 Think Tech Hawaii. Civil engagement lives here. Welcome to the Asian Review. I'm your host, Bill Sharp. Our show today, U.S. Trade Strategy, Asia. And my guest is Mr. Russell Honma, a trade specialist and often visitor to Think Tech Studios. Welcome to Asian Review. Well, thank you, Professor Bill Sharp. I remember when I first met you, was it like in 1990 when you were the president of a Japan American society in Hawaii. And that's when I was just starting out to learn what all about U.S. and Japan was going through. And I know that you're quite a mentor to me back then. Oh, wow. Thank you for the compliment. That's really nice of you. Well, let's sort of get right into it because as always, our time always goes faster than we wanted to go. Well, is there a coherent U.S. trade strategy? Right now, between your, in terms of Asia-Pacific region. Right. I know that our United States trade representative, Robert Laiheuser, is kind of looking at the scene if we can rejoin the TPP again, the Trans-Pacific Partnership. They call it comprehensive, progressive TPP now. And there's only 11 members right now besides United States. I know when Donald Trump, the president, made an announcement when he went to the war Economic Forum in Davos, Switzerland. He mentioned that the United States is interested in rejoining the TPP. And I know that like in China, we're not a member of the RCEP that China is pushing with the ASEAN country plus six nations. Right. And so vice versa, China is not a member of TPP or the so-called comprehensive progressive TPP. But do we have a comprehensive coherent organized U.S.-Asia trade policy? It seems to me it's kind of scattered. We talk about getting back into TPP. We talk about, you know, renegotiating the chorus, Korea, U.S., FTA. We talk about getting into this trimmed-down form of TPP. And we talk about bilateral investment treaties here and there. But it doesn't seem to be anything coherent to me. Yeah, actually, I guess what the President Trump is trying to do right now, he wants to put everything instead of going to the multilateral or trilateral basis, he wants to focus on the bilateral trade agreement, like country to country, and see what the pro and the cons are, and see what the strength and weaknesses are in the trade agreements. And I know that he's kind of focusing right now on China because China trade agreements or he wants to see if we can come up with a vital bilateral trade agreement with China. That's interesting because I know that he, I've heard lots of talk about a possible bilateral investment treaty with Japan, and I think that's something probably Prime Minister Abe and Trump are going to talk about this week in Florida. But I hadn't heard that about a bilateral trade investment treaty with China. I know that when President Barack Obama was a President, we're focusing at that time with having this US-China investment in technology transfer agreement. And we had our trade representative back then working on the deals. But hopefully when President Barack Obama, I mean, Donald Trump came in office, he started he wanted to renegotiate with all those trade agreements or the trade issues that President Barack Obama had brought up with these trade representatives. So what do you think about this strategy, the Trump strategy, it's hard to tell what his strategy is because he changes from day to day. But let's take this bilateral approach. What do you think about this bilateral approach, bilateral approach, bilateral approach, and then maybe ultimately some sort of multilateral approach. What's your take on that? Well, I think he's just kind of playing this hard to get kind of approach instead of I think being a former developer in the construction industry executive that he wants to see what the strength and the weaknesses are and see if we can make any improvements from those trade agreements or those trade discussions that's been going on. And unlike in China's case, I know that he was when I spoke last time with your colleague Mr. Jay Fiddle, we talked about the retaliative measure on the tariffs where United States was going to put 25% tariffs on steel and 10% tariffs on aluminum. So that kind of triggered everything and hopefully that China is trying to retaliate saying that if they do that we're going to put 50 billion dollars of retaliatory measures just like we came up with the 50 billion. Now we're bringing up the ante up to 100 billion dollars. Wow. So that might create like a trade war. Yeah, let's get to that trade war just a little bit later but let's focus on TPP for right now just the other day, the Australian I believe he was a trade minister made a very bold statement saying look we're really not into renegotiation of anything and that statement was aimed at the White House. And it seems to me other countries that have stuck with TPP they're not really willing to do this renegotiation because their negotiations for TPP took a long time anyway. So what do you think is going to happen if the U.S. says it wants to get back into TPP but it's not willing to renegotiate and all these other countries are putting up a pretty solid war does that mean U.S. participation in TPP is this done or what's your take on that? I think it's going to be open you know it's just maybe I know that our prime minister from Japan Abishinzo is going to be meeting President Donald Trump next week I believe maybe I think it was on the 17th so two days from now and hopefully he's going to bring up that issue that because I know that Japan, Australia, New Zealand and Canada and other 11 members of the TPP once United States to rejoin into this new comprehensive TPP. Well let me ask this question this question goes a little bit beyond trade but obviously the U.S. had the rebalance to Asia which seems to be no one talks so much about it these days and the economic side of that was TPP and then the U.S. pulled out a TPP we don't hear very much about the pivot or the rebalance to Asia anymore if the U.S. gets back into TPP does that give new life does that