U.S.–China Week: Resetting trade agendas, Korea challenges, Imagining Trump-era alliances (2016.11.28)

Welcome to issue 79 of U.S.–China Week. During the coming three weeks, I will be in Washington, Shanghai, Beijing, and Tokyo for meetings and some speaking engagements. Please get in touch if you’d like to meet up in one of those places. Publication may be irregular while I’m on the road.

At time of writing, we have almost no further information about the incoming U.S. administration’s Asia-relevant staffing. The work of studying key figures’ views will have to wait for now.

As always: Please encourage friends and colleagues to subscribe to U.S.–China Week. Here is the web version of this issue, ideal for sharing on social media. You can also find U.S.–China Week on Medium and on Facebook, and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

TRADE
Trump pledges TPP withdrawal ‘on Day 1,’ USTR says still working on U.S.–China bilateral investment treaty

In a pre-recorded video message, President-elect Donald Trump said he would “issue a notification of intent to withdraw from the Trans-Pacific Partnership” on “day 1,” moving up the timeline on a previously reported plan to pull out of TPP in the first 100 days. Media reports and commentators, building on the dominant frame from the APEC summit, clustered around the idea that (in the words of NPR’s Audie Cornish) “U.S. withdrawal would open the way for China to strike its own deals across Asia.” At The Diplomat, Prashanth Parameswaran helpfully outlined the differences between TPP, the ASEAN-China-plus RCEP negotiations, and the APEC-centric FTAAP—including ways they are complementary and competing. And Michael Pettis wrote in WSJ that “it would be nearly impossible, given China’s economic requirements, for it to replace the U.S. at the center of global trade.”

The annual U.S.–China Joint Commission on Commerce and Trade (JCCT) meeting took place in Washington in this new context, but its outcomes appear continuous with Obama-era processes. Like last year‘s meetings, Chinese technology security policy was a topic of discussion, and the U.S. reported joint language declaring: “the two sides recognize that generally applicable Information and Communications Technology (ICT) security-related measures in their respective countries in commercial sectors do not discriminate unnecessarily or unnecessarily restrict trade or the flow of information in an orderly fashion.” Mark Cohen of the China IPR blog summarizes intellectual property outcomes. According to Politico, U.S. Trade Representative Michael Froman said bilateral investment treaty (BIT) “conversations are ongoing. … I think it’s important that it be a high-standard agreement that really reforms and opens up the Chinese economy and creates real disciplines to address the kid of problems our companies have had in that market. Again, we’ve made real progress, but we’re not there yet.” A Chinese economist reportedly proposed a U.S.–China bilateral free trade agreement.

Meanwhile: Economists who had claimed to measure the impact of China trade on U.S. localities wrote that they “find a robust positive effect of rising import competition on Republican vote share gains” and that, other things equal, Hillary Clinton would have won if Chinese import penetration had been 50 percent lower; WSJ translated the findings from academese to journalese. / NYT reported that Facebook has developed tools that might be used to comply with Chinese censorship regulations. / Reuters reported that a company seeking to buy a U.S. semiconductor firm “is funded partly by cash originating from China’s central government and also has indirect links to its space program.” / And Bloomberg assess potential Trump conflicts of interest connected to a major Chinese bank’s tenancy in Trump Tower.

KOREAN PENINSULA
New Korea sanctions agreed by U.S. and China face Russian friction; Speculation that Trump to prioritize Korea over trade

NYT‘s Jane Perlez reports that U.S. government sources believe Trump referred to the challenge from North Korea as a “big problem for the country” that Obama mentioned during the pair’s meeting at the White House. The piece speculates that Trump could take a softer tack on trade with China in service of seeking Chinese cooperation on the Korean nuclear issue. Trump’s designated national security adviser, Lt. Gen. Michael Flynn said in an apparently improvised public speech that he does not believe Kim Jong-un is a “rational actor,” unlike his father and grandfather. / Reuters reported that “the United States and China have agreed on new U.N. sanctions to impose on North Korea over the nuclear test it conducted in September, but Russia is delaying action on a draft resolution, a senior Security Council diplomat said.”

