Our So-Called Foreign Policy: Already, a Biden Misstep

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alliances, allies, Asia, Asia-Pacific, China, Demitri Sevastopulo, East China Sea, Financial Times, globalism, Japan, Joe Biden, Northeast Asia, Our So-Called Foreign Policy, Senkaku Islands, South Korea, Taiwan, Takeshima Islands, Yoshihide Suga

Now wait a second! For decades we’ve been hearing that possible President-elect Joe Biden is a foreign policy genius! Or at least that during his (47?) years in public life, he’s gained encyclopedic knowledge of the world and especially its flashpoints. (See, e.g, here.)

And just last night came the news that the former Vice President may have needlessly thrown the Northeast Asia security scene into major confusion over whether his administration will or won’t defend the Senkaku Islands.

Never heard of the Senkaku Islands? I’m tempted to forgive you. After all, they’re little than a bunch of uninhabited islets and rocks in the East China Sea. Although the surrounding fishing grounds seem to be fertile and there may or may not be undersea energy resources nearby, in and of themselves, their economic importance at present appears marginal.

Their strategic importance, in terms of controlling sealanes close to the economic goliath of Northeast Asia could be greater. But if so, we begin approaching why the Senkakus should be closer to your radar screen. For the islands are claimed by no fewer than three countries: Japan (which currently “administers” them, China, and Taiwan. The first is a formal U.S. treaty allly, the second has become arguably America’s chief strategic rival both in the Asia-Pacific region and globally, and the third an historical part of China that Beijing seems increasingly determined to regain – and by force if necessary.

Moreover, since the Obama administration clarified the matter in 2014, it’s been U.S. policy to regard the Senkakus as Japanese territory that, under the terms of the two countries’ security arrangement, the United States is bound to help Tokyo defend against attack. And in principle, this includes nuclear weapons use – a major concern since the likeliest attacker these days, China, has lots of nukes of its own capable of reaching the U.S. homeland.

Or is this still U.S. policy? As widely reported yesterday, Biden issued a statement reaffirming the 2014 commitment (made of course when he was Vice President). At least that’s what new Japanese Prime Minister Yoshihide Suga claims Biden told him in a phone call. But as alertly caught by the Financial Times‘ Demitri Sevastopulo,

“In a summary of the call provided to the media, the Biden transition team said the president-elect had ‘underscored his deep commitment to the defence of Japan and US commitments under Article V’ [of the security agreement] but did not refer specifically to the Senkaku. A transition team spokesperson declined to comment beyond the content of the summary.”

Isn’t this exactly the kind of confusion an experienced foreign policy hand should know how to avoid? And in particular, one who’s made “renewing” and “restoring” these arrangements after four years of a supposedly destructive Trump approach a hallmark of his global strategy?

Nor does the confusion stop there, for the Senkakus aren’t the only disputed islands in Northeast Asia. Don’t forget the Takeshima Islands. Or should they be called by their Korean name – Dokdo? Because they’re claimed by both North and South Korea, as well as Japan. Since South Korea is a U.S. security ally on a par with Japan, do they qualify for American-aided protection, too? If the North Koreans attempt a grab, that would seem like an easy call. (Of course, never forgetting that the North Koreans may well possess nuclear weapons that can hit the continental United States, too – or soon will.)

But what if South Korea attacks them and Japan invokes its U.S. treaty obligations? Wouldn’t Tokyo have every reason to believe that the Senkaku formula applies to the Takeshima/Dokdos, too? And what about the reverse situation – a South Korean attack? Would a Biden administration spokesperson be content to leave those countries in the dark about America’s real policy, too?

These scenarios may seem far-fetched. But only a little while ago, so did a pandemic that would kill hundreds of thousands of Americans and millions around the world, and cripple the U.S. and global economies. I don’t recall the September 11 terrorist attacks being widely predicted, either.

Precisely because, for a globalist alliance worshipper like Biden, there are no easy answers to the Senkakus and Takeshima issues (and please don’t take my use of the Japanese names as an endorsement of Tokyo’s claims), the best maxims to follow are “Do no harm” and the closely related “Keep them out of the news.” Worrisomely, they’re two maxims that the ostensible master strategist who might become America’s next President seems to have completely forgotten.

Our So-Called Foreign Policy: Big Decisions Coming on Asia

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Asia, Asia-Pacific, Central America, China, containment, currency manipulation, deterrence, East Asia-Pacific, Japan, Mexico, New Journalism, Norman Mailer, nuclear deterrence, Our So-Called Foreign Policy, semiconductors, South Korea, Taiwan, tripwire, U.S. Army, Vietnam, Walker D. Mills, Western Europe

Whenever I think about what to blog about, I ask myself a question that I first heard one of my all-time writing idols raise many years ago when he faced similar decisions. The occasion came during a college writing seminar where the guest lecturer was none other than Norman Mailer.

The seminar probably took place sometime in 1974, and one of my fellow students asked Mailer why he hadn’t turned out anything about the Watergate scandal. I had been wondering this myself, since Mailer’s world renown by then stemmed both from his novels and from his forays into the “new journalism” that was emerging in that era, in which gifted writers tried to employ some key techniques from fiction (especially their keen insights into human nature and their considerable descriptive and narrative skills) ito shed light on the events of the day. On top of turning out numerous important non-fiction works, Mailer had also run (unsuccessfully) for Mayor of New York City in 1969. So he was by no means shy about sounding off on headline subjects, and I’m sure I wasn’t the only one of his fans anxious to hear about the Nixon-centric drama.

But his answer was disarmingly simple. He decided to give Watergate a pass because he couldn’t think of anything distinctive and important to say.

And that’s an (admittedly roundabout) way of explaining why today’s post won’t be about any aspect of President Trump’s contraction of the CCP Virus. At the very least, events are moving so quickly that it’s hard to know the score. Instead, I’m focusing on foreign policy, and in particular two major, under-reported developments in U.S.-Asia relations that are underscoring the return of Cold War-like challenges across the Pacific, but that should be teaching American policymakers very different lessons.

I’ve already dealt to some extent with the first here on RealityChek: The U.S.’ loss of global leadership in the manufacture of cutting-edge semiconductors to companies in South Korea and especially Taiwan. In a journal article scheduled for publication this week, I’ll be laying out the key the technical details and some of the main policy implications. But in brief it amplifies my argument that the location of the world’s most advanced producers of the vital building blocks of modern economies and militaries right at China’s doorstep means that the defense of Taiwan in particular has now become a vital U.S. national security interest that requires the kinds of military forces and strategies (including a threat to use nuclear weapons) employed to protect major treaty allies like Japan and Western Europe both during the Cold War decades and since.

After all, those Cold War commitments – which exposed the United States to the risk of Soviet and to a lesser extent Chinese nuclear attack – were reasonably justified by the belief that Japan and Western Europe were centers of industrial and technogical power and potential that could create decisive advantages for the communist powers if they gained control or access to their assets. The importance of advanced semiconductors today means that Taiwan now belongs in the same category.

