A truck hauls waste out of the Oyu Tolgoi mining site. Mining projects are contributing to rapid economic growth on the Mongolian Steppes.
Photo from energydigital.com
As a landlocked country with less than 4 million people, Mongolia doesn’t seem a likely candidate to be APEC’s first new member since 1998. Have rapid growth and a rising China made Mongolian accession more than a pipe dream?
Most recent World Bank data puts Mongolia’s growth rate at a blistering 17.5% , driven in large part by massive joint mining ventures between the Mongolian government and private firms. Notably, the Oyu Tolgoi mining project, is estimated to be the largest undeveloped gold/copper reserve in the world and is expected to account for 30% of the country’s GDP by the time of its completion. Mongolia holds a 34% share of the project, with controlling interest held by Canadian mining company Turquise Hill, part of the multinational mining giant Rio Tinto. If Mongolia can avoid the corruption, over-speculation, and environmental degradation that often come with resource based development, and strategically invest its profits, these projects put Mongolia on track to be a major regional economy and resource provider within the decade.
Moreover, there seems to be regional desire to draw Mongolia out from under China’s economic thumb. China consumes 90% of Mongolia’s exports, raising national security concerns inside Mongolia and market envy from other regional powers, such as South Korea and Japan. Diversifying Mongolian trade patterns is clearly an economic and security interest of such countries, and would likely support Mongolian accession to APEC should they see it as a means to this end.
This is more than just speculation. In September, Indonesian President Susilo Bambang Yudhoyono visited Mongolia to discuss trade ties on his way to the Vladivostok APEC summit, and expressed general support for Mongolian entrance into APEC. Japan, which has supported a Mongolian APEC bid since the nineties, is already working to balance China through routes such as TPP under Prime Minister Abe’s hawkish hand; on March 31st he met his Mongolian counterpart Norov Altankhuyag in a bilateral summit focused on increasing trade and diplomatic ties. While these overtures alone are hardly enough to secure a Mongolian bid (see for example India, which failed to become an APEC member despite vigorous support from Australia and the United States) they might signal a growing momentum towards expanding the forum.
APEC had a moratorium on accepting new members until 2010, and with the recession coming to a close, it’s reasonable to believe member economies will be looking to broaden the scope of the co-operation. Mongolian accession to APEC still seems like a long shot, but economic and political indicators definitely support the idea more than they have in the past. The Steppes are stepping up, and Mongolia could yet become APEC’s first landlocked nation.
Speaking at this month’s annual IMF meetings held in Tokyo, Japan, Lagarde revitalized gender equality discourse in hopes of pulling Japan out of its economic slump. It should come as no surprise that Lagarde, the female managing director of the Fund, appreciates the role of women in political and economic development.
At the meeting, Masaaki Shirakawa, governor for the Bank of Japan, emphasized the importance of increasing women’s participation in the labor force, and Lagarde capitalized on the moment and urged Japan to create a more conducive environment for female workers. She suggested that with better childcare assistance and a more positive perception of women’s workplace capabilities, women could be a large boon to the country’s economy. A Goldman Sachs report published in 2010 indeed supports this claim, maintaining that higher female participation rates would raise GDP levels by almost 15%.
The discussion of reinvigorating a significant portion of the population comes at a crucial time for the nation. Japan continues to suffer from a simultaneously aging and decreasing population. The proportion of the elderly—and thus people out of the workforce—continues to rise, consequently producing higher welfare demands that put a large strain on the government’s checkbook. At the same time, women’s departure from the workplaces exacerbates the situation. More women withdraw from the workplace out of occupational dissatisfaction as they continue to lose higher career positions to men, and inadequate childcare support compels women to return full-time to the home post-childbirth.
So what are Japan’s viable options? As Lagarde and many others have proposed, the government can enhance childcare assistance so that women are encouraged to enter and remain in the labor force. Yet considering the Democratic Party of Japan’s track record since winning the elections in 2009, improvements in childcare welfare policies seem unlikely within the current financial environment. Regarding workplace discrimination, it may be difficult to alter cultural gender perceptions, but the government could choose to implement gender quotas or better job placement programs. Japan might further consider granting paternity leave instead, shifting a portion of childcare responsibilities away from the mothers to the fathers. The extent to which these policies might enhance female worker participation and overall economic productivity—or even draw criticisms—remains to be seen. Other countries in the region such as South Korea and Thailand that face similar population characteristics and gender inequalities could very well look to Japan for how to address the issue and what policy avenues to take. As the conversation on boosting the global economy continues, women indeed have the power to exit their marginalized roles and become the principle force in national recovery.