ANALYSIS: U.S. officials in a new administration, whoever had won, were always going to have to take on the Korean Peninsula’s complex array of challenges with a mixture of solo U.S. initiative (inevitably with significant South Korean involvement), Chinese cooperation, and broader coordination with governments in Tokyo, Moscow, and elsewhere. Both Trump and Hillary Clinton had also signaled increased emphasis U.S. economic priorities in a way Chinese counterparts were unlikely to welcome. The political landscape does not accommodate an either-or approach, even if some Chinese voices wish it could: Both Korea and economic irritants will be taken up in the coming months. Both issues also are joined by a common uncertainty. There is a gap between what Trump promised in the campaign and what is likely possible even in the unlikely event the administration closely follows campaign rhetoric. And the still-evolving Trump national security team, combined with a president who is untested to say the least, leave the world planning for an unpredictable United States in any emergency.

ALLIES
Philippines, U.S. agree to fewer military exercises; Chinese think tank floats fishing deal with Philippines, SCS ADIZ

Reuters reported: “Philippine and United States military officials agreed to scale back joint exercises and reduce U.S. troop deployments, a Philippine general involved in the talks said on Tuesday, though a statement issued by the allies spoke of ‘close cooperation.'” The official joint statement was short and simple.

Journalists covering a new report by the government-connected National Institute for South China Sea Studies in Hainan floated the possibility that China might declare an air-defense identification zone in the South China Sea, in the words of the institute’s director Wu Shicun, “if the U.S. continues to intensify patrols and low-altitude spying in the region.” Wu also said, regarding Scarborough Shoal, “A wholesale bilateral fishing industry deal is still being discussed, an agreement has not yet been reached,” Reuters reported. A Foreign Ministry spokesperson said: “The Chinese side has also made proper arrangements for fishing activities by the Philippine fishermen in waters near Huangyan Dao [Scarborough Shoal] in the interests of bilateral friendship. I want to stress that China’s sovereignty and jurisdiction over Huangyan Dao has not and will not change.” Bill Hayton flaggedWu’s statements as “trial balloons.”

Trump adviser Flynn’s October trip to Japan, which included a meeting with a top adviser to Prime Minister Abe, was reportedly “on the invitation of a U.S. company for which he serves as an adviser.” Which company was not specified.

ANALYSIS: Trump’s business ties to the Philippines were a subject of a NYT story on potential conflicts of interests over the weekend, leading with Philippine President Rodrigo Duterte’s decision to appoint one of Trump’s business partners as a special envoy to the United States. Flynn’s business ties are another question; though it is not uncommon for national security officials to work in the private sector between terms of public service, these links provide reporters and others with a lot of legitimate questions about the reasons behind government decisions. As the transition and the media churn through speculation about who will run the State Department, it’s worth asking whether the State Department will be relevant to major decisions. Under previous administrations, the White House and National Security Council have already seized some of the prerogative traditionally thought to reside at Foggy Bottom.

READINGS
Review and Q&A on Pomfret’s new U.S.–China history; Mearsheimer on Trump-era policy; Pei’s scenarios

#USChinaWeek1966
‘U.S. Denies Soviet Raised Border Issue in Talks on China’

“WASHINGTON, Nov. 22[, 1966] —The State Department denied today a report that the Soviet Union had discussed, in top-level talks with Washington officials, concern over problems along the Soviet border with Communist China. … [A] State Department spokesman said he was not denying that the recent discussions had dealt with Chinese-Soviet relations, China’s development of nuclear weapons and prospects for a treaty to prevent the spread of atomic arms. The State Department dealt with an article in The New York Times today reporting closed-door conversations held last month by Andrei A. Gromyko, the Soviety Foreign Minister, with President Johnson and Secretary of State Dean Rusk. … ‘If your query grows out of a report which we have read this morning which carries statements which purport to represent the content of discussions which Mr. Gromyko had with the President and the Secretary, those statements are untrue.'”

(Source: The New York TimesThis entry is part of an ongoing feature of U.S.–China Week that follows U.S.–China relations as they developed in another era of change and uncertainty, 50 years ago.)

ABOUT U.S.–CHINA WEEK

U.S.–China Week is a weekly news and analysis brief that covers important developments in U.S.–China relations and features especially insightful or influential new policy analysis.

Graham Webster is a senior research scholar, lecturer, and senior fellow of the Paul Tsai China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. He is also a fellow for China and East Asia with the EastWest Institute. His website is gwbstr.com.

Disclaimer: Opinions expressed here are my own (and I reserve the right to change my mind).

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Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].