The Trans-Pacific Partnership and the need for KORUS

Posted on Monday, June 27, 2011 by Luke Warnock

The Trans-Pacific Strategic Economic Partnership Agreement (TPP) represents the Obama administration’s first push toward establishing a true multilateral trade framework for conducting trade negotiations in East-Asia. Even with the prospect of an “early harvest” out of Doha Round (which may in itself imperil any future single consensus agreement), the TPP remains the most promisingadvanced pathway to Asia-Pacific regional economic integration."

Although the TPP is gaining momentum and attracting a larger pool of prospective members, its success is seen as contingent upon the completion of outstanding U.S. free trade agreement, including that with Korea. The South Korea-United States Free Trade Agreement (KORUS), a hangover from the Bush Administration, has yet to be approved by Congress though the State Department estimates that the agreement will result in a $10-$12 billion increase in U.S. GDP, including $11 billion in new merchandise exports. More importantly, KORUS has been described as “the acid test for whether the United States can return to a leadership position on trade.”

Without the passage of KORUS, there is little hope that the U.S. could forge a gold standard agreement within TPP negotiations and reestablish itself as a proactive diplomatic and economic force in East-Asia. Congressional unwillingness to ratify the relatively benign and uncontroversial KORUS does not bode well for the TPP, which includes more challenging elements such as intellectual property and origination reforms and may directly impact America’s dairy and textile industries. In comparison to the stalled KORUS process, the Korea-EU FTA was recently approved and is due to go into effect next month.

Currently, the nine TPP members are already linked by 25 bilateral or regional agreements; for the United States, the TPP can promote new regional trade relations and reinforce existing FTAs, like that with Singapore, by establishing more consistent trade rules. In the long term, many see the real value-added to the TPP negotiations as its potential to open the door to a Free Trade Area of the Asia-Pacific Agreement (FTAAP).

Beyond the direct economic gains, the TPP is the most apparent representation of American reengagement in the Asia-Pacific region; a place where, historically, close diplomatic and economic partnerships have proven to be the most effective long-term means of maintaining security and fostering prosperity. Recent disputes over water rights in the South China Sea and access to rare earth minerals have caused several regional powers, specifically Japan, Indonesia, Vietnam, and South Korea, to question whether China can provide the type of economic and security partnership they once thought of as a strategic necessity. Cultivating robust regional relationships now through agreements like KORUS and the TPP will pay dividends down the road when the U.S. faces increasingly complex economic and security challenges in Asia.

Image: Japan Obama Asia APEC Summit
Source: East Asia Forum

Under the Radar 06.17.11

Posted on Friday, June 24, 2011 by Maggie Rank

A weekly compilation of underreported events in Asia.

  • A member of China’s Central Military Commission resolutely opposed nationalizing the People's Liberation Army (PLA) characterizing the absolute leadership of the Communist Party over the military as the ‘soul’ of the army and an important political advantage of the party and the state.

  • President Obama announced the drawdown of 10,000 American troops from Afghanistan by the end of 2011 with an additional 23,000 returning by the end of summer 2012. Concerns remain about the capacity of Afghan security forces to adequately maintain security in the country, see Project 2049 Institute’s latest report on advancing Afghan police training .

  • The air forces of Japan and Australia will hold their first-ever joint exercise in Alaska in July, in line with a bilateral defense cooperation agreement signed in May last year.

  • U.S. President Barack Obama issued a public notice Thursday to extend the national emergency in relation to North Korea by one year, citing the existence and risk of nuclear proliferation as well as the country’s actions and polices as posing an unusual and extraordinary threat to the United States.

  • UN reports name Burma as the fifth largest producer of refugees, with 415m700 reported to be fleeing the conflict, and trailing Afghanistan as the second largest producer of opium.

  • Officials from Libya's rebel National Transitional Council undertook a two day visit to China where they will meet with Chinese officials, despite Beijing's opposition to the current NATO operation.

  • Vietnam and China conducted two days of joint navy patrols including a port call in China, despite recent confrontations over territory in the South China Sea.

