President Obama initiated his long-awaited (and long overdue) quest for “fast track” or Trade Promotion Authority (TPA) from the US Congress, understanding that final negotiations and eventual passage (or not) of his Asian “rebalance” economic centerpiece, the Trans-Pacific Partnership (TPP) free trade agreement, rests upon achieving TPA. Without TPP, Obama’s already tarnished leadership image will be severely damaged, his “lame duck” status will be solidified at home and abroad, and his Asian pivot will be seen not as the multidimensional strategy it was intended to be but largely a unidimensional (security) single-focused (China) strategy. Meanwhile, China continued to tarnish US and ASEAN leadership through its accelerated island-building projects in the South China Sea, while Washington’s badly managed response to China’s Asian Infrastructure Investment Bank initiative provided another (self-inflicted) wound. Washington’s questions were the right ones, but its seemingly “choose between us and China” approach resulted in most US partners and allies choosing Beijing. Finally, US-DPRK and North-South relations went through cycles of hope and despair with no real progress in sight, as speculation runs rampant as to why Kim Jong-Un decided not to go to Moscow.

TPP edges forward

The biggest Asia-Pacific economic story this year, at least from Washington’s perspective, has been the fate of the Trans-Pacific Partnership (TPP). Eyes are on the US to see if Congress will give President Obama the “fast track” Trade Promotion Authority that is key to his negotiating credibility. No country will reach a final agreement with the US if Congress can subsequently modify key provisions. Obama made little push for TPA in the first six years of his term, but he has made it a priority now that his administration is winding down and the GOP controls both houses of Congress – a situation that, ironically, makes it easier for him to get the bill passed. Democratic skepticism of trade agreements is strong and even the prospect of undermining a president from their own party might not get them to swallow their distaste for such a deal. At present, bills are winding their way through Congress to give Obama TPA: passage is by no means assured, however. Since GOP support for such deals can’t be taken for granted, Obama is going to have to twist arms among his own party to get the legislation secured.

TPA is not the only holdup, however. In addition to talks among the 12 TPP parties, there are bilateral negotiations among various governments and one of the most important of those is between Washington and Tokyo. Japanese negotiators are tough, and they are holding out for a TPA deal before they put their final offers on the table, a point made plain during Prime Minister Abe Shinzo’s state visit to Washington in late April. The US-Japan talks focus on longstanding sticking points such as agriculture and autos.

This year, there have been three TPP officials meetings. The first was in New York City, Jan. 26-Feb. 1. Reportedly they made progress on market access for goods. Topics discussed included intellectual property, investment, non-conforming measures, state-owned enterprises, rules of origin, environment, and financial services. The second round convened in Hawaii March 9-15, and there negotiators took up technical issues regarding market access, intellectual property, rules of origin, state owned enterprises, and textiles. Lower level negotiations followed. The third TPP officials meeting took place in Maryland, April 23-26, and many of the same topics were on the table. Talks occurred in every possible format – bilateral to plurilateral – with the goal of finalizing treaty text.

Quick progress is critical. If Congress doesn’t get TPA passed soon, there is little chance that TPP will be concluded before the end of summer. If it takes that long to get agreement among the 12, there is the real danger that Congressional deliberations will drag on through 2015, at which point it will become an issue in the 2016 campaign, effectively pushing back ratification a year – and the prospect of a rejection is real. If administration officials are correct that TPP is as important for its strategic as its economic interests – a position with which we agree – then delay and denial would be a serious blow to US credibility, authority, and leadership.

China flexes its economic muscle

The second story dominating the media narrative of the first four months of 2015 was the launch of the Asian Infrastructure Investment Bank (AIIB). This proposal by Beijing is designed to help plug the estimated $8 trillion dollar infrastructure investment gap in Asia. Many Western nations, the United States among them, saw the AIIB as a challenge to the World Bank and the Asian Development Bank. They feared that it would provide money on different terms, and in so doing undermine those institutions’ authority as well as the rules and norms that guide their lending. In short, the AIIB would be the cornerstone of an alternative regional financial architecture, one that challenged the system set up by Washington and like-minded governments after World War II.

Officially, the US was not opposed to the bank so much as cautious about its operating procedures. Washington was merely waiting for answers to questions about how the AIIB would work before making a decision on whether to join (although the prospects of the US Congress allocating money to a Chinese-led institute seemed slim). Unofficially, however, there were reports that the US actively opposed the new bank and was pressing other governments to stay away. That strategy crumbled in late March when the United Kingdom agreed to join as a founding member, a decision that spurred other Western governments to follow suit: Germany, France, Italy, Australia and South Korea also made the March 31 deadline. (New Zealand had joined the bank in early January, a move that didn’t seem to have the same impact as the British decision.) Fifty-seven nations in total joined as prospective founding members.

The flood of applicants was roundly portrayed as a “defeat” for the US. (Japan was one of the other holdouts.) Since China’s push for new lending institutions was thought to have stemmed from frustration over the slow pace of reform at the World Bank and the International Monetary Fund – a result of the US Congress’ refusal to back agreed changes to voting shares of members – it was seen as an own goal. Coming on the heels of US complaints that China was refusing to do more to provide international public goods, US policy was criticized for being incoherent and self-defeating.  It’s hard to disagree.

