Shanmugam: US risks losing credibility in Asia

It needs mature approach on key issues like trade and China, he says
By Jeremy Au Yong, US Bureau Chief In Washington, The Straits Times, 17 Jun 2015

THE United States may find itself irrelevant in Asia if it continues to drag its feet on free trade and if it fails to find a way to accommodate the rise of China, said Singapore Foreign Affairs and Law Minister K. Shanmugam in Washington yesterday.

Mr Shanmugam, who is at the start of a week-long working visit to the US, gave a hard-hitting critique of Washington's policy on Asia during a forum at the Centre for Strategic and International Studies.

Am currently in Washington, DC for a working visit. Spoke at a forum at the Centre for Strategic and International...
Posted by K Shanmugam Sc on Tuesday, June 16, 2015

Pulling few punches at the hour-long dialogue, he issued his strongest remarks yet on the US failure to make meaningful progress on the mega trade pact with Asia known as the Trans-Pacific Partnership.

The deal presented a stark choice to the US, he said.

"Do you want to be part of the region or do you want to be out of the region?

"If you are out of the region, not playing a useful role, your only lever to shape the architecture, to influence events is the Seventh Fleet and that's not the lever you want to use, or you can't use it at every instance. Trade is strategy and you're either in or you're out... The world doesn't wait, not even for the United States."

Mr Shanmugam delivered a similar message yesterday at a separate forum organised by The Atlantic magazine. He said US credibility would be severely impacted if it failed to push through the free trade deal.

"How do you remain and be taken seriously if, after having committed so much of your prestige to this, you don't do it?" he said.

His remarks come just days after US President Barack Obama's trade agenda took a big hit in Congress from members of his own party. Last week, Democrats blocked a measure key to granting the President fast-track negotiating authority under a Bill known as the Trade Promotion Authority.

Mr Shanmugam was similarly frank when asked about the US' approach to China.

He said the US can no longer dominate the whole world, that it now must make room for China as well. He gave the example of the International Monetary Fund, where US failure to ratify a 2010 quota reform granting China a larger say in the organisation likely led to the formation of the China-led Asian Infrastructure Investment Bank.

"You have to understand, it is a multipolar world... You have to accommodate the rise of China. And if you don't, you will find alternate multilateral institutions being set up where you are completely excluded."

He then added: "That's one aspect, it requires a certain - for want of a better word - an adult approach towards dealing with some of these issues."

Mr Shanmugam did, however, say that he remains optimistic about the US but worries that the current internal troubles are undermining its ability to lead the world.

"We are supreme realists and the realism makes us think that America eventually will get it right as it always has done."

Clinton snubs Obama on Pacific trade pact
Presidential hopeful backs fellow Democrats against 'fast-track' deal
The Straits Times, 17 Jun 2015

WASHINGTON - Mrs Hillary Clinton has complicated President Barack Obama's quest for fast-track authority on his Pacific trade pact by throwing her support behind fellow Democrats who revolted against the measure last week, while the US Congress further delayed action on related legislation.

Mrs Clinton's criticism on the presidential campaign trail further dimmed hopes of reviving the White House's drive for the Trans-Pacific Partnership (TPP) in Congress, a key piece of legislation in Mr Obama's second term.

"I believe that one of the ways the President could get fast-track authority is to deal with the legitimate concerns of those Democrats who are potential 'yes' voters to see what's in the negotiation or even what's in the existing framework agreement that is being drafted, could be modified or changed," Mrs Clinton, who is seeking her party's nomination for the presidency, said on Monday.

Republicans, who control Congress and want more time to rescue Mr Obama's trade agenda, moved to postpone a House vote expected yesterday, setting a July 30 deadline for future action.

"We remain committed to getting (fast-track) done, and this will give the President more time to communicate the consequences of not moving forward with his party," said a Republican party spokesman.

Mr Obama's own Democrats last Friday derailed his push for authority to speed trade deals through Congress with a yes-or-no vote, casting doubt on the trade pact central to the administration's pivot to Asia.

Mr Edward Alden, a trade policy expert with the Council on Foreign Relations, said any late tweaking of the deal to appease Democrats could cost the trade pact broad support elsewhere. "In doing what secretary Clinton is recommending, the administration could well lose the support it has on the Republican side," he said.

Mr Obama would need to persuade almost 100 fellow Democrats to support the landmark trade Bill.

Since her campaign entered a more expansive phase last Saturday, Mrs Clinton has made it clearer that she is actively courting the left wing of the Democratic Party, which fears the trade deal would hurt American workers.

"The President continues to be confident we will navigate this particular procedural snafu and move this across the finish line," White House spokesman Josh Earnes said.