  • China’s share of the world’s production of rare earth minerals, critical for the manufacturing of many electronics, is expected to decrease sharply in the next two years from its current 95% to 60% as American, Australian, and European corporations resume domestic mining operations. See Project 2049 Institute’s analysis of China’s rare earth monopoly.

  • The Ministry of Foreign Affairs (MOFA) yesterday announced that starting on July 1 next Friday, all first-time passport applicants, regardless of their ages, will have to complete their applications in person at designated governmental offices . This is seen as a step towards qualifying for visa waiver agreements with countries such as the United States.

  • Rising Chinese Communist Party star Bo Xilai, one of China’s “new left” is resurrecting Maoist values and ideas through his “red” campaign. This is part of a small but growing resurgence of Maoist doctrine in contemporary China.

  • TEPCO, the Japanese operator of the crippled Fukushima reactor, backs out of bidding for Malaysia's first nuclear power plant. Japan had positioned nuclear power export as a part of its economic growth strategy, but the recent disaster has caused concern among potential Southeast Asian customers. For more, see the Project 2049 Institute report on nuclear energy in Southeast Asia.

  • The air forces of Japan and Australia will hold their first-ever joint exercise in Alaska in July, in line with a bilateral defense cooperation agreement signed in May last year.
  • An Agenda for U.S.-Central Asia Relations

    Posted on Monday, June 20, 2011 by Isabella Mroczkowski

    A comprehensive new report from the bipartisan Central Asia Study Group, chaired by former Deputy Secretary of State Richard L. Armitage, and the Project 2049 Institute calls on American and Central Asian leaders to rise to the challenges and opportunities in Central Asia. The report proposes an action agenda on economics, energy, governance, security, social development, and regional cooperation, and places particular emphasis on the importance of reconnecting Central Asian countries to the global economy.

    Report author Evan A. Feigenbaum (Director, Asia, Eurasia Group, and Adjunct Senior Fellow, Council on Foreign Relations) presents questions about the goals of SCO and outlines what the U.S. role should be, as the 10th SCO summit convenes in Astana, Kazakhstan.

    Over at another CFR blog, The Internationalist, my colleague, Stewart Patrick, has posted a good piece about the Shanghai Cooperation Organization (SCO). Boy, did that take me back to old times.

    The SCO stokes up all kinds of opinions in the United States—some informed, some less informed; some vituperative, and others merely skeptical.

    Back in 2007, while serving as Deputy Assistant Secretary of State for Central Asia, I became, I think, the only U.S. official ever to devote an entire speech to the SCO. Just two years earlier, the SCO had called for a timeline to end the Coalition military presence in Afghanistan. And since the U.S. was in the midst of prosecuting a war, there was a great deal that we in the United States were forced to wrestle with as a result. For one, we sought to forestall any repeat statements from the group. But for another, we aimed to sort through the SCO’s deeper (and perhaps darker?) intentions.

    Stewart’s post took me back to some of the questions we asked ourselves four years ago. And I still don’t have great answers. In fact, I’m not sure the SCO’s own members do either—although there’s no question that the organization is more active (and perhaps more functionally-inclined) than in the past.

    For reference, here’s that old speech I gave back in 2007 at the Nixon Center (which recently changed its name to the Center for the National Interest). And here’s a Russian version, reprinted by the journal, Russia in Global Affairs (which earned me some rather scathing comments from Russian readers … ).

    What’s the big question about the SCO? The biggest, I think, remains this one—and it applies to many other organizations in this part of the world: How do interested states promote cooperation and integration in a region where cross-border linkages are so essential, and yet so very elusive? The Central Asian space—indeed, much of the post-Soviet space—is littered with an alphabet soup of these organizations: not just the SCO, but also CSTO, EURASEC, ECO, the CIS summits, and so on. And we have a body of (mostly unhappy) evidence, accumulated over two decades now, to suggest that while Central Asian countries desperately need to cooperate, their need for cooperation too rarely translates into complementary policies. And this has been true even on some of the backbones of economic life: crossing a border, clearing a customs checkpoint, sharing water and electricity, or irrigating land. In many areas, Central Asians and their neighbors are deeply dependent on one another. Yet this reality was, is, and will almost certainly remain deeply disquieting to some.