OECD: Japan among other Asian nations face a greater gender inequality problem in the labor market than most.
Unlike most summers in Beijing, which are usually arid and scorching hot, the summer of 2012 was in one word – wet. Storm after storm, the rain would sometimes get so strong that I saw thigh-deep waters more reminiscent of an ocean than a city street outside my window. In July 2012, the largest flood in more than 60 years swept Beijing, flooding streets and homes, trapping people in their cars, and killing around 70 people (unofficial figures estimated to be much higher). More than the natural disaster, Beijing residents were outraged at the government’s inadequate response to the flood. They asked how could such an atrocity happen in China’s capital? Despite the 4 trillion-yuan infrastructure stimulus following the 2008 financial crisis, there weren’t enough drains that could handle the flood, too much litter clogged the existing drains, and leftover debris from construction sites left the water muddy and dangerous. While Shanghai also received heavy rainfall, the city did not experience devastating floods because its infrastructure problems are not as severe as Beijing and the majority of China.
Infrastructure isn’t the only problem. In September, a Foxconn manufacturing facility in Taiyuan, the capital of the Shanxi province, was shutdown following a chaotic riot that erupted between workers and security guards. One of the biggest electronics manufacturers in the world for high tech companies such as Apple and Dell, Foxconn has recently been criticized for poor working hours and wages. In a New York Times article concerning the September shutdown of the facility, a Foxconn employee was quoted saying, “At first it was a conflict between the security guards and the workers, but I think the real reason is they were frustrated with life.” Labor protests like those at the Foxconn manufacturing facilities are just one symptom of the Chinese people’s dissatisfaction.
Earlier this year, Professor Richard A. Easterlin, a leading authority on subjective well-being, a.k.a. happiness, released a report titled “China’s life satisfaction, 1990-2010.” The study showed that contrary to conventional wisdom that suggests that happiness coincides economic growth and improvement in living conditions, this is not the case in China. Post-1979, China witnessed the reform of socialist programs such as state-owned enterprises. According to the study, after the dismantling of the iron rice bowl, people began to lose their jobs and their social safety net, and became less happy relative to when the iron rice bowl existed. And even as GDP per capita increased for all socioeconomic classes, happiness did not correlate. Instead, when people, in particular those in the lower socioeconomic classes, saw the growing inequality between the rich and the poor, their life satisfaction decreased.
Happiness has historically been an integral component to Chinese society. In Confucian theory, the idea of the benevolent leader entails a ruler’s responsibility to ensure harmony through the maintenance of balance in society. Happiness can be seen as a necessary condition, if not a metric for societal harmony. The success of China and the Chinese Communist Party (CCP) greatly hinges upon the happiness of its people. And leaders realize this. A goal that is often cited in party rhetoric is to achieve a “harmonious society.” But whether this is an actual or nominal goal has yet to be demonstrated.
I would argue that the problem is not entirely one of infrastructure, corruption, or inequality – at least not explicitly. The real problem is a lack of trust– trust that you can buy Chinese goods without fear of illness or death, that when it rains, the drains will be able to rid the streets of water, that when an earthquake occurs, the buildings will remain intact, that your officials will adhere to a certain code of ethics, that with hard work, you can succeed. The people must have faith that the CCP has the common people’s best interests at heart. Only then will the CCP have the hearts and happiness of the people and the harmonious society they purport to desire.
In the end, no one is denying that the CCP has achieved remarkable success in economic growth in the past 30 years. People’s livelihood has undoubtedly been bolstered by China’s huge strides in economic development. However, now the issue is more what the CCP could do. The CCP could make strides towards greater safety, health, and labor standards. They could aim for quality rather than quantity when it comes to modernization. That way, perhaps incidents like the massive flood in Beijing or the protests at Foxconn can be prevented. And especially with the new leadership transition in November, the CCP has great potential to not only remedy the systemic problems in China, but also build the nation on a more solid foundation and pave a road to prosperity.