As I detail in the upcoming article, Washington has rightly been building closer diplomatic and military ties to Taiwan in response (though I also argue that it’s ultimately far more important for the United States to restore its semiconductor leadership ASAP). But this fall, an article in an official journal of the U.S. Army argued for taking a net step that, however logical, would be nothing less than momentous – and comparably sobering. In the words of Marine Corps Captain Walker D. Mills,

“The United States needs to recognize that its conventional deterrence against [Chinese military] action to reunify Taiwan may not continue to hold without a change in force posture. Deterrence should always be prioritized over open conflict between peer or near-peer states because of the exorbitant cost of a war between them. If the United States wants to maintain credible conventional deterrence against a [Chinese military] attack on Taiwan, it needs to consider basing troops in Taiwan.”

To his credit, Mills goes on to make explicit that such troops would in part be performing the kind of “tripwire” function that similar units in South Korea serve – ensuring that aggression against an ally ensures the start of a wider war involving all of America’s formidable military capabilities. The benefit, as always, would be to prevent such aggression in the first place by threatening consequences the attacker would (presumably) find prohibitive.

Where Mills (like U.S. strategists for decades) should have been much more explicit was in explaining that because the threatened major conflict could easily entail nuclear weapons use, and since China now in particular, has ample capability to strike the U.S. homeland, the deployment of tripwire forces can result in the nuclear destruction of any number of American cities.

So this course of action would greatly increase at least theoretical dangers to all Americans. But what’s the alternative? Letting Beijing acquire knowhow that could eventually prove just as dangerous? As my upcoming article demonstrates, the blame for this agonizing dilemma belongs squarely on generations of U.S. policymakers, who watched blithely as this dimension of the nation’s technological predominance slipped away. And hopefully, as I just stated, this predominance can be recreated – and dangerous new U.S. commitments to Taiwan’s security won’t become permanent.

But that superiority won’t come back for years. Therefore, it seems to me that, as nuclear deterrence provided for Western Europe and Japan succeeded in creating the best of both possible worlds for the United States, this strategy could well work for protecting Taiwan for essentially the same reasons.

I’ll just insist on one proviso: At some point before it becomes a fait accompli, this decision should be run by the American people – as has never been the case.

Unfortunately, as I’ve also pointed out, Taiwan has become so important to the United States that even an America First-inclined U.S. President will have to look the other way at its longstanding trade protectionism and predation in order to maintain close ties – just as it winked at German, Japanese mercantilism in particular during the Cold War. But that kind of linkage needn’t apply to other countries in East Asia (and elsewhere in the world), who lack the kinds of assets Taiwan possesses, and in that vein, I hope the Trump administration (and a Biden presidency, if the former Vice President wins in November) won’t let strategic considerations prevent a thoroughgoing probe of Vietnam’s possible exchange rate manipulation and one other trade offense.

The former concern, of course, stems from the effects of countries’ sometime practice of keeping the value of their currencies artificially low. An under-valued currency just as artificially lowers the prices of a manipulator’s goods and services in markets all over the world vis-a-vis their U.S.-origin counterparts, and therefore makes the latter less competitive for reasons having nothing do with free markets.

The argument against the investigation (which I’ve so far seen only on Twitter, but by folks who are thoughtful and well-informed) is that in an economic conflict with China, the United States needs all the friends it can get. In addition, these critics point out, if tariffs are placed on Vietnamese goods, then companies thinking of leaving China because of the Trump levies on hundreds of billions of dollars’ worth of Beijing’s exports will face greater difficulties exiting, since Vietnam is such a promising alternative for so many products.

What these arguments overlook, however, is that, as a neighbor of increasingly aggressive China, and a country that’s struggled for centuries to prevent Chinese domination, Vietnam has plenty of powerful reasons of its own to help with any anti-China efforts initiated by the United States So it’s highly likely that Vietnam will keep cooperating with American diplomacy and other policies regardless of what the United States does on the trade front.

Moreover, Vietnam lacks Taiwan-style leverage over and value to the United States because it’s not a world-class producer of anything. So there’s no need for Washington to grin and bear Vietnamese trade abuses that may be harming the U.S. domestic economy.

And finally, although it’s great that Vietnam has been a prime option for companies thinking of moving factories and jobs out of China, it would be even better for Americans if those companies seeking low-cost production sites moved to Mexico or Central America, since greater economic opportunity for those Western Hemisphere countries will be so helpful to the United States on the immigration and drugs fronts.

Mark Twain is reputed (possibly incorrectly) to have said that “History doesn’t repeat itself but it often rhymes.” That is, it holds important lessons, but discovering them can be challenging, and both American security and prosperity are about to depend heavily on U.S. leaders getting them right.

Our So-Called Foreign Policy: Why America’s Stakes in East Asia’s Security are Looking Vital Again

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allies, America First, China, East Asia, East Asia-Pacific, extended deterrence, free-riding, globalism, Intel, Japan, Joe Biden, manufacturing, Michele Flournoy, nuclear weapons, Our So-Called Foreign Policy, protectionism, Samsung, semiconductors, South Korea, Taiwan, Trump, TSMC

News flash! This past week I read a newspaper column by George F. Will that didn’t prompt me to say “What an ignoramus!’ In fact, not only did I learn something. I learned something so important that, in conjunction with some other recent developments, is causing me to rethink some long and deeply held ideas I’ve had about America’s grand security strategy in the East Asia-Pacific region.

Specifically, although Will’s own focus in the September 8 piece was who Joe Biden would pick as Secretary of Defense, the piece itself described some ominous changes in the U.S.-China military balance in Asia that call into question my main concerns about America’s approach to region, and especially what I’ve depicted as an increasingly dangerous reliance on nuclear weapons to deter Chinese aggression. Meanwhile, as I’ll detail in a forthcoming freelance article, two U.S. Asian allies – Taiwan and South Korea – whose value to the United States I’ve long insisted doesn’t remotely justify running such risks, are looking for now like critical assets.

To review, since the Cold War began, the United States has resolved to defend its East Asian allies in large part by using the threat of nuclear weapons use to persuade potential attackers to lay off. Presidents from both parties agreed that the conventional military forces needed to fight off China and North Korea (and early on, the Soviet Union) were far too expensive for America to field. Moreover, the Korean War convinced the nation that fighting land wars in Asia was folly.

Before China and North Korea developed nuclear weapons able to reach the U.S. homeland, or approached the verge (the case, it seems, with the latter), this globalist policy of extended deterrence made sense whatever the importance to America of Asian allies. For the United States could threaten to respond to any aggression by literally destroying the aggressors, and they couldn’t respond in kind.

