By Rajan Philips –

Rajan Philips

There is no question, Trump has turned world trade upside down. While he is not getting everything he wants, no one in the world is either willing or able to call his bluffs or stop him in his tracks. The recent ASEAN summit in Kuala Lumpur had Trump written all over it even if it meant far less than what was displayed. The summit and its dynamic also showed world leaders jostling around like sales people at an industrial exhibition. Except, there were no booths or interesting products on display. Only Trump’s tariffs and the pleadings of others.

“Trump gives ‘toothless’ Asian summit its moment in the sun,” BBC online headlined its news story on the ASEAN summit. It would equally be correct to say, “ASEAN gives Trump the adulation he craves for.” The Malaysian media understandably took it differently. “Malaysia didn’t just host ASEAN – it steadied a shifting world,” read the headline for one commentary. Malaysian Prime Minister Anwar Ibrahim won fulsome praise for his shepherding of the main ASEAN summit and other summits within summits. In one of the meetings, Anwar even managed a self-deprecating crack but aimed at Trump: “We share a lot in common, one of which is that I was in prison, and you almost got there.”

Anwar to Trump: “I was in prison, and you almost got there!”

Apparently everyone laughed including Trump, who did not get ‘nasty’ with his Malaysian host the way he usually does with his White House guests. If there was a snub at the summit, or rather to Trump, it came by way of two prominent no-shows – by India’s Narendra Modi and China’s Xi Jinping. Xi later met with Trump at another summit in Seoul, while Modi limited himself to a virtual appearance from Delhi and left the rest to his delegates just as the Chinese did in KL. The backdrop to all the small p politics at the summits was Trump’s tariffs and their predictable unpredictability.

It is a sea change from the state of world politics even ten years ago. That was when politics governed over trade, but now it is trade that is running politics. The changes are even starker from the Cold War era when politics, political economy and trade were all subordinated to the ideologically dictated alternative end states for humanity: Either free market capitalism or state led socialism. Even the NPP government has been a quick learner of the art of the possible on the external trade front, if not foreign policy as a whole, much to chagrin of its critics left and right, especially when it is about Israel or the UNHRC.

ASEAN’s New Relevance

ASEAN itself was founded in 1967 to contain communism in Asia. Originally a group of three in 1961, comprising Thailand, Philippines and Malaya, it was formalized as an organization of five with the addition of Indonesia and Singapore in 1967. Brunei joined in 1984, and four more came after 1995 from virtually the other side of the communist curtain, namely, Vietnam, Laos, Myanmar and Cambodia. The eleventh and the latest addition in Kuala Lumpur is Timor-Leste, formerly East Timor.

China that was once the principal champion of communism in Asia, later accused of being a rogue player who broke all the trading rules to get ahead in the world of capitalism, is now the principal champion of abiding by the rules of world trade if not all the norms of non-interference and non-exploitation between countries.

On the other hand, the US, the self-appointed champion of global free trade before Trump, has become the unabashed opponent of free trade and the purveyor of tariffs under Trump. Vietnam that fought a bloody war to see the last American soldier humiliated and leave its territory is now all in for signing trade deals with Trump.

The main historical achievement of ASEAN has been in providing a largely informal framework for its members to co-operate economically while keeping out of touchy internal problems and thorny regional issues. Where ASEAN has tried to influentially intervene, it has found itself to be totally ineffective. A case in point is the civil war in Myanmar that has been slow burning from 2021 and ASEAN has been able to do nothing about it even though Myanmar is a member country.

Nor could the organization prevent the border clashes that broke out in July between Thailand and Cambodia. However, ASEAN leaders, especially Malaysian PM Anwar Ibrahim, were able to bring at least a cessation of hostilities between the two neighbours with Trump threatening high tariffs on both unless they stopped fighting. And they did, however reluctantly, and went on to sign a peace agreement at the summit under the auspices of Trump. Trump was thoroughly pleased as the globetrotting peacemaker, but no one is sure what it has achieved on the ground across the border. Even the current admission of East Timor as a full member is more a triumph of time than accelerated diplomacy.

Yet ASEAN has found new relevance for its being because of Trump’s trade tariffs. The summit this year provided a forum for non-ASEAN members to trade their wares in order to minimize the effects of Trump tariffs. Besides Trump and delegations from India and China, there were other western leaders from the EU, Canada, Brazil and South Africa, along with the Prime Ministers of Japan and South Korea. ASEAN has always been inviting other world leaders to the annual ASEAN summits and holding sidebar summits with them. But this year there was an added significance to the gathering and its invited guests because of the tariff turmoil.

Trump’s main reason may have been to lord over the signing of the peace agreement between Thailand and Cambodia, but ASEAN leaders took the opportunity to make the best use of his presence and win special exemptions for some of their key exports while agreeing to Trump’s imposition of higher than earlier tariffs on all of their exports. Thailand and Cambodia were given new deals as rewards for their peace agreement, while Malaysia and Vietnam also used the opportunity to improve their earlier deals with Trump.

