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Economy: Bush Team Hopes to Improve Standing in Asia During Presidential Trip

Interviewee: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies
Interviewer: Bernard Gwertzman, Consulting Editor
November 11, 2005

Elizabeth C. Economy, the Council's C.V. Starr Senior Fellow and Director for Asia Studies, says that until now, the Bush administration's policies toward Asia have been so one-sided on counterterrorism that Asian leaders have felt their concerns have been ignored. With Bush about to head to South Korea for another Asia-Pacific Economic Cooperation (APEC) summit, "the Asia hands within the administration are making an enormous effort in advance of this trip to get the president and the top foreign policy leadership to focus on Asia in a way that they haven't ever done," she says.

Economy discussed the summit—and Bush's visits to Japan, China and Mongolia—with Bernard Gwertzman, consulting editor for cfr.org, on November 10, 2005.

President Bush leaves Tuesday on a trip to Asia that will take him to an Asia-Pacific Economic Cooperation (APEC) summit conference in Busan (Pusan), South Korea, as well as to Japan, China and Mongolia. He is slated to give a major speech in Kyoto, the ancient Japanese capital, on overall Asian policy. How would you regard Bush's policies in Asia? Is it one of his success stories?

I don't know that I would characterize the administration's policy toward Asia as a "success story" to date. I think that, as is the case in many other parts of the world, people in Asia feel as though President Bush and his team have been very much of a "one-note band," overwhelmingly focused on the war on terror to the exclusion of other issues that are critical to Asia. Asian leaders have gotten tired of having the Asia Pacific Economic Cooperation summits dominated by discussions of counter-terrorism challenges. At the same time, the White House has made some significant blunders as when Secretary of State Condoleezza Rice did not attend the Association of South East Asian Nations [ASEAN] annual summit this past July. She was the only foreign minister not to attend and that was considered a slap in the face to the region.

What was the reason she gave?

She said that she had a full travel schedule and she sent Deputy Secretary Robert B. Zoellick. He is an admirable stand-in from a policy perspective, although he probably doesn't possess the same star quality of the secretary of state, and he doesn't have the same access to the president. Also, there was an understanding within the region that [Rice's] participation would signal that the administration was placing a greater priority on Southeast Asia, and when she didn't attend that didn't happen.

In the three years left in this term, do they have any room for improvement?

I think there is significant room for improvement. In fact, I think the Asia hands within the administration are making an enormous effort in advance of this trip to get the president and the top foreign policy leadership to focus on Asia in a way that they haven't ever done. Some of this newfound attention may also have to do with the fact that the United States is in danger of being marginalized in the region. In December, all the ASEAN countries plus Japan, China, South Korea, India, Australia, and New Zealand, will gather for the inaugural summit of the East Asian Community (EAC).

This is an organization that has yet to define its major principles, but the Asian leaders are talking about the full range of issues—trade and investment questions, transnational challenges, and security problems—and the United States is not going to be part of this arrangement. Part of what President Bush has to do when he goes to Busan, for the Asian-Pacific Economic Cooperation [APEC] Forum, is to make the case for why APEC matters and why the nations in that area should want the United States to remain deeply engaged. If we don't make that case in a way that's appealing to Asian leaders, we will find ourselves trying to operate and influence events in a region in which we are not a significant player in the most important regional arrangements.

It's interesting that we're not invited to the EAC meeting, since we're such a Pacific powerhouse.

Well, I think the region was divided as to the wisdom of including the United States. The Australians and some others—the Japanese, Singaporeans and Indonesians, apparently— tried to make some room in the EAC for the United States, but one of the conditions of participation is that a member state signs the Treaty of Amity and Cooperation, which is a non-aggression treaty, and we're not willing to do that.

At the APEC meeting in South Korea, what is likely to emerge?

I think President Bush has a couple of top priorities. One is to try to get Asia to rally around [the] Doha [agreement] for the next round of trade talks in Hong Kong in December. He didn't have much success in Latin America, and I think that Asia will also be tough sledding. Some countries will be quite supportive and some countries are going to raise concerns. President Roh of South Korea, for example, has already raised a red flag concerning the downside of free trade and globalization, noting that social disparities increase, which causes long-term harm to the development of the market.

