PHILIPPINES
The Manila Times-Apr 8
THE riposte of China last week to US President Donald Trump’s inflammatory rhetoric and imposition of punitive tariffs on Chinese goods could be taken as the beginning of a trade war between the world’s two largest economies. Trade partners of both countries are justifiably gravely concerned at the potential, perhaps even inevitable, collateral damage to their own economies as a result.
Trump on Thursday announced he would order an additional $100 billion in tariffs on Chinese goods. That is in addition to $50 billion in punitive tariffs already imposed on products such as steel, aluminum and others.
China responded quickly and forcefully, saying it would impose retaliatory import duties on key US exports soybeans, aircraft, and automobiles, and launched a formal challenge to the US move before the World Trade Organization.
The 10 members of the Association of Southeast Asian Nations – the Philippines, Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia, Laos, Myanmar, and Brunei – arguably have more to lose than any other region, as China and the US account for about 20 percent of ASEAN’s total trade. Excluding intraregional trade (which accounts for about 24 percent of the total), China is ASEAN’s biggest trade partner while the US is the fourth-largest, ranking just slightly behind Japan and the European Union.
In addition to economic impacts, such as reduced demand from the two big export markets, significant fluctuations in prices of finished goods and commodities, and disruptions in supply, countries on the sidelines of the US-China conflict face increased political risks. Being perceived as too supportive or not supportive enough of one side or another could result in the damaging tariffs being imposed on their own exports. For countries like the Philippines, where the development of the export economy is still very much a work in progress, getting directly caught up in the trade war could be catastrophic.
So far, however, ASEAN has taken the appropriate perspective toward the fight between its bigger friends, one that positions the members of the regional bloc to take advantage of any opportunities that may arise from it.
In a meeting of the member nations’ finance ministers in Singapore on Friday, ASEAN sent a clear message that the region would not take sides in the trade dispute, and let the two economic superpowers know in no uncertain terms that their actions were not acceptable and could not possibly have a positive outcome.
Speaking to the press after the meeting, Singapore Finance Minister Heng Swee Keat said, “We sounded a warning about the risk of rising protectionism and the possibility of the trade disputes deteriorating…. We need to send a strong signal that trade tensions — and if it escalates into something worse — will not benefit anyone. It will be very negative for everyone involved.” Heng added that ASEAN remains committed to pursuing its own program of trade liberalization, and reiterated the importance of maintaining an open process that addresses the needs of those who might be negatively affected by globalization.
In practical terms the economic effects of the trade war will not be apparent for a few weeks or months to come, but ASEAN has taken the right course to draw the line, so to speak, at the conflict’s very beginning. It is a position that every ASEAN country, including the Philippines, should adhere to firmly.
ASEAN and its fast growing 640 million people constitute the world’s sixth-largest economy and third-largest market. Leveraging that strength in numbers in the right way may help to put a swift end to these foolish and destructive trade policies, as well as expand the region’s market reach and influence throughout the world.
(first published in The Manila Times – http://www.manilatimes.net/asean-on-the-right-track-in-us-china-trade-war/391206/)
