Tuesday, May 10, 2016

The US 2016 Presidential Election and the implication for the future political economy of the Asia-Pacific Region

Gratiana JUNG

Before Donald Trump, the US Republican party candidate in the Primary for 2016 presidential election, comes to the scene, no one would have seen the Trans-Pacific Partnership (TPP) could face up the uncertainty other than the twist and turn on the Capitol Hill. Many would just think it might delay for a while resulting from the election hassling and bustling. That probably was the worst scenario. But, here are Donald Trump, a New York estate business tycoon, and Bernie Sanders, a long-serving Democratic Senator running on the anti-establishment sentiment. Their hostility towards something outlandish has been particular pronouncing in trade, immigration, and traditional foreign policy remits. Their arguments have generated overwhelming supports and heated media interests. Indeed, the whole election campaign is characterised by this isolationist and protectionist  tone that the US experienced long time ago.

This trend worries the US allies, in particular those in the Asian-Pacific where Japan, South Korea, and China were singled out by candidates for sucking in already constricted US resources and taking advantages of the country’s liberal trade policy However, the world is no longer the one that the US could just adopt the Monroe Doctrine or simply shape it according to its own wishes. The day the US single-handedly shaped world economic system in Bretton Woods has ended, and it is not the hegemon in complete command. The US now needs more friends rather than foes. The new president would probably only come to realise the difference between campaign rhetoric and real policy implementation the day when he/she is inaugurated officially. Nevertheless, the presidential primary does indicate the shift in the US politics where the undercurrents cut through the globalisation. It is, therefore, not merely a Trump or Sanders phenomenon. Allies of the US might need to take note on the trend, and adjust their policy and approach accordingly.

On trade policy for the four major hopefuls in both parties nomination, all put premises on opening up the US markets. It seems that “fair trade” instead of “free trade” would be the game to play for the next administration whoever being elected as the new US president. Jobs back home is paramount, and not only in terms of increasing in numbers but also in quality. It is the message centred to this campaign. Undoubtedly it would also be the policy battle ground after July when the party nomination is finalised. Both Trump and Sanders have been rallying on an anti-Wall Street and anti-establishment sentiment. They both stressed the ultimate objective for the US external policy is to safeguard and generate jobs at home, and not allowing foreign workers to abuse the US welfare system and steal the employment opportunity that supposed to be the Americans’. Their view, if examining carefully, is indeed shared by other major candidates. Ted Cruz of the Republic party has stated clearly that he supports free trade. But while initially backing for the Obama Administration’s TPP deal, he later withdrew his endorsement. Though he argued that free trade is good for US when it facilitates the liberalisation of foreign markets, thus helps farmers, ranchers, and manufacturers in US. Hillary Clinton has been supporting trade liberalisation for decades, and devoted to promoting regional economic integration and the TPP as the Secretary of State under President Obama. But in 2015 turning her back to the novel and ambitious free trade agreement, that she termed in 2012 “the gold standard in trade agreements.” She stated that “I don't believe it's going to meet the high bar I have set.” She also argues that “[a]ny trade deal has to produce jobs and raise wages and increase prosperity and protect our security,” in April 2015. Among the four candidates, Sanders has gone to the extreme that he intends to annul all the FTAs, while Trump wants to have some be renegotiated, such as the TPP, and Cruz holds the same argument on the matter.

Hillary Clinton’s opposition to the TPP is a distinctive feature in the current US trade politics ambiance. while the whole idea of the TPP is key to the Obama administration’s strategic pivot to Asia, in 2015 she lost confidence in the deal without giving a robust argument. If Clinton could this easily shrug off her pass records in helping to build up such a vital architecture in the region, it is not all surprising that other candidates who has no pervious burdens could just voice out whatever that would please grassroots voters and civil society.

