The Reality of US Trade Decline in Southeast Asia

This post is a follow-up to one I made a few weeks ago concerning changing regional predominance in the Asia-Pacific. The bigger they are, the harder they fall: In 2008, the United States was left behind by China as the third-largest trading partner of ASEAN member states--Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam--after Japan and the European Union. Fast-forward to the present and the ASEAN secretariat has revealed an even more remarkable finding: In 2009, China emerged as ASEAN's outright largest trading partner even as worldwide trade fell. The EU maintained second place status, while Japan fell to third and the US stayed in fourth place.

Indeed, those championing a continued and strong American presence in the region have many reasons to be wary. At midyear 2010, trade between ASEAN and China is already up 55%. While some gains are attributable to global recovery in trade volumes, some are also due to the trade agreement assigned between ASEAN and China which came into effect at the start of the year. Speaking of which, fearmongering of China wiping out ASEAN in terms of export competitiveness appear overblown as ASEAN's trade surplus with China looks set to increase, not decrease or even become a trade deficit:

China-ASEAN trade volume reached 136.5 billion U.S. dollars in the first half of the year, up 55 percent year on year, making ASEAN China's fourth biggest trading partner, said Gao Hucheng, vice minister of commerce, in a press conference Monday. Gao said that the establishment of the China-ASEAN Free Trade Area on Jan. 1 was a major milestone for regional economic integration indicating that bilateral economic and trade relations have entered a new stage.

And the establishment of the China-ASEAN Free Trade Area has brought real benefits for enterprises and people of both sides, said Gao. First, bilateral trade and investment in China and ASEAN have witnessed rapid growth. The bilateral trade volume reached 136.5 billion U.S. dollars, up 55 percent year on year, 11 percent higher than the growth rate of China's [overall] imports and exports during the same period.

China's imports from ASEAN hit nearly 72 billion U.S. dollars, increasing by 64 percent, and China's exports to ASEAN hit 64.6 billion U.S. dollars, increasing by 45 percent, which means ASEAN has become China's fourth biggest trade partner.

And where were the Americans amidst all this Asian economic activity? Recently, Vietnam hosted a meeting of trade ministers involving ASEAN and its main partners in Da Nang. All and sundry were present including representatives from the EU, Japan, and others. Guess who wasn't there? If your answer is "America," then you're just about right:

President Barack Obama should complete plans to host Southeast Asian leaders this year, amid criticism of the U.S. for skipping a trade ministers meeting this week in Vietnam, the head of a U.S. business group said.

Association of Southeast Asian Nations heads are awaiting the where and when of a summit with Obama, Alexander Feldman said yesterday at the Asean conference, also attended by China, Japan, South Korea, India, Australia, the European Union, New Zealand and Russia. The U.S. absence was “a disappointment,” Asean Secretary-General Surin Pitsuwan said.

Asean leaders “don’t know whether they’re going to Washington or New York; they don’t know whether they’re going in September or October,” Feldman, president of the U.S.-Asean Business Council, said in an interview. “This is a critical test for the administration, to see if they can balance domestic and international politics...”

And there's no guessing who else was there to push for closer economic ties with ASEAN:

“The world economy more and more shifts toward” Asia, European Trade Commissioner Karel De Gucht told journalists in Danang yesterday. “It is clear to me that Asean is not only a growth engine but that it will also serve as a motor of recovery for other regions of the world.”

While the Obama administration has taken steps to boost relations between the U.S. and Southeast Asia, the lack of an American government presence in Danang represented a lost opportunity, Feldman said. “Asean is critically important to our domestic agenda, to the president’s national export initiative,” Feldman said.

Chinese Commerce Minister Chen Deming used his visit to the Danang meeting as a chance to argue for use of the yuan in trade between China and Asean, while the European Union released a statement pitching its desire for “greater economic and political engagement” with the bloc.

I am simply appalled that the likes of the Economist do not observe these meaningful events, preferring to focus on specious ones like the South China Sea non-controversy. While the US may run interference on security matters in the hopes of forestalling closer economic ties in Asia, it certainly isn't doing much that is constructive. If the EU sent its trade commissioner and China sent its commerce minister, the least America could have done is sent US Trade Representative Ron Kirk. By not even bothering to send someone to our gathering of trade officials, I guess it's clear that its interests lie elsewhere.

Like in many other parts of the world, they've been outmanoeuvred in Southeast Asia--and it's nobody's fault but theirs. The global pecking order is a-changin'.