Who rules in writing Asia’s rules?
11 May 2015|

Asia Pacific

The Asia Pacific is going through a vivid and significant rule-making tussle.

It’s unusual because rule-making and norm formation usually involve inching through decades. Power hierarchies tend to shift gradually and thus rules, by definition, are reasonably static. The international rules and norms based on power hierarchies follow gradually behind power shifts, but eventually adjustments happen. And a bit of adjusting is going on in Asia.

Credit one of the great political wordsmiths of our time for putting this in lights. Step forward Barack Obama in his State of the Union address:

‘China wants to write the rules for the world’s fastest-growing region.  That would put our workers and businesses at a disadvantage.  Why would we let that happen?  We should write those rules.’

Obama is in a rare political space (no more campaigns) where he can wield that most dangerous of political explosives – the big truth.

The context for Obama’s rule-making plea to Congress is two other truths about the US and China that mean rule-writing power is in play.

The United States faces a long-term relative decline in its economic and military power in Asia. Trends don’t get much bigger.

The important word is relative. The US will continue to grow. It’s still an essential player. But its hegemonic role in Asia is fraying.

Obama’s pushback against relative decline has two arms – the Trans-Pacific Partnership and the military pivot to Asia. Both have their problems. Not least because at the sharp end where policy and politics become pointy, these are both responses to China. And the tide is running for Beijing.

China is a status quo-tidal power.

The relative shift is to Beijing. China exults at the way the international tide of trade and power has been running and wants to push along this evolution of the  status quo — stability accompanied by a continued shift of the tide in Beijing’s favour.

China understands this is a rule-writing moment. A previous meditation on Asia’s rules made much of a speech by Xi Jinping that argued it’s time for Asia—led by China, obviously—to set its own standards (and, implicitly, move on from US rules):

‘In the final analysis, it is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia. The people of Asia have the capability and wisdom to achieve peace and stability in the region through enhanced cooperation.’

China is acting the bully in South China Sea, remaking the rules with mountains of sand, changing reefs into military islands. Elsewhere, Beijing is buying friends using American techniques: write new rules and get others to sign up. Then everyone else will help entrench your system. And they’ll even pay some of the costs—soft power fuelled by a lot of cash can enlist plenty of supporters.

The initial Chinese response to the Trans-Pacific Partnership was to start negotiations on the Free Trade Area of the Asia-Pacific. The trouble was this was just TPP-lite. It was responding to a US tune and playing by US rules.

In the past two years, Xi Jinping has shifted ground and really started the rules struggle. China’s Asia Infrastructure Investment Bank and the Silk Road strategy play to Beijing’s strengths.

The AIIB and Silk Road reflect Beijing’s system—the government decides and directs while the state owned enterprises deliver. Not everything Beijing is promising will come to pass—or be built, but it’s about making the rules as well as making the roads.

Equally, the economic gains of the US TPP are not as great as boasted, as plenty of fine economists will happily explain. See this Canberra Times piece on the proclaimed trade benefits of the TPP being ‘a lot of nonsense.’

The flaws in the TPP mean it doesn’t shift the economic game as much as promised. As rule writing, though, it makes perfect sense. Create a preferential trade bloc that balances against China by excluding China.

Ignore the stuff about China being welcome to join TPP at some future date. Beijing isn’t going to let the US use a trade treaty to re-write Chinese environmental or labour standards. For China, the TPP is about US rule as well as US rules.

US commitment or insouciance about maintaining US rules will be the way Asia views the Congress vote on giving Obama fast track authority to conclude the TPP. If Congress rejects fast track it will do much more than merely kick the issue downstream to be dealt with by the next President.

Robert Samuelson set out the conundrum well in the Washington Post.

He, too, makes the point that the gains of the TPP are relatively modest in the totality of the Asia Pacific economy (delivering an extra 0.9 percent to the incomes of the 12 countries by 2025). For Samuelson, this is about power in the Pacific:

‘We seek to reassure nations that we’re still a Pacific power and that our proposal represents a useful framework to govern the region’s trade. A collapse would leave a vacuum that China would most likely fill.’

A joint sitting of the US Congress has just heard this message delivered with passion by Japan’s Shinzo Abe, uniting themes of alliance, US pivot and the TPP. Abe made the link between economics and geopolitics with his exhortation that long term the TPP’s ‘strategic value is awesome, we should never forget that.’

If Congress ignores Abe and opts out, Japan will have one more piece of evidence for its fear that the US might no longer be capable of delivering the goods for Asia’s security and system. Should Congress reject the TPP fast track, start counting down to the moment that Japan steps away from the US and Tokyo signs on to be a member of China’s AIIB.

The importance of the TPP for Asia is the answer it will give to the big question posed by Barack Obama: Who rules and who writes the rules?​