China using economic coercion to pick off key allies one by one as US stands by doing nothing or worse

President Trump, both during his campaign and during his first year in office, correctly realized that China is the key security threat to the United States and its allies. Unfortunately, neither he nor his advisers seem to have realized the full implications of this for trade policy. China has been using economic coercion to pick off key allies one by one as the US stands by doing nothing or worse.

In the case of South Korea, when that country’s economy was being gravely threatened economically by China for having adopted the THAAD anti-missile system, President Trump, rather than coming to South Korea’s aid in this crisis, threatened it with unilateral trade measures. South Korea, isolated and beleaguered, gave up THAAD, leaving a major hole in the defenses of not only South Korea but also Japan, Taiwan, and the US.

Similar pressures are now being ramped up against Australia. China has been bribing Australian politicians and lobbyists, stealing military secrets and commercial data, and blocking the completion of an Australian free trade agreement with Taiwan.

The US and its allies should band together and agree that whenever China tries to coerce one of its members through trade coercion or other harmful economic measures, the US and its allies will come to the assistance of the member under attack and collectively retaliate back at China even harder. China should get a taste of its own medicine by being hit with measures that damage its economy more than that of the allies.

Reviving the successor to the TPP

Reviving the Trans-Pacific Partnership (TPP), or rather, the US joining its successor presently being held together by Japan, would be a good first step to pulling together an economic NATO in the Pacific, with Taiwan and India also invited to join. Trump’s exit from the TPP, although in fulfillment of a campaign promise, was a free gift to China on the order of Obama’s $100 bn. gift to Iran. It should be speedily reversed.

If Trump wishes to launch complaints against allies — for example, Canada, Mexico, or South Korea — let it be through low key measures submitted through the decision bodies of NAFTA and the World Trade Organization (WTO). But the chief US trade complaints should be directed against China, preferably in collaboration with the European and Japan, also through the WTO. (See yesterday’s Founders Broadsheet for details.)