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AseanAffairs Magazine
March - April 2010

The United States is facing daunting prospects in the Asia-Pacific region, a huge market for US goods, while China’s influence is growing as it makes rapid trade inroads in the region. The implications for the US and its need to redefine its ties with Asean are explored in our exclusive interviews with Ernest Z. Bower, Senior Adviser & Director - Southeast Asia Program, Center for Strategic and International Studies, Founding Partner, Brooks Bower Asia LLC and former President of the US-Asean Business Council, and Demetrios Marantis, Deputy United States Trade Representative for Asia.

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Q: As the US turns to the Trans-Pacific Partnership Agreement (TPP), what is the fate of US-Asean FTA?

A: The United States and Asean have strong trade and investment ties and the United States is committed to further building this relationship. Together, Asean countries
are the fifth largest trading partner of the United States, with two-way goods trade totaling $146 billion in 2009. In 2006, the United States and Asean concluded the USAsean Trade and Investment Arrangement (TIFA), which has served as the cornerstone of our engagement since then. Under the TIFA work plan, the new initiatives will support Asean economic integration and deepen economic relations with the United States.

Q: Is the rush to build up TPP an answer to the possible launching of the East Asia Free Trade Area?

A: The United States announced its intention to enter into TPP negotiations after a thorough trade policy review. The review recognised the dynamism of the Asia-Pacific
region and its importance to the United States. Like the other countries participating in the TPP, the goal of the United States in this negotiation is to deepen our relations with Asia Pacific within the framework of a high-standard, 21st Century agreement that will help enhance US competitiveness and support the creation and retention of high-quality, highpaying jobs.

Q: How real is the danger of the US “getting locked” out of Asia Pacific including Asean in the wake of China’s fast trade expansion in the region?

A: US trade and investment with the Asia Pacific continues to grow, even as other countries, including China, continue to strengthen their own relationships in the region. However, the proliferation of bilateral trade agreements in the region has potential implications on trading patterns in the region.

Through the TPP, the United States is seeking to advance US interests in Asia Pacific as well as negotiate a broad-based regional agreement that will help serve as a potential for economic integration across the region.

Q: Is China’s trade domination in Asean imminent? What are the signals?

A: China has increased its trade in the region, but increased trade between China and Asean is not a zero sum equation for the United States or for other countries seeking to enhance their economic relations with Asean countries. With globalised production, one needs to be careful about drawing such conclusions.

Q: The global economic crisis and the resultant decline in Asean’s trade with the US has taught Asean a lesson in having alternative markets to the US.
Why should Asean be expecting the US to be a sustainable market for its exports?

A: As the largest market for the world’s goods and services, the United States expects to remain an important, long-term trade and investment partner for Asean and other countries. Indeed, even in the wake of the global recession, the data show the continued strength of US-Asean economic relations.

US goods imports from the Asean region have not only rebounded from their decline in 2009, but were 20 percent higher in the 2nd half of last year as compared with the first half of 2009. At the same time, our investment relations remain strong. The stock of foreign direct investment from the United States into Asean countries was $153 billion in 2008.


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