KUALA LUMPUR (March 14): ASEAN businesses have urged President Trump's administration to provide more clarity and certainty on the US trade policies for the benefit of mutual growth in the US and ASEAN, according to a statement by CIMB ASEAN Research Institute (CARI) today.
In 2015, the US was ASEAN's fourth largest trading partner, with trade between the two recorded at US$212 billion and nearly a third of all US investment in Asia went to ASEAN — more than US investment in China, India and Japan combined, said CARI.
It was concluded that ASEAN's development had benefited tremendously from international trade and foreign investment, and non-ASEAN countries have also gained from ASEAN as an export market, as well as the key role ASEAN has played in global value chains, said CARI.
"Similarly, the US is a major market for ASEAN exporters, while ASEAN is a crucial production base for many US companies. Therefore, open trade policies are in the mutual interest of both ASEAN and the US," said CARI.
While participants 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, said CARI.
"The US had already withdrawn from the Trans-Pacific Partnership (TPP), leaving the remaining eleven members in the pact, of which four are ASEAN member states, to re-evaluate the trade deal which they began negotiating in 2008," said CARI chairman and the ASEAN Business Club president Tan Sri Dr Munir Majid.
He was speaking at the conference today titled "Dealing with a changing world order: What will Trump's economic and foreign policies mean for ASEAN?", organised by CARI in collaboration with the ASEAN Business Club.
"US trade relations with China and other partners are still largely undefined. Business requires certainty to operate and thrive, especially when the ASEAN Economic Community is at a nascent state with teething issues.
"We urge President Trump to continue engaging with ASEAN in order to forge mutually beneficial trade ties," Munir added.
US-Asean Business Council senior vice president and regional managing director Ambassador Michael W. Michalak believes that 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 US, said CARI, adding that US goods and services exports to ASEAN supported over 500,000 American jobs.
CARI chief economist Dr Arup Raha commented that if Trump follows through with his campaign rhetoric and imposes tariffs of between 25% and 45% on Chinese exports, it would be a game changer for the global economy.
"Tariffs would also lead to a further rise in the US dollar and weaken the RMB, 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 Arup.
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 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," said Abdul Majid.
CARI Senior Fellow Tunku Zain Al-'Abidin thinks that President Trump's protectionist positions and Brexit referendum results are both a reflection point for ASEAN.
"As evident in the US presidential election results and Brexit vote, there is a growing distrust in public institutions, national or regional.
"If ASEAN truly wishes to deliver the most optimistic objectives of its proponents, then it needs to build trustworthy yet flexible institutions at an uncertain time such as this," said Tunku Zain.