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Why Global Order Still Needs America in Asia

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Why Global Order Still Needs America in Asia R AZEEN SALLY Why Global Order Still Needs America in Asia sia has a gathering conventional wisdom erally, through key bilateral relationships, and in about the impending end of a seventy- networks of multilateral co-operation, especially in year-old US-led global order and China’s NATO, the UN, IMF, World Bank and WTO. Ainevitable rise to regional leadership. Te US will All the above has enabled unprecedented glo- no longer provide the public goods necessary for balisation, growth and prosperity. Post-war West a stable and open global order. It will disengage European reconstruction and recovery would not from Asia, on both security and economic fronts. have happened without US leadership, nor would Donald Trump’s election heralds a marked accel- Soviet communism have been defeated peacefully eration of US withdrawal from leadership, globally and Eastern Europe’s freedom regained. Te same and in Asia. To pessimists, this threatens a col- can be said of Asia’s extraordinary post-war eco- lapse into a 1920s and 1930s scenario of global dis- nomic success, which started in East Asia and order—power conficts, economic deglobalisation spread to South Asia. US treaty alliances, troops and depression. To Asian optimists, US decline is on the ground, and naval predominance have main- China’s opportunity to rise to Asian, if not global, tained the regional Pax and facilitated commerce, leadership. A regional Pax Sinica will replace a glo- within Asia and between Asia and the world. bal Pax Americana. But US leadership has been declining since the I fear US disengagement will result in a more beginning of this century, frst with Middle East unstable and less open world. But I do not think a misadventures, then with the global fnancial crisis regional Pax Sinica is either inevitable or desirable. and ensuing economic feebleness, and latterly with Moreover, if Asia is to continue to enjoy stabil- President Obama’s foreign-policy pusillanimity— ity and prosperity, it will still need US leadership: his reluctance to lead internationally. Concurrently, there is no alternative. the world has become more multipolar, especially with China’s spectacular economic ascent. Tat has made China a regional and global power—the Declining US leadership and the Age world’s number two. It projects its power most of Trump visibly in its East and South-East Asian backyard. ax Americana has ruled the world since 1945. Inevitably, this has caused tensions with the US, US leadership has provided essential public hitherto Asia’s only global power and its key gPoods for a stable and open global order. Te US “balancing” power. has kept its market open to foreign imports and What comes next with President Trump? foreign capital, while promoting freer trade and First, we should all be worried by Mr Trump’s capital fows globally. Te US dollar remains the character and judgment: his dubious business world’s key currency, lubricating international pay- record and ethics, scant policy knowledge, outra- ments for goods and services. Te US has provided geous campaign pronouncements, knee-jerk, yah- liquidity to the rest of the world in times of mon- boo Twitter soundbites and, not least, disgusting etary distress. Perhaps most important, US hard manners. Ordinarily, this would disqualify him power—its military and naval presence world- from the highest public ofce in the world. Equally wide—has saved the world from global wars and alarming are his isolationist views on immigra- kept it open for fourishing commerce. Ten there tion, geopolitics and globalisation—his version of is US soft power—the irresistible pull of America’s “America First”. Since he took ofce, domestic and dynamic open society, its glorious mix of liberty, foreign policy has become much more unpredict- markets and democracy. Te US has led unilat- able and volatile. Tat is bad for global order. 10 Quadrant July-August 2017 Why Global Order Still Needs America in Asia But there is one silver lining: now is a good homespun do-it-yourself economics. Trade def- chance to inject a dose of economic liberalism into cits or surpluses, in isolation, say nothing about US domestic policy—on tax reform, deregulation, national competitiveness; the US and other coun- the environment, energy, education, health care tries have long prospered with persistent trade and labour markets. Some of Mr Trump’s cabi- and current-account defcits. China is not kill- net ofcers are economic liberals with successful ing US manufacturing with an undervalued cur- records in business, politics and the professions. rency; if anything, it is now overvalued. Reviving Te Trump White House could work productively labour-intensive manufacturing in the US is a with a Republican Congress to achieve at least fool’s errand: such jobs are gone forever. Te US some of this agenda. Tat