Early this week, Japan’s majority party, the Democratic Party of Japan (DPJ), replaced several top ministerial positions in preparation for an election that is expected late this year or early next spring. Prime Minister Yoshihiko Noda appointed ten new ministers to cabinet positions, leaving only eight ministers in returning to positions they held before October 1st. As the third such cabinet change in Noda’s year-long tenure as prime minister, the move has hardly caught anyone off guard. Rather, this shuffle seems a predictable, desperate attempt to shore up party support.
Although the Cabinet had almost sixty percent support following its inauguration last year, throughout December it’s popularity had dwindled to almost twenty percent. This drop in approval (and thus electability) comes at a time when the opposition LDP has announced political old-timer Abe as head of party and is soaring in the polls. Awash in bad news, Noda must have decided another shuffle of his cabinet was the answer to his electability woes.
And perhaps he was right. Although several of the new ministers are relatively unknown to the public (many Japanese even confused the new Finance Minister with a recently retired baseball star of the same family name), several charismatic and popular leaders were put in higher, more visible cabinet posts. For example, Jun Azumi (the previous Finance Minister known for his quick tongue and voter support) will now take a role as top deputy secretary general of the DPJ.
That said, it is unlikely this shuffle will have any real effect on the upcoming election. Chosen more for perceived popularity than real job credentials, many of Noda’s new cabinet picks are already drawing criticism from news sources and opposition. Meanwhile, a Tuesday poll by Japanese news source Kyodo found that the new cabinet’s popularity had edged up only slightly with the move, settling up three points over the past month to about twenty-nine percent on Tuesday. This is still below the thirty percent popularity line generally thought prerequisite for success in Japanese elections, and with the DPJ hesitant to call elections, the Japanese people would have plenty of time to recover from the honeymoon of yet another leadership change. Japan has found its cabinet shuffled, but its electorate unstirred.
By Adam Motiwala, BASC Research Assistant
In a recent blog post, fellow research assistant Jake Lerner discussed some lessons that could be gleaned from the failed North Korean missile test. However, I think it is important to be hesitant when extracting such extravagant claims from a single dud missile:
1. That the regime did not collapse after the failed launch is not a sign of stability. No one reasonably expected the collapse of the North Korean regime after a single failed missile test. Just because the younger Kim still appears as the figurehead of the crumbling country, it is nonsensical to conclude that a post-Kim Jong Il power struggle is not currently underway. Instead, talk of political positioning between “hawks” and “doves” continues unabated and that the missile test happened at all might have been the result of Kim Jong Un being overruled by some unknown overlords. Furthermore, the regime might have only come clean to its people about the mishap because of a newfound fear of being unable to control the flow of information into the country, a scary prospect for the hermit kingdom. Frankly, it is far too early to speak of North Korean stability.
2. The suspension of U.S food aid is nothing new and frankly not that important. It is nothing new for the Americans to deny North Korea food aid after excessive belligerence. This should not come as a surprise to onlookers; it is not a unique outcome to North Korean actions. More importantly, it should be remembered that the North Korean elite do not necessarily care much about food aid. The regime has survived a decade of severe food shortages and mass starvation, and the North Korean elite have a history of spinning food aid cancellation as an act of Western imperial oppression. In addition, given the rumors that the North may have just manufactured its food shortage by hoarding food for the centennial, it would not come as a surprise if the North Korean top brass sought the suspension of food aid in an attempt to look strong.
3. To say North Korea is not a nuclear threat to the West misses the point. It is difficult to think of a way in which a North Korean nuke could actually change the rules of the game. The strategic calculus on the part of the Kim regime has and would remain static: occasional belligerence can make way for hard bargaining, but a nuclear attack on any country would mean instant obliteration. The claim that the North is “far from being a direct nuclear threat to the West” is a nonissue and is hardly worth noting.