    Four years after I gave that old speech at the Nixon Center, it may be worth re-asking the four questions that were at the heart of the presentation.

    First, what does the SCO actually do, not just say, to promote cooperation?

    Second, does the SCO strengthen or dilute the independence and sovereignty of all of its members, including its smaller Central Asian members who, too often, have been the victim of geopolitical struggles? Put a bit more sharply: What’s the relationship between two huge continental powers—China and Russia—and the SCO’s smaller Central Asian members?

    Third, is the SCO directed against the United States?

    And fourth, does the SCO’s agenda for cooperation in Central Asia complement or contradict Washington’s own?

    You can go back and re-read that old speech. But the first question, I think, remains particularly salient.

    Some, particularly in Beijing and Moscow, argue that the organization has now cohered. But I wonder. To some, it’s a security group, to others a trade bloc, and to others a group that has gained greater ideological content. But do diverse SCO members, observers, and dialogue partners truly share a vision of their organization? And for that matter does holding an exercise, however large and impressive, in itself produce enduring security cooperation? As Stewart notes in his own post, there are rivalries aplenty among this group of states.

    Ironically, the larger the SCO has become, the more diffuse it has become. The SCO began in the mid-1990s as the “Shanghai Five.” And back then, in its early incarnation, the group had clear criteria for membership: its members all shared a border with China. The group had a defined purpose and measurable goals. In essence, the Shanghai Five sought to resolve outstanding border disputes among China and its post-Soviet neighbors.

    But having accomplished this task, and then expanded its membership to include Uzbekistan, four observers, and some contact partners, the SCO’s purpose and goals have become broader and, thus, murkier.

    The SCO charter lists a range of goals, from security and stability, to fighting narcotics and terrorism, to economic cooperation, to cultural exchange. And that’s an ambitious list. But it’s hard to point to concrete achievements in many of these areas—except on the basis of bilateral or non-SCO agreements and understandings.

    It’s worth remembering that a Kazakhstan-China oil pipeline is not, in fact, a “SCO” pipeline. Indeed, while China established a SCO-specific loan facility to the tune of $10 billion at the height of the most recent financial crisis, its bilateral loans to Central Asia are more calibrated and significant, not least because their terms and conditions differ from the brand of conditionality promoted by the international financial institutions, and by the United States.

    Should the U.S. cooperate with, or perhaps even join, the SCO? I doubt the issue will ever be considered seriously. Indeed, even without the many other reasons that fuel American skepticism, Iran’s observership in the group makes this prospect especially unlikely and unattractive. In a 2009 interview with CFR, shortly after I left the U.S. government, I reflected a bit on the Obama administration’s tentative efforts at outreach.

    The fact is, regional cooperation in Central Asia remains thin, and the U.S. can and should promote it. (For an elaboration of that argument, see the report issued earlier this year by the bipartisan Central Asia Study Group, which I’ve highlighted in previous postings). But in the security realm, at least, the U.S. will, by necessity, have to focus mostly bilaterally. SCO membership for the United States isn’t in the cards. The U.S. hasn’t been invited to join and, in any case, SCO members would likely stall if the U.S. were to seek it. For the moment, the U.S. is probably more useful to Central Asians, in particular, as a modest counterbalance on the outside than as a clubby participant in this Chinese-Russian vehicle.

    But ad hoc U.S.-SCO discussions are worth pursuing, building on the participation of Patrick Moon, then the Deputy Assistant Secretary of State for Afghanistan, in SCO discussions of Afghanistan issues in March 2009. That meeting was an example of timely and mutually beneficial—but ad hoc and topically specific—discussions, with the SCO, organized along functional lines.

    The U.S. does need a regional approach to Central Asia, particularly on economic issues. But there are interesting opportunities elsewhere. The U.S. could, for example, revisit a stalled 2007 effort to work with the Asian Development Bank and two strategic partners— Japan and the EU—to lend additional impetus to the ADB’s Central Asian Regional Economic Cooperation (CAREC) program, which includes ten countries (six in Central Asia, including Afghanistan, as well as China) and six international financial institutions. In 2007, the EU refused to join a U.S. and Japanese effort to create a forum between CAREC and the world’s three major market economies to be called “CAREC Plus Three.” However, if Washington and Tokyo approach Brussels again, this could still form a powerful pro-market nexus, working closely with key countries and the major IFIs. Together, Washington, Tokyo, and Brussels could aim to give market approaches a new push in the region.