As I noted, however, once China and North Korea became capable of striking the continental United States with nuclear warheads, or seemed close to that capability, this U.S. policy not only made no sense. It was utterly perverse. For nothing about the independence of South Korea and Taiwan, in particular, made them worth the incineration of a major American city – or two, or three. The security of much larger and wealthier Japan didn’t seem to warrant paying this fearsome price, either.

Greatly fueling my opposition to U.S. policy and my support for a switch to an America First-type policy of military disengagement from the region was the refusal of any of these countries to spend adequately on their own defense (which, in combination with U.S. conventional forces, could deter and indeed defeat adversaries without forcing Washington to invoke the nuclear threat), and their long records of carrying out protectionist trade policies that harmed the American economy.

As Will’s column indicated, though, the threat, much less the use, of nuclear weapons is becoming less central to American strategy. Excerpts he quotes from recent (separate) writings by a leading Republican and a leading Democratic defense authority both emphasize dealing with the Chinese threat to Taiwan in particular with conventional weapons. The nukes aren’t even mentioned. Especially interesting: The Democrat (Michele Flournoy) is his recommended choice to head a Biden Pentagon – and she’s amassed enough experience and is well regarded enough among military and national security types to be a front-runner. I also checked out the journal article of hers referenced by Will, and nuclear weapons don’t come up there, either.

Moreover, neither Flournoy nor her Republican counterpart (a former aide the late Senator John McCain) shies away from the obvious implication – accomplishing their aim will require a major U.S. buildup of conventional forces in East Asia (including the development of higher tech weapons). In fact, they enthusiastically support it.

Any direct conflict involving two major powers has the potential to escalate beyond the expectations of the belligerents. But certainly bigger and more capable American forces in East Asia would reduce the chances that war with China will go nuclear. So in theory, anyway, the nuclear dimensions of my concerns could be reduced.

Moreover, my willingness to run greater risks to safeguard Taiwan and South Korea in particular, and pay the needed economic price – even if they keep free-riding on defense spending – is growing, too. That’s because of the theme of that forthcoming article I mentioned: Intel, the only major U.S.-owned company left that both designs and manufactures the most advanced kinds of semiconductors, has run into major problems producing the last two generations of microchips. In fact, the problems have been so great that the company has lost the technological lead to South Korea’s Samsung and in particular to Taiwan’s TSMC, and their most advanced facilities are in South Korea and Taiwan, right on China’s rim.

Given the importance of cutting edge semiconductors to developing cutting edge tech products in general, and ultimately cutting-edge weapons (including advanced non-weapons electronic gear and cyber warfare capabilities), acquiring the knowhow to produce these microchips by whatever means – outright conquest, or various forms of pressure – would make China an even more formidable, and even unbeatable challenge for the U.S. military, at least over time.

So until Intel, whose most advanced factories remain in the United States, figures out how to regain its manufacturing chops, or some other U.S.-owned entrant rides to the rescue, there will be a strong argument on behalf of protecting South Korea and Taiwan against Chinese designs at very high risk and cost. And as noted above, Americans may even have to tolerate some more military free-riding along with, in the case of South Korea, fence-sitting in the overall U.S.-China competition for influence in East Asia.

At the same time, because of the military (including nuclear) risks still involved, seizing back control of the semiconductor manufacturing heights ultimately is the best way out of this bind for Americans. So shame on generations of U.S. leaders for helping this vulnerability develop by swallowing the kool-aid about even advanced manufacturing’s obsolescence and replacement by services. But this grave mistake can’t be wished away, or overcome instantly, either – though efforts to regain this lost tech superiority need to be stepped up dramatically. So shame on current leaders, their advisers, and wannabe advisers – whatever their favored foreign policy strategy – if they fail to acknowledge that dangerous new circumstances may be upon the nation, and the sharp imperatives they logically create. And that includes yours truly.

Following Up: It’s Fish-or-Cut-Bait Time for the U.S. Alliance with South Korea

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alliances, allies, America First, burden sharing, CCP Virus, coronavirus, COVID 19, deterrence, globalism, North Korea, nuclear war, nuclear weapons, Our So-Called Foreign Policy, South Korea, The National Interest, tripwire, Trump, Wuhan virus

Just last week, I posted about how U.S. grand strategy in East Asia is heavily reliant on dangerously unreliable allies. So what a pleasant surprise to yours truly that the very day afterwards, polling data was published making clear just how fitting my description is of South Korea – a longtime bulwark of the American military position in the region. Just as important, the findings also confirm both (1) that the longtime strategy – which has largely continued during the Trump years – could result in American troops finding out during combat that forces and facilities they were relying on for support aren’t available after all; and (2) that coddling this fecklessness risks needlessly entrapping the United States into a nuclear war.

Although almost completely uncovered in the American media, the U.S.-South Korea alliance has been nearing a crossroads for months, as President Trump has insisted that the Seoul government pay more of the costs of stationing American forces on South Korean soil, and the South Koreans have responding with a mixture of grudging concessions at negotiations over the subject, and outright indignation. And in a July 23 National Interest post, a team of scholars from Western Kentucky University showed that a majority of the South Korean public feels exactly the same way.

There’s no question that, as a fully sovereign, independent country, South Koreans and their government have every right to hold whatever opinion they wishes about its security relations with the United States. But of course, Americans and their government are entitled to the same views, and it would be entirely reasonable to regard South Korea’s opinions and policies as complete – and dangerous – outrages.

As the Western Kentucky researchers show compellingly, numerous polls, as well as a recent survey of their own, show that strong majorities of South Koreans want the U.S. military to remain in their country because they believe that these forces are crucial to their own country’s security. But they’re also decidedly reluctant to accommodate the U.S. requests to shoulder more of the defense burden.

From an American standpoint, these attitudes would be understandable if any combination of the following conditions still described South Korea – it’s a poor country that can’t afford to defend itself adequately, or it’s already spending on its down defense to the max, or it doesn’t face very serious security threats to begin with. These conditions might also warrant cutting the South Koreans some slack when it comes to their resentment of President Trump’s allegedly heavy-handed approach to the issue – which the polls show tend to increase their unwillingness to pay more of the costs of hosting U.S. forces. After all, no one likes being bullied.

Here’s the problem, though, from an American standpoint: None of these conditions hold. And none are close to holding. For as of last year, South Korea was the world’s twelfth biggest economy, with total output of about $1.63 trillion. The gross domestic product of highly secretive North Korea’s is estimated at about $20 billion. That’s 0.01 percent of the South’s total. (Here‘s a handy source for the data.)

South Korea’s military spending isn’t real impressive, either. Both in absolute terms and as a share of its economy, it’s gone up. But as of last year, it was still only 2.7 percent of its gross domestic product. By comparison, the United States spends 3.4 percent of its economy on the military. (For both figures, click on this link.)

