Global Economies

2016 Annual Report

"Perhaps we are undergoing a period of historic change, where disorder is the new order. But even during such periods, history follows patterns. It is based on successions: one simple idea or action precedes more complex ones, shaping change and development. At the EastWest Institute, we believe one cannot afford to wait on history; rather, our role is to tackle specific issues before they worsen and turn into conflicts." — Cameron Munter, EWI CEO and President

The EastWest Institute is proud to release its 2016 Annual Report, highlighting last year’s programmatic activities, achievements and new initiatives.

The impact of the institute across the globe is a testament to the talented and diverse staff working across five offices, our distinguished Board of Directors and a profound global network of decision makers and experts that help facilitate our mission.

Global Cyberspace Cooperation Summit VII

Overview

The EastWest Institute’s Global Cooperation in Cyberspace program anticipates future security risks, defines the outlines of potential conflict and brings together the people who can do something about it.

An invitation-only event, the seventh cyber summit, organized in partnership with the UC Berkeley Center for Long-Term Cybersecurity, will bring together policymakers, business leaders and technical experts to discuss the most pressing issues in international cyberspace, including securing the Internet of Things, balancing encryption and lawful access to data, developing norms of behavior, improving the security of information and communications technology (ICT) and strengthening the resilience of critical infrastructure.

Please visit cybersummit.info for more information. 

International Trade in the Trump Era

In his inaugural address, U.S. President Donald Trump said, “We will follow two simple rules: Buy American and hire American. We will seek friendship and goodwill with the nations of the world, but we do so with the understanding that it is the right of all nations to put their own interests first.”

President Trump’s “Contract with the American Voter” stated that on his first day in office, he would take several actions to protect American workers. The President indeed wasted little time. On January 23, he signed an executive order to withdraw from the Trans Pacific Partnership (TPP), announced his intent to renegotiate the North American Free Trade Agreement (NAFTA), and Treasury Secretary nominee Steve Mnuchin pledged to investigate Chinese currency policy. President Trump’s promise to identify and immediately end trade practices that are abusive to American workers is next on the agenda, and will be more complicated.

President Trump is quickly demonstrating that he is America’s Dealmaker-in-Chief, and will pursue “free and fair” international trade agreements on behalf of American workers. Defining fair trade in the 21st century global economy will be the central challenge of Trump’s trade policy.

Fair trade for mutual benefit
Throughout his campaign, President Trump articulated his philosophy of America First—a concept that recognizes trade agreements that advantage the American worker, while acknowledging other nations will do the same for their own citizens, thus resulting in the prospect of mutually beneficial trade agreements.

Looking forward, the Trump Administration must clearly and carefully articulate its concept of “Buy American and Hire American,” and clarify “fair trade” so as to inspire international cooperation and market based competition, and avoid international confrontation and dangerous, unintended consequences. 

For President Trump’s “free and fair trade” policy to effectively promote friendship and goodwill depends upon how closely it adheres to rules-based agreements, as opposed to becoming rhetoric driven, populist and protectionist.

In rules-based fair trade, “fair” is defined as nations voluntarily entering agreements based on their national interests, adhering to agreed rules and international norms of economic behavior and enforcing and renegotiating trade rules through previously agreed means of recourse. Rules-based “fair trade” takes on a legal, objectively defined outlook, where international cooperation drives market-based competition.

In such a construct, determinations of “unfair” or “abusive” trade tactics are based solely on analysis of economic evidence, in the context of the previously agreed agreements. Any declaration of abuse and change in trade practices would not be a vote against free trade, but a vote for playing by the rules. Simply put, free trade does not mean a free-for-all.

Unfortunately, fair trade in the Trump Era risks becoming rhetoric-driven and protectionist if existing agreements get labelled abusive in whichever industries American workers are not experiencing gains or wherever cities are in decline, regardless of what other technological and global economic forces might be at work. In this context, emphasis on anecdotal rather than statistical evidence is quite common. Everyone in America seems to have heard of someone who “lost a job to China,” or a company that moved to Mexico, but not every American can name someone who found a job selling goods and services to the Chinese, or a company which hired American workers while also hiring Mexican workers. There is a fine line between protecting American workers, which is rules-based, and protectionism, which is rhetoric driven.

