What impact will Trump’s presidency have on Philippine interests?

Dindo Manhit, President of the Stratbase-Albert del Rosario Institute (ADRi) for Strategic and International Studies

There has been no shortage of shocks in 2016, but the American people’s decision to elect Donald Trump as their next president is the icing on the cake. The results of the election, followed closely in the Philippines and in the rest of the Asia, took most of the United States and the rest of the world by surprise. Markets fell in Tokyo, Seoul, Beijing, and Manila as residents began to seriously consider a world where Trump is the face of American power.

If he keeps to his promises, Trump will sow division with Asia at a time when the United States has interests in promoting stability and American goods and services. To some, businessman Trump would not take steps to jeopardize the American economy; to take Trump by his world would be beyond imagination. Yet, if the Philippine election and the US election are anything to go by, it does not make sense to bet against change.

Security jitters in the Asia-Pacific

From the defense point of view, there is no consensus over Trump’s policy for Asia or what he could tangibly accomplish. Nevertheless, his remarks during the campaign left Asian leaders cause for concern. Trump had called for the United States’ to disentangle itself from its Asian allies, suggesting that countries like Japan and South Korea had not done enough to pay for their share of the “burden.”

In a confounding move, Trump has also supported Japan and South Korea developing nuclear weapons. Many believe that Japan could develop nuclear weapons very quickly if it wished, if not for the United States discouraging it and South Korea from doing so. Such a move would greatly complicate the region’s efforts over North Korea, which has been testing nuclear weapons of its own in recent weeks.

Trump-induced uncertainties prompted Northeast Asian leaders to move quickly to reach out to the president-elect and gain reassurances of their alliances. South Korea reported that Trump and South Korean President Park Geun-hye had already spoken by phone and that Trump had already assured her of the United States’ continued commitment. For his part, Japanese Prime Minister Abe Shinzo has already scheduled a November 17 meeting with the reality show magnate, likely to secure a continuity of US support to Japan.

Trump-induced uncertainties prompted Northeast Asian leaders to move quickly to reach out to the president-elect and gain reassurances of their alliances.

Manila only recently reaffirmed the Philippines’ strategic partnership with Japan, during President Rodrigo Duterte’s trip to Tokyo. While there, Duterte also assured Shinzo that the Philippines would stand by its longstanding partner, especially when it comes to the Japan-China dispute in the East China Sea. If, amid a Trump-led US drawdown from Asia, Japan and China butt heads over Senkaku islands, Duterte should be prepared with the Philippines’ position.

Further south, however, the Philippines’ “pivot to China” amid greater US uncertainty could be a defining moment for the rest of Southeast Asia. Depending on how you look at it, a reduced American presence in the region could either remove an irritant in regional relations (the Duterte administration’s view) or encourage China to be more active in the disputed areas. As it is too early to see where Trump will take it, the Philippines should be prepared for either eventuality.

The Philippines’ “pivot to China” amid greater US uncertainty could be a defining moment for the rest of Southeast Asia.

Is this the end of the Asia pivot? No one can say for sure, but despite its sometimes flawed implementation the pivot was supported by both Republicans and Democrats in the United States. Republicans now control the US Senate and House. Depending on how much they find themselves at odds with the new president and his goals the United States’ Asia policy could find itself continued in a different form or abandoned altogether.

Trump’s trade war?

On the economic front, Trump has been much clearer. His “Donald J Trump Contract with the American People” lists six actions that he would take on his first day of being president of the United States. One of them is for the US Secretary of the Treasury to label China a “currency manipulator,” which would let the US government eventually impose duties to offset the negative impact of the Chinese government’s currency devaluation. The cheaper the RMB, the cheaper Chinese products are to import.

The move would have strange timing, as the Chinese government is believed to have been far less active in devaluing its currency and the RMB has increased in value over at least the past 12 months. Nevertheless, such a move would likely have an impact on US-China trade, which amounted to 659 billion in 2015. Filipino exporters upstream (e.g. exporters of electronics that are used in finished goods that China exports to the US) could expect some impact from that move.

More than just his specific commitment to scold China for its currency practices, Trump has also said that he would renegotiate NAFTA and withdraw from the TPP. Of course the Philippines is not directly affected by these deals, but the government should pay attention to Trump’s anti-trade stance and consider which other policies the new US government could revisit. If America becomes more closed to trade, the Philippines will have to find new markets just as it is trying to boost domestic manufacturing and export volumes; the US is the Philippines’ second-largest export destination.

The Philippine government should pay attention to Trump’s anti-trade stance and consider which other policies the new US government could revisit.

Finally, Trump has also promised to introduce an “End the Offshoring Act” within his first 100 days. He says that this would establish tariffs to discourage US companies from relocating to and hiring in other countries. The US is the largest source of foreign direct investment in the Philippines, concentrated in the manufacturing sector. This should be on the horizon of the BPO sector and the administrators of the economic zones.

Incoming isolation

In Manila, the saying goes that Clinton would be good for the Philippines but that Trump would be better for Duterte. In terms of policy, Trump has little to offer that would benefit the Philippines. Now that he has won, the Philippines should hope that clearer heads in Washington can steer the direction of the United States’ Asia policy into safer waters. At the end of the day, a more insular America will hurt the US and the Asian region alike.

In terms of policy, Trump has little to offer that would benefit the Philippines.

In terms of personality, the two leaders’ similarities in hyperbolic speech could perhaps make them more attuned to the other’s attitudes. To take a more optimistic point of view, if this shock helps the Philippines and the United States restart and enhance their relationship, then Trump’s election could be a blessing in very heavy disguise.

This article was originally published by PhilStar Online at: http://www.philstar.com/headlines/2016/11/11/1642729/what-impact-will-trumps-presidency-have-philippine-interests

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