President Trump’s highly anticipated visit to some of our most important trade and economic partners in Asia.
Today, I am going to talk about President’s Trumps 12-day tour in Asia, and the significance of each nation he intends to visit.
From what I understand, this is expected to be a 12-day trip with visits by the President of the United States (@POTUS) to five nations, which are Japan, South Korea, China, Vietnam and the Philippines.
Although the consensus throughout the media is that his focus will be on North Korea, he will also engage in other important issues at each location.
To summarize his visit, let me provide some basic information on each anticipated stop along his tour:
Japan – President Trump is expected to discuss maximizing pressure on North Korea, as well as trade and economic relations. In April, earlier this year, Vice President Mike Pence met with Deputy Prime Minister Taro Aso from Japan to discuss U.S.-Japan Economic Dialogue structured around three key points: Common Strategy on Trade and Investment Rules/Issues; Cooperation in Economic and Structural Policies; and Sectoral Cooperation.
Common Strategy on Trade and Investment Rules/Issues – a bilateral framework for setting high trade and investment standards; perspectives on trade and investment initiatives of the United States and Japan in the regional and global trading environment; and addressing third-party concerns.
Cooperation in Economic and Structural Policies – active use of the G7’s “Three-Pronged Approach” – mutually-reinforcing fiscal, monetary, and structural policies; cooperation on global economic and financial developments and challenges; and cooperation on regional macroeconomic and financial issues.
Sectoral Cooperation – improved commercial relations which will promote mutual economic benefits and job creation in both countries.
Needless to say, our relationship with Japan is much more involved than just strategic military locations and imposing pressures upon harmful and rogue regional regimes.
Without going into too much depth, let me summarize some key facts about our trade relationship with Japan…U.S. goods and services trade with Japan totaled an estimated $270 billion in 2016 – exports were $108 billion; imports were $162.8 billion. The U.S. goods and services trade deficit with Japan was $55 billion in 2016, and Japan is currently the United States’ 4th largest goods trading partner with $195 billion in total (two way) goods trade during 2016 – more details can be found at this link at the Office of the United States Trade Representative.
South Korea – President Trump will mainly focus on the obvious North Korean problem – it is reported that he won’t visit the Demilitarized Zone (DMZ) as previously reported.
In addition to North Korea, he will most likely discuss the Terminal High Altitude Area Defense (THAAD), which was not well received by some of the general population in South Korea, and even much less welcomed by China, who initially viewed it as a direct military threat, as well as an advanced intelligence gathering network.
The THAAD system is designed to intercept and destroy ballistic missile during their terminal phase using a hit-to-kill methodology – similar to the more popular Patriot missile system, but lacking the explosive warhead functionality. It’s important to note, that although not favorably received initially by China, North Korea’s persistence with its nuclear ambitions have loosened some of the tensions – China has even deployed their own anti-ballistic missile system in the region as an apparent precaution against North Korean missile strikes as well.
Trade is also very much expected to be discussed during the President’s visit to South Korea, as he has indicated his intentions to withdraw from the Korea-U.S. free trade agreement (or KORUS), unless it is renegotiated – Seoul has tentatively agreed.
Some of the key points about US-Korean trade are: U.S. goods and services trade with Korea totaled an estimated $144 billion in 2016 – exports were $64 billion; imports were $80.8 billion. The U.S. goods and services trade deficit with Korea was $17.0 billion in 2016. Also of note, Korea is currently our 6th largest goods trading partner.
China – As with other countries in the region, President Trump is expected to discuss North Korean, as well as trade and economics. It’s no secret that China is the most important economic partner with North Korea. Resulting from continued pressure from the United Nations, as well as the United States, China seems to be turning their words into action by penalizing banks that do business with the rogue nation and by stopping imports/exports, such as oil and food. China has definitely stepped on pressures on North Korea since the recent reports about the tunnel collapse at a nuclear test site resulting in the death of more than 200 people, along with the increased radiation level detected following the last underground test.
As far as trade between the US and China is concerned, here are some of the facts: U.S. goods and services trade with China totaled an estimated $648 billion in 2016 – exports were $169 billion; imports were $478.9 billion. The U.S. goods and services trade deficit with China was $310 billion in 2016. The U.S. services trade surplus with China was $37 billion in 2016. Also of note, China is currently our largest goods trading partner with $579 billion in total (two way) goods trade during 2016.
Vietnam – During President Trumps visit to Vietnam, we can expect him to concentrate on the Asia-Pacific Economic Cooperation (APEC), which is a regional economic forum established in 1989 to leverage the growing interdependence of the Asia-Pacific region. “APEC’s 21 members aim to create greater prosperity for the people of the region by promoting balanced, inclusive, sustainable, innovative and secure growth and by accelerating regional economic integration.”
Here are the basics on US-Vietnam trade: Over the past decade, U.S. exports to Vietnam have increased significantly to $10 billion in 2016 – up 43 percent from 2015 and up 823 percent over the past decade. Still, the United States maintains a goods trade deficit with Vietnam, which totaled $32 billion in 2016, our sixth largest. Also of note, in 2016, Vietnam was our 16th largest goods trading partner with $52 billion in total two-way goods trade, while we are Vietnam’s largest trading partner second to China.
Philippines – I would expect President Trump to address the key Association of Southeast Asian Nations (ASEAN) on his visit.
ASEAN consists of ten members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
President Trump is also expected to meet with the Philippines president who has been accused of human rights abuses and violations. The White House has been quite vocal in its concerns in this regard.
It is also expected he will discuss the US military presence there – including upgrades and expansions, along with trade and economic relations.
Trade relations between the United States and the Philippines has a long history. Over the past decade, two-way trade between the United States and the Philippines has grown by more than 25 percent. In 2016, U.S. exports to the Philippines increased to more than $8 billion. U.S. services exports to the Philippines have increased by more than 60 percent and now total $2.5 billion. Also of note, in 2016, the Philippines was the United States’ 31st largest goods export market. The United States is the Philippines third largest trading partner after China and Japan. (more details can be found here).
According to National Security Adviser, H. R. McMaster, “The president’s trip will focus on three goals: first, strengthening international resolve to denuclearize North Korea. Second, promote a free and open Indo-Pacific region. Third, advance American prosperity through fair and reciprocal trade and economic practices.”
Well, that’s the President’s Asian tour in a nutshell – at least as I understand it.