It can still be argued –as the Western Kentucky researchers maintain – that the South Koreans are already being more than generous in funding the U.S. military presence, and that a change in Trump attitude would likely induce more cooperation. But their defense burden-sharing views – as has been the case with so many others – weirdly ignore how the most valid standard by far is not whether the South Koreans (or any other U.S. ally) are paying as much as the United States for their defense or slightly more or slightly less or whatever. The most valid standard is whether they’re paying as much as is needed (adjusted for their capabilities of course) to defend themselves on their own. And the reason could not be more obvious: For all the talk of “common defense,” it’s their security that’s most at risk, not the United States’. (See my contribution to this anthology – from 1990 – analyzing this largely off-base burden-sharing debate.) 

And nowhere is this difference starker than on the Korean peninsula – on which South Korea is right next door to a North Korean regime that is widely described as dangerously aggressive or utterly deranged. Yet whatever you think of North Korea, nothing could be clearer than that it poses a much greater danger to South Korea than to the United States.

This observation, of course, brings us to the most completely unacceptable feature of this situation for Americans: It’s precisely because South Korea is flagrantly free-riding in defense matters that tens of thousands of U.S. troops need to be stationed right at the Demilitarized Zone dividing the peninsula, and why nowadays (as opposed to the period during which North Korea had no nuclear capabilities) their presence could well result in the U.S. homeland being hit by a North Korean nuclear warhead.

That’s because, as I’ve repeatedly explained, the mission of these U.S. forces isn’t to contribute a successful conventional military defense of South Korea.  They’re too weak – even with the help of the South Koreans.  Instead, their mission is to serve as a nuclear war tripwire – to prevent (or in the parlance of strategists “deter”) a North Korean attack in the first place by creating the danger that a U.S. President will respond to their imminent destruction by turning the conflict nuclear.  But however important South Korea is, is it really worth the complete destruction of a major American city, or two, that would result from a successful North Korean retaliation?

That this question has been evaded continuously by the U.S. government ever since North Korea’s nuclear forces began nearing intercontinental capabilities is appalling enough. That it’s still being evaded by a President supposedly devoted to America First principles – and now that Americans have had months of experience with the upheaval caused by a virus that for all its dangers can’t directly destroy any of the country’s infrastructure and the rest of its physical plant – is nothing less than masochistic. Indeed, compared with these nuclear issues, America’s legitimate gripes about finances are wildly misplaced, unless they’re seeking to pressure Seoul to become militarily self-sufficient – which they aren’t.

There’s one consideration that could overrule all these objections: If President Trump concluded that South Korea’s security was a vital American interest, and therefore by definition worth putting America’s very survival on the line for. But revealingly, no such utterances of the kind have issued from the administration. And if they had, of course, then the United States would automatically lose all its leverage in the defense costs talks with South Korea, as Seoul could be confident that America would (as so memorably pledged in former President John F. Kennedy’s 1961 Inaugural Address) “pay any price, bear any burden, meet any hardship” to keep it free – and, incidentally, prosperous.

And here’s the icing on this cake: The public opinion findings presented by the Western Kentucky authors suggest that South Koreans on the whole aren’t so completely terrified by the threat from the North as Americans suppose them to be. For example, the authors’ own survey found that only 70 percent agreed that they were “concerned about North Korea’s nuclear weapons program.” And the authors report that “South Koreans were only mildly concerned about North Korea using military force against them ….”

Does this sound like an ally that’s certain to stand shoulder-to-shoulder with Americans if military tensions in its own neighborhood approached the boiling point? That would promptly increase the preparations needed for imminent conflict? Or one that would keep hemming and hawing until the shooting actually started – and even afterwards attaching more importance to showing good faith to the North in hopes of halting the conflict than in mounting the most effective defense possible, much less helping the United State seize the initiative when the opportunity came? Anyone who believes that staunch South Korean backing can simply be assumed in any of these circumstances simply hasn’t been paying attention, and would be backing a policy sure either to produce calamitous defeat, or to push Washington to use nuclear weapons as a Hail Mary – and risk North Korean retaliation in kind.  

Finally, to return to a point made earlier: South Korea is a sovereign, fully independent country that’s completely entitled to pursue its own policy course. And if it’s not worked up about a North Korea threat to respond enough to give a joint defense of its territory a reasonable chance of success, it’s not for Americans to complain. Instead, it’s for them to either put their collective shoulder to the wheel and commit fully to defend the South come what may – or take the hint, get out of Dodge ASAP, and make sure they don’t have to pay the consequences if South Korea is wrong.

Our So-Called Foreign Policy: Trusting Asian Allies to Help Contain China is Risky Business

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alliances, allies, Asia-Pacific, Aspen Institute, Cato Institute, China, East Asia-Pacific, Hong Kong, India, Japan, Jim Risch, Our So-Called Foreign Policy, Republicans, South Korea, Taiwan, Ted Galen Carpenter, Trade, Trump

Some leading Republican Senators are slated to introduce legislation today intending to fill what they see as a big and dangerous gap in U.S. globalization and national security policy: the alleged lack of a comprehensive strategy to push China to conform with international norms on trade and related business policies and practices, and to make sure that the People’s Republic doesn’t replace the United States as the kingpin of the East Asia-Pacific region.

I haven’t seen the bill yet, but this Financial Times report gives what looks like a pretty complete summary – which comes from the horse’s mouth (Idaho Republican Senator Jim Risch, the lead sponsor and the Chairman of the Senate Foreign Relations Committee). Some of the economic proposals seem promising – although their focus seems to be China’s appalling human rights violations (about which the United States sadly can do little) as opposed to China’s economic predation (which Washington has considerable power to fight effectively).

As for the national security stuff – I really wish that Risch and his colleagues had consulted with Ted Galen Carpenter of the Cato Institute, one of America’s most trenchant foreign policy critics (and, full disclosure, a valued friend).

For in a new survey just posted by the Aspen Institute, Carpenter has made depressingly clear that one of the conditions most vitally needed nowadays for containing China’s growing military power and political influence in its back yard – reliable allies – simply doesn’t exist and isn’t likely to anytime soon.

Risch and Carpenter certainly agree on the importance of reliable allies, and apparently on their absence – although the former evidently and bizarrely believes that President Trump deserves at least part of the blame for the current unsatisfactory state of America’s regional security relationships. That take on the U.S. approach is bizarre because America (a) keeps running a growing risk of nuclear attack on the American homeland by stationing “tripwire” forces in South Korea largely because that wealthy country continues to skimp on its own defense; and (b) last I checked, America’s immense (and expensive) naval, air, and land deployments in the region were still fully intact.

And don’t just take my word for it: Carpenter lays out in painstaking detail how under President Trump the United States has actually clarified its rhetorical opposition to China’s territorial ambitions, stepped up its military operations in the Asia-Pacific region, and boosted military aid to Taiwan – which of course China views as nothing but a renegade province that it has every right to take back by force.