By Patricia Sun, BASC Research Assistant
On February 6, 2012, Wang Lijun, vice-mayor and head of the Public Security Bureau (PSB) of Chongqing, and a hero in Chonging gang trials, traveled to the U.S. consulate in Chengdu to seek political asylum and offload Bo Xilai’s misconducts in Chongqing, but “left of his own volition” a day later. Since the explosive event, Chongqing became the center of focus. Soon after, on March 15, the CPC Central Committee made the announcement of dismissing Bo Xilai from his post as Chongqing party chief and related municipal positions. Then, on April 10, Bo Xilai was suspended from the party’s Central Committee and its Politburo pending investigation for “serious disciplinary violations.” Meanwhile, Bo’s wife, Gu Kailai was formally investigated as a suspect of the murder of English businessman Neil Heywood, who had economic connections with the Bo family. The series of events hint on direct confrontations between neo-Maoists/leftists and rightists as well as a heated campaign to protect the legal system. On April 13, the People’s Daily published a commentary on its front page with title “自觉遵守党纪国法” (“Voluntarily Obey the Principles of the Party and Laws of the State”), emphasizing that “no matter what position one holds, Party members shall never place themselves over Party discipline and the law.” On April 18, the Xinhua Agency published an article named “Criminal Case Shall Not be Interpreted as Political Struggle,” signaling the CCP’s determination “to safeguard the socialist rule of law, to investigate and handle every discipline violation and never tolerate corruption.” The responses of official media used Bo Xilai’s case as an exercise of the principle of “ruling the state by law” and as a public anti-corruption campaign. Such special use of the law has its origins in Bo Xilai’s conduct during the Chongqing gang trials and the highly suspicious lawsuits that followed, including Li Zhuang’s case.
In the Chongqing gang trials (重庆打黑除恶专项行动), the municipal government of Chongqing turned the trials into a mass movement by encouraging and rewarding citizens for exposing the crimes. To maximize the effectiveness of the campaign, the municipal government provided special envelopes for reporting letters to every household and allowed ordinary citizens to meet face to face with high-level officials of the PSB to disclose the crimes. Hundreds of special investigation groups that included police, lawyers and prosecutors were organized. These groups worked like an intelligence agency, in secrecy and with extreme efficiency. Arrested suspects were thrown into jail almost immediately and under secret codes rather than real names . As a result of using secret codes, neither family members nor lawyers could find the suspects who were arrested because of their association with gangsters. Even though the Chongqing gang trials proved remarkably effective in cracking down on the web of gangsters and corrupt officials such as former head of the Bureau of Justice Wen Qiang, the mass trials nevertheless gain the infamous name of violating judicial procedures. Secret detention, mass investigation and rewards for exposure of crimes closely resemble similar practices during the Cultural Revolution. From this perspective, the Chongqing gang trials were not simple campaigns against organized crime and corruption led and dominated by judiciary agencies and the police, they were in practice a mass movement that significantly affected the lives of all citizens in Chongqing.
The trials’ violation of judicial procedures became even apparent in the follow-up trials, as the case of Li Zhuang shows. Li Zhuang, defense lawyer for Gong Gangmo (a major gangster), was arrested and accused of “coaching his client to make false claims of torture.” Dramatic changes happened in the second instance as Li completely admitted his crimes even though he fiercely appealed them in the first instance. As a result, Li was sentenced to 18 months in prison and barred for life from practicing law. In fact, Li made an unsuccessful attempt to tell the media the story behind his sudden change of attitude in an interview before the second instance, during which he showed a letter of confession and hid his secret meaning in the letter, which says he was forced to admit the crimes in exchange for probation and would appeal once he got released. Li Zhuang’s case provoked a heated debate; while people were perplexed for his sudden change of attitudes, many accused Chongqing government’s intervention of judicial system and asked for just judicial procedure. Although the Chongqing government intended to use Li Zhuang’s case to improve their infamous name for violating judicial procedure, the result of Li Zhuang’s case ultimately confirmed the government officials’ intervention and abuse of power.
Throughout the entire Chongqing gang trials and follow-up lawsuits, violation of justice and over-use of administrative power became so prevalence that even though the action cracked down on a web of crimes, it triggered the development of a new one. Since the web of gangsters and officials could only exist because of the ineffectiveness of the legal system, cracking down at the expense of justice only resolved superficial problems associated with specific people but not the roots of gangsters’ issues. Moreover, by turning the trials into a mass movement, the action brought up the potential dangers of chaos and deviation from the path of economic development, as seen in the “唱红” (sing red songs) movement. In the 唱红 movement, the municipal government organized Chongqing’s residents to sing songs that were popular in the revolutionary era and that praised the leadership of CCP, so-called red songs. This movement has parallels in the Cultural Revolution, when people sang songs and perform operas (样板戏) to praise the CCP and Mao Zedong.
