Trump altering stance on TPP has grave implications
America will be the bigger loser, and China could end up being the biggest beneficiary.
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US President Donald Trump has been quick to change his stance on complex issues such as US relations with other countries, including that with China. Trump has also been unpredictable in his approach towards important multilateral organisations such as the North Atlantic Treaty Organization (NATO) and US ties with important allies in the Indo-Pacific region, especially Japan and South Korea.
The most recent instance of Trump yet again changing his views was his statement on the Trans Pacific Partnership (TPP) in Davos during the World Economic Forum, saying that the US was open to a rethink, provided the provisions were fair. While the US pulled out of TPP agreement much to the chagrin of other signatories, 11 countries -Australia, Brunei, Canada, Chile, Japan, Malaysia,Mexico, NewZealand, Peru, Singapore and Vietnam - have agreed to sign the deal in March in Chile.
While speaking at Davos, Trump said that the US was not averse to negotiating trade deals with its TPP partners.
In an interview to CNBC, on the eve of his address, Trump said: "… would do TPP if we were able to make a substantially better deal. The deal was terrible, the way it was structured was terrible. If we did a substantially better deal, I would be open to TPP."
The US president sensed the pitch at Davos, which was firmly in favour of globalisation, and a more open economic world order. During his address while speaking of American interests, Trump made it a point to state that watching out for US interests did not imply that his administration would like America to become more insular. The president said:
"America first does not mean America alone. When the United States grows, so does the world. American prosperity has created countless jobs all around the globe and the drive for excellence, creativity, and innovation in the US."
For instance, Indian Prime Minister Narendra Modi while pitching in favour of globalisation said, "Instead of globalisation, the power of protectionism is putting its head up."
Modi had gone to the extent of saying that inward looking tendencies were an important challenge arguing that "... such tendencies can't be considered a lesser risk than terrorism or climate change."
Interestingly, Modi's remarks on globalisation were welcomed by the Chinese, with the Chinese foreign ministry spokesman, Hua Chunying, arguing in favour of China and India working together for promoting globalisation. Hua said, "China would like to enhance coordination and cooperation with all countries including India to steer the economic globalisation towards benefiting world economic growth and well-being of all countries."
Last year in his address at Davos, Chinese President, Xi Jinping, had spoken in favour of globalisation saying, "Pursuing protectionism is like locking oneself in a dark room… Wind and rain may be kept outside, but so is light and air."
While some flexibility is welcome, excessive unpredictability and Trump's woolly approach on serious issues is confusing the outside world. While a business-like approach is good to an extent, to deal with complex geo-strategic issues purely from the prism of US' short-term financial interests as opposed to long-term geo-political interests is a disastrous idea.
Every country has to watch its own interests, and the US is no exception, and there is absolutely no doubt that domestic public opinion cannot be ignored. Yet, if the US wants to be a leader, it cannot be as transactional as Trump. US dreams of a "free and open Indo-Pacific", this key aim of American defence strategy will remain a mere dream, if the US sends confusing signals to its allies in the region, and is not willing to take a clear leadership role. While the strategy identifies China as a threat, Trump's continuous somersaults on relations with US allies are only emboldening Beijing.
While it is unfair to single out Trump for being insular he has been the mascot for inward looking protectionist economic policies and an anti-immigration sentiment. While the US president did tell the global audience at Davos, that "America First does not mean America alone" if he does not start thinking like a US President.
Currently he is thinking purely like the head of a business enterprise, and running a business is fundamentally different from leading a country (though off course there may be some similarities), which for long has sought to be the flag bearer of democratic, liberal values and globalisation. While Trump's isolationism and myopic approach may cause some discomfort for other countries, and groupings like the TPP, but they will find other alternatives as has been the case with the signatories of the TPP, America will be the bigger loser, and China could end up being the biggest beneficiary.