America lays down gauntlet for Asean, Apec summits

THE global spotlight turns to the Asia-Pacific this week, with world leaders from Russia to Australia and India to Canada attending the Asean and Apec summits. With states in attendance accounting for more than 50 per cent of global GDP and nearly half of world trade, US-Chinese rivalry will be centre stage in their respective attempts to shape the regional order.

With Donald Trump, surprisingly, skipping the events, his deputy Mike Pence will be pitching the US case. On Monday, before starting a trip taking in Japan, Singapore, Australia and Papua New Guinea, the US vice-president asserted that Washington seeks a region "where sovereignty is respected, where commerce flows unhindered and where independent nations are masters of their own destinies ... while some nations now seek to undermine this foundation, the US is taking decisive action to protect our interests and promote shared success".

While not acknowledging China explicitly here, Mr Pence is primarily referring to Beijing which has its own ambitions to shape the regional order. To that end, President Xi Jinping and Premier Li Keqiang this week will be promoting at Asean and Apec not just their Belt and Road plan, one of the biggest initiatives of its kind in history with a trillion dollar price tag. In addition, they will be doubling down on their visions for a Free Trade Area of Asia-Pacific (FTAAP) and a pact, for which discussions have been underway since 2012, known as the Regional Comprehensive Economic Partnership (RCEP).

While FTAAP is a project that has been under debate since at least 2004, it has assumed new importance for Beijing since the inception of the Trans-Pacific Partnership (TPP) which was originally promoted by the Obama administration.

According to Mr Xi, the FTAAP would provide a significantly greater economic boost than TPP (which comprises Singapore, Australia, New Zealand, Japan, Canada, Brunei, Chile, Peru, Vietnam, Malaysia and Mexico, but not the United States as was originally intended because of Mr Trump's rejection of it). And the Chinese president has encouraged Apec in the past to "vigorously promote, setting the goal, direction and roadmap and turn the vision into reality as soon as possible".

Mr Xi has said that FTAAP and RCEP do not "go against existing free trade arrangements". However, at the heart of the debate on this issue is contrasting US and Chinese visions to shape the regional order and cement their influence on it.

And Beijing's push for FTAAP and RCEP (which comprises the 10 Asean members plus India, Australia, Japan, South Korea and New Zealand, but not the US) thus provides an alternative model for regional economic integration much more conducive to its national interests. This is not least because China will be explicitly part of the new economic agreements and will shape their design by creating free trade areas with it potentially at the centre.

Beijing would like this week's events to see significant new momentum put behind FTAAP and RCEP, not to mention Belt and Road. And it is in this context that the US will set out its own stall for the shaping of the regional order under three pillars: promoting prosperity, enhancing security, and supporting transparent and responsive government, rule of law, and protection of individual rights, including religious freedoms.

Yet, despite the US ambitions set out here, there are concerns among allies in Asia-Pacific that this is too little, too late by the Trump team, especially following its pulling out from TPP. For instance, former Obama-era US trade representative Michael Froman has despaired that Washington "is the one going to be left on the sidelines as others move forward".

A key remaining question now, for US allies, therefore is whether the Trump team will step up to the plate and develop a comprehensive and well-funded grand strategy to embed US influence, as Mr Obama had intended with TPP. There are some signs in the last few months that Washington is starting to wake up to smell the coffee.

Last month, for instance, a bill was signed into law by Mr Trump which will create a US$60 billion new International Development Finance Corporation (IDFC) aimed at strategic investment in developing countries. The new IDFC will move forward US interests, in Asia-Pacific and beyond, including supporting US firms in key developing markets to enhance US geopolitical influence vis-a-vis China.

This latest step in Washington's response to China's growing influence builds on other recent announcements by US Secretary of State Mike Pompeo. In July, for instance, he committed some US$113 million in regional investments focused on technology, energy and infrastructure as a "downpayment" on future US commitments to Asia-Pacific.

Extensive as these pledges are, however, there appears no overarching plan to bring them all together in a powerful, strategic way. And this perceived under-ambition has left allies anxious, especially given Mr Trump's uncertain personal commitment to the region as underlined by his non-attendance this week.

History points to what may now be needed to fill this vacuum. In the post-war period, the US has undertaken a global institutional-building project on a largely bipartisan basis, at least until the election of Mr Trump, to encourage growth of democracy and open markets across the world.

From 1945, US administrations helped create and nurture key bodies that exist to this day - from the UN to the IMF and World Bank. Inspired by this success, both the administrations of George HW Bush and especially Bill Clinton sought to respond to the collapse of Soviet Communism by encouraging the creation of a range of economic institutions, including not just Apec, but also the WTO and Nafta too.

Yet, with Mr Trump pulling the plug on US participation in TPP, and possibly in other institutions such as the WTO, a vacuum exists that either the US or others will fill. And the danger for Washington is that irresistible momentum could now build for a regional architecture, including RCEP and FTAAP, which allows Beijing to assume the upper hand.