Further sharpening the ASEAN unity and economic integration will be key to keeping the regional economy out of negative impacts caused by the US-China trade tensions.
At the World Forum on ASEAN, Ignatius Darell Leiking, Minister of International Trade and Industry of Malaysia, said the trade troubles provide a good moment for economic introspection and recalibration. “We need to start taking the opportunity of what was already built several years ago and that is ASEAN,” he said. “Work as a single ASEAN, to trade between ourselves and make it seamless between ourselves. That could reduce the impact that is forthcoming because of this tariff war.”
Official said the US-China trade tensions will not be able to hurt ASEAN if all nations cement their unity
Speaking to the worryingly bilateral direction of global trade, Alan Bollard, executive director of the Asia-Pacific Economic Co-operation (APEC) Secretariat based in Singapore, said that it is unclear how far relations might deteriorate.
“If there is $60 billion worth of trade into the US with a 25 per cent tariff and vice versa, and the threat of $200 billion worth of trade under a tariff of that sort, I don’t know at what point trade friction becomes trade war,” he said. “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, Japan. “But there are solutions.” Tanabe said the solutions included both voluntary export restraint and import expansion, which 30 years ago helped calm trade stresses.
Beyond boosting intra-ASEAN trade to help protect the bloc from global disruption, APEC’s Bollard pointed out that current circumstances have seen other countries step up to take the lead in major trade agreements, such as the Trans-Pacific Partnership (TPP) and 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 (Regional Comprehensive Economic Partnership)?” he asked.
Acknowledging the uncertainty about whether existing pressures will be short, medium or long term, Victor L. Chu, chairman and chief executive officer of 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,” said Chu. “Hong Kong and ASEAN signed a free trade agreement last November and that is very interesting. We want to be at the centre of Asia looking at a closer relationship with Japan, with ASEAN, while at the same time contributing to China’s road and bridge 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 whereby we help each other, provide input into how to develop our countries, in an equal way,” he said, “Then we’ll be alright.”