It is important to note that President Trump has selected Cabinet members and trade advisers who clearly intend to engage China and other nations on matters of possible trade violations, but who have primarily advocated a rules-based fair trade agenda during their careers. If their past work is any indicator, arguably President Trump’s trade team seems more likely to adhere to the rules-based definition of fair trade in actually determining what trade practices have been abusive and pursuing rules-based solutions to end them. 

The key trend to watch now is whether a border tax favored by President Trump, which is selectively administered on certain companies and countries believed to be unfairly and unreasonably moving American jobs offshore, or a border adjustment favored by some House Republicans and levied on all companies, will be promoted. Moreover, President Trump has indicated trade agreements are better pursued in bilateral rather than multilateral forums, so this will also be a trend to watch.

Looking Forward

To craft trade policy in the 21st century, it is crucial to recall that the livelihoods and living standards of America’s 325 million citizens, and the world’s 7.4 billion people, increasingly depend not only on their own local capabilities and resources, but also on their access to global networks and markets. 

The prospect of an increasingly populist, protectionist approach toward a more rhetoric-based “fair” trade policy are building, which endanger the very notion of mutually beneficial, free and fair trade. Further, this type of mentality could incite international confrontation and unleash conflict over trade and jobs, should other countries follow suit and seek to close their markets.

International trade policy that aims to be free and fair has served America well. For President Trump to build goodwill between nations, he can aspire to make international trade even more beneficial by communicating and pursuing rules-based solutions. 

Firestein Reflects on Seven Years of U.S.-China Political Party Leaders Meetings

For the ninth time since 2010, the EastWest Institute organized meetings between delegations of U.S. Democratic Party and Republican Party leaders and Communist Party of China (CPC) senior officials as part of the U.S.-China High-Level Political Party Leaders Dialogue (P2P) on November 14 in Washington, D.C. Global business leaders also took part this year. David Firestein, EWI's Senior Vice President for the Strategic Trust-Building Initiative and Track 2 Diplomacy, discusses the significance of the dialogue process. 

What was the idea behind the first P2P and what were the initial challenges?

P2P came out of a trip that EWI made to China in 2008, about a year after EWI launched its China program. We asked our Chinese counterparts what we, as an organization, could do in the service of U.S.-China relations that hadn’t already been done by others. Our senior Communist Party of China (CPC) interlocutors said that the one area in U.S.-China relations that had not been fully developed was the linkage between the principal political parties of the two countries: the CPC, the Democratic and Republican Parties of the United States. At the time, the CPC, as a party, had relations or dealings with just about every major political party in the world but for the two U.S. major parties. And with that suggestion, EWI set about the work of establishing the first-ever dialogue between these the major parties.

The process was not without its difficultiesmainly, political sensitivities on the U.S. side about the notion of dealing with the Communist Party of China. And we came to understand that whatever we were going to do would need to be done on a bipartisan basis, so that neither U.S. party would be able to criticize the other for engaging with China’s ruling party. With some diligence and perserverance, and with the involvement of the National Democratic Institute (NDI) and the International Republican Institute (IRI), we assembled the first bipartisan U.S. delegation to what came to be known as the “U.S.-China High-Level Political Party Leaders Dialogue”or “P2P,” for shortin early 2010. That delegation was led by prominent Democrat and former U.S. Secretary of State Madeleine Albright and former George W. Bush Administration ambassador to the United Nations Rich Williamson. And on that visit, we had the honor of meeting then-Chinese Vice President and Politburo Standing Committee member Xi Jinping, among other senior leaders.

John Mroz, Richard S. Williamson and Madeleine K. Albright meet with then Vice President Xi Jinping in 2010.

How has P2P, as an event, evolved over the years? Are there more or less challenges in organizing the event?

