KUCHING: Asean businesses have urged US President Donald Trump’s administration to provide more clarity and certainty in US trade policies for the benefit of mutual growth in the US and Asean.
A roundtable discussion, with the theme ‘Dealing with a changing world order: What will Trump’s economic and foreign policies mean for Asean?’ was organised by CIMB ASEAN Research Institute (CARI) yesterday in collaboration with the Asean Business Club.
In 2015, the US was Asean’s fourth largest trading partner, with trade between the two recorded at US$212 billion. Nearly a third of all US investment in Asia went to Asean, more than US investment in China, India, and Japan combined.
The participants of the roundtable highlighted their concerns about Trump’s possible protectionist policies. Speakers also discussed how the new administration’s policies could negatively impact business and investment in Asean and the region’s economic integration.
“The US had already withdrawn from the Trans-Pacific Partnership (TPP), leaving the remaining eleven members in the pact, of which four are Asean member states, to reevaluate the trade deal which they began negotiating in 2008.
“US trade relations with China and other partners are still largely undefined. Business requires certainty to operate and thrive, especially when the ASEAN Econommic Community is at a nascent state with teething issues.
“We urge Trump to continue engaging with Asean in order to forge mutually beneficial trade ties,” said Tan Sri Dr Munir Majid, chairman of CARI, and president of the Asean Business Club who chaired the roundtable.
Meanwhile, Ambassador Michael W. Michalak believes that the US companies will continue to invest in Asean due to the region’s favourable demographics and market potential.
“Asean, with its ongoing commitment to build an integrated community, remains a very attractive investment destination for American companies. Although the US has a trade deficit with Asean, it is an important export market for American products, supporting about half a million jobs in the US,” said Michalak.
US businesses have been the largest cumulative source of foreign direct investment in Asean, and Asean countries are increasing their investment in the United States. US goods and services exports to ASEAN supported over 500,000 American jobs. Major goods exports are machineries, aircraft, mineral fuel and oil, optic and medical Instruments and agricultural products.
Dr Arup Raha, chief economist at CARI, commented that if Trump follows through with his campaign rhetoric and imposes tariffs of between 25 to 45 per cent on Chinese exports, it would be a game changer for the global economy.
Such tariffs would disrupt supply chains that have been functioning for many years and the effects will be felt all over Asean.
“Tariffs would also lead to a further rise in the US dollar and weaken the renminbi, both of which would have a negative impact on Asian currencies. Over the medium term, potential growth will suffer as efficiency gains from trade are lost.
“The countries that will feel the most pain are the ones that rely on open international markets to sell their products, and that includes almost all of Asean,” said Raha.
Former Ambassador of Malaysia to China and current President of the Malaysia-China Friendship Association, Datuk Abdul Majid Khan warns that a trade war between the US and China would not only hurt the two countries, but also global economies.
China’s National People’s Congress, which met just last week in Beijing, had also weighed in on the implications and possible impact of President Trump’s policies.
“China may have taken away global manufacturing jobs in the past thirty years, but it has also moved up the global value chains. President Trump has yet to meet with President Xi Jinping, but such a dialogue is crucial to provide better clarity to the world of what to expect from the two superpowers. The sooner the better.”