breathe new life into the pivot? If you look at the trade volume I think because United States has roughly like 18.7 trillion dollars of gross national product so that's how much business that's per capita we're we're generating so if you look at and calculate that with the numbers with the 11 countries we're going to have like 40 percent of worldwide GNP or gross domestic sales so that's going to give a lot of leverage and I know if you look at the RCIP what China is trying to do right now with the ASEAN plus six countries which basically the six countries are Australia, China India, South Korea, New Zealand, Japan and the ASEAN 10 is like Burma or they call it Myanmar, Cambodia, Indonesia, Laos, Malaysia Philippines, Singapore, Thailand and Vietnam they're the 10 countries and some of these countries in the RCIP belongs to TPP as well so they get both leverages and Japan belongs to the TPP and they're part of the RCIP 6 nation Singapore is a country as well in Vietnam with a little leverage they can play dual membership so if you look at the membership it's kind of interesting how they play it out that's very interesting speaking of Prime Minister Abe's trip to Florida this week what do you think will be the outcome of that? I think they just want to make sure that they have the issue with North Korea issue I know that with the denuclearization of the missiles and the weapons of mass destruction they're going to have a meeting with South Korean president going to meet I think on April 27th of this month in the end of May they want to try to set up a meeting with Kim and Eun in Donald Trump on the last show they're going to try to see if we can do a meeting in Hawaii since we have a Pacific command here with the RIMPAC as well so that might kind of have a good ideal location might be east west center or the Pacific I imagine the Korean American community and Korean citizens of the Republic of Korea living in Hawaii I would guess will put together really large street demonstrations and going back to besides the meeting with Abe Shinzo not only the North Korean issue but I think they might want to talk about United States rejoining the Comprehensive Progress TPP that might be the second issue and I know that Prime Minister Shinzo Abe is pushing the so-called high-speed real transit projects the Shinkansen project in the North America I know there's one project going on in California high-speed rail project and there's one in east coast with the northeast corridor they're coming with maglev technology with the HSS T. Is that from New York to Washington? Yes, going from New York actually goes from Washington DC, Maryland to New York to Boston to Philadelphia and they call it the Northwest Corridor project, it's a private funding project from Texas which is from Dallas, Texas to Houston they call it Texas Central and they're using the N700 technology for the bullet train concept. That's really interesting I know that they have, since my sister lives on the east coast, I go to the east coast a couple times a year at least I did when my mother was alive, now I probably go once a year and I sometimes go to Washington to talk to all the folks in the think tanks and see what the inside the Beltway thinking is and I take the Amtrak to Sella from Washington to Philadelphia, that's a pretty nice train but not as fast as the Shinkansen I know the Amtrak, they own most of the high-speed rail tracks so I'm sure we have to get the Amtrak involved and hopefully get the ride away so maybe possible some kind of joint venture might be coming out of this deal. That'd be very interesting that would be really interesting. I know in California Governor Brown has put a lot of priority on that high-speed rail to go right down the Central Valley as I understand it, he thinks it'll be a big job career well, okay, TPP, we pretty well talked about that and I think we just, it's not really a trade issue but let's just touch on it anyway there are several, I think there's something like 12 Japanese citizens being held captive in North Korea, they were abducted on the shores of Japan by, I guess you would call them North Korean frontmen and I'm sure and I think you would agree but if you don't just tell me that Prime Minister Abe will bring this up to President Trump that when you talk to Kim Jong-un, you know, tell him that we're concerned about those 12 of Japanese and we want them back. Yeah, I think that happened already I think when they first met in Longargo and they made a press release that President Donald Trump mentioned about those seven families, the remaining captivity that was kidnapped. I remember when I was a child when I was born and raised in Japan, my mother used to tell me that means to be aware with the North Korean so there's a lot of rumors among the Japanese mothers that telling their children to be aware of the North Korean because there was a lot of this kidnapping they call it in Japanese. That's interesting, that's really interesting. Yeah, I'm sure that's going to come up and I would think that President Trump would be sympathetic to that if somehow he didn't think that it would interfere or disrupt his negotiations or chat with Kim Jong-un. Anyway, so what do you think? Are we going to have a trade war with China? I don't think, to me, it's still the negotiation. It takes about six months I would say based on the first 90 days they're going to see if the negotiation is going to work between our United States trade specialists that's focused on China and I know that the Chinese has their officials that's working on a deal right now so see how it's going to happen. And I noticed that last week in Baoh, Hunan Province, they had the Baoh Economic Forum in Hunan. That's not right there because I'm getting told we need to take a break and we have to pay our respects to all of those that support us. So you're watching Asian Review. I'm your host Bill Sharp. My guest today is Mr. Russell Honma. He's a trade specialist and our show US Trade Policy Asia and we'll be right back. I'm Pete