Bo Xilai’s dismissal is important in a sense that before him, officials of his level such as Chen Liangyu and Chen Xitiong were dismissed or accused mainly because of economic corruption, rather than abuse of power and violation of state’s laws and the Party’s principles. Apart from the political struggle behind the scene, CPC brought down Bo to signal its primary concern with economic development and to prevent growth of municipal power. Moreover, as seen in Premier Wen Jiabao’s comments on Bo Xilai’s downfall, Bo’s actions make a strong analogy with practices in Culture Revolution, in which the entire legal system was in effect paralyzed. By criticizing his actions, the central government has hinted at its intention for future political reform towards rightist side and built an image of itself as the defender of “rule by law.”
By A. M. Newhall, BASC Research Assistant
On March 16th, President Barack Obama nominated Jim Yong Kim to replace the graying Robert Zoellick as President of the World Bank. Although The Wall Street Journal hailed the selection of a candidate lacking experience in either finance or diplomacy as a refreshingly daring choice, other states in the international system did not share this enthusiasm. Many viewed Kim’s nomination as the perpetuation of U.S. domination of the global financial system. Following Kim’s nomination, representatives of the BRICS — Brazil, Russia, India, China, and South Africa — met in New Delhi to discuss the creation of a non-Western version of a “World Bank,” one more equitable to emerging economies.
Analysts unfamiliar with poker viewed such statements as a serious attempt to create a rival economic financial system. Indeed, even Robert Zoellick addressed the hypothetical scenario by gamely suggesting a partnership between the World Bank and the proposed BRICS-run institution. However, more perceptive analysts realized this was an attempt to bluff the World Bank into considering a less conventional candidate and, more importantly, gain some policy concessions. Indeed, as journalist Richard Blackden of The Telegraph observed, “the fight for the top job at the bank starred a dog that barked loudly but did not, in the end, bite.” The much-touted plan to create a rival institution to the World Bank had become nothing more than hot air amid the parlor tables of power by March 28th. Soon, most European governments such as the United Kingdom and France had endorsed Kim. On April 13th, Russia, ever crafty in international power politics, betrayed its BRICS comrades and threw its support behind the U.S. nominee. On April 16th, the World Bank confirmed Kim as its next leader.
The selection of Kim, whose Harvard pedigree and presidency of Dartmouth College makes him the consummate American choice, was decried as narrow-minded in a world in which global power increasingly shifts away from the United States and the World Bank is dogged by accusations of irrelevancy in the modern global economy. According to William Easterly of New York University’s Development Research Institute, “The World Bank doesn’t have any obvious role in the current world environment.” Indeed, with China offering FTAs with few strings attached and pouring billions of dollars as “free gifts” to impressionable regions such as the Caribbean, one must wonder if the World Bank is still relevant except as a symbol of waning U.S. power in an increasingly multipolar world. To his credit, Kim understands these issues and has pledged to guide the World Bank in a new direction, one more in harmony with the changing international order. If Kim honors his pledge, the Bank might take its cue from the International Monetary Fund and appoint an important Chinese official to a key post.
By Jake Lerner, BASC Research Assistant
On Friday, North Korea’s long anticipated, much criticized, and uncharacteristically open launch of its Unha-3 rocket ended in flames. Take-away lessons from its disintegration over the Yellow Sea:
1. Kim Jong Un’s leadership is stable enough to survive failures. Even very shortly before Kim Jong Il’s death, Japanese, South Korean, and American analysts worried that a North Korean power vacuum, however temporary, would create an internal power struggle between top generals and Kim Jong Un, Kim Jong Il’s heir. Further, many speculated that any new power in the country would be forced to take an extremely aggressive stance against South Korea and the West in order to garner military and popular support and not appear weak or incompetent. Although such fears have proved largely false, Kim Jong Un’s ability to shake off a substantial military-technological failure (he was appointed to head the new National Defense Commission during a meeting of the Supreme People’s Assembly just hours after the mishap) demonstrates his relatively stable grip on the country.
