US Mid-term Elections: Indication of Continuity or Harbinger of Change?
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By Ross Darrell Feingold and Elizabeth Freund Larus

US Mid-term Elections: Indication of Continuity or Harbinger of Change?

Dec. 03, 2018  |     |  0 comments

In a midterm election that, like any other, is widely seen as a referendum on the American president, the results reveal that the US electorate is divided in its support of President Donald J. Trump and his policies. The president’s party almost always loses seats in Congress in midterm elections. In 1994, Bill Clinton’s Democrats lost 60 seats in the House and Senate; in 2010 President Obama’s Democrats lost 69. As recounts in contested races begin to settle, it appears that the Democrats will have picked up 30-odd seats in the House, fewer than anticipated. Republicans defied political gravity by expanding their majority in the Senate by two seats. Naturally, President Trump referred repeatedly to a successful election result at his post-election press conference on November 7, 2018.


As the 116th Congress convenes in January 2019, do not expect House Democrats to seek, or even want, immediate and drastic changes in US foreign policy. Trade wars with multiple trading partners will continue because, in the eyes of many Americans and American politicians, major trading partners have not changed their egregious behavior. Regardless, the execution of US trade law into actual policy does not need Congressional approval. So, who are the winners, losers and those facing a period of uncertainty in the US foreign policy agenda?


Those who support President Trump’s China strategy can expect policy continuity and thus must be happy with the election result. Trump is confident that his China trade strategy is working, describing China tariffs in early November as “We’re doing very well the way we’re doing it now.” Confident that the threat of even higher tariffs on more goods will force China to negotiation a settlement favorable to the United States, Trump has threatened to raise existing tariff rates and add duties on another USD 267 billion of Chinese goods.


Both Democrats and Republicans support a tougher stance on Chinese trade and intellectual property practices. In recent decades as bilateral and multilateral trade agreements proliferated, Democrats, with their pre-Trump base of blue collar and union voters, typically had a protectionist’s skepticism towards lowering US trade barriers. Democrat Presidents Bill Clinton (North American Free Trade Agreement) and Barack Obama (Trans-Pacific Partnership) had to seek Republican support for their major trade agreement initiatives. The new Democrat House majority will not be the party of “drop the tariffs.”


Earlier this year, with overwhelming bi-partisan support in both the House and the Senate, President Trump signed into law the Foreign Investment Risk Review Modernization Act (FIRRMA), which makes more robust the reviews previously conducted by the Committee on Foreign Investment in the United States (CFIUS). As an illustration of the breadth of concerns about China among US lawmakers, congressmen attending the roundtable hosted by President Trump to discuss the new act referenced numerous China-related concerns beyond those which FIRRMA seeks to address. With professional advisers providing clients strategies to structure transactions so as to comply with FIRRMA, House Democrats could even hold hearings into China investments that the Trump Administration approves.


Countries on the receiving end of Trump’s criticism over tariff and non-tariff barriers, as well as other restrictions that disadvantage US companies, have shown a willingness to negotiate. Examples include South Korea, Canada and Mexico, as well as Japan. An early November phone call with Chinese President Xi Jinping and plans for a bilateral meeting at the upcoming G20 summit, along with an optimistic presidential Tweet, indicate that Trump is open to a trade agreement with China. Larry Kudlow, director of the National Economic Council, subsequently gave the President’s remarks some context, explaining that US negotiators are doing normal preparation but that the two sides are not on the cusp of a deal. Yet in the week after the election, China reportedly sent the Trump Administration a written trade proposal. There is one caveat, however: Having taken the House, Democrats could look into such issues as the 18 trademarks that China has granted in recent months to companies linked to Mr. Trump and his daughter Ivanka and whether they reflect conflicts of interest. China says it handles all trademark applications equally, but House committees could probe whether Beijing has exploited the Trump family’s substantial intellectual property holdings in China for political or diplomatic advantage.


Within a week of the election, the bi-partisan US-China Economic and Security Review Commission issued its annual report with a range of recommendations to respond to China’s trade, military, sanctions enforcement and other policies. Many of the commission’s recommendations in its 2017 report resulted in legislation or executive branch actions and this year’s report forms a basis for House-Senate cooperation on China issues in 2019. Also in the week after the election, the bi-partisan National Defense Strategy Commission issued its assessment of the 2018 National Defense Strategy, which included detailed analyses of scenarios involving war with China as well as North Korea. Combined with large US military exercises with Japan simultaneous to the US mid-term elections, the security agenda’s focus on China remains unchanged regardless of the election result.

The post mid-term attention on Asia bodes well for the US presence in the Indo-Pacific and occurs even without President Trump’s attendance at the East Asia and APEC summits.

