WASHINGTON — President Donald Trump is likely to tout new business deals as he barnstorms through Asia this week, but his trip is highlighting a broader failure on the world stage: None of the countries he’s visiting wants to negotiate a two-way trade deal with the United States.
Trump and Chinese President Xi Jinping are expected to celebrate a number of new business agreements when the two leaders meet on Wednesday and Thursday, thanks to a delegation of nearly 30 American companies that Commerce Secretary Wilbur Ross has brought to Beijing. Xi could also announce progress in policy areas ranging from investment to drug approvals. Trump has also talked about making arms sales to South Korea and Japan.
But by pulling out of the 12-nation TPP on his third day in office, Trump walked away from free trade deals with Japan, the world’s third largest economy, and from Vietnam, one of the fastest growing countries in the Asia-Pacific. And even though Trump said he wanted to hold bilateral free-trade talks with the TPP nations, he hasn’t been able to persuade a single country to start.
The lack of progress in one-on-one trade deals with Asian countries not only shows the limitations of Trump’s “America First” trade policy, but potentially puts the U.S. in a weaker position as other countries band together to forge trade deals without the United States.
“Now Trump promises to pocket those TPP concessions and demand more, while retracting U.S. offers. That package has little appeal” — Chicago Council on Global Affairs fellow Phillip Levy
Trump got a pledge from Japanese Prime Minister Shinzo Abe on Monday that the two countries would work together to expand trade, without any reference to formally launching bilateral talks. In contrast, Japan is already pursuing a free trade agreement with the European Union and is leading efforts among the 11 remaining TPP members to put that deal in place without the U.S., at least for now.
One reason Japan is wary of starting bilateral trade talks with United States is that it made a politically difficult decision to open its agricultural market to more U.S. farm exports in the TPP deal, Phillip Levy, a senior fellow at the Chicago Council on Global Affairs, wrote this week on the Foreign Policy magazine website.
“Now Trump promises to pocket those TPP concessions and demand more, while retracting U.S. offers. That package has little appeal,” Levy said.
Trump’s tough stance with Mexico and Canada during reopened discussions on NAFTA could also be to blame for other countries’ cold feet, said Wendy Cutler, a former U.S. trade official who is now vice president of the Asia Society Policy Institute.
Trump and first lady Melania Trump sit with Jinping and his wife Peng Liyuan in Beijing | Jim Watson/AFP via Getty Images
“All these countries are watching the NAFTA negotiations very closely and wondering how they will proceed and what the outcome will mean for them,” Cutler said.“My sense is everyone would prefer to wait. It’s one thing to put tough proposals on the table. It’s another to see what the outcome will be.”
Asian countries have already noticed how Trump has treated South Korea, Cutler added, referring to the president’s decision to force a renegotiation of the five-year-old U.S.-South Korea Free Trade Agreement by threatening to withdraw from the pact.
Trump and South Korean President Moon Jae-in agreed on Tuesday in Seoul to accelerate efforts to tweak the deal, with the U.S. president boasting that Seoul has agreed to buy “billions of dollars worth of [U.S. military] equipment” to bring its trade with the United States into balance.
There could be some awkward encounters at Trump’s second-to-last stop, in Da Nang, Vietnam, which is the setting for this year’s Asia Pacific Economic Cooperation leaders meeting. All 11 remaining members of the TPP are also members of APEC, and they could announce plans to move ahead with the pact while Trump watches from the sidelines.
The U.S. is also fighting with China over the wording of the final statement that leaders will issue at the conference, with the Trump administration pushing hard to change boilerplate wording calling for “free and open trade” to “free and fair trade” — in line with the Trump administration’s desire to aggressively use U.S. trade laws to keep out unfairly traded imports.
Trump and Xi are slated to give back-to-back speeches in Da Nang on Friday, giving regional leaders and business groups a chance to size up two competing visions for the Asia-Pacific and decide which leader presented the better case.
It’s no secret that Trump’s decision to bolt the TPP left many U.S. allies in Asia wondering if he was turning his back on the entire region, said Alan Bollard, executive director of the APEC secretariat. “I think there is quite a bit of concern as to whether that has happened or not. There will be a lot of interest in that,” he said.
But first and foremost, APEC members are hoping Trump will lay out a “coherent view” of U.S. policy toward the region and how they see trade shaping relations, Bollard said.
“It’s been quite a tough year for us because we’ve seen massive improvements in living standards that trade has done in the past decades,” but Trump’s rhetoric doesn’t seem to acknowledge that, he said.
When it comes to China, Trump is unlikely to get anything close to what he most wants: an agreement to make the systemic changes that would be needed to address the U.S.-China bilateral trade deficit, which totaled $347 billion in China’s favor last year and could set a new record of about $370 billion in Trump’s first year in office.
Trump himself has even downplayed the prospect of him getting in Xi’s face over trade on this trip.
“Xi is about as high as he possibly could be in terms of his domestic stature, and President Trump is in a much more vulnerable position,” said Scott Kennedy, director of the China business and political economy project at the Center for Strategic and International Studies. “President Trump needs more substantively to be achieved out of his trip to Asia than every leader that he meets with, including Xi Jinping.”
Trump himself has even downplayed the prospect of him getting in Xi’s face over trade on this trip, because the need to have China’s cooperation in dealing with North Korea is a more pressing concern.
“Trump needs something to bring home from the trip, and if they came with a hammer, that wouldn’t happen,” Kennedy added. “So, he’s coming with the roses. They’re going to have some deals so he can tell his base, ‘We had the hammer in our back pocket. We ended up getting these deals and I accomplished something that no American president has with China.'”
Trump’s actions back home could also be making it tough to ink an important deal with China. Under his direction, U.S. Trade Representative Robert Lighthizer is investigating whether the U.S. should impose unilateral sanctions because of Chinese policies and practices that either fail to protect the intellectual property rights of American companies or that force U.S. companies to hand over valuable technology if they want to do business in China.
Meanwhile, the Commerce Department announced recently that it would continue to treat China as “non-market economy” in trade cases. Chinese officials have indicated they will challenge that decision at the WTO.
Cutler said she’s yet to hear a “coherent” China strategy from the administration, a point that Kennedy at CSIS echoed.
“I think they’d like to be tougher … but the investigations need to be further along, and they need to decide internally what the ask is for China, and what they would do if they don’t get that, and what they would do if China retaliates,” Kennedy said.
“They have not done those things. So, instead of going with ‘Plan A,’ they’re going with ‘Plan B,’ which is, ‘Let’s get through the trip, let’s look like we’ve accomplished something and then when we get home, maybe these other things will mature and we can change course.’”