2. The United States is willing to stick to its guns on food aid negotiations. The US recently agreed to provide food aid to North Korea in exchange for slowing its nuclear program. Prior to the rocket test, US officials warned that a launch would void the agreement and preclude American aid shipments. Despite the test’s failure, the US suspended food aid to North Korea on Friday. Since the rocket’s failure means it provided no functional threat to the US, this shows that the US is more worried about North Korean belligerence than technical or military prowess.
3. North Korea is far from being a direct nuclear threat to the West. The obvious lesson from the Unha-3 failure is that the DPRK still lacks the technological prowess to consistently launch satellites. The technology required to launch satellites into orbit (very large and accurate rockets) is similar to that required for Inter-Continental Ballistic Missiles, so North Korean missiles capable of hitting the US are hardly a near-term threat. In an interview, President Barack Obama said that the test is consistent with a pattern of North Korean technological failures, but that the country’s willingness to carry out the test was still cause for alarm. That said, North Korea’s rare willingness to admit the launch’s failure to its own public means advanced rocket capabilities aren’t currently a centerpiece of the DPRK’s internal policy portrayal. However, North Korea’s ability to carry out a nuclear attack on American troops and the huge population center of allied Seoul makes an ability to actually strike the west a more symbolic than practical concern.
By Adam Motiwala, BASC Research Assistant
Ever since the group of disgruntled students first immortalized their message of revolution onto the worn-down walls of the city of Deraa, there has been much discussion about what the West should do about Syria. An increasingly vocal chorus of people is now calling for a reenergized and bellicose Western response, with some, including former Deputy Secretary of Defense Paul Wolfowitz, insisting on arming the opposition. At the same time, convincing arguments about the logistical complexity and dubious legality of, and lack of domestic appetite for, full-scale intervention have taken this option off the table. What seems to have been lost in this discussion are three widely-ignored realities about the situation in Syria that suggest that even a more limited Western intervention may not be the best option.
First, many are quick to conflate the events in Syria with those that occurred in Egypt and Libya. Yet it is important to remember that the number of vested interests in Syria is far greater than that elsewhere in the Middle East. Although Hosni Mubarak was in many ways a U.S. strongman, there was little chance of a foreign country intervening to prop up the regime against a democratic opposition. Unfortunately, this simply is not the case in Syria. The last Russian naval base outside of the ex-Soviet Union is in the Syrian city of Tartus; a stop in Syria is thus the only way for the Russians to refuel when going through the Mediterranean. Similarly, Iran uses Syria a means of extending support to Hamas and Hezbollah.
Both countries have shown the ability and willingness to support Assad in squashing the opposition. If the United States were to increasingly supply the Free Syrian Army (FSA), it is easy to imagine that the Kremlin would respond by intensifying its support for the regime. The prospect of Syria slipping into such a Cold War-style proxy war between the United States and Russia is worrisome, and would likely be profoundly bloody for Syrian society and detrimental to the global economy.
The second point of concern is what would replace a defeated Assad regime. It is important to remember that Bashar al-Assad still retains considerable support among minority groups in Syria and that the opposition remains fractured and has had little success in attracting non-Sunni leaders. Alawites, Christians, Druze and the merchant class have expressed legitimate fear of retaliation were a Sunni government to take hold in Damascus. This means that a new regime lead by the Syrian National Council (SNC) risks the chance of being just as divisive as the current one, solving few of the ongoing problems. Furthermore, the fact that the opposition has now received the endorsement of both Hamas and al-Qaeda (putting the terrorist organization and the United States on the same side of an issue for the first time in living memory) is troubling, and may serve as an indication of the nature of the SNC. The only thing that would be worse than a Syrian civil war would be a brutally repressive Islamist regime that came to power via U.S. action.
Finally, Syria’s large stockpile of chemical weapons has almost entirely escaped media attention. Syria has not yet joined the Chemical Weapons Convention, and is one of the few countries thought to possess considerable amounts of VX, the most vicious nerve-agent known to man (an unfathomably small dose of 10mg touching the skin is sufficient to kill). A more weaponized and aggressive opposition might provide the Assad regime with a justification for actually deploying these weapons. This could in turn lead to a spiral escalation wherein NATO responds to the use of WMDs with bombs and Assad, in desperation, reacts with even more chemical weapons.