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Earlier this week, I met Senate Armed Services Committee (SASC) Chairman Senator John McCain. We discussed issues of...
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TPP deal 'less about economics, more about US strategy in Asia'
Shanmugam issues strong call for US to move on free trade for second day
By Jeremy Au Yong, US Bureau Chief In Washington, The Straits Times, 18 Jun 2015

FOREIGN Affairs and Law Minister K. Shanmugam told US lawmakers yesterday that the Trans-Pacific Partnership (TPP) free trade deal was critical, more because of its implications on America's strategy towards Asia than any economic considerations.

While the debate has raged in the United States over whether free trade is good or bad for its workers and economy, Mr Shanmugam said economics was actually a smaller part of the equation.

Speaking to a newly reformed Congressional Singapore Caucus at the US Capitol Building, he said if it was simply about economics, Singapore would have little reason to push for the trade pact.

"Why are we plugging the TPP when we have a free trade agreement with the US? We have a free trade agreement with China, with Japan, with other countries that matter," he said.

"Strategically, what is your engagement with Asia, what is your leverage of engagement with the fastest-growing region in the world? The only game in town is the TPP."

This was the second day in a row Mr Shanmugam had issued a strong call for the US to move on free trade, and comes as congressional leaders continued to scramble to find a way forward for a key trade Bill that was blocked by Democrats last week.

The Foreign Minister had said at two different forums that the US risks losing its credibility in Asia if it fails to deliver on the trade deal, and he repeated that message directly to lawmakers yesterday.

"For some years now, American administrations from the president downwards have been coming out to Asia and have been saying how important it (TPP) is as part of American engagement of Asia Pacific. …And it is really the litmus test of American ability to deliver on what it has promised, what the president has said is the most important thing America is doing in the Asia Pacific."

He added: "These are tough messages but that's what friends are for, to tell it to you as it is."

The TPP aside, Mr Shanmugam reaffirmed the strong Singapore-US bilateral relationship and welcomed the relaunch of the Singapore caucus in the US House of Representatives.

The caucus, which was first started in 2002, is being relaunched this year with new co-chairs, Democrat Denny Heck of Washington state and Republican Bradley Byrne of Alabama. The caucus lost one of its previous co-chairs in an election cycle.

The caucus brings together lawmakers from both sides of the aisle that have an interest in Singapore or have a significant Singaporean presence in their districts. Mr Byrne, for instance, represents a district in Alabama that is host to ST Aerospace.

Mr Shanmugam hailed the caucus as a "strong signal of bipartisan support" for Singapore-US ties.

He also pointed out the many ways the friendship and trust between the two countries have been mutually beneficial.

Singapore was the US' third-largest foreign direct investor in 2013 and Singapore firms have created close to 40,000 jobs in the US.

At the launch ceremony, Mr Heck told reporters that there had been a lot of enthusiasm from lawmakers for the relaunch of the caucus.

Said Mr Heck: "A couple of us who had an interest reached out to other members and said, 'This used to exist, we think it should exist again, especially in (the) light of the emerging importance of Asean...

"Lo and behold, we barely turned around and there were 20 other people who said yes. Clearly, there was some interest there, some latent interest, and we just tapped into it."

He also said he appreciated the tough message from Mr Shanmugam: "I think that is how good friends talk to one another. I don't have a problem with that at all. In order to build on success, you've got to be straight with one another."

Separately yesterday, Mr Shanmugam met US National Security Adviser Susan Rice and was hosted to lunch by Deputy Secretary of State Antony Blinken. At both meetings, the leaders reaffirmed the close ties between Singapore and the US.

* Obama gets 'fast track' authority for TPP deal
But more remains to be done before trade agreement becomes a reality
By Melissa Sim, US Correspondent In Washington, The Straits Times, 26 Jun 2015

MORE work lies ahead for the 12 Pacific Rim nations before their trade accord becomes a reality, even though the United States Congress has granted President Barack Obama "fast track" authority, a key step in the process, said trade experts.

"Everybody has been waiting for TPA to lay down their final offers," said trade policy analyst Bill Watson from think-tank Cato Institute, referring to the Trade Promotion Authority that gives the President power to negotiate trade deals by limiting Congress to a "yes" or "no" vote on them. "But with the number of issues remaining, it seems like it might still take a while."

Experts say some sticking points include intellectual property rights, US-Japan market access and the investor-state dispute settlement mechanism.

The Obama administration's inability to obtain TPA, also referred to as "fast track" authority, had been largely blamed for the delay in the completion of the Pacific Rim deal known as the Trans-Pacific Partnership (TPP).

After weeks of political wrangling, it was only on Wednesday that the Senate voted in favour of granting TPA to Mr Obama.

This came after a huge setback on June 12, when House Democrats tried to torpedo TPA by voting down a companion worker aid programme. The House then found a way to pass TPA without the programme last week, leading to Wednesday's vote.

