Burning the playbook: US-China trade war is rewriting the rules

How is great power competition turning a region rife with old grudges into a hotbed of new conflict?

Gil Rickey

Politics, International relations | Asia, East Asia

8 October 2019

The normalisation of ‘tariffs as punishment’ by the US and China is encouraging smaller states in the Asia-Pacific to use antagonistic trade policies to pursue historic grievances. If this is left unchecked, it is likely that the region’s security alliance system will fall apart, writes Gil Rickey.

While the US-China trade war continues to burn, smaller states are feeling the heat. It has threatened not only the economic growth of states in the Asia-Pacific, but also the security of the region by normalising the use of ‘tariffs as punishment’.

In the past, the US maintained the role of the World Trade Organization in resolving trade disputes institutionally. However, under the Trump Administration, the US has ignored international institutions and normalised the use of trade disputes to leverage other states.

This has signalled to smaller states that unilateral trade war tactics are now fair game for strategic, geopolitical or historic disputes.

The consequences of this normalisation can be seen in the ongoing trade dispute between Japan and South Korea.

Tensions between the two states run deep, going all the way back to Japan’s annexation of the Korean Peninsula in 1910.

A recurring issue has been the acknowledgment of Japan’s treatment of ‘comfort women’, who were Korean women sold against their will into what was a legalised Japanese sex trade. In 2015 Japan payed US$9.5 million in reparations, however, South Korean President Moon Jae-In has suggested this isn’t enough.

Tensions boiled over in early July when Japan accused South Korea of illegally sharing chemical imports with the DPRK. Japan then removed South Korea from its preferred trading partner ‘whitelist’. Korea quickly followed suite, mirroring the tit-for-tat-tariffs between the US and China.

It is likely that Japan and South Korea feel more comfortable using these tactics as they have been normalised by both the world’s superpowers. Due to their size and influence, the US and China are what scholars Martha Finnemore and Katheryn Sikkink refer to as ‘norm-entrepreneurs’, meaning they could normalize the use or disuse of ‘trade as punishment’ amongst smaller states.

However, the Japan-South Korea dispute has not stopped at trade warfare, as South Korea on 22 August elected to not renew it’s 2016 intelligence sharing agreement with Japan. The agreement, known as the ‘General Security of Military Information Agreement’ (GSOMIA), was signed between Japanese Prime Minister Shinzo Abe and then South Korean President Park Geun-hye to ensure real-time sharing of information about North Korea’s missile development program.

More on this: Why North Korea's full de-nuclearisation is a fantasy

The breakdown of the Japan-ROK intelligence sharing agreement will likely have several negative consequences for regional security, not least regarding North Korea. Without the free sharing of intelligence, it becomes harder for the US, Japan, or ROK to keep an eye on Pyongyang.

This is particularly important as the DPRK is ramping up its missile testing program. At the time of writing, the DPRK has launched seven short range missiles into the Sea of Japan since it ended its 17-month ban on tests in late July. As relations between Japan and South Korea worsen, there are opportunities for Pyongyang to expand its missile program in secret.

In recent weeks tensions have raised even further. South Korea recently conducted a series of military exercises it claims are intended to defend a group of rocky islands, known as ‘Dokdo’ in Korea and ‘Takeshima’ in Japan, from Japanese invasion. Ownership of the islands is disputed, and a confrontation could serve to act as a flashpoint for military conflict.

Japan and South Korea have shown how historical tensions can cause economic and strategic clashes, which could represent a wider trend for the Asia-Pacific region in the coming years. With the US and China normalising confrontational and dangerous economic policies, a region rife with old grudges could become a hotbed for new conflicts. Indeed there are a number of historical and geographic grievances, from the Durand Line between Pakistan and Afghanistan to the South China Sea, that could transform into new flashpoints.

As the Asia-Pacific becomes more divided, traditional leaders such as the US and Japan are abdicating their role as regional stabilisers. It is therefore up to middle powers like Australia to promote inter-regional stability, lest it crumble around them.

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