As tension throughout 2017 shifted in 2018 to the historic Trump-Kim summit and, for the time being, a pause in North Korea’s provocative nuclear and missile actions, Congressional Democrats struggled to respond. From pre-summit accusations that Kim Jong-un had a giggle fit at US expense, and post-summit responses that Trump was in a haste to reach an agreement in Singapore (notwithstanding that no agreements were reached), Congressional Democrats watched with frustration as President Trump achieved what President Obama had failed to do. With reports after the mid-term election that North Korea continues to operate undeclared ballistic missile bases, Secretary of State Mike Pompeo can expect aggressive questions from House Democrats about the status of denuclearization progress, especially if there is a second summit. In anticipation of this, within days of the mid-term election, Trump Administration officials have been clear in publicly explaining the pre-conditions for a second summit, and announced jointly with Japan additional North Korea sanctions.

Tension in Korea during the first two years of the Trump presidency was not limited to North Korea’s nuclear and missile programs. South Korea was both an early target of President Trump’s trade policies, and an early example of a country that offered concessions through revisions to the Korea-United States Free Trade Agreement (KORUS). Congress’ role in the KORUS amendment process will be limited, due to the technical nature of the amendments.

Vice President Mike Pence’s post-election visit to Asia has re-energized the on-again, off-again efforts to create cohesive trade and security policies among the Australia, India, Japan, and US “Quad”. A detailed statement issued during Pence’s post-election visit to Tokyo outlines plans for joint infrastructure investment efforts in Asia, and was followed by a Quad leaders meeting on the sidelines of the ASEAN (Association of Southeast Asian Nations) summit that increases the likelihood of the Quad’s resurgence. Prime Minister Narendra Modi and Prime Minister Shinzo Abe have enjoyed positive relations with President Trump, and the conservative policies of Australia’s Scott Morrison make him a natural ally as well. Public-private partnerships to expand opportunities in Asia for US infrastructure companies create jobs and exports in the United States, and it’s likely House Democrats will be supportive, especially if it proves impossible to pass a domestic infrastructure spending bill.

Despite criticism that the Trump Administration unevenly sanctions human rights violators and questions about the sanctions’ efficacy, the Trump Administration has relied heavily on sanctionssuch as those available under the Global Magnitsky Act — to impose penalties on human rights violators. Post mid-term election, there are already signs of a more robust human rights and religious freedom agenda, which will be yet another issue that attracts bipartisan support. Upon Congress’ return to Washington D.C. after the mid-term election, Florida’s Republican Senator Marco Rubio, an outspoken monitor of human rights issues in China and Hong Kong, introduced a bill with bipartisan support to condemn human rights violations in Xinjiang. In his meeting with Aung San Suu Kyi at the ASEAN summit, Vice President Pence delivered the Trump administration’s most high-profile criticism to date of the persecution of Rohingya Muslims in Myanmar. Pence also repeatedly asked Suu Kyi to pardon two imprisoned Reuters journalists.

Democrats were critical of Trump’s first Secretary of State Rex Tillerson’s moves to reduce staffing levels, and will welcome Pompeo’s efforts to resolve unfilled State Department positions in Washington D.C. and overseas including in Asia. If Secretary of Defense Jim Mattis resigns, Pompeo’s role in national security policy will be further strengthened. For stakeholders such as foreign governments or non-governmental organizations that lack a relationship with incoming committee chairmen and staff, there is no time to delay establishing such relationships. In the Senate, Idaho Republican James Risch is expected to replace the retired Tennessee Republican Bob Corker as Senate Foreign Affairs chairman; Risch is already active on China and Taiwan issues. In the House, Foreign Affairs Committee chairman Ed Royce, well known for his support of Taiwan, has retired. If ranking Democrat Elliot Engel of New York becomes committee chair, for Asia policy he is a bit of an unknown quantity; his website’s foreign policy section lists no Asia issues. The Armed Services committees in both the Senate and House face significant turnover, though partisan differences on issues such as nuclear weapons research are unlikely to impact bipartisan support for an expanded US military presence in the Indo-Pacific.

The post mid-term attention on Asia bodes well for the US presence in the Indo-Pacific and occurs even without President Trump’s attendance at the East Asia and APEC summits. This contrasts sharply with Europe, where worries about the pre-election decision to withdraw from the Intermediate-range Nuclear Forces Treaty, a fractious post mid-term phone call with United Kingdom Prime Minister Theresa May, and a contentious visit to France followed by presidential tweets critical of France’s trade policies indicate changing US priorities. With the Trump-Xi meeting at the G20 expected to cover a wider range of issues than Trump’s meeting with Vladimir Putin, Asia might indeed be a winner from this mid-term election.

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