Collusion by Nomi Prins

Author:Nomi Prins
Language: eng
Format: epub
Publisher: PublicAffairs
Published: 2018-05-01T04:00:00+00:00

TRUMP’S PROMISE OF FRIENDSHIP TO JAPAN

On January 20, 2017, Donald J. Trump became the forty-fifth president of the United States. Three days later, he signed the executive order to officially remove the United States from the Trans-Pacific Partnership, an agreement to “promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in the signatories’ countries; and promote transparency, good governance, and enhanced labor and environmental protections.”

The TPP contained measures to lower both nontariff and tariff barriers to trade and to establish an investor-state dispute settlement (ISDS) mechanism. Before Trump opted out, it was to cover twelve countries, including the United States and Japan, but not China. To Japan, it had represented an excellent competitive opportunity relative to China. But if the United States wasn’t involved, Japan would have to expand with other TPP members, as well as with China through other means.

The Trump White House geared up to make its mark on the US and global economy with policy directives that included financial deregulation and bilateral trade agreements. America doesn’t exist in a vacuum, not politically, militarily, or financially. The mistakes made in handling the financial crisis and the Fed’s artisanal money activities shifted the perception of the United States regarding nationalism and Wall Street’s role in maiming the economy.

President Xi Jinping reacted by strengthening China’s trade ties throughout Asia, championing China’s own version of the Trans-Pacific Partnership. Indeed, by the time Obama and then Trump said no to the TPP, China had established free trade agreements (FTAs) with nine of the twelve countries of the TPP and was pursuing more.257 Japan, on the other hand, took the route of forging a tighter US connection, continuing its monetary policy collaboration, but it needed China economically.

The two Asian giants had already collaborated on a unified Sino-Japanese equivalent of the TPP, called the Regional Comprehensive Economic Partnership (RCEP), which predated the TPP. On November 20, 2012, at the East Asia Summit in Cambodia, leaders from the Association of Southeast Asian Nations and its free trade agreement partners launched the negotiations.

The RCEP was an Association of Southeast Asian Nations (ASEAN)–centered proposal that initially included the ten ASEAN member states and countries with existing FTAs with ASEAN—Australia, China, India, Japan, New Zealand, and the Republic of Korea. It complemented Australia’s participation in bilateral FTAs with individual countries and its plans for the Trans-Pacific Partnership agreement (TPP).258 The RCEP included sixteen countries, representing half the world’s population and 30 percent of global GDP.259

Abe believed he could convince Trump to reembrace the TPP. He figured that the TPP (which lacked China’s participation) would be “meaningless” without US involvement.260 The Brookings Institution estimated that had the United States joined the twelve-country agreement, which represented 40 percent of global GDP and 20 percent of global trade, it stood to gain $77 billion annually and Japan even more, $105 billion annually.261 But Trump wouldn’t budge.

Japan had much to consider: Would the nation work with Trump on a separate bilateral

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