In fact, both Korea and Japan are likely to raise challenges on the issue of agricultural subsidies. Nonetheless, President Bush would like to get a reasonably strong consensus document in support of the next round of talks. Another issue on President Bush's agenda is promoting cooperation on avian flu. This is, of course, of enormous concern globally right now, and Asia is the hot spot. The President will want to try to ensure that when and if cases are identified all the governments coordinate, there is real transparency and we don't have to worry about a Severe Acute Respiratory Syndrome [SARS] type of reaction by the Chinese government in particular.

Last year there was a lot of criticism of the Chinese for the way they handled SARS in 2003, including from within the country. Have they done better on the avian flu?

The signs seem to be moving in the right direction, but I don't think that we can say definitively the Chinese are prepared to be as transparent as necessary. They are in the process of slaughtering millions of chickens and ducks and, in the process, decimating their poultry industry. I think the difficulty for the leaders in Beijing, however, is not only are they reluctant to acknowledge the degree of the problem, they also have no guarantee they are going to get accurate information from the provinces. It's entirely possible, if not even probable, that some cases might pop up and a provincial leader might try to cover it up. There is very little incentive in the Chinese system to be the bearer of bad news. Nonetheless, I think Beijing is eager to avoid the type of international condemnation it suffered as a result of its trying to hide the SARS epidemic, and thus is attempting to be more forthcoming.

A third key issue for President Bush to tackle at APEC will be "next steps" in the wake of the six-party talks on North Korea's nuclear program [recently completed] in Beijing. If there is any progress made at the six-party talks, he will try to nail down some specifics in terms of the ordering of steps and time-tables, to bring some greater definition to the very preliminary agreement that was hammered out at the last round of talks. Every major participant in the talks, save North Korea, will be at APEC. So the summit affords the President a critical opportunity to try to build consensus among the top leaders.

Let's move to Japan. You don't hear much about Japanese-American relations these days. Is that because they're quite normal or is it just because there isn't much to say?

I think it is fairly clear the U.S.-Japan relationship is the strongest of America's relations with any of the other regional powers, and President Bush's relationship with President Junichiro Koizumi is one of the most effective. During President Bush's tenure, we have pursued a succession of security-related agreements with Japan, and Japan has emerged as one of our strongest allies, supporting, for example, the U.S. war in Iraq. Of course there remain some sticky issues: our troop presence on Okinawa, although resolved by the top leaders, remains unpopular with much of the Japanese public; Japan is recalcitrant on the issue of opening its agricultural sector and markets in some other areas are difficult to penetrate; and there is the issue of what type of defense force Japan will develop going forward. It appears Japan may revise its constitution to permit a more proactive security posture.

So this will allow Japan to put troops overseas?

Some Japanese self-defense forces are already posted abroad—in Iraq, for example—but in non-combat positions. We will have to wait to see the substance of the constitutional revision. It is being hammered out right now in Japan.

Do we want Japan to play more of a security role in the world?

Over the past decade or so, in some quarters of the United States policy community, there has been the feeling that we do want more defense-burden sharing. The United States can't afford to be the sole policeman in Asia, and Japan needs to step up to the plate. I think the Bush administration is pressing hard for a more active Japanese role. At the same time, any dramatic—or even subtle—change in Japan's defense posture will cause significant concern within the region, so this has to be done very carefully.

The big spotlight will be on Bush's trip to China. Is this his first visit there?

No, he's been before. He attended the APEC summit in Shanghai in 2001.

He was supposed to meet with President Hu Jintao in Washington, and that meeting was canceled because of Hurricane Katrina. Bush subsequently met Hu at the United Nations. Secretary of Defense Donald Rumsfeld just had a trip to China, and there are a number of trade issues and security issues with China. What do we expect to come of Bush's visit?

