Guest commentary by Takuji Okubo
US President Donald Trump and Japanese Prime Minister Shinzo Abe might have more in common than it first appears, and that will have impact not just on US-Japan relations but across the world.
Trump and Abe may seem a world apart as national leaders.
One is a brusque populist who never held a public office until recently. The other is a mild-mannered career politician.
However, as they spent the weekend together, they must have realized that they share a number of policy traits: they both want to normalize their relationship with Russia, they are both alarmed at the increasingly dominant influence of China, and neither of them have much sympathy for refugees or critical media.
Among the G7 leaders, Prime Minister Abe is the only one who had no critical words against Trump’s now notorious “travel ban” executive order. In Abe’s eyes, President Trump must have seen a dependable ally.
From left to right, Japanese first lady Akie Abe, Japanese Prime Minister Shinzo Abe, US President Donald Trump and US first lady Melania Trump pose for photos before a dinner at Trump's Mar-a-Lago estate in Palm Beach, Florida, the US, on Febuary 11, 2017. /CFP Photo
The impact of Trump-Abe summit on Japan’s policy
The US’s unilateral withdrawal from the Trans-Pacific Pact (TPP) was a blow to Japan.
However, while PM Abe had been using the TPP to bolster his reformist appeal, its failure may not hurt his political credibility. The TPP was a policy inherited from the previous government. While he understood the importance of the TPP as a foundation for the US and Japan to maintain their economic leadership in the pacific region, the trade liberalization embodied in the TPP had no appeal to him. In November last year, Prime Minister Abe publicly said that the TPP is meaningless without the US's involvement.
Rather than trade, the more vulnerable issue for Japan was its currency.
Until this weekend, the Trump administration was stepping up the pressure on the Japanese yen, accusing Japan of manipulating its exchange rate. In our view, the accusation was essentially valid. Japanese policy makers have been “guiding,” if not “manipulating,” the yen lower over the last four years, through its monetary policy as well as through verbal interventions.
It seems that PM Abe succeeded in containing the issue in the summit though.
Japanese Prime Minister Shinzo Abe (back left) speaks at a press briefing on the DPRK's missle launch as US President Donald Trump (back second left) listens at Mar-a-Lago in Palm Beach, Florida, the US, on Febuary 11, 2017. /CFP Photo
Where does the summit leave the rest of Asia and the world?
The abandonment of the TPP and loss of leadership provide a window of opportunity for China to exert stronger leadership in Asia.
RCEP, the trade negotiation process involving China, Japan, India, Australia and 12 other countries, is the prime contender for the “next” deal in Asia. However, the RCEP negotiation will be even trickier than the TPP, given the diversity and more equal standing of countries involved.
For the rest of the world, the biggest concern emerging from the Trump-Abe summit is that Japan seems to be breaking ranks with the other G7 countries in condoning anti-liberal policies of the Trump administration.
With important national elections scheduled in Europe, the tide seems to be against the solidarity of former “west” block countries.
(Takuji Okubo is the Founder and Chief Economist of Japan Macro Advisors, a macroeconomic consultancy based in Tokyo and in Bangalore. Before founding the company, he held senior economist positions in global investment banks including Goldman Sachs. The article reflects the author's opinion, not necessarily the view of CGTN.)
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