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Thursday, October 20, 2016

TPP, Trans Pacific Partnership free trade agreement is adrift, Vietnamese official says it's not on upcoming agenda. 'America's grip on power in Asia is slipping,' says Japan economist-Nikkei

10/14/16, "As TPP flounders, Philippines' Duterte ratchets up anti-US rant," Asia.nikkei.com, Kazuki Kagaya, Nikkei senior staff writer

"Philippine President Rodrigo Duterte's vitriol toward the U.S. shows no sign of stopping, suggesting the Philippines may move closer to China.

Duterte chose China for his first overseas trip outside Southeast Asia as president. He appears to be trying to take advantage of his country's location facing the South China Sea in an effort to play the U.S. and China off against each other as the two powers jockey for dominance.

Duterte's tactics underscore the bleak prospects for the Trans-Pacific Partnership, a free-trade agreement that U.S. President Barack Obama had hoped would cement American influence in the region for decades to come. Instead, with the pact looking moribund, U.S. influence with the Philippines and other Southeast Asian countries is waning.

Trading places

The language Duterte directs toward the U.S. is undiplomatic, to say the least. He has said his country may "break up" with the U.S. during his tenure and has invited Obama to "go to hell." This is a big change in tone from Duterte's pro-American predecessor, Benigno Aquino. The shift follows criticism from Washington and the United Nations over a bloody crackdown on suspected drug dealers, thousands of whom have been gunned down by police and vigilantes.

Toru Nishihama, chief economist at Dai-ichi Life Research Institute, said of Duterte's harangues, "It is an appeal, done in a typically populist way, for voters who support his war on narcotics, which is a crucial measure to improve internal security." His primary motive is to solidify his public support, Nishihama said. It has little to do with whether he is pro-American or pro-Beijing.

He added: "The TPP is going adrift and America's grip on power in Asia is slipping."

Although the Philippines is not among the TPP's 12 participating countries, the previous administration had said it wanted to join. Aquino was concerned the Philippines might be at a disadvantage in attracting foreign investment vis-a-vis TPP member Vietnam.

But opposition to the pact has grown in the U.S. Congress....Given its size, U.S. ratification is essential if the deal is to take effect. The TPP's future is now hard to gauge.

"If the TPP...runs into trouble, regional economic integration in Asia might suffer a great delay," said Koji Sako, senior economist at Mizuho Research Institute. The TPP is expected to be a template for future rules on trade and investment in the Asia-Pacific region.

Inspired by the TPP, the 10-member Association of Southeast Asian Nations and China have been pushing ahead with multilateral frameworks for economic cooperation, such as the Regional Comprehensive Economic Partnership and the ASEAN Economic Community. As Sako sees it, if the TPP stalls, efforts to complete the RCEP and AEC may also slow down.

Continental drift

If that happens, the Philippines will place its hopes for new investment on China and Japan, Nishihama said. Duterte is scheduled to visit China and Japan on a tour starting Oct. 18. The previous Philippine administration was among the strongest critics of China's increasingly strident claims over disputed territory and growing military presence in the South China Sea. But since late June, when Duterte took office, Manila has avoided bringing up the issue at diplomatic events.

When Duterte visits China, observers believe he will not speak harshly about the South China Sea dispute and ask for more Chinese investment under Beijing's "One Belt, One Road" initiative, an infrastructure project that aims to forge new land and sea trade links between Asia and Europe.

The move away from the U.S. is spreading to other Southeast Asian participants in the TPP. Reuters recently reported a high-ranking Vietnamese official as saying the government will not include ratification of the TPP on the agenda for the next parliamentary session starting on Oct. 20. Vietnam had been expected to ratify the pact during the session, aiming to offer the country's textiles and other exports to a much wider market. With no immediate likelihood the TPP will take effect, Vietnam is taking a wait-and-see approach.

Hanoi has also been at loggerheads with China over islands in the South China Sea, but there are signs of a change. In late September, when Duterte held a summit with President Tran Dai Quang, media reports said the two countries reaffirmed their security cooperation aimed at countering China's maritime advances. But no concrete measures were revealed.

Indonesia is reportedly taking a firmer stance toward Chinese fishermen operating near the Natuna Islands, at the southern end of the South China Sea. But it, too, appears to be taking care to avoid antagonizing China.

In response to these strategic shifts, Duterte seems to be trying to cash in his chips from as many regional players as possible. Until now, his outspoken criticism of the U.S. has helped him boost his popular support at home. But if he leans too far toward China, he may provoke a nationalistic, anti-Beijing reaction. Duterte's precarious diplomatic game is likely to continue as he awaits the outcome of the U.S. presidential election in November."




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