It is safe to say that US relations with East Asia has been directionless for some time since the bulk of its energies are consumed in the Middle East, particularly with the War on Iraq.
The past year has seen the US trying to play catch up in Asia as the former worries about the increasing influence of the Chinese.
With the Democrats now in charge of both Houses in the US government, they have signaled their clear intention not to have the President and his administration dictate the foreign policy direction. US relations with Asia may be set for some changes.
This week’s fight picked by Washington to sue China over 'illegal' industrial subsidies is a preview in this area. Despite the fact that the US’s WTO move against China is the largest of its kind in WTO history, the mild response from Beijing to US charges suggests a new sophistication in China’s international trade policy with the US. By merely issuing a statement that it 'regrets' the United States' decision to start legal action at the World Trade Organisation (WTO) and calling Washington's move a 'pity', China shows a remarkable adaptation to something which they are increasingly getting used to – partisan politics in Washington.
This is in fact already the third case the United States has filed against China since it joined the WTO in 2001. One was resolved before it reached WTO arbitration. The other pits all Western powers European Union and Canada against China. The Democrats are eyeing a possible fourth WTO case against China for rampant piracy of American goods. China is learning fast on how to deal with these “disputes” and pressure from the West. Just as Japan got used to it in the 1980s when a club of Western countries forced Tokyo to reevaluate the yen. The Chinese Trade Ministry unveiled a new set of tools in dealing with Washington, relying on consultations to 'deliberate' the US case and a policy of keeping 'bilateral contact over the issue all along'.
This is a signal that it is open to negotiations and also a reflection of its newfound confidence in handling Washington’s messy partisan politics coolly and rationally. The stake at hand is about US$760 billion (S$1.2 trillion) worth of record US trade deficit with China in 2006. The US simply wants China to spend more and take over some of the responsibilities from the US in energizing the world economy. China has no issues with that but wants to buy assets with its spending spree which the US has rejected as strategic companies. It is difficult to see how this trade clash will work out.
China may rest easier knowing that it is not the only East Asian country that the US has a bone to pick. Malaysia is also in the US Congress’s sights for trade sanctions. Tom Lantos, the head of the US House of Representatives' top foreign affairs panel called on President Bush to suspend free trade talks with Malaysia in protest over the 16 billion dollar deal signed in January between the state-owned National Iranian Oil Company and Malaysia's SKS Group which Lantos described as "abhorrent". The 25-year deal was to develop the Ferdos and Golshan offshore gas fields in southeastern Iran and establish liquefied natural gas (LNG) plants. "That is why today I am sending a letter to our trade representative, Susan Schwab, requesting that all negotiations between the United States and Malaysia on a free trade agreement be suspended until Malaysia renounces this proposed deal," Lantos told a Congressional hearing.
Lantos and his supporters plan to invoke the Iran Sanctions Act, requiring sanctions against companies involved in Iranian energy development which the US regards as a renegade state. The 1996 Iran-Libya Sanctions Act compels the US President to impose punishments on companies which invest more than 20 million dollars in Iran's energy sector. This comes at a bad time for Malaysia which is preparing for a fifth and crucial round of negotiations to frame a free trade agreement before Bush's powers to strike free trade deals expire in June 2007. Once Bush’s powers expire, Malaysia will face a much tougher Democrat crowd in its trade negotiations.
In contrast to China’s or Malaysia’s troubles with the US, Vietnam is now the poster child for US investments in East Asia. As Vietnam opened its economy and eased some of the rigid controls exerted over its people, and made moves to establish ties with the Vatican, Washington has relaxed its own restrictions on dealings with Hanoi. Last year, US has removed Vietnam from a list of countries of particular concern regarding religious freedom. And in December 2006, the US Congress approved permanent normal trade relations for Vietnam with the country joining the World Trade Organisation (WTO) in the same month.
The US and Vietnam now hope to double bilateral trade to US$15 billion (S$23 billion) by 2010. The US complemented Hanoi’s entry into the WTO with the lifting of an arms embargo, the first formal step to establishing military ties with the Indo-Chinese socialist state. While the two political systems (US democracy and Vietnamese socialism) have little in common, US clearly sees Vietnam as a valuable strategic ally in buffering against an even large socialist state up north. The Americans may also be reminded that this could very well be the beginning of yet another an emerging trade deficit with an East Asian state, Vietnam, in its latest political and military outreach.
Despite the fanfare over Vietnam’s emergence as recipient of American economic and political largesse, reality is far from rhetoric. Professor Carlyle Thayer, a Vietnam expert at the Australian Defence Force Academy noted that for a start, Hanoi does not have the cash nor does it have the element of trust to start a spending spree on US arms. Thus, the relationship is likely to be another unilateral flow, of US investments and money to build up Vietnam’s economy in the hope that it would provide a strong political and military buffer to Chinese power. A senior general in the Vietnamese military told The Straits Times: 'The (two sides) can now cooperate in military training, but I'm not sure we will buy military materials...because we cannot entirely trust the Americans…Their actions indicate they still want to change our government, so we always need to be cautious about US intentions.'
Vietnam may draw lessons from other East Asian powers in dealing with Washington by aligning with US interests if it is in their favor but remaining cautious when it is not, given the fickle politics in Washington. This seems to be the current situation in Tokyo, the US’s closest ally, which has seen the Japanese Defence Minister repeatedly criticizing the Bush Administration’s War on Iraq but promptly shut up by the Americans who warned that such comments may affect the US-Japan alliance. This, however, may not stop top Japanese politicians from strategically expressing their true opinions as the normally pro-American Foreign Minister Taro Aso has joined the fray, criticising US' policy on Iraq and US operations in Iraq as being naive. It is also worthwhile to note that Washington’s two closest allies, Tokyo and Seoul, are pulling troops out or ending their logistical support for the US War on Iraq as the Americans go for troops surge at the same time.
'No easy solution' to US-China trade row (Straits Times, 5 February 2007)
Bush pushed to tackle China trade subsidies (Straits Times, 4 February 2007)
US-Viet ties get boost with end to ban on arms sales (Straits Times, 3 February 2007)
US asked to suspend free trade talks with Malaysia over Iran deal (Channelnewsasia, 1 February 2007)
Hanoi and Vatican agree to set diplomatic ties (Straits Times, 1 February 2007)
Vietnam unveils liberal policy on religion (Straits Times, 3 February 2007)