McGinnis-Mark and every Monday at one o'clock I'm the host of Think Tech Hawaii's research in Munna. And at that program we bring to you a whole range of new scientific results from the university ranging from everything from exploring the solar system to looking at the earth from space, going underwater, talking about earthquakes and volcanoes and other things which have a direct relevance not only to Hawaii but also to our economy. So please try and join me one o'clock on a Monday afternoon to Think Tech Hawaii's research in Munna and see you then. Welcome back to Asian Review. I'm your host Bill Sharp. My guest today is Mr. Russell Honma. A vast amount of experience in the area. Our show today is US Trade Policy Asia. We've been talking about some of the salient issues, our trade issues facing the United States, the possibility of rejoining the TPP, Prime Minister Abe's visit with President Trump in Florida this coming, this week, not this coming week, this week, and what that might turn up. And just before the break we're beginning to talk about the possibility of a U.S.-China trade war. So let's pick it up from there. And you know President Trump he does say some things that do make a lot of sense I think is when it comes to China for a long time U.S. companies have been at a disadvantage. Dan or the Chinese market they have to sign over their technology to the Chinese government. They have to produce their client lists. They have to enter into a joint venture with a Chinese partner. So it does seem pretty unfair. And obviously China's ripped off one way or the other has ripped off vast amounts of U.S. technology. On the other hand a trade war does seem a bit I don't know how should we say excessive. But is it to be avoided? Will there be a trade war or will it be avoided? I think if they play it smart I know the Chinese don't want a trade war but they're saying that if it happens it happens. But right now they're seeing if the trade war does happen in terms of we have a trade act from 1974 where it's a section 301 which talks about retaliative measure for dumping law selling the merchandise below the fair market value. And that's what's happening with China right now. And even with the technology transfer like you mentioned when you want to do a joint venture in China you have to show all your manifests, your blueprints, your cinematics and how you're going to do the partnership. None of these companies in China are state owned enterprise. They're not actually a private company. So when you deal with the state owned enterprise they have their own subsidiary company so it's always that they're going to start up something on the side. And we know that it's been going on for about 20, 30 years already we've been kind of looking at the other way with the copyrights and the Frenchman of licensing fees. There seem to be a kind of a pattern here when it comes to US trade with Asia just a matter of South Korea, Japan, China perhaps to a lesser degree Taiwan. It's always like markets are kept fairly close. Most of these countries operate under industrial policy where the government has a lot of influence on a company and what it's to do even if it's a private company and then there's government subsidies and then there's dumping. For the benefit of the audience which Bob explained with dumping is, dumping is closing your market and then penetrating another market and selling under the market price in order to gain market share. And I think I don't like to say this but I think most Asian countries have been guilty of this at one time or another. Definitely, I mean Japan used to do that. I remember when you were the president of the Japan American Society we had that close with Prime Minister Nakasone from Japan was a prime minister but Ronald Reagan was a president so they were kind of negotiating in terms of friendship kind of trade war and they came up with a structure and petritive initiative talk between Tokyo and Washington and came up with some kind of measure with the terms and conditions and that kind of prevented the trade war and I think what's happening in China-U.S. relationship we have to come up with some kind of structure and petritive initiative talks and come up with some kind of goals and objectives and how we're going to approach this and I think our trade specialists and our senior officials are working on that deal right now. You know this is really interesting. I lived in Japan in the 80s and there was a lot of, as you well know there was a lot of trade friction between the United States and Japan at that time on the strategic side the U.S. and Japan were very close on the economic side there was lots of massacres and friction and you mentioned earlier section 301 that was so prominently discussed in that day. Sector-specific talks, in other words we're going to go down each sector of the economy and negotiate and semiconductors were a huge issue and to me this is a little bit like deja vu because I hear the same sort of language being brought up now in relationship to China. You know section 301 sector-specific talks, etc. My fear is, just to share my thought with you is it always seemed in the 80s the U.S. side got out negotiated by the Japanese side. The Japanese side was much better organized, much more better informed. They understood America quite well. Lots of the Japanese negotiators had worked together as a team for quite a long time. Many of them had studied in the U.S., got advanced degrees and in most cases very leading universities. English was very good and then there was a U.S. side that got kind of thrown together at the last minute they really didn't understand Japan very well and it was very unusual to find someone who spoke Japanese and the U.S. side they wanted a quick victory so they could run out to a microphone and get a 30 second spot on the news. The Japanese had lots of patience and were somewhat tenacious. I think they kind of ran over the U.S. and I just wondering if we're not going to see a replay of that although this time the