It is pivotal for Asean to strengthen its collaborative resilience and deepen its unity and economic integration in the wake of escalating trade tensions between the United States and China, said Asean ministers at the World Economic Forum (WEF) in Hanoi.
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During a session on the geopolitics of trade, Ignatius Darell Leiking, Malaysia’s Minister of International Trade and Industry, said trade troubles provide a good opportunity for economic introspection and recalibration.
“We need to start taking the opportunity of what was already built several years ago and that is Asean,” said the minister. “That is to work as a single Asean, to trade between ourselves and to make it seamless between ourselves. That could reduce the impact of the tariff war that is forthcoming.”
Alan Bollard, executive director of the Asia-Pacific Economic Cooperation (APEC) Secretariat, said it is unclear how far relations might deteriorate.
“If there is $60 billion worth of trade into the US with a 25 percent tariff and viceversa, and the threat of tariffs on $200 billion worth of goods, I don’t know at what point trade friction becomes trade war,” he commented, “but it doesn’t look good at all.”
“What’s happening now between the US and China is a kind of déjà vu for me,” noted Yasuo Tanabe, senior vice-president and senior corporate officer at Hitachi.
“But there are solutions. Back in the 70s and 80s we were often pressured by the US and we negotiated on many issues in almost all sectors,” Mr Tanabe said, adding that the solutions included both voluntary export restraint and import expansion, which helped calm trade stresses 30 years ago.
Beyond boosting intra-Asean trade to help protect the bloc from global disruption, APEC’s Mr Bollard pointed out that the current circumstances have seen other countries step up to take the lead in major trade agreements, such as the Trans-Pacific Partnership (TPP), and this may encourage others to follow suit.
“We are going through a period where we are seeing a bipolar world move into a multipolar one. Who would have thought that Japan would have taken leadership of the TPP? I never thought that would have happened and it has. Is it possible that India could do the same thing on RCEP?” he asked, referring to the Regional Comprehensive Economic Partnership.
Acknowledging the uncertainty about whether existing pressures will be short, medium or long term, Victor L. L. Chu, chairman and CEO of Hong Kong’s First Eastern Investment Group, said there is also an upside.
“If you look at the silver lining, it is an opportunity for us to look at our competitive advantages.
“Hong Kong and Asean signed a free trade agreement last November and that is very interesting. Hong Kong wants to be more than a China bridge; we want to be at the centre of Asia looking at closer relationships with Japan and with Asean, while at the same time contributing to China’s Belt and Road Initiative.”
With much speculation about what is on the economic horizon, Minister Leiking warned that there is no time to waste. Asean leaders must embrace the reality that a solution is needed now and from within, despite the differences in the region’s economic development.
“Asean negotiators should have in their mind that the intention is to see their neighbours prosper. If all our neighbours prosper together, and we help each other by providing input into how to develop our countries in an equal way, then we’ll be alright,” said Mr Chu.
Past trade tensions between the US and Japan and voluntary trade measures that are being taken could serve as a model for current fractures between the US and China, while greater integration among Asean’s 10 member states will help strengthen the regional bloc against economic disruption, they added.