As unattractive as it may sound, then, the best course of the action is to allow current trends to continue. As the rate of defections from within the Assad regime hastens, and as renewed sanctions continue to send the Syrian economy into free-fall, many predict that the business class will stop supporting the regime in droves. Once this happens, Russia may realize the need to hedge its bets and give up its unconditional support of the regime, thus opening doors for political compromises. In short, patience may be the least bad solution to what promises to be a rough revolution in Syria.
By Daniel Chen, BASC Research Assistant
On March 9, 2012, the eleventh round of the Trans-Pacific Partnership negotiations came to a close. TPP, a “21st century trade agreement” that spans three continents and covers a multitude of issues from trade in goods and services to regulatory coherence, encompasses nine members and hopes to be a centerpiece of increased interaction in the Asia-Pacific region. TPP has become a priority of the Obama Administration in its “pivot” back to Asia, and one need only look at the TPP webpage at the USTR website to understand that the United States is investing considerable diplomatic energy in ensuring its creation.
TPP makes strategic sense to the United States for three paramount reasons. First, the Asia-Pacific is currently witnessing a rapid proliferation of FTAs with varying trade standards and rules that are diverse in scope, architecture, and objectives, hindering trade and investment and preventing deeper integration. However, by “multilateralizing regionalism,” TPP rationalizes these webs of bilateral agreements into a coherent whole that lessens transaction costs. Second, TPP promises long-term economic benefits as more and more countries join the agreement through its open accessions clause. While the United States currently has FTAs with four out of the other eight negotiating members and the remaining countries have relatively small and liberalized economies, TPP’s enlarging capabilities bode well for future liberalization in the Asia-Pacific. Lastly and perhaps most importantly, the United States has emphasized TPP for political reasons. As Hillary Clinton noted, “In Asia, they ask whether we are really there to stay, whether we are likely to be distracted again by events elsewhere, whether we can make — and keep — credible economic and strategic commitments, and whether we can back those commitments with action. The answer is: We can, and we will.” TPP is then a signal that the United States will remain an engaged player in the Asia-Pacific.
It is this last aspect that is the most controversial. Given the latest Sino-American trade disputes, such as the Senate passing a bill condemning China’s currency manipulation and the recent imposition of tariffs on Chinese solar panels, many people reasonably suspect that any American moves in the Asia-Pacific are meant to contain China’s Rise. American involvement in TPP is then viewed with intense scrutiny. Moves such as Senator Hatch’s attempt to include currency provisions in TPP exacerbate these tensions. Similarly, cries concerning China’s rise and our relative decline compound fears on both sides of the Pacific.
Since 2009, China has acted more aggressively toward its neighbors. Episodes like the Senkaku Island dispute with Japan and its continued support of repressive regimes like that of North Korea presage China’s increasingly assertive role in Asia. Nonetheless, China cannot be thought of as an American enemy. The two countries are increasingly dependent on one another; for example, China needs the United States as a consumer and the United States relies on China as an investor. While critics often worry about China’s rise, the truth is that Americans have directly benefitted from China’s economic miracle. Furthermore, tackling many important global problems, such as North Korean proliferation and global imbalances in trade, requires dialogue and agreement between both powers. Without the involvement of either China or the United States, constructive solutions cannot be reached. In this way, TPP should also not be thought of as an American attempt to stymie China’s increasing dominance; TPP is more of a way to keep counteract diminishing American relevance rather than a means to contain Chinese ascendancy. As Fred Bergsten and Jeffrey Schott of the Peterson Institute of International Economics assert, “‘Hedging’ strategies are not the same as ‘containment’ strategies. For most countries in Asia, the TPP is about keeping the US in, rather than keeping China out.”
Overall, TPP and active U.S. engagement with the Asia-Pacific should both serve as signals that the United States will remain relevant in the region while reassuring China that TPP is not an effort at containment. In this way, countries like Japan, South Korea, and members of APEC can pursue “hedging” strategies while simultaneously ensuring the Asia-Pacific remains an area conducive to commerce and trade.