characters would be a little bit different from the U.S. and China What's your take? If you look at the government structure, Japan was more like a socialist and it kind of went to democratic government. Now China was a communist is a communist country but they're trying to move into the socialist kind of concept for their monetary and fiscal policies. I think if you look at the long run, I think China is realizing they have to be more democratic if you're going to go international and do businesses abroad. More democratic or more open? Open and democratic. I have a feeling China doesn't want to be a whole lot more democratic maybe it will be less democratic. I think the people want to be more democratic in those terms but if you go in the business, I think when you look going back like Dao Xiaoping said it doesn't matter what the color of the cats are, longest they catch mice. And if you look at the history of the leadership, you know we had Sun Yuck Sen he came to Hawaii, he studied at Punahou and Iolani and his disciples of Mao Tung Tong and Kamchak Shek and they came to Taiwan and they kind of broke away and so then they came to Dao Xiaoping and then Hu Chintao, now we have a leader Xi Jinping which we just recently had that Communist Party Congress and he said that they voted on him to be, he can have unlimited terms with no years of restrictions so I think he wants to be the next Dao Xiaoping or Mao Tung. Long lasting fellow, long lasting leader. Well you know I read a very interesting article, actually I brought it with me it's called the Sino Insider, maybe some of the folks in the audience have heard of this. And the title is Risk Watch China with Strad, a trade war. And it makes a very good argument that suggests, not only suggests but pretty strongly argues that in a trade war the United States would be the victor because China's economic situation is not as good as one often thinks it is. There's been a contraction of the manufacturing sector, there's been an increase in unemployment there's an increase in the number of displaced manufacturer workers, debt is increasing you know investors don't want to invest in China as much as they used to because China's become somewhat expensive. It's highly dependent on the U.S. as an export market and if a trade war evolves that China's probably going to be the loser. I think the leaders of China realize that so when they formulate the BRICS when they had the World Cup in Brazil, British actually it was Brazil Africa, Russia was involved in China and they came up with the Asian Infrastructure Bank Investment Bank and that was a start in the One Built One Role Initiative, part of the One China policy and kind of bridge the gap between your Asia kind of concept because they know that in order to bring in more domestic demand investments they have to rely on these international partners so the strategy was coming with the Asian Infrastructure Investment Bank in which you have to pay an anti of 10 if you're a small country you got to pay like 10 billion dollars into the pot to be a member and I know that United States in Japan is not a member because United States has a membership with the World Bank and Japan is a leader with the Asian Development Bank in Philippines. That's interesting. I see we're looking at the clock here we're sort of whittling away at our remaining time here and as I said we have about four minutes left a big part of this negotiation, a big part of the problem in trade is artificial intelligence obviously China is striving to develop this artificial intelligence capabilities the US is too this is really it seems like the key technology of the future and who can ever master artificial intelligence is going to have a really big advantage not only when it comes to manufacturing and economics but also strategic issues in other words in military sense it seems that a lot of the problems between China and United States generally revolve around intellectual property would you agree? Yeah I think so and I think China is focusing on I just went to a lecture in the east west center and there was a professor from Canada who was one of the leading for focusing on China's zero sum for artificial intelligence and he was mentioning how China wants to be a leader in artificial intelligence but if you look at the long one in diversity of artificial like you mentioned it could be military purpose or it could be space technology or it could be a humanoid kind of concept that Japan is very advanced in humanoid having their CPU kind of concept I know they're focusing on the 2020 Tokyo Olympics using robotics as our Tokyo to be a smart city concept so that's where artificial intelligence in terms of community smarts concept can be applying and they already have private companies and they're already working on that but China needs to do it in terms of international not only for domestic demand not only for internal purposes they have to go abroad and show that they can do the artificial intelligence and commercialize it into business where the consumer can utilize that artificial technology right well we have one minute left here so let me just quickly ask you this question just have to make this real brief there's been a renegotiation of the Korea US FTA what's your take briefly Korea I know that Donald Trump said they're not going to give tariffs on the steel and aluminum and they want to negotiate some of the free trade agreements I think that's going to happen I think we should keep that Korea and I know the Korean delegates and the trade specialists are supporting that measure Korea is our ally and they're friends and partners well I guess we'll have to leave it there as always the time goes by faster than we like to like it to go by so I'd like to thank you very much for joining us today I'd like to thank our guest Mr. Hanma and I'd like to remind you that next week I guess we'll be Mr. Leo Chuchung he is the vice chairman of TITRA the Taiwan External Trade Development Organization should be a great show we'll see you then