The formal P2P process now has a history of nearly seven years. The most significant evolution of the process occurred in 2013, when we reached out to the Democratic and Republican Parties and invited sitting DNC and RNC officers to take part in the dialogue for the first time. Whereas in earlier convenings, we had featured prominent Democratic and Republican former statesmen, governors and legislators, as well as former DNC and RNC chairs, now we were also involving sitting DNC and RNC leaders and that added a new element to the talks; it was at this point that we could say we had created a true dialogue channel between the parties themselves. That was no mean feat, in my view; and when you really think about it, P2P might very well be the only formal dialogue mechanism that brings together sitting DNC and RNC officials into the same room and the same conversationto say nothing of the CPC. So we were very proud of moving the P2P process in this direction and the representatives of the two U.S. party committees consistently characterized the process as being tremendously valuable in terms of increasing their understanding of the politics of a country that, arguably, is America’s most consequential bilateral partner.

Another major development over the years pertains to our substantive agenda. In the first few iterations of the dialogue, we delved into both domestic governance and foreign policy issues. But starting around 2013, we came to understand that our real value-added, as a process, was in the political and domestic governance areas, not in foreign policy, given how many official U.S.-China dialogue mechanisms are already in place with respect to that cluster of issues. So we deemphasized foreign policy and moved much more deeply into politics and domestic governance, which we regarded as P2P “comparative advantages.” To our knowledge, P2P represents the only ongoing, sustained senior dialogue about domestic politicsas distinct from policybetween the two sides. This is where P2P’s unique value really is to be found.

In terms of challenges, I would say that, overall, P2P is easier to run today than it was six years ago, mainly because there is a significant “constituency” for the dialogue now at very high levels. People in both China and the United States understand the process, value the process, and see the process as a unique channel for high-level political discussions that fill a gap in the U.S.-China relationship. It’s become much easier to recruit significant figures to take part in the dialogue than it was in the days before the dialogue existed or became well known in the U.S.-China field. That said, some challenges remain. For example, getting sitting members of the United States Congress to China for P2P visits remains problematic owing to Congressional ethics rules and constraints. And similarly, we now have to condense the visits to the United States and pack more into fewer days owing to new constraints governing these kinds of visits on the Chinese side (as a result of China’s ongoing anti-corruption and “anti-extravagance” campaign). But on the whole, P2P has become easier to execute.

What are some of P2P's achievements over the years in terms of U.S.-China relationship since the first meeting? Do officials from the two countries have easier access to each other? Are there any concrete bilateral cooperations at the country level that resulted from P2P?

P2P fills a unique niche in U.S.-China engagement; with P2P, EWI is doing something that had never been done and that isn’t being done by anyone else. In a sense, EWI, along with our Chinese partners, have a monopoly on the market with respect to the construct of a U.S.-China political partyand more generally, high-evel politicaldialogue. So that’s one significant achievement in itself. Building on this point, I would add that EWI has orchestrated the highest-level joint (and, in fact only) DNC/RNC visits to China in history; the only interactions ever between the CPC and the chairs of the DNC and RNC (separately); and one of the relatively few, if not the only, joint visit to China by Cabinet-level officials of both the Obama and George W. Bush Administrations, among other milestones. And in China, we’ve met with Xi Jinping, current Vice President Li Yuanchao, Politiburo Standing Committee member and anti-corruption “czar” Wang Qishan, and numerous other top Chinese officials, including in the Zhongnanhai leadership compound. We have also created a platform for important and timely track 1.5 and track 1 (official) interactions between major foreign policy figures on both sides around such issues as North Korea; and P2P has been a platform for some of the deepest and most detailed discussions of Chinese foreign policy decision-making that have ever occurred between Chinese and U.S. counterparts. Finally, through P2P, CPC leaders came to meet with several of the “finalists,” in both the Democratic and Republican Parties, in the 2016 race for the U.S. presidency.

In 2011, EWI facilitated the first ever meeting between the Communist Party of China and the Republican National Committee Chair. From left to right: Reince Priebus (left) and Wang Jiarui; CPC delegation (left) meets with Reince Priebus (right, standing) and representatives from the Republican party and EastWest Institute;  Reince Priebus (left), Mike Duncan and David J. Firestein.

