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Japan’s Trump Dilemma

Dr Titli Basu is Associate Fellow at the Manohar Parrikar Institute for Defence Studies and Analyses. Click here for detailed profile.
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  • December 20, 2016

    In the wake of Donald Trump’s election as U.S. president, Japan is weighing the geopolitical and geo-economic implications of the new economic and security policies that his administration may adopt. While the alliance with the U.S. has lain at the heart of post-war Japanese foreign and security policy, Trump’s emphasis on “America first” and his reservations with regard to alliance commitments have made Tokyo deeply anxious.

    Geo-economics: TPP and beyond

    Early signals indicate that the Trump administration is likely to depart from Obama’s pivot or rebalance to Asia. The most important indicator in this regard has been Trump’s description of the Trans-Pacific Partnership (TPP) – often touted the economic pillar of the pivot – as a “potential disaster” and his declared intent to withdraw from it upon assuming office in January 2017. Japan is hesitant to process the harsh reality of such an impending U.S. decision, continuing to argue that the TPP is not “completely dead”.1 As the second-largest economy in the TPP after the U.S., Japan hurriedly ratified the free trade agreement in an extended session of the Diet, making it the only member country to do so. But Japan is likely to find it extremely difficult to convince other countries to ratify the TPP in its present form. Even Abe himself had earlier acknowledged that a TPP without the US market is “meaningless”.2

    Whether TPP fades away or emerges in a new shape remains to be seen. But Japan cannot afford to let go of the TPP easily. Abe in particular considers TPP as an essential mechanism to capitalise on the Asia-Pacific’s growth potential and revive Japanese economic development. He considers TPP as a base for Abenomics and for his trade strategy. World Bank assessments indicate that, with TPP, Japan’s growth rate is likely to increase by an additional 2.7 per cent by 2030,3 with exports rising by USD 23.2 billion annually.4 Consequently, Abe has invested considerable political capital to overcome resistance from the farm lobby to the TPP.

    Earlier in November, in an attempt to highlight the advantages of the TPP, the White House’s Council of Economic Advisers pointed out that Washington would have to sacrifice significant economic gains and suffer trade diversion as well as lesser market access in comparison to China if the TPP were to be dropped. Moreover, 35 U.S. industries that export a combined USD 5.3 billion worth of goods to Japan are likely to witness a loss of market in comparison to Chinese contenders due to tariff cuts under the Regional Comprehensive Economic Partnership (RCEP) that is being negotiated.5 Jason Furman has argued that in a scenario where the TPP does not fructify and China manages to bring RCEP into effect, the U.S. will be adversely affected. 6

    But with Trump seemingly determined to drop the TPP, Japan is being pushed into seriously reconsidering and prioritizing other opportunities including the 16-nation RCEP, and negotiating free trade agreements with other partners such as the European Union and a trilateral China–Japan–South Korea FTA. While Japan is a member of the RCEP, it has certain reservations towards this mega-regional trade deal, which lacks the “gold standards” of the TPP in protecting intellectual property rights and does not insist upon state-owned enterprises following strictly commercial practices. Even more importantly, RCEP excludes the U.S., which provides China – the world’s second largest economy – a greater role in shaping this regional trade arrangement.

    As far as the U.S. is concerned, Trump is an advocate of negotiating “fair bilateral trade deals that bring jobs and industry back onto American shores”.7 Trump’s designate as Commerce Secretary, Wilbur Ross, has also categorically stated in a letter to the Japanese Finance Minister Taro Aso that his focus would be on strengthening bilateral economic ties. However, drawing from its own experience in the 1980s and 1990s on the size and composition of the trade deficit and issues of market barriers, Tokyo is likely to be cautious when it comes to negotiating a bilateral free-trade agreement with the U.S.

    While Japan pushed hard to conclude a broad free trade agreement with the EU by 2016 in the wake of Brexit and Trump’s posture on TPP, negotiations are most likely to continue into early 2017.8 Here, it is important to note that negotiators would also have to overcome a rift concerning tariff issues and operational safety clause. Britain has until now served as Tokyo’s platform for trade and investment in the broader EU single market. With Brexit, Japan faces a new urgency in concluding a free trade agreement with the EU.

    Geopolitics in the post-rebalancing era

    Japan requires the U.S. alliance more than ever given the evolving regional security dynamics marked by an increasingly defiant North Korea claiming to possess miniaturised nuclear warheads and aggressive Chinese strategic ambitions in the East and South China Seas. Moreover, with the region getting engulfed in history issues and intensified nationalism, Japan is locked in sovereignty disputes with most of its neighbours including, Russia, China, South Korea, and Taiwan. Even as Japan invests energy on regional diplomacy, the Abe administration managing to bridge the trust deficit in Northeast Asia appears to be a remote possibility. With Chinese adventurism in the East China Sea, Russian deployment of the state-of-the-art anti-ship Bastion missile system and the Bal system in Etorofu and Kunashiri Islands, respectively, and a North Korean ballistic missile landing in Japan’s exclusive economic zone, Japan is increasingly looking for reassurance from the U.S. under Article 5 of their security treaty.