Singapore yesterday welcomed the passage of TPA. Its Ministry of Foreign Affairs said in a statement: "This is an important development that will facilitate the conclusion of negotiations on the Trans-Pacific Partnership."

Indeed, now that TPA is in the bag, observers are turning focus to the TPP negotiations and how each state's lawmakers will react to the final language of the pact.

Ms Lisa Sachs, director of the Columbia Centre on Sustainable Investment at Columbia University, said: "There are, of course, many complex issue areas and the parties involved have diverse interests and priorities, so I expect that the actual negotiations will face some challenges."

For example, Mr Watson said countries still have to negotiate the final concessions they are willing to make on tariffs.

Japan and the US are a case in point. While Japan has high tariffs on agricultural products such as rice and dairy, the US has restrictions on car imports. "These are some of the things that will need to work themselves out," he said.

Still, some high-level officials have recently expressed optimism in fast completion of negotiations.

Australian Trade and Investment Minister Andrew Robb was quoted in the media last week as saying "we are literally one week of negotiation away from completing this extraordinary deal", while Japan's Economy Minister Akira Amari told reporters on Wednesday that a broad agreement on TPP could be reached next month.

After the deal is signed, each state will have to have it ratified by their lawmakers.

In the US, lawmakers will, among other things, look out for the inclusion of the investor-state dispute settlement mechanism which some worry might hinder the government's ability to regulate investors. They will also look at what is being done to ensure high environmental standards.

Such topics, said Ms Sachs "were already very heatedly discussed in the context of TPA".

If history is any indication, the chances of TPP passing the Congress are good. Mr Watson said: "It's been a long time since Congress voted 'no' on a trade deal."

However, experts caution that controversial legislation like the TPP would be more difficult to pass once campaigning for the 2016 US presidential election goes into full swing next year.

Professor William Grimes of Boston University said: "Legislators will calculate their voting decisions based on what will help their party's nominee (or preferred nominee)."

* Obama signs key trade Bill into law
But tough talks still lie ahead, as 'fast-track' authority to negotiate treaties are a first step
By Jeremy Au Yong US Bureau Chief In Washington, The Straits Times, 1 Jul 2015

One key trade battle may be over, but more lie ahead. Even as United States President Barack Obama signed a critical Bill into law on Monday, he made it clear that he was already steeling himself for more tough negotiations as he seeks to secure the country's largest trade deal.

Before signing the legislation that would grant him fast-track negotiation authority on trade, he stressed that the so-called Trade Promotion Authority (TPA) was just a first step.

"The trade authorisation that's provided here is not the actual trade agreement. So we still have some tough negotiations that are going to be taking place," he said.

"And so, the debate on the particular provisions of trade will not end with this Bill signing.

"But I'm very confident that we're going to be able to say at the end of the day that the trade agreements that come under this authorisation are going to improve the system of trade that we have right now. And that's a good thing."

While the trade talks have been confidential, observers say negotiators for the landmark Trans-Pacific Partnership (TPP) are still working on stumbling blocks like agricultural tariffs in Japan and labour standards in Vietnam.

The TPA - which speeds up the congressional review process of any trade deal - was finally passed by both chambers of Congress last week, after months of bitter infighting, political manoeuvring and unprecedented personal lobbying by the President. During the law's journey through the US Congress, the President had to endure a revolt from within his own party.

He was dealt embarrassing blows twice - when the Democrats in the Senate and then in the House conspired to try and block the Bill.

The White House considers fast-track negotiation authority critical to the completion of the TPP and the US-European Union Transatlantic Trade and Investment Partnership.

Without guarantees that the US legislature would not meddle with any agreement, experts agreed that the talks would have limped along.

Still, the close margins and intense battles made it clear that free trade remains a deeply divisive issue and Mr Obama's remarks on Monday struck the middle ground between being congratulatory and conciliatory. He devoted a significant chunk of his comments to reassuring American workers that free trade was good for the country.

"I would not be doing this, I would not be signing these Bills if I was not absolutely convinced that these pieces of legislation are ultimately good for American workers.

"I would not be signing them if I wasn't convinced they'd be good for American businesses.

"I would not be signing them if I did not know that they will give us a competitive edge in this new economy, and that that new economy cannot be reversed. We have to embrace it."

He added: "This legislation will help turn global trade - which can often be a race to the bottom - into a race to the top. It will reinforce America's leadership role in the world - in Asia and in Europe and beyond. If I didn't believe it, I wouldn't have fought so hard to get these things done."

Monday's signing was also hailed by Republican leaders as a sign that the Washington gridlock is beginning to ease. House Speaker John Boehner said: "This Bill is a big win for American jobs and leadership, and I hope the President will continue to work with us to get more bipartisan, House-passed jobs Bills signed into law."