Regardless of what the United States is or isn’t doing, though, if U.S. alliances are going to be strengthened and oriented more explicitly against China, the allies themselves need to be at least as concerned about Beijing’s aims as Americans. That’s mainly, as Risch and his Senate colleagues note (along with yours truly over the years, as in the above linked 2014 RealityChek post), because China’s military buildup and modernization drive have eroded U.S. military superiority, and because if there’s anything worse than going to war without needed allies, it’s going to war with allies unlikely to help out once the shooting starts. And Carpenter revealed exactly how real that latter danger is by detailing just the latest instance of allied timidity:

“Washington is seeking backing from both its European and East Asian allies for a more hardline policy regarding China. The Trump administration exerted pressure for a strong, united response to Beijing’s imposition of a new national security law on Hong Kong. US officials wanted a joint statement condemning that measure and an agreement from the allies to impose some economic sanctions. However, the European Union collectively, and its leading members individually, flatly refused Washington’s request. With the exception of Australia, the reaction of the East Asian allies was no better. Japan declined to join the United States, Britain, Australia, and Canada in issuing a statement condemning the PRC’s [People’s Republic of China’s] actions in Hong Kong. South Korea seemed even more determined than Japan to avoid taking sides on the Hong Kong issue.”

And as the author rightly emphasizes, “Given the dearth of even diplomatic support from the allies for Washington’s Hong Kong proposal, there is even less chance that those countries will back a military containment policy against the PRC.”

A principal reason is money. Since the 1990s, America’s Asian allies (in particular, Japan, South Korea, and Taiwan) have profited hugely from setting up electronics assembly operations in China and selling the final products (made largely of their own parts, components, and materials, and put together with their production equipment) to the United States. Why on earth would they want to break up this highly lucrative marriage of their technology on the one hand, and China’s low labor costs and lavish subsidies on the other?

To be sure, as noted repeatedly on RealityChek, China has been moving up the technology ladder, and replacing Made-Elsewhere-in-Asia inputs with its own manufactures. But it’s a long way from totally supplanting its neighbors’ products.

It’s true that American multinational companies also are guilty of feeding and profiting handsomely from the Chinese beast. And it’s equally true that pre-Trump U.S. Presidents have helped create the problem by coddling allied fence-sitting. But at least the Trump administration’s trade policies are striving to disrupt these U.S. corporate supply chains, and its tariffs are threatening the profitability of foreign-owned multinationals’ export-focused China operations.  Japan has followed suit on decoupling to a limited extent, and India – which has moved closer to the United States lately for fear of China – is increasingly wary of its own, much less profitable, entanglement with the People’s Republic. But even Taiwan keeps eagerly investing in China and thereby increasing both its wealth and its military power.

Neither Carpenter nor I support the goal of beefing up U.S. military China containment efforts in the Asia-Pacific region (though not for the exactly the same reasons). In fact, we both favor major pullbacks. But we both agree that if containment is to be pursued, Washington needs to do a much better job of lining up its local ducks. Otherwise, it could find itself either losing another war in Asia, or winning a victory that’s pyrrhic at best.

P.S. One of Risch’s co-sponsors, Utah Republican Mitt Romney, has just revealed that he’s especially clueless on the potential of rallying the allies. 

Our So-Called Foreign Policy: Closer U.S. Taiwan Ties Must Become a Two-Way Street

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alliances, allies, CCP Virus, China, coronavirus, COVID 19, decoupling, East Asia-Pacific, foreign investment, Hong Kong, Huawei, national security, Our So-Called Foreign Policy, South Korea, Taiwan, tech, Trade, Trump, TSMC, Wuhan virus

As if its CCP Virus coverup and planned crackdown on what’s left of Hong Kong’s freedoms weren’t bad enough, China has been escalating its aggressive words and deeds throughout its East Asia/Pacific neighborhood, and one major sign has been new pressure exerted on Taiwan – which Beijing views as a breakaway province that needs to end its rebellion immediately and join the Communist People’s Republic.

This more worrisome Chinese posture understandably has sparked calls for the United States to retaliate by demonstrating stronger support for Taiwan in various ways. This impulse also seems reasonable to me. But if the Trump administration speeds up its march down this road, it handles a closer relationship with Taiwan a lot better than its predecessors for decades had handled security alliance relationships with Japan and South Korea. Specifically, it’s crucial that Taiwan share much more of the burden of resisting China’s ambitions than has long been the case.

The latest alarm bells about China’s Taiwan policies have been set off by China’s words – or, more accurately, a missing word. Although the PRC (People’s Republic of China) has never renounced using force to achieve its longstanding aim “reunifying” China (as it defines the issue), its rhetorical positions toward the island have long fluctuated between the conciliatory and the blustery. But for 40 years, when Beijing mentioned of reunification, the word “peaceful” has always preceded it.

Last Friday, though, China’s second most important leader dropped the “peaceful” – and did it at a major forum: the annual meeting of the country’s rubberstamp parliament.

So it seems clear that the China cloud over Taiwan has darkened. But U.S. steps to bolster Taiwan’s security will greatly underperform – and may actually increase the dangers posed to America by China itself – unless Washington starts demanding in return that Taiwan stop its longstanding practice of investing massively in manufacturing in China, including in high tech sectors.

Indeed, as of 2018, according to this report, the total value of Taiwanese investment in China hit $180 billion – ten times the value of Taiwan’s investment in the United States. The annual amounts have been going down, but mainly because of the Trump administration’s tariffs on China, which have made it much more difficult for any factories in China – Chinese or foreign-owned – to earn fat profits by exporting major shares of their output to the United States. Even so, such investment had reached massive proportions. Indeed, in 2017. China still attracted nearly 45 percent of all Taiwan’s outbound foreign direct investment. Moreover, so much of this investment has come in technology sectors that fears have emerged of the island hollowing out its own innovation sector – which has been so vital to Taiwan’s spectacular economic development. And of course, Taiwanese companies like contract semiconductor manufacturing giant TSMC have been major suppliers of microchips and other high tech products to Chinese tech companies like Huawei, the global leader in advanced telecommunications.

It’s important to recognize that Taiwan is hardly the only U.S. ally that’s promoted China’s economic – and therefore technological and military – development. It’s not even the biggest. (That dubious honor goes to Hong Kong, but most of this Chinese “Special Administrative Region’s” direct investment flows to China seem to be concentrated in lower-tech, labor-intensive sectors without significant national security implications.) Moreover, the United States remains complicit itself.

But even though his administration doesn’t use the word, decoupling from China does appear to be a major goal of President Trump’s. There’s certainly been a lot of it. I’m not big at all on the United States embarking on a full-fledged campaign to mobilize East Asia/Pacific countries to out-compete China for influence in the  region. Indeed, I’ve argued that disentangling the United States from China economically is vital to ensure American security and prosperity on its own merits. But if President Trump does want to go the full-court anti-China press route, what’s the point if supposed American allies aren’t all-in on decoupling asd  as well?