How does the EastWest Institute follow up after each P2P event?

The primary goal of the P2P process is twofold: one, to increase U.S. and Chinese understanding of the politics of the other country and how those politics bear on policy choices; and 2) to establish and nurture relationships between key players on both sides that can serve as conduits for communications, particularly in times of need or stress in the relationship. After each P2P visit, we present a written summary of key points to major USG stakeholders (e.g., in the White House, State Department and Capitol Hill, primarily), and the Chinese similarly report the P2P proceedings to China’s top leadership. We don’t publish these summaries externally, but do generally publish a more general abstract of the meeting’s discussions.  

EWI facilitated the highest-level tripartite major political party meeting in the history of U.S.-China relations:
U.S. Democratic and Republican delegates meet with Vice President Li Yuanchao (third from right) at the Great Hall of the People in Beijing in 2013.

How are the topics decided every year?

For each P2P session, EWI works closely with the CPC’s International Department—effectively, the Communist Party’s “foreign ministry,” if you will—to set the substantive agenda for the visit. As noted earlier, we now tend to focus on politics and domestic governance, rather than foreign policy; and within these broad rubrics, we tailor the specific topics to what’s currently happening in these areas at the time of the visit. Needless to say, for P2P9—on Nov. 14, 2016, just days after the U.S. presidential election—the election, the transition and the election’s (and the domestic political process’s) implications for U.S. China and Asia policy were all on the agenda, as well as a deep dive into U.S. public opinion (regarding the election, in particular). We also heard from the Chinese about China’s own political process and in the course of P2P10 (notionally planned for late 2017) will discuss the all-important 19th Party Congress.

9th U.S.-China High-Level Political Party Leaders Dialogue

The EastWest Institute also organizes other annual U.S.-China events. How do these events complement or overlap each other? How have these separate events shaped, in any way, the relationship between the two countries?

EWI’s three U.S.-China track 2 (and track 1.5) dialogues focus on different areas and issue sets and, in this regard, tend to complement each other.  P2P looks at politics and domestic governance, as I’ve mentioned. The U.S.-China Sanya Initiative (“Sanya”) brings together former U.S. and Chinese 4-star generals (including, on the U.S. side, former members of the U.S. Joint Chiefs of Staff, for example) to discuss military issues of mutual interest, with special emphasis on U.S.-China mil-mil issues and East Asian regional security issues. And the U.S.-China High-Level Security Dialogue (HLSD), which began in 2007, annually brings a distinguished group of U.S. former officials, military officers, think tank analysts and business leaders to China for a week to meet with Chinese counterparts from the Party, the government, the military, the think tank world and academia, and the business world to examine security issues of mutual interest to the United States and China.

Collectively, these dialogues have contributed to a deeper and broader understanding between significant U.S. and Chinese personages and between the two countries and, we believe, increased trust among the participants and between the countries. As the United States transitions from one presidency to the next, the need for this type of exchange remains substantial and we look forward to the work and opportunities ahead.

Related link9th U.S.-China Dialogue Explores Bilateral Relations Post U.S. Election

Click here to access publications from the institute's China, East Asia and the United States Program, including from the previous eight P2P events.

If TPP Fails, China Takes Advantage

The administration of U.S. President Barack Obama is moving into its final three months in office and the trajectory of one of its signature foreign policy initiatives — the U.S. "rebalance" to the Asia-Pacific — remains unclear.

Washington's inability thus far to ratify the Trans-Pacific Partnership (TPP) trade deal — a 12-country deal that encompasses nearly 40 percent of the world's gross domestic product — has its friends and partners in the region concerned about its long-term commitment to the Pacific.

In August, Singapore's Prime Minister Lee Hsien Loong bluntly referenced this unease during his trip to Washington: "For America's friends and partners, ratifying the TPP is a litmus test of your credibility and seriousness of purpose [in the Asia-Pacific]." 

 

Click here to read the full article on Al Jazeera. 

 

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