vacuum. His Asian Infrastructure Investment Bank, “Belt and Road Initiative” and other deep-pocketed initiatives buttress Beijing’s soft power. China is investing trillions in renewable energy, robotics, cutting-edge transport and artificial intelligence. Trump is working to make coal great again.

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Abe and Moon might fare best, economy-wise, by running down the clock on Trump’s presidency. Abe’s triumph with the TPPII shows why he wants to avoid bilateral deals with the US. There’s zero chance Tokyo would come away with advantageous trade terms with Trump. The same goes for Moon, with whom Trump is renegotiating trade terms. Also, the TPP is leverage to woo Korea, Indonesia, the Philippines and other neighbours.

While testosterone flashes could get in the way, the year ahead is a fascinating opportunity for North Asia’s frenemies to find common ground. Xi, Abe and Moon can lower trade barriers, create links between bond, stock and currency markets and devise a collective use for more than US$4.6 trillion of foreign-exchange reserves.

Tensions won’t disappear. But Trump’s visit showed Asian leaders need to look closer to home for partners. The good news is that Da Nang suggests they’re beginning to do that.

William Pesek is a Tokyo-based journalist and the author of Japanization: What the World Can Learn from Japan’s Lost Decades. Twitter: @williampesek