Our So-Called Foreign Policy: Another Wuhan Virus Lesson Globalists Need to Learn

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alliances, allies, China, core deterrence, coronavirus, COVID 19, Eastern Europe, extended deterrence, globalism, Japan, NATO, North Atlantic treaty Organization, North Korea, nuclear deterrence, nuclear war, Our So-Called Foreign Policy, Russia, South Korea, Soviet Union, tripwire, Western Europe, Wuhan virus

Here’s a seemingly off-the-wall question: What does the Wuhan Virus have to do with U.S. policy toward its global security alliances?

And here’s why it’s not only not a perfectly sensible and even vital question, but why the best answer is “Plenty”: Because these decades-old globalist arrangements now pose to America risks that look like the coronavirus-in-not-so-miniature. Even worse: The benefits to the United States these days are much more modest than  during the Cold War era when they were created.

The purely national security arguments should by now be familiar to RealityChek regulars. (See here and here for fuller descriptions of the points I’m about to summarize.) The North Atlantic Treaty Organization (NATO – which has linked the United States, Europe, and Canada), and the bilateral security relationships between the United States and Japan and South Korea, originally aimed to prevent the Soviet Union from dominating global centers of economic and technological strength and potential, and therefore of military strength and potential.

In fact, these countries and regions were considered so important that American policy made clear that Washington was ready to wage nuclear war – with all the dangers such conflicts would create for the U.S. homeland. Moreover, because the allies (or protectorates, as many call them) understandably doubted that American leaders really would, when the chips were down, “sacrifice New York to save London,” Washington felt compelled to station the U.S. military directly in harm’s way.

The idea was never to stop Soviet or North Korean or Chinese aggression with conventional forces alone. Quite the contrary. These units were intended as trip-wires. The very likelihood that they’d be annihilated was supposed to put irresistable pressure on a U.S. President to respond to attacks with nuclear weapons. In turn, this prospect was supposed to deter U.S. adversaries from attacking in the first place.

Such an approach (called “extended deterrence” by the cognoscenti – as opposed to “core deterrence,” which sought to protect the United States itself) made obvious sense when the United States enjoyed a monopoly on nuclear weapons. It even made arguable (though less obvious) sense when the Soviets reached nuclear parity, and the Chinese developed their own rudimentary nukes.

Since the end of the Cold War, however, it’s made much less sense, and more recent developments have turned this nuclear umbrella border-line – and crazily – suicidal. For the Soviet Union is gone. It’s been partly replaced with a newly aggressive Russia, but the countries most threatened by Moscow are not the economic and technological giants of Western Europe, but the newer NATO members of Eastern Europe – whose security was never remotely vital to the United States, as evinced by the long decades they spent as Soviet satellites or actual parts of the former USSR.

In East Asia, nuclear forces both in China and in North Korea can now not only hit the United States (or in the case of Pyongyang, are rapidly approaching that capability). When it comes to China, these weapons’ launch platforms have become much more difficult for the United States even to find, much less take out before they can be used. In other words, for all the continuing and even growing economic and technological importance of Japan and South Korea – which is considerable – the nuclear threats to America from their leading potential adversaries have grown faster both quantitatively and qualitatively.

And in all these alliance cases, despite President Trump’s clear interest in a fundamentally new America First-type foreign policy, and even though the allies are amply capable of fielding the forces needed to defend themselves, they choose not to. Therefore, U.S. forces still serve as tripwires in both Europe and Asia.

It’s likely that the economic damage done to the United States from a North Korean nuclear nuclear bomb landing in a big American city or two wouldn’t compare to the coronavirus economic damage we’re seeing now and are likely to see. But who can doubt that this damage will be substantial in economic terms, and catastrophic from a humanitarian standpoint? And in the areas hit, the harm to businesses and their workers could well last much longer. Further, the impacts of the kind of much larger retaliatory strikes that could come from China (if it invades Taiwan) or Russia, would be that much greater.

And these prices paid for maintaining current alliance policies would be all the more unacceptable because they are now completely unnecessary – because of the allies’ capabilities, and because so many of the European countries now under this U.S. “nuclear umbrella” are so thoroughly marginal to America’s safety and prosperity.

The globalist supporters of these alliances insist that these risks are indeed acceptable largely because deterrence has made them so remote. That sounds ominously like the optimism expressed by so many Americans (myself included) the day(s) before the Wuhan Virus threat’s scale became all too real. Now it’s increasingly clear that the globalists’ favored policies of indiscriminate free trade and offshoring-happy globalization policies have gravely endangered the nation’s health security as well as its prosperity, at least in the near-term. Let’s not be needlessly blindsided by a calamity triggered by the globalists’ hidebound alliance policies.

Our So-Called Foreign Policy: A China Fork-in-the-Road Coming for America First-ers?

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allies, America First, Barack Obama, China, deterrence, East Asia, globalism, industrial policy, Marco Rubio, national security, North Korea, nuclear deterrence, Our So-Called Foreign Policy, South Korea, Trade, tripwire, Trump

Something’s been bothering me for some time about the way that the national debate over dealing with China has been evolving.

Don’t get me wrong – it’s been great to see the major shift in the conventional wisdom since President Trump took office toward genuine recognition that the People’s Republic poses major economic and national security threats to the United States, that many of these threats are closely related, and that they have to be dealt with both on the economic and national security policy fronts.

That’s tremendous progress from the pre-Trump – and globalist – consensus that greater U.S. economic engagement with China was promoting more economic and political freedom in China, and more peaceful international behavior (or definitely would in some indefinite future), and that any dangers emanating from Beijing in the national security sphere are best coped with by increasing America’s military presence in East Asia (e.g., former President Barack Obama’s “pivot to Asia,” largely rhetorical though it was), cooperating more closely with the country’s allies in the region, or some combination of the two.

You don’t have to be an avid follower of world affairs to realize that the sharp distinction drawn by this globalist consensus between China economic and China national security policy was already producing a mind blowingly idiotic result: Washington was still resolving to resist any expansionist ambitions of Beijing’s in East Asia while continuing to help send China’s way floods of money and defense-relevant technology bound to turn into formidable military equipment that U.S. and other allied forces would face if conflict broke out.

Further, as I began pointing out years ago, because of the impressive progress made by both China and North Korea in developing intercontinental-range nuclear weapons, the globalist approach was exposing the American homeland to an ever increasing threat of nuclear attack – and mainly because even the U.S.’s wealthiest regional allies refused to field the (admittedly) expensive conventional military forces that could repel aggression from Beijing or Pyongyang without American help.

So everyone should be encouraged by the growing, bipartisan support for limiting the flow of U.S. resources and technology to China – even though many allegedly converted globalists continue hoping in vain that this goal can be achieved without setting limits (like tariffs) on trade and investment between the two economies.