But how to prevent the US from inundated foreign goods? How to ensure good quality in job creation? How can those objectives to be achieved? It is all about “levelling the playing field,” according to the majority of candidates. So far, the policy option that being manifested ranges from high import taxes, prohibiting US enterprises to set up overseas factories, to penalise currency manipulators, and China obviously has been the target in more than one case above. Trade deficit, investment, and monetary policy have all been linked to job creation in the US. Nevertheless, there is no novelty in it. The US has been there before. During the Great depression and the 1970s in a protectionist stance the super 301 act was deployed to penalise countries conducting unfair trade. But the“beggar thy neighbour” policy did not help to generate jobs back home, nor did it increase competitiveness.

Indeed, the merits of trade deficit, in- and outbound investments, as well as the currency issue are not entirely straight forwards. It is much more complicated, so is the overall welfare effects of liberalisation. Besides, bear in mind that the two financial crises has changed the perspective on economic policy-making. Instead of pursuing growth in numbers, the quality and its long-lasting impact is stressed. But sustainable growth and income inequality has not been properly singled out in debates in this primary campaigns. Developed and developing economies all encounter structural problems that calls for reforms, and the US is included certainly. To tackle issues like these needs cooperation at all levels. Especially, since the Clinton administration in 1993 launched the APEC summit in Seattle, it has foretold the new area for US trade policy pertaining to the Asian-Pacific. Since then, the region’s political and economic landscapes have been different.

There was a brief time when the US under George Bush Junior was so preoccupied with the middle-East and the war on terror. But until the end of his administration, he, too, realised the region is too vital to lose, especially when China was growing in an accelerating speed. He then proposed the Free Trade Area of Asian-Pacific (FTAAP) in the 2006 APEC summit. Under the incumbent President Obama, through rebalancing and pivot, the role of the US in the Asian-Pacific is firmly put back on the map again. This is the structure with many historical and strategic facets, and any new president will inherit it in the foreign policy-making for years to come. The Clinton administration has also set the tone of the US trade policy firmly on multilateralism and rule-based international economic order, while supporting by different layers of diplomacy. If the unilateral-minded Bush Junior failed to challenge it, and furthermore backfired when he did that should sufficiently predict the future evolution of the US foreign economic policy. Despite that demands for protectionism or isolationism is looming domestically at this moment.

On the foreign affairs front, in a globalised world, the debates is indeed tightly interwoven with jobs. In the recent TV interview, Donald Trump boldly stated that he thinks nuclear armament of Japan could be a policy option to assist the US in patrolling the region The concept has its rooted cause in domestic politics where the budget is constrained and the US voters have long doubted external military involvement. Candidates tend to argue the case for caps on defence spending, except for Hillary Clinton and Ted Cruz. But the policy appears to be in a paradox. On the one hand, candidates expect less military involvement; on the other hand, they also assert a hard-line stance on terrorism and unfriendly countries. How the US security is to be safeguarded without trading with its allies in return for supports. As discussed, the US could not maintain a world order that it preferred unilaterally under globalised world where terrorists attack is increasingly random. Don’t look far, just focus on what happened in Brussel and Paris. Intelligent sharing and cyber-security as well as the freedom of maritime navigation, just to name a few, are issues where cooperation with allies is vital. The average Americans might not understand the significance of these issue on their jobs and livings back home. But, it does matter. Failing to maintain a workable and effective foreign relations, and losing control in international affairs would risk the stability in markets.

When Trump said he wants to make the country great again, he probably has also recognised the US hegemon is in declining. For a while, it is tempting to attribute all the criticisms and credits to Trump or Sanders, but the truth is  they are only a phenomena which reflects how the US politics has shifted. But, the good news is that this is not entirely new. The US has been there before. Recently, a comparison has been drawn between Ronald Regan’s political belief and his unconventionality at his time and that of the candidates in the 2016 campaign. This might give some positive hope to our so far gloomy forecast for the US future foreign policy. Whoever is elected, there is bound to be uncertainty for a period of time. Obviously for the US allies in the Asian-Pacific, the 2016 US presidential election is not about candidates did not debate enough on Asia. It is about the imbalanced and ambivalent policy stance they hold pertaining to the region with a growing economic potential and a challenging new hegemon in making.

(Gratiana JUNG is a senior researcher of Yuanta-Polaris Research Institute.)

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