    For more insight on how the U.S. can promote U.S.-Central Asia cooperation read the full report.

    This piece was first posted
    here by the Council on Foreign Relations.

    Under the Radar News 06.17.11

    Posted on Friday, June 17, 2011 by Isabella Mroczkowski

    A weekly compilation of underreported events in Asia

  • Japan signed a $3 million MOU with the UN for Afghan National Police education. With NATO’s July transition from Afghanistan, chronic police illiteracy poses a main challenge to maintaining security. In a recent publication, Project 2049 provides insight on advancing ANP training and ensuring that the ANP will have the confidence to take charge.

  • The Philippines Navy removed Chinese markers in the South China Sea after the U.S. pledged its support for Manila in the Spratly Islands territorial dispute. Meanwhile China opposes U.S. and ASEAN interference in the sea and urges a bilateral solution to the territorial dispute.

  • South Korea redeployed surface to surface air missiles on the border with DPRK and plans to deploy 36 Apache choppers to a border island to guard against attacks by North Korea. Recent reports convey new North Korean capabilities to load a nuclear warhead atop a missile and confirm a new larger than expected naval base in Goampo.

  • During a state visit to Moscow, Chinese President Hu Jintao and Medvedev put forth agreements increasing bilateral trade to $200 billion by 2020. They vowed to works towards a strategic energy partnership. However disagreements over pricing hampered finalization of natural gas pipeline deal.

  • Protestors in Bangladesh held this month’s second series of strikes against government efforts to amend the constitution in favor of holding onto power in the 2014 elections.

  • Despite Pyongyang’s resistance to resume six party talks, Seoul urged North Korea to liberalize the economy and abandon its isolationist tendencies.

  • Vietnam struggles to balance demands to defend domestic interests while not provoking China in Spratly row. To address demands Vietnam considered a military draft.

  • Indonesia pursues a free trade agreement with the European Union, noting the complementarities of the EU’s capital and technology with Indonesia’s resources and textile industries. The proposed FTA will account for 95% of tariffs in nine years.

  • In China’s Guangzhou province, protests over abuse of power between vendors and security guards led to riots, with police resorting to tear gas. Tensions stem from migration restrictions laws that exclude China’s 350 million migrant workers from access to social benefits.

  • In the midst of reconstruction following February’s fatal earthquake, Christchurch, New Zealand faced another series of 6.0 aftershocks. In addition to the $11 billion in construction costs, Christchurch residents are increasingly relying on social services for anxiety, depression, and alcohol issues.
  • Under the Radar 06.10.2011

    Posted on Friday, June 10, 2011 by Maggie Rank

    A weekly compilation of underreported events in Asia.

  • Tensions between Vietnam and China escalate as hackers respond to the maritime conflict over the Spratly Islands. The territorial dispute has migrated to the internet where pictures of armed Vietnamese men on Chinese sites, and Chinese flags on Vietnamese sites have taken the place of protesters.

  • Thailand has released almost 100 Pakistani refugees of the Ahmadiyah Muslim group after six months in detention. Thailand does not recognize refugees; the Thai Committee for Refugees and other activists paid more than $150,000 in bail to release the prisoners.

  • The nuclear-capable Prithvi-II missile was successfully test-fired in India. The missile is capable of carrying payloads up to 1,000 kg and has a sophisticated inertial navigation system.

  • Malaysia is considering what could become its largest-ever program to legalize illegal immigrants upon whom it relies heavily for labor. The plan is designed to document “foreign workers in the country, which could improve national security, reduce human trafficking and increase tax revenues.”

  • Foreign ministers gathered in Godollo, Hungary for the 10th Asia-Europe Meeting (ASEM) to discuss natural disasters and terrorism, and other non-traditional security issues.