My problem? Many of the new China hawks (and the leading example here is Florida Republican Senator Marco Rubio, who deserves considerable credit for his out-front role waking up other conservatives to the need for changing course on China) apparently believe that new U.S. trade, investment, and technology transfer curbs are mainly needed to shore up America’s decades-long position as the national security kingpin of East Asia. In other words, they’re hoping that America First-type China economic and technology policies can buttress globalist East Asia policies.

Maybe they’re right.  And if they succeed, it will at least become less likely that American troops will be killed in battle by Chinese weapons developed with dollars and knowhow from the United States.

Unfortunately, too much of the nuclear danger to the United States will remain in place – because the free-riding instincts of America’s East Asian allies inevitably will be reinforced. That is, the more confident they stay in America’s determination to protect them, the less military effort they’ll feel the need to make, and the longer U.S. military forces in places like South Korea will be needed to play tripwire roles – deterring aggression due to their vulnerability to attack and the chances that their imminent destruction will pressure a U.S. President to save them with nuclear weapons use that could trigger a similar retaliatory strike on the United States.

As I’ve written repeatedly, because taking every step possible to prevent a nuclear weapon from landing on American soil should be a much higher priority for Washington than protecting free-riding allies, it’s best for the United States to pull its troops back from the front-lines in East Asia and force its allies to defend themselves. And if this means okaying their own decisions to build nuclear forces, fine with me. I’d also sell them any conventional weapons they’re seeking – which would achieve the added benefit of improving American economic growth and employment.

Does this mean that an America First China policy would or should lack any national security dimension? Not at all. For as I first explained in this recent interview, staying ahead of China technologically will stay imperative for the United States to protect itself from the kinds of cyber-attacks Beijing is already capable of waging and has probably been sponsoring. And the threat is hardly limited to the hacking of U.S. government agencies or private businesses that originates from China. The more Americans (including individual Americans possessing valuable knowledge) use Chinese technology products because these goods have become the world’s best or cheapest, the more their privacy will be vulnerable to Chinese surveillance and ultimately blackmail. The advanced telecommunications equipment produced by Huawei is of course the most important example so far.

There’s another technology-based national security issue that purist America First-ers of my ilk need to deal with as well, and one that I haven’t sufficiently thought through. Nothing’s changed my mind about the United States being a big net loser from trade with East Asia, or about how it can retain the clout if needs in the solely from its role as a final consumption market these export-dependent economies will desperately need.

But thanks largely to failed globalist trade policies, most of the world’s semiconductor manufacturing capacity and capability is now located in East Asia – particularly in Japan, Taiwan, and South Korea. It may be tempting to believe that these countries will become more resistant to China’s power if the United States withdraws militarily from the region. But prudence counsels against simply assuming the best.

So as America First leaders start and keep offering these countries all the military hardware they need to rebuff Chinese advances, they will also need greatly to step up efforts to restore U.S. self-sufficiency in these key building blocks not only of high tech industry, but increasingly of all high value manufacturing and services. (To their credit, Rubio and some other new China realists also understand the need for redoubled American industrial policy efforts to achieve these goals.)

Attempts to reorient U.S. foreign and trade policies in America First directions are still at such an early stage that concern about these differing emphases might look premature. But events have a way of forcing major decisions much earlier than expected – either because crises erupt sooner, or because lead-times to implement new strategies can be longer, than is convenient. So all America First-ers should agree at least agree that the earlier this potential division in America First ranks is addressed, the better.

(What’s Left of) Our Economy: Were the US Washing Machine Tariffs Really Failures?

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consumers, Federal Reserve, General Electric, imports, jobs multiplier, large residential washers, LRWs, manufacturing jobs, metals tariffs, safeguard tariffs, South Korea, tariff-rate quota, tariffs, U.S. International Trade Commission, University of Chicago, USITC, washing machines, Whirlpool, {What's Left of) Our Economy

It’s as close to a slam dunk conclusion as can be – at least according to economists, think tank hacks, and Mainstream Media journalists: The early 2018 U.S. tariffs on large household laundry machines have been a dismal failure.

Or have they been?

The levies belong in a category different from those of the main Trump administration trade-limiting measures because they were first mandated by an independent federal agency (the U.S. International Trade Commission, or USITC) via a long-standing legal process.  And they’ve been panned for supercharging costs for consumers, and padding the profits of the domestic industry to extents that dwarfed the new production and jobs they fostered. (Here’s a typical example of the press’ evaluation, drawing on equally typical research from the venerable University of Chicago and the even venerable-er Federal Reserve.)

What has gone oddly unreported has been the verdict rendered by the USITC – which came out in August. Sure, the agency is grading itself. At the same time, it’s privy to the most authoritative data (taken from the domestic and foreign companies involved themselves), and it’s surely worth noting that the Commission paints a significantly different , and brighter, picture.

The tariffs, put in place in February, 2018, affected the nation’s total global imports of these products, but mainly impacted such “large residential washers” (LRWs) from China, Mexico, South Korea, Thailand, and Vietnam – the biggest foreign suppliers to the U.S. market. The duties’ aim: stemming a sudden surge of LRWs that injure U.S.-based manufacturers. But they don’t shelter the domestic industry forever.

After three years – the amount of time the Commission has determined these domestic manufacturers need to adjust – they’re phased out for both the final products and many of the parts covered in the “safeguard order.” In addition, consistent with their surge focus, they only apply to imports above a certain level of units – a trade curb known as a “tariff-rate quota.” In all, moreover, the ultimate objective is to give victim industries time to adjust and then stand on their own two feet. That’s why detailed adjustment plans are a condition of receiving tariff relief.

To some extent, the USITC’s judgment doesn’t contrast dramatically different from that of the tariffs’ critics. Both noted (in the Commission’s words) “generally increased prices” and “decreased imports.” The Commission, though reported some developments generally missed by the critics (especially “some improvement in the financial performance of continuously operating [domestic] producers,” and market share gains for these companies) and some given decidedly short shrift (“increased production by two new U.S. producers” – both of whose owners come from South Korea, undoubtedly because the option of supplying the American market through exports was sharply limited).

The Commission didn’t address one of the critics’ most compelling points – that the new U.S. jobs were created at a cost to consumers (via the higher prices they’ve paid) of a whopping $817,000 per job. But the University of Chicago/Federal Reserve study actually conceded that this number might be an exaggeration, since manufacturing jobs (like all jobs) create a “multiplier effect” – that is, they foster additional employment in related industries ranging from suppliers of inputs to transportation, packaging, and warehousing services. What these researchers didn’t mention is that manufacturing’s jobs multiplier is unusually high.

Moreover, like virtually all scholars of trade, tariffs, and employment, the Chicago/Fed team neglected other benefits of manufacturing job creation (and prevention of further manufacturing job loss). These include:

>avoiding the wage losses suffered by displaced manufacturing workers who find work in lower-paid industries (an especially important consideration given today’s very low overall unemployment rates)

>avoiding the revenue losses incurred by these workers’ communities and the economy as a whole due to reductions in their taxable income;

>avoiding the increased pressure on social programs required to serve employees who can’t find new jobs – which encompass not only unemployment compensation but spending that seeks to address the pathologies that often follow working class Americans’ deteriorating personal finances, like divorce, delinquency, alcoholism, and opioid and other drug use, not to mention higher mortality;

>and the costs incurred by local businesses because of worker-customers who can no longer afford as many of their products and services, which of course reduces business’ own taxable income and additionally crimps public finance at all levels. (See, e.g., this highly cited study.)