is a big “if”. It has fallen is competitive in manufacturing niches, but they at the frst hurdle—cleanly repealing and replacing are technology- and capital-intensive and employ Obamacare. Trump administration dysfunction fewer people. Trump seems to have no appreciation and Republican Party fratricide could cripple other of fragmented cross-border production in global reforms. But if some major reforms were achieved, value chains, which have benefted US producers and rejuvenated the US economy, that would be and consumers enormously. good for the rest of the world. Trumpian economic nationalism comes at a Te two most vexing global issues are security vulnerable time in international trade. Tree vul- and trade. nerabilities stand out. First, global On security, the signals are trade growth has slowed markedly contradictory. During the presi- since 2012, barely keeping pace dential election campaign, Mr Russia can only with world GDP growth—what Trump dismissed NATO and disrupt and destroy, is dubbed “peak trade”. It revived, implied that Europeans, Japanese not co-operate or lead along with global economic growth, and South Koreans should fend in the frst quarter this year. But it for themselves. His love letters to to provide anything is too early to tell if this is a new President Putin’s authoritarian, stable or productive. trend or just a blip on the screen. revanchist Russia are alarming. Second, protectionism has crept But he has also sounded hawkish Its present swagger up since the global fnancial crisis, on the US’s global military and on the international though it has not escalated to 1930s naval reach, especially to counter heights, nor has it reversed exist- Chinese maritime expansion in stage is solely the result ing globalisation. And third, the Asia. His secretaries of state and of Western timidity. US’s withdrawal from the TPP is defence are avowed international- a monumental blunder for two rea- ists who favour stronger projection sons. Te TPP is the most ambi- of US power abroad. Tey are also seasoned, cel- tious trade deal since the conclusion of the GATT ebrated professionals who reached the top of busi- Uruguay Round in 1994. Whatever its faults, it con- ness and the military. Overall, it is still too early to tains hard rules for freer trade and foreign invest- tell whether US national security policy will head ment among its twelve members, who make up a towards disengagement or re-engagement with the third of world GDP and a quarter of world trade. It world. would boost global value chains in the Asia-Pacifc. As to trade, Mr Trump’s message is economic Furthermore, it was a geopolitical signal of US re- nationalism—loud and clear. He has broadcast this engagement in Asia—the vaunted US “pivot”. Now message for the last thirty years: Japan-bashing in these economic gains are forgone. And it is a dan- the 1980s and 1990s, then China-bashing. He has gerous signal of US disengagement from Asia. announced the US’s withdrawal from the TPP, If the US does turn protectionist, it will only wants to renegotiate NAFTA, has threatened high accelerate these trends since the GFC. Creeping tarifs against China and against US companies protectionism will afect bigger chunks of interna- that relocate production abroad, and says he will tional trade and disrupt global value chains. World ignore the WTO. Te US’s other major trade initi- trade will slow down. Tat will drive world GDP ative, a free trade agreement with the EU, is either growth even lower, in the West and the Rest. A stalled or dead. Mr Trump’s senior trade-policy more pessimistic scenario is of a full-blown trade appointees are fellow economic nationalists. All war: unrestrained US protectionism, escalating tit- are obsessed with trade defcits, China-bashing, for-tat retaliation by the EU, China and others, and industrial policy to revive US manufacturing. perhaps NAFTA’s break-up, and severely disrupted Tis is a toxic cocktail of what Paul Krugman global value chains. Tis would be a lurch back once called Pop Internationalism—a destructive, to 1930s-style protectionism, deglobalisation and Quadrant July-August 2017 11 Why Global Order Still Needs America in Asia depression. I still think this doomsday scenario is pled at home, its economy dependent on oil, gas and unlikely to materialise. other commodities but without a solid foundation. Abroad, it can only disrupt and destroy, not co- operate or lead to provide anything stable or produc- Alternatives to a US-led global order tive. Its present swagger on the international stage is ome who predict continued, even accelerated, solely the result of Western timidity. Western pow- US decline and disengagement say the world will ers could easily contain Mr Putin, but they choose rSemain stable and open. Others will pick up where not to do so. the US leaves of: they will substitute for US leader- And what about stronger international institu- ship to provide international public goods.
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