  • The IMF is urging Japan to triple its sales tax,from 5 percent to 15 percent, over the next several years. Following the crises this March, Japan faces a debt twice as large as its $5 trillion gross domestic profit. The IMF says increasing the tax will give “confidence to the Japanese people about the long-term sustainability of the outlook.”

  • Following the elections last year, Burma received record $20 billion in foreign investments, compared to $300 million in 2010.

  • North Korea reported fired at least one KN-06 missile into the Yellow Sea as a statement to garner attention and food aid. Military sources say that the tests were planned before North Korea threatened to sever military ties and communication with South Korea.

  • Taiwan’s Democratic Progressive Party presidential candidate Tsai Ing-wen (蔡英文) traveled to the United Kingdom and to Germany to learn about sustainable energy. The primary purpose of the trip was to gather information about the EU’s green energy programs and the future of nuclear programs and safety.

  • Afghan President Karzai traveled to Pakistan for reconciliation talks amid foreign withdrawal concerns. Afghan officials said the visit will test whether or not Pakistan is prepared cooperate in ending the war in Afghanistan.

  • China reports a trade surplus far smaller than expected, due in part to soaring imports and a drop in global demand. The surplus rose to $13.1 billion this April, but did not hit Reuter’s forecast of $18 billion.
  • Under the Radar News 06.03.11

    Posted on Friday, June 3, 2011 by Luke Warnock

    A weekly compilation of underreported events in Asia
      • Chinese Confucius Institutes face numerous administrative challenges as planners look to expand global footprint. Shortages of qualified multilingual teachers and vast differences in cross-border instruction standards and cultural norms have hampered efforts to swiftly export Chinese cultural education.
      • Chronic drought, pollution, and rapid urbanization prompted Chinese government officials to undertake the aptly named $62 billion South-North Water Diversion Project, which is expected to divert 6 trillion gallons of water from the Yangtze to the north China plain, while displacing and relocating 350,000 villagers. This as Hunan Province is struggling with a devastating drought of its own, hurting its fishing and agricultural sectors. See Project 2049 past analysis.
      • Dissatisfaction with the response of Japanese Prime Minister Naoto Kan’s government to the recent triple disaster prompted a parliamentary vote of no-confidence. The Prime Minister survived, but the vote highlighted a growing concern within Japan and across the region for the dangers posed by natural disasters and their implications for national security.
      • Singapore unveiled its first motorized infantry unit touting increases to operational efficiency provided by the nimbler and smarter vehicles. New communication systems will integrate these units into Singapore’s greater military complex enabling forces to engage in a wider variety of operations at much longer ranges.
      • U.S. Senator John McCain traveled to the Burmese capital Naypyidaw where he met with Burmese lawmakers, before traveling to Rangoon where he met with pro-democracy leader Aung San Suu Kyi. McCain encouraged Burma’s new government to begin the process of internal reconciliation, release political prisoners, and take further steps toward democratic reform.
      • Tensions in the Spratly Islands continued as Vietnamese vessels fishing five miles south of Da Dong Island were confronted by Chinese naval forces. This is just the latest incident in what Vietnamese officials are claiming is a growing trend of harassment, and Chinese officials see as increased efforts to secure their sea claims.
      • The Australian House of Representatives has moved to suspend cattle exports to Indonesia in a move Indonesian authorities are calling a blatant political maneuver intended to increase Indonesia’s Australian frozen meat imports. Indonesian authorities deny accusations that the 11 affected slaughterhouses engaged in cruel treatment of animals.
      • Indian security forces in Kashmir have killed three suspected members of the Lashkar-e-Taiba (LeT) militant group, including the commander of the Pakistan-based terror outfit.This comes as U.S. Homeland Security Secretary Janet Napolitano designated LeT “in the same rank” as al-Qaeda.
      • China and Russia signed an agreement intended to increase gas cooperation in what officials from both countries view as the beginning of a long term joint energy strategy. The Sino-Russian oil pipeline came into operation on January 1st 2011, and additional projects like the “east line” and the “west line” expected to transport 30 billion cubic meters and 38 billion cubic meters of natural gas respectively.

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