As I mentioned before, there has been a good deal of planning in advance of this meeting. I think one of the things the President's team has tried to do is to line up some successes before the two leaders even meet. In addition to the textile agreement that was just struck, which serves the interests of some textile and apparel manufacturers in the United States, it appears that after a long hiatus in military-to-military cooperation with China, we are going to open the door to exchanges, information sharing, and potentially, hot lines and training. That is a significant step because the lack of transparency in the Chinese military apparatus, as well as our reluctance to engage with the People's Liberation Army during the past almost five years, certainly contributes to a lack of understanding and perception of threat on both sides. So, advances on military-to-military cooperation will likely be announced as another summit success. President Bush will also press on the currency issue yet again, but that won't go anywhere. China will move on its currency when it is ready to do so.

What is the issue on the currency in layman's terms?

In layman's language, there is a widespread belief outside China that China maintains an unfair trade advantage by undervaluing its currency, thereby making Chinese goods less expensive than they ought to be and making it difficult for U.S. goods to compete.

Because they want to keep up their exports?

Exactly. Exports are the engine of Chinese growth at this point, and the only way the Chinese government can see to continue to raise the standard of living of its people. I think another big issue on the table is going to be property rights. In the last six months or so, the administration has started to take a tougher line on China, calling on the Chinese government to document the cases it has brought against violators, the outcome of the cases, and the penalties.

I think the Chinese have announced a three-month campaign crackdown. Is that important?

It will make no difference whatsoever. China needs a reorientation of its system of local governance, much greater investment in enforcement, etc. These are very difficult, long-term, institution-building measures that are so fundamental—both politically and economically—here is very little chance they will happen in the near term.

This is mostly about DVDs and software?

It is absolutely not simply a matter of DVDs and software. Chinese companies pirate the most sophisticated technologies, pharmaceuticals, even entire automobiles. There are people who reengineer machine parts from computer diagrams off the web. Teams of people in some Chinese companies look to exploit loopholes in the patents of foreign companies. This is a challenge not only to the letter of the law in the WTO [World Trade Organization] but also the spirit of intellectual property protection. For U.S. companies, this results in a loss of tens of billions of dollars in profit annually.

That's really outrageous.

Absolutely. Companies like Pfizer, with Viagra for example, stand to lose hundreds of millions of dollars over the years. This is an enormous issue that affects many sectors of the U.S. economy.

But there is no easy solution.

There is no easy solution. The protection of intellectual property rights has everything to do with local implementation, local enforcement, and the strength of the Chinese court system. None of this provides any reassurance the situation will improve in the near term.

Do U.S. companies try to go to court in China on this?

They are starting to do that. But it's difficult to prove, time-consuming and costly, with no guarantees. The process is complicated with local Chinese officials often in cahoots with local industries. Nonetheless, I think we will see more cases going before the WTO.

What about human rights?

One of the things this administration has been criticized for has been downplaying the issue of human rights with China. With this trip, however, I think that the administration is trying to stave off its critics. President Bush has come out very clearly and stated that he was going to discuss human rights with all the leaders in Asia. He met with the Dalai Lama at the White House on Wednesday, despite Chinese unhappiness.

It is also announced the president will go to church while he's in China.

Right. He's going to push on the issue of the freedom of worship. I think the administration has become quite sensitive to criticism about U.S. policy toward China, and about broader U.S. policy toward Asia, and they are really acting quite preemptively to fend off that kind of criticism.

So at the end of the day, do you give the administration points for having a more thoughtful approach to Asia or China?

I think our approach to China, as articulated by Zoellick in his speech to the National Committee on U.S.-China Relations, is the right one. In this speech, he discusses the fact that China is a rising power and we need to ensure that as China becomes a global power it also becomes a responsible stakeholder in the international system. There are, of course, some challenges to such a vision. The first is, for China to be a responsible stakeholder in the system really means its system of governance must undergo some fundamental reform. In order to address issues like intellectual property rights, avian flu, global climate change, human rights etc., you need good governance. Unfortunately, President Hu Jintao and his team have demonstrated little inclination to move forward on the type of political reform necessary to achieve a higher standard of local governance. This regime is fundamentally a weak one consumed with maintaining political stability. Thus far, that has translated into a clampdown on alternative political perspectives rather than an embrace. Second, I think the United States will have to do a better job of leading by example. It is difficult to gain traction with the Chinese if we are not practicing what we preach.

They still have labor unrest?

There were 74,000 protests in China last year. Social unrest—whether due to labor issues, the environment, public health, or corruption—is the government's number one concern.

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