    While Japan seemingly prefers Republican Presidents,9 this time around it desperately hoped for a Hillary Clinton administration which would have ensured continuity instead of the uncertainties surrounding the U.S.’s Asia policy under a Trump presidency. Clinton was the key architect of the rebalancing strategy. In 2011, she had argued that the security alliances with Japan, South Korea, Australia, the Philippines, and Thailand constitute the fulcrum of U.S. efforts in the Asia Pacific. In contrast, the Trump campaign had categorically articulated the candidate’s dissatisfaction with Japan on the issue of burden-sharing within the alliance.10 The Trump campaign perceived the alliance with Japan as costly and one-sided despite Tokyo reportedly sharing 48.3 per cent of the costs involved.11 The direct cost of stationing U.S. forces in Japan is valued at USD 5.47 billion for fiscal 2016. Japan shelled out USD 1.7 billion for direct sustenance of the base in fiscal 2015. Besides, Japan has decided to devote USD 3.1 billion for the relocation of 4,000 U.S. troops to Guam, accounting for 36 per cent of the estimated cost of USD 8.6 billion.

    Trump’s rhetoric during the campaign was very critical of the asymmetrical partnership between the U.S. and Japan. However, campaign rhetoric does not necessarily translate into concrete policy. Candidate Trump and President Trump are unlikely to talk or act in the same manner. Be that as it may, Trump did terrify Japan when he argued that the U.S. should be “prepared to walk”12 and Tokyo consider defending itself against Pyongyang. In addition, Japan’s nuclear sensitivities and crusade against nuclear proliferation received a shock when Trump suggested that a nuclear Japan may not be a bad idea.13 This stand was contrary to the April 2015 Joint Statement of the Security Consultative Committee (2+2) meeting, which articulated the case of “ironclad U.S. commitment to the defense of Japan, through the full range of U.S. military capabilities, including nuclear and conventional”.14

    While Japanese Defence Minister Tomomi Inada stated during Defence Secretary Ashton Carter’s December 2016 visit that the debate should be centred on shared security capabilities rather than financial burdens, uncertainty looms large in the wake of Trump’s election. The debate on burden sharing within the alliance is hardly a new issue. Tokyo has long been pushed by the U.S. to assume a greater role within the alliance instead of being a ‘passive free rider’. For instance, the October 2000 Armitage Report pointed out that “Japan’s prohibition against collective self-defence is a constraint on alliance cooperation. Lifting this prohibition would allow for closer and more efficient security cooperation”.15

    The burden sharing issue has been widely debated in the U.S. strategic community since the Cold War years. Japan opted for the Yoshida Doctrine as an effective approach to escape entrapment in the US-Cold War scheme of things. This enabled Japan to focus solely on its economic development and spend minimally on defence while relying on the U.S. security umbrella. However, with the trade wars intensifying with the U.S. and the fear of abandonment gripping the leadership, Japan has over the decades incrementally expanded its role and redefined its security identity with overseas deployment of Self Defence Force (SDF). Now with a fast altering East Asian security setting, Japan has initiated a fresh debate on the scope of Article 9 and taken definitive steps in assuming greater responsibilities with the enactment of the 2015 Legislation for Peace and Security. The year 2015 also saw Abe demonstrating willingness to accept greater responsibilities within the framework of the US-Japan security alliance by revising, after 18 years, the Guidelines for US-Japan Defence Cooperation.

    Road Ahead

    Japan worries that in case the U.S. refrains from playing a major role in the regional architecture building process, China will have an easier path in crafting a Sino-centric order in the Asia-Pacific.16 Such a development is likely to prove to be a monumental challenge for Japan as geopolitical and geo-economic uncertainties intensify regional complexity. With Washington opting for a more inward-looking policy, it will be increasingly problematic for U.S. allies to persuade their security provider of the need to maintain the alliance network in its existing form. While Japan’s decades-old alliance with the U.S. is likely to stand the test of time since it is mutually beneficial, Tokyo certainly will have to deliver more than it is used to in order to convince President Trump that Japan is not a liability but an asset as an ally.

    Since the Asia-Pacific region is emerging as the epicentre of economic growth, Trump is likely to remain invested in the region. While the U.S. will continue to work closely with its long term partners in the region, Trump may reorient the nature of the asymmetrical alliance partnerships in Asia. Besides, what shape other important bilateral relations such as the U.S.-China, U.S.-Russia, U.S.-Korean Peninsula and U.S.-ASEAN relations take under President Trump will also determine the U.S.’s overall approach towards this region. As Japan adapts to the new geo-strategic and geo-economic realities in the midst of profound changes unfolding in the global power structure, its strategic choices in turn will play a crucial role in shaping the East Asian security environment.