The USITC report, moreover, shed light on another big reason that the costs-per-manufacturing-job-saved might be exaggerated: Not all of the increased costs of the tariff-ed products are due to the tariffs. In particular, the Commission listed no less than 14 factors other than import competition (and the tariffs placed on these goods) that affect the prices of LRWs. They range from raw materials, transportation, and energy costs to competition levels from substitute and between domestic producers, U.S.-based production capacity, productivity changes, labor contracts, and state and local government incentives, and demand levels at home and abroad (because all the U.S.- and foreign-owned manufacturers sell all over the world). The USITC then proceeded to ask producers, importers, and purchasers (retailers) to rate the importance of these factors on prices since the tariffs’ imposition in February, 2018.

The answers were reported in table III-26, and import competition levels were anything but dominant. Indeed, their importance consistently was rated by all three stakeholder as lower or no greater than that not only of raw materials costs (higher due to entirely separate tariffs on metals that were imposed by the Trump administration) but of energy costs, domestic production capacity (surely limited over time by the previous import flood), the allocation of this production capacity to other products, productivity levels, labor agreements, transportation and delivery costs, and domestic demand levels.

And adding to the case for reducing the costs per job figure: According to the official U.S. Bureau of Labor Statistics figures, after jumping by 16.31 percent from the February, 2018 onset of the tariffs through that November, they’ve since fallen by 9.73 percent (through September).

In fact, this development leads to a major point completely missed by the tariffs’ critics. As also indicated by the phaseout schedule and the linkage of the tariffs to the submission of adjustment blueprints, the levies were never intended to produce instant results, or to furnish crutches forever. The USITC describes the implementation of these plans starting on p. IV-5 and, more revealing, presents the evaluations of the retailers – who are bound to be the most demanding judges.

The reviews are mixed, but varying numbers of these companies stated that the two domestic recipients of the tariff relief – Whirlpool and General Electric – introduced new products (the most commonly cited improvement), upgraded product quality, expanded marketing campaigns, bettered their customer service, and taken other positive steps (Table IV-2).

Will these measures prove sufficient? Even after the tariffs come off, definitive answers will prove elusive, because as made clear, the LRW trade policy picture contains so many moving parts. What does look definitive, however, is that so far, the critics have engaged in a flawed rush to judgment.

 

 

(What’s Left of) Our Economy: A Vital Globalization Lesson from South Korea

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China, Financial Times, industrial policy, Japan, self-sufficiency, South Korea, technology, Trade, {What's Left of) Our Economy

As Americans continue debating the merits of remaining dependent on supplies of key products from China (including state-of-the-art 5G telecommunications technology), a great example of why self-sufficiency can be crucial – along with laying adequate groundwork – has just come from an economy much smaller than the United States’ and capable of standing on its own in many fewer areas: South Korea.

In fairness, never during its remarkable rise from deep impoverishment and war-time devastation has South Korea bought the basic principle underlying the generally open trade (and investment) policies that have shaped the global economy throughout the post-World War II era. That is, its leaders have never been willing to prioritize worldwide efficiency by permitting market forces to determine which of their industries would excel.

Indeed, South Korea has been one of the world’s most hermetically sealed economies and hasn’t even been able to cite legitimate national security concerns for its approach. After all, it’s been staunchly defended by the United States for decades – even enjoying the presence of American military tripwire units aimed at forcing, to the greatest extent possible, Washington to risk nuclear attack on the American homeland in Seoul’s defense.

Recently, however, South Korea encountered an economic threat that it – understandably – concluded posed unacceptable risks to the high tech industries that have created so much of its prosperity. Because of a dispute centering on from compensation for atrocities committed by Japan during its long-time colonial rule over South Korea, Japan in July cut South Korean tech companies off from supplies of three chemicals needed to make numerous key products, including semiconductors and advanced displays (computer and TV screens). Japan also removed South Korea from its list of countries enjoying preferential trade status.

And as the Financial Times reported last week, in response, Seoul has decided not simply to accept that Japan’s curbs would surely reduce the competitiveness of its tech sector, and to leave to the subsequent workings of market forces to determine what types of activity would dominate its economy – and determine its fate. Instead, it’s decided to build up its own capabilities in electronic inputs in order to reduce its vulnerabilities to even broader restrictions that Japan might impose as long as this bilateral trade war lasts – and surely in order to cut its exposure to similar potential threats from elsewhere.

According to the Financial Times, “Seoul plans to invest more than Won 5tn between 2020 and 2022 in research and development, in an attempt to localise about 100 different components and materials in the next five years. South Korea has also said it will provide tax breaks, cut red tape and encourage co-operation between big companies and their small suppliers to accelerate the localisation process.”

Nor is South Korea’s government is unlikely to pay much heed to any whining about short-term cost pain from consumers or companies elsewhere in these high tech supply chains. Its officials “stress the importance of diversification. ‘Cost savings is no longer the best thing for our companies. Risk hedging has become much more important.’”

And Seoul seems completely unimpressed with the warnings from conventional economists, like the one who stated “No country can be fully self-sufficient. Focusing on local substitutes only can bring more negative side effects. They may end up having to buy expensive local parts and materials although they can be easily sourced abroad at cheaper prices.”

For the South Korean government understands that Japan’s cutoffs mean that vital parts and materials may not always, or often enough “be easily sourced abroad at cheaper prices” – or at any prices.

Moreover, although it’s no doubt true, as the article contends, that South Korea is behind Japan technologically, Seoul’s drive for greater self-sufficiency is no pipe dream. For the country has built impressive enough technological wherewithal to endow these policies with a solid foundation. Indeed, there’s considerable evidence that decades of “Korea First” industrialization policies have been keys to the South’s long record of rapid gains in global technological competitiveness.

Not that South Korea has an easy row to hoe, as this piece indicates. But here’s where we come to the lessons for the United States: Despite longstanding and offshoring-friendly trade and globalization policies, it remains the global technology leader and therefore boasts advantages that dwarf South Korea’s – or any other country’s. Even better, it’s developed a tried and true formula for fostering world-class innovation, in high tech industries ranging from pharmaceuticals (think “National Institutes of Health”) to aerospace and software and information technology (think “Pentagon”).

In other words, the United States has more than enough “wallet” to overcome the technology threat posed by China, or any other possible rivals – though the Trump administration’s industrial policy initiatives could stand considerable improvement. But the President’s China trade policies show that, for the first time in decades, the United States has a leader with the will.