Canadian Prime Minister Mark Carney, who is in the middle of a tariff tug-of-war with Trump, made a different pitch to ASEAN leaders, urging them not to get locked into the US market (on Trump’s terms) but to look for opportunities for expanding trade with other countries that are supportive of rules-based free trade. He made a sales pitch for Canada as an energy superpower – both conventional and nuclear, with growing investments in cybertechnology and artificial intelligence, and having one of the world’s largest reserves of critical minerals and the largest financial centre for mining operations.

Mr. Carney is looking for trading allies to reduce his country’s export dependence on the US especially with Trump insisting on imposing tariffs on Canadian export. Carney, a former governor of the Bank of Canada and the Bank of England, sees opportunities in the ASEAN conglomerate of 600 million people with a bloc GDP of $10.2 trillion. He was speculative about a potential trade agreement between the EU and ASEAN as a counter to what he earlier called Trump’s monetization of US hegemony. His ideas were not without resonance at the summit.

The Regional Comprehensive Economic Partnership (RCEP) that includes ASEAN plus Australia, China, Japan, New Zealand and South Korea, had its side summit where it reiterated “its commitment to an open, fair and rules-based multilateral trading system, amid an increasingly unsettled geopolitical climate.” The RCEP also reaffirmed its “commitment to the World Trade Organisation rules and principles as the foundations of an open, transparent, fair and rules-based multilateral trading system that ensures predictability and non-discrimination for all trading partners”. This after Trump has virtually walked America out of WTO.         

The RCEP, began coalescing around 2012, and was formalized when the US withdrew from the incipient Trans-Pacific Partnership in 2017, soon after Trump was sworn in as President for his first term in office. Trump is now trying to impose tariffs on members of RCEP which is now set up to be a barrier against Trump tariffs. Other countries are now reportedly interested in joining RCEP, including Bangladesh, Chile, Hong Kong and Sri Lanka.

Critical Minerals

To my earlier point, the current and the proposed new alliances are all about lubricating trade and nothing about the people or improving their livelihoods in their national settings. A far cry from the days when terms of trade were a crucial part of geopolitical discourse. Nor is there any global urgency about the now chronic conflicts and their tolls on innocent people in Ukraine, Gaza, and in Darfur, Sudan, where just this week more than 400 people were allegedly killed in a hospital in El-Fasher following its capture by the Rapid Support Forces (RSF), a paramilitary force with government support.

With Trump claiming credit for ending wars and conflicts, no one else seems concerned about current global conflicts. There are NGOs tracking global conflicts, but no government anywhere seems concerned unless there is a neighbourhood spillover. And Trump is not interested in any place unless there are business opportunities as in the Middle East, or there are the so called critical minerals, or rare earth elements (REEs), which are a fundamental requirement for the growing high-tech industries, as well as the defence industry for producing targeted missiles and fighter jets.

The demand for critical minerals is expected to grow by 400 to 600 percent over the next few decades, with the demand for lithium and graphite exceeding 4,000 percent to fuel the burgeoning EV battery industry. China virtually reigns over the critical mineral sector, reportedly accounting for 70% of global production and 90% of processing global output. The US and the west are anxious to pushback on China’s dominance over critical minerals.

China recently announced restrictions on its critical mineral exports to the US, Trump hit back with a 100% tariff threat, and China was ready tit-for-tat and threatening to stop US imports. An apparent truce was reached in Seoul where Trump and Xi met, with Trump agreeing to reduce his tariff levels on Chinese exports, and China agreeing to suspend its restriction on critical mineral exports and to allow US imports, especially the export of soybeans that is critical for American farmers. But the trade relations between the two economic superpowers are still significantly strained with each facing its own internal challenges.

Critical minerals are also top of mind for the G-7 countries, namely, US, France, Germany, Japan, Britian, Canada and Italy, which are working towards a special critical minerals pact as a counter to China’s current dominance of the sector. The scramble for gaining advantage in unrestricted mineral extraction, rather than seeking greater global co-operation for orderly use of a natural resource, is a symptom of the ethos of capitalism.

What is also curious is the growing enthusiasm among G-7 countries and the EU  to bolster their defence industries as the path to the next phase of economic development. After a whole generation of western leaders preoccupied with disarmament has come and gone, their current successors are privileging defence purportedly for civilian economic growth. Trump as usual has given the rest of the G-7 group a huge surprise by announcing on Truth Social that he has  “instructed the Department of War to start testing our Nuclear Weapons on an equal basis,” and that “the process will begin immediately.”

Trump posted his nuclear message just before his meeting with Xi in Seoul. Apparently it was meant for Russia and not as a barraging chip with China. Time magazine has called the post “an error-filled and unclear order.”  For it says a lot about Trump’s cluelessness about who does what in his own government. It is the Department of Energy, and not the Department of War (or Defence), that is responsible for nuclear testing. Trump has three more years to learn about his government and the world has three more years to suffer his long learning curve.