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The Most Important Trip of Trump's Presidency - trump airforce1

President Trump departs later this week for a critical five-nation Asian tour. In many respects, it is a trip perfectly timed for leader-to-leader interactions central to furthering U.S. security interests in the region:

  • In Japan, with a PM and close Trump ally (Shinzo Abe) fresh off an encouraging victory in a snap election.
  • In South Korea, with a president (Moon Jae-in) desperately in need of U.S. reassurance given Pyongyang’s nuclear advances.
  • In China, with a president (Xi Jingping) just anointed by a Party Congress for another five-year term and whose “thought” is now inscribed in the Chinese constitution.
  • In Vietnam, with a Communist party leadership cohort eager for deepened U.S. commercial ties despite Trump torpedoing the Trans-Pacific Partnership (TPP), a trade pact strongly supported by Hanoi.
  • And finally, in The Philippines, with a president (Rodrigo Duterte) who has become a human rights pariah and who flirts with Russia and China to pursue an “independent” foreign policy despite long-standing treaty ties to the U.S. 

To say the trip will be challenging will be an understatement. What might be the key behind-the-scene objectives in each stop? Briefly, in itinerary order, they could include the following:

  • Japan: beyond the embraces, North Korea and trade will dominate; Trump wants a commitment from Abe to pursue a bilateral trade deal; he won’t get it; legislators in the Diet are still miffed at Trump jettisoning TPP; but Abe will likely commit to deeper defense spending on U.S. systems as North Korean missile testing accelerates.
  • South Korea: there’s no Abe-style warmth in the Trump-Moon relationship; and while the leaders have more closely aligned their North Korean policies, they still differ on the single issue Trump will press with fervor: the Korea-U.S. trade agreement (“KORUS FTA”); Trump is threatening withdrawal if the “imbalance” is not rectified; Moon has signaled a willingness to renegotiate, calming for a time the unfortunate dust-up.    
  • China: the most important meeting of the five; Trump’s public rhetoric towards Xi has been remarkably modulated over the last month, but the president will press privately on North Korea, and especially on the ”colossal” trade deficit and “predatory” trade practices – as he should. Top of this list includes forcible technology transfers under the PRC’s new cybersecurity law as well as IP theft.
  • Vietnam: with an economy growing as fast as India’s and China’s, the business case for deeper ties with Hanoi is clear; but the headline grabber over the last quarter was Vietnam's agreement to a U.S. aircraft carrier visit in 2018 – something the president will likely highlight next week as the historic event it surely represents.  
  • The Philippines: this will not be an easy visit; while Duterte has evidently warmed in his rhetoric from the Obama years, the best Trump can likely expect might be a re-affirmation by Duterte of the treaty relationship and perhaps the sale of additional U.S. small arms to help in the fight against Islamic militants. 

In 2012, President Obama famously charted a strategic “rebalance” to the Asia-Pacific region, to re-orient both military and commercial interests away from the Middle East and to this vital region; but despite the rhetoric, the “rebalance” or “pivot” proved more stylistic than substantive.

  • Further, both Obama and Bush43 found occasional excuses not to attend the two most important leader meetings of countries in this region: the Asia-Pacific Economic Cooperation (APEC) forum and the East Asia Summit – both scheduled during Trump’s visits. Trump will attend the former (while in Vietnam) but skip the latter; unfortunate.

Bottom Line

Given the significance of this trip, the president needs to listen carefully to his national security team; and he needs to stay on script if he is to advance U.S. commercial and strategic interests. This trip will be by far the most important of his presidency. We wish him luck.

The Most Important Trip of Trump's Presidency - market brief