Taipei seeks new partners in post-TPP world

Subject Taiwan's trade policy. Significance Washington's abandonment of the Trans-Pacific Partnership (TPP), a comprehensive free trade agreement between economies on both sides of the Pacific Ocean, is prompting Taiwan to seek a new direction in trade policy. Taiwan’s president, Tsai Ing-wen, is seeking to increase trade and investment with partners other than China -- particularly with India and South-east Asia -- and pursue a bilateral trade agreement with the United States. Tsai's Presidential Office has already established a special office to promote trade links with India and South-east Asia. Impacts Taiwan will be subject to intense China-US rivalry, with both seeking to draw the island away from the other. Beijing will put pressure on Taipei to resume cross-Strait economic expansion efforts. Trade with India will expand, but will still be dwarfed by exports to China. Tsai's 'New Southbound Policy' initiative is unlikely to reduce Taiwan’s reliance on the China market significantly.

Subject Emerging US policy towards South-east Asia under the Trump administration. Significance On May 5, the 30th US-ASEAN Dialogue opens in Washington, to be co-chaired by US Secretary of State Rex Tillerson. This follows Vice-President Mike Pence’s visit to Indonesia of April 20-22, the first to South-east Asia by a cabinet-level official from the Trump administration. The White House used that occasion to announce that President Donald Trump will attend the APEC meeting in Vietnam and the East Asia Summit (EAS) in the Philippines in November. Impacts Trump may co-chair a US-ASEAN Summit with Philippines president on the EAS’s margins, which could improve frayed bilateral ties. Congress could frustrate any Trump administration plans to sanction countries with trade surpluses with the United States. An ASEAN-US free trade agreement is unlikely soon. Trump has invited Vietnam’s prime minister to visit Washington later, which could make Hanoi more bullish towards China.


Subject UK political, security and economic ties with South-east Asia. Significance China earlier this month reacted angrily to UK Defence Minister Gavin Williamson’s suggestion that a new UK aircraft carrier would be sent to the Pacific and that the United Kingdom would use “lethal force” against countries violating international law. Williamson indicated late last year that the United Kingdom might seek a more permanent military presence in South-east Asia. Impacts Post-Brexit, the United Kingdom will aim to negotiate bilateral and multilateral trade deals with South-east Asian countries. The United Kingdom will station more diplomatic personnel in South-east Asia, including to the ASEAN Secretariat in Jakarta. Increased UK presence in the South China Sea would be welcomed by the United States and its security partners.


Significance She addressed two key issues during her trip: tensions in post-coup Myanmar and China’s growing regional footprint. Shortly after she left the region, the United States announced that it would donate unused COVID-19 vaccines abroad, including to South-east Asia. Impacts Washington will tighten its sanctions on the Myanmar military while supporting ASEAN’s five-point plan to ease the country’s crisis. The National Unity Government, a parallel administration to Myanmar’s junta set up by its opponents, will try to attract greater US backing. Manila and Washington may extend negotiations over renewing their Visiting Forces Agreement to prevent the pact expiring in August.


Significance London's actions drew a harsh, if unofficial, reaction from the White House. It underscores the growing rivalry between the United States and China over the changing architecture of global and regional institutions. Impacts Institutional competition will not spill over much into the security field, where China's neighbours seek to balance it. Increased European involvement in South-east Asia will accelerate movement towards an EU-ASEAN free trade agreement. Increased international prestige could help Chinese President Xi Jinping's domestic clout.


Subject South-east Asia's push for trade agreements. Significance Late last month, an Indonesian delegation led by Trade Minister Enggartiasto Lukita began a week of negotiations in Washington to lobby against the withdrawal of trade preferences for Indonesian exports to the United States. Meanwhile, South-east Asian states are involved in two major trade agreements: the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the 16-state Regional Comprehensive Economic Partnership (RCEP). Impacts US trade reprisals against Indonesia could weaken Jakarta’s support for Washington’s diplomatic pressure on North Korea. The US-China tariff escalation could prompt partners to redirect some of their trade, boosting trade between Taiwan and South-east Asia. ASEAN Economic Community integration will be slow despite progress in RCEP and the CPTPP.


Subject Outlook for Thai-US-China relations. Significance Chatchai Thipsunaree, Thailand’s permanent secretary in the Ministry of Transport, confirmed on May 17 that construction of the long-awaited Thai-China high-speed railway will begin this year. The project reflects the growing momentum in Thailand’s relations with China, and refiguring of ties with the United States. Impacts Trump administration officials see less strategic imperative in the US-Thailand alliance than previous administrations. China’s growing presence in South-east Asia, particularly on the Mekong, will trigger resistance from affected populations in Thailand. Thai officials will allow Chinese infrastructure projects to proceed despite local protests.


Subject South-east Asian defence budgets. Significance The pressure of responding to the COVID-19 pandemic is prompting many South-east Asian governments to cut defence spending and postpone or cancel new arms acquisitions. Meanwhile, China and the United States continue to vie for influence in the region. Impacts Piracy attacks will increase across the region as socio-economic distress rises and budgets for navies and coast guards fall. ASEAN unity will fracture as tensions among member states increase. Economic problems will cause political instability across South-east Asia, possibly even leading to military coups in certain countries.


Subject Impact of COVID-19 crisis on US-China rivalry in South-east Asia. Significance Washington’s preoccupation with handling the COVID-19 crisis has undermined the operational readiness of US armed forces in the Indo-Pacific. China has capitalised on this situation by pushing its claims in the South China Sea. Impacts South-east Asian economies will be hit hard as US-China trade tensions rise and foreign investment falls. Infrastructure projects in the region that are part of China’s Belt and Road Initiative will face delays and cancellations. Medical assistance from the United States, China and elsewhere will barely ease the strain on regional health systems caused by COVID-19.


Subject Drone sales to South-east Asia. Significance Washington announced last month that it will lift its ban on selling armed/lethal unmanned aerial vehicles (UAVs, or 'drones') to allies and security partners. This decision has South-east Asian implications: many US allies and interests are there. South-east Asia also has a significant appetite for unarmed drones. Consequently, the region is becoming a fruitful ground for sales and use of both types of UAV. However, this brings mixed security implications. Impacts China will compete with major drone vendors the United States, the EU and Israel for South-east Asian sales. South-east Asian governments will update their laws to incorporate drone-related considerations. Authoritarian governments will probably attempt to control the use of drones by the media and civil society. ASEAN countries will expand domestic drone production, especially under the ASEAN Economic Community.


Subject Development of South-east Asian coastguards and their geopolitical implications. Significance Senior coastguard officers from Australia, Japan, the Philippines and the United States will meet later this year to discuss cooperation and capacity-building -- and the assertive actions of China's coastguard in littoral waters. With external partners' support, South-east Asian states are developing their coastguards to fight crime and assert maritime territorial claims. Impacts Fishing activities will probably trigger spats between South-east Asian and China's coastguards. Gradually, inter-operability between South-east Asian coastguards will expand. Tokyo and Washington will use coastguards to deepen ties with South-east Asian countries. There could be frictions between Indonesia's and Malaysia's coastguards over waters around Ambalat.


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