China flexes it military muscle; ASEAN (meekly) responds

While Beijing was winning friends and influencing countries with its still booming (if somewhat slower) economy, it was also flexing its muscle in the South China Sea. China’s activities there are well documented elsewhere in this report. Comprehensive details regarding its island building efforts – dubbed “the great wall of sand” by the commander of the US Pacific Fleet (and soon to be PACOM commander) Adm. Harry Harris – can be found via the CSIS Asia Maritime Transparency Initiative.

ASEAN, which normally does a good lot of burying its head in the sand when it comes to egregious Chinese behavior, finally took notice, if somewhat meekly, during the ASEAN Summit on April 26-27 in Kuala Lumpur and Langkawi, Malaysia. The Chairman’s Statement noted that ASEAN members “share the serious concerns expressed by some Leaders on the land reclamation being undertaken in the South China Sea, which has eroded trust and confidence and may undermine peace, security and stability in the South China Sea.”  Given the seriousness of the issue, the assembled heads of state “instructed our Foreign Ministers to urgently address this matter constructively including under the various ASEAN frameworks such as ASEAN-China relations, as well as the principle of peaceful co-existence.” This was as close as the leaders came to naming China as the source of the problem. They also called on all signatories “to ensure the full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea in its entirety” and “urged that consultations be intensified to ensure the expeditious establishment of an effective COC [code of conduct].”

If ASEAN was slow to blame China, Beijing had no problem accusing Vietnam and the Philippines, by name, for violating the spirit and intent of the DOC. Guilty as charged! All the claimants have made modifications since the DOC that violated the spirit and intent of the DOC and Hanoi is pursuing a land reclamation effort of its own, although the scope pales in comparison with that undertaken by Beijing.

Bandung 60 years on

Earlier in April, Jakarta hosted 21 heads of state and representatives from over 100 countries from Asia, Africa, and the Middle East at the 60th anniversary of the Asian African Conference. The original Bandung conference, as it is generally known, brought together 25 countries from Asia and Africa in an attempt to forge a coalition of nonaligned states among newly independent nations.  It focused on peace, security, and development as the Cold War was heating up.

The 60^th anniversary shindig sought to increase the economic and political power of emerging countries. Attendees railed against income inequality and terrorism, calling for more trade and investment among developing nations. While there has been explosive growth in two-way trade between the regions – it went from $2.8 billion in 1990 to $270 billion by 2012 – there is room for improvement. For their enthusiasm, however, the conference was long on rhetoric and short on deals. The final declaration also condemned terrorism and transnational crime, and called for the peaceful resolution of disputes, without providing any means to do so or penalties for failure.

The meeting was also notable for the presence of Japanese Prime Minister Abe Shinzo, who heralded the Bandung spirit of “live and let live,” promised to continue Japan’s 70-year history of contributing to regional peace, and pledged to step up Japan’s support for economic development among emerging nations. Chinese counterpart Xi Jinping also promised aid, with no strings attached, and urged the countries of Asia and Africa to step up to do take more responsibility for their collective future. Abe and Xi met on the sidelines of the meeting, another sign that the Japan-China relationship has bottomed out and is on the rebound.

Six-Party Talks prospects: somewhere between hopeful and completely hopeless

We have tried in this Regional Overview over the years to track the progress (or lack thereof) of the Six-Party Talks aimed at denuclearization of the Korean Peninsula. There was a glimmer of hope early in the reporting period after a track-two meeting in Singapore involving several former US negotiators (Steven Bosworth and Joe DeTrani) that once the obligatory round of US-ROK winter/spring exercises – and equally obligatory round of DPRK short- and medium-range missile launches – were over, dialogue would resume. It was not meant to be. The North is willing to come to talks if the US and others treat it as a bonafide nuclear weapon state; they won’t and shouldn’t.

The most interesting side issue (or sideshow) revolved around Kim Jong Un’s declared intention to attend World War II 70^th Anniversary celebrations in Moscow (an event many Western leaders planned to boycott). However, the North announced on April 30 that the Young General would in fact not be going on his first overseas trip after all, citing “internal Korean affairs.” This has raised speculation (for the umpteenth time) that Kim’s grasp on power is tentative and that a power struggle could soon ensue, if not already underway. Lending credence to this speculation was a ROK intelligence report indicating that the North’s Minister of the People’s Armed Forces Hyon Yong Chol (the second-most senior military officer in the DPRK), had been put to death by firing squad on April 30, for plotting against the government and for falling asleep during a military parade. If true – it’s certainly credible but then again few things about the North, regardless of how bizarre, still seem credible – it could either mean that Kim is showing off his ultimate power or that he is increasingly unstable and insecure; we tend toward the latter but, when it comes to North Korea, we’re all guessing.

There is also a much less sinister and equally plausible reason for the trip’s cancellation: since Kim Jung Un is neither head of state nor head of government, protocol would dictate that he be lined up after all those who are. How could the “living God” explain being in the back row of the group photo, rather than standing between Putin and Xi Jinping, his obvious “rightful place.”

To end this segment where it started, as our reporting period was drawing to a close, there was a report from Seoul that the other five parties might be willing to meet with the North, without preconditions, to discuss a resumption of talks, i.e., to talk about talks. We’ll have to wait and see on this one.