Sunday Times 2
Re-balancing foreign policy in the Trump era
View(s):By Dr. Sarala Fernando
Given the historic pattern in US foreign policy of vacillation between the poles of isolationism and “manifest destiny” (promoting American values overseas), perhaps President Trump’s victory should not have come as a surprise.
The smouldering discontent in America’s manufacturing heartland was well known as a consequence of globalisation freeing up the movement of goods, services and persons, and the displacement of traditional factory jobs by automation towards increased productivity. However, few would have thought the momentum of globalisation could be checked or reversed given the huge profits accruing to US global companies and benefits to the American consumer.
Under Trump, several US and foreign companies have obediently agreed to re-source in America but can these goods be manufactured as economically as those now produced overseas and will American patriotism rise to meet the inevitable price hikes?
Despite mischievous speculation about China’s rising military expenditure, China has never been a colonial power
Developments in the apparel industry will be crucial for Sri Lanka which relies heavily on the US market. Our manufacturing companies are closely tied to US retailers and they must be closely studying the ramifications of the new US agenda, over which there is much uncertainty. Already our apparel companies are struggling to maintain competitiveness in the EU markets and desperate to obtain the EU GSP+ concession where there is only a small remaining window of opportunity.
The apparel and footwear industries in the US have gone global since decades and with the demands of quickly changing fashion trends, the imperative for flexible movement of production is paramount. Some 98.4 percent of shoes and some 97.3 percent of clothing sold in the United States are currently imported (US Apparel and Footwear Association AAFA statistics). Instead of bringing back low cost production from overseas, an AAFA expert suggests that new jobs in the US could be in emerging areas such as robotics and 3D printing, which might be used to manufacture cloth and “smart fabrics” that include embedded sensors.
During the election campaign, Trump had voiced support for imposing taxes upward of 30 percent on apparel imports from major suppliers like Mexico and China but it seems the US Presidency has limited powers in this respect and any new tariff could be challenged within WTO. Moreover, disrupting free trade arrangements on apparel with strategic partners like Bahrain or Vietnam could adversely impact US defence interests.
The recent visits of US Defence Secretary James Mattis to South Korea, Japan and Nato headquarters have dispelled earlier fears about continued US support for these historic defence partnerships, nevertheless, clear ultimatum has been issued on cost sharing, thereby ruffling policy makers in partner countries. With strategic partners smarting under the new US dispensation, China is reaping a rich political harvest, being seen as “reliable” and “constant”. Yet China too is moving carefully in order not to disturb its many economic linkages with the US. China is successfully using diplomatic tools which, for the time being, appear to have softened President Trump’s approach, for example confirming support for the One China policy after making that initial breaking-news phone call to Taiwan.
With the expectation of a more inward- looking US under President Trump, there was some excitement about possible shifts in global strategic alliance including speculation that a new alliance between China, Russia and India may take shape, competing with the previous US pivot to Asia. However, China will be cautious about over- extending itself in this regard given the historic experience of the break-up of the Soviet Union which some theorize came about as a result of deliberate entrapment through the Star Wars strategic competition with the US.
It seems now that Japan under Prime Minister Shinzo Abe is endeavouring to come into the game, with its diplomats and academics moving around Asia looking for a role in any emerging strategic arrangements. Upto now Japan’s role in the region has been strictly limited to economic projects given the lingering fears of Japanese re-militarisation.
In Singapore, which is particularly nervous over the uncertainty in its traditional reliance on the US, initial academic assessments support a more robust Japan-India partnership to counter what they perceive as China’s growing economic and military assertiveness while underlining that any attempt to bandwagon against China would be counter-productive.
Despite mischievous speculation about China’s rising military expenditure, it is worth keeping in mind that China has never been a colonial power nor had hegemonic ambitions outside its borders. The more likely scenario therefore is of a cooperative rather than a competitive balancing of powers in the Indian Ocean where the US is by far the dominant naval power.
So what does all this portend for Sri Lanka? One half of our government has adopted a strictly business bottom line profit approach to disposing of lossmaking strategic assets like the ports in Hambantota where Chinese investment is welcome in any shape or size while other voices within the government have cautioned against this approach. This confusion is reflected in the struggle to agree on the share to be given to the foreign operator for Hambantota port, 80-20 or the more traditional 60-40 as in Pakistan’s Gwadar. More importantly, people are mobilising against the devastation of natural resources in areas like Hambantota opened for unregulated foreign investment exploitation. Sanjana Hattotuwa’s recent article described Hambantota as resembling a strip mined area from the air instead of the virgin forest present just a few years ago. Deforestation will also have its effect on loss of rain water, a precious commodity in the south. This raises the spectre of pipe-borne water being used eventually to wash ships and planes while drinking water for the villagers will have to be supplied by bowser!
There are win-win solutions for sustainable development which responsible Sri Lanka companies subscribe to, a notable example being Kandalama where by addressing local protests the landmark hotel is now winning all the eco-green awards. The problem is that our government does not seem to have the guts to impose the same rules and obligations on foreign investors, despite the well-recognised “polluter pays” principle. The large scale projects by Chinese State Owned Entreprises (SOEs) are very much under public scrutiny in Sri Lanka because they have run up against strong environmental lobbies. One has only to see the huge rocks for the port city piled up on Galle Face Green to shudder at the thought of the devastation to the area where they were mined and the increased threat of earthslips.
The Chinese SOEs entering the South would do well to address a variety of concerns which range from land ownership issues to livelihood support to provision of drinking water for the affected villagers within the overall concerns of protecting nature and wildlife in the surrounding areas.
In the past, large Chinese projects were mainly government-to-government gifts and non-controversial but with the SOEs entering the arena on an aggressive profit motive, the Sri Lanka public is rising in protest which will not help to maintain bilateral friendly relations in the long term. Building the airport and harbour in Hambantota may have enhanced Sri Lanka’s position on the New Silk Route but did little to foster bilateral people to people relations, with many complaints that neither local labour nor local suppliers benefitted. It is to be hoped that those developing the new Chinese industrial zone in Hambantota will take heed of the lessons learned and find ways to grow the adjoining Sri Lankan villages along with the industrial output while also protecting nature and wildlife. If the Chinese SOEs do not heed these lessons, they may run the risk of becoming the new “ugly Americans”, which would be a real pity given the historic strengths of the bilateral diplomatic relationship.
(The writer is a retired Sri Lanka Foreign Service Diplomat.)