ASEAN Trade and Investment with the U.S. — They want it and we need it.

Dr. Stuart Malawer at Petronas Towers (Jakarta, Indonesia) (July 2012)

      After spending the last two weeks giving presentations and discussing global trade and investment strategies with foreign multinationals and financial institutions in Thailand, Malaysia and Indonesia here are some observations and general conclusions.
… Indonesia is clearly the largest and most dynamic economy in Southeast Asia in terms of investment and trade opportunities for U.S. firms.
… Indonesia has just filed an antidumping dispute against the EU in the WTO concerning the EU’s imposition of antidumping duties on the import of chemical related products. There are significant tensions in EU – Indonesian trade relations.
… Indonesia is set to buy Chinese interbank bonds to help diversify its foreign reserve holdings. Indonesia is increasingly sophisticated in its global financial dealings.
… Foreign direct investment in Indonesia has increased 30% in the second quarter from a year earlier. This further evidences the  growth potential of Indonesia.
… Petronas Bhd., Malaysia’s state-owned energy company, has offered to acquire the large Canadian energy company Progress Energy Resources. Global mergers and acquisitions are increasingly instigated by multinationals from outside of the U.S. They are increasingly raising U.S. national security concerns.
(This is along with the recent offer by China’s CNOOC Ltd. to buy Canada’s oil and gas company Nexen Inc. This proposed acquisition is one of the biggest overseas expansion efforts by a Chinese company to date. But since Nexen has assets in the United States it plans to ask CFIUS to review this transaction for national security concerns.)
… Malaysia’s high Standard and Poor’s rating was recently affirmed. This further indicates the growth potential of Malaysia.
… Thailand among other ASEAN nations, such as Vietnam, are extremely concerned about the failure of the recent ASEAN ministerial meeting in Cambodia to adopt rules  addressing the law of the sea issues relating to China’s claims in the South China Sea and East China Sea. In particular, the issue relating to the Exclusive Economic Zone (EEZ) is fiercely debated.
(Unfortunately, the continued U.S. failure to ratify the Law of the Sea Convention doesn’t help the U.S. in mediating this dispute.)
… Concern among these three nations remains, of course, with China as to trade issues.
(The recent split decision in the WTO case brought by the United States over China’s restrictions on electronic payments markets / credit cards indicates the continued central role of the WTO in addressing the trade issues in the region.)
(Indeed, the EU has recently opened an antidumping investigation into China’s solar panel industry and the U.S. has recently imposed newer duties on import of Chinese wind turbine towers.)
… All these countries, including the U.S. and China, continue to oppose the EU’s carbon tax on airlines. This is a growing and unnecessary extraterritorial application of EU regulations.
(There is also continuing conflict over the U.S. extraterritorial application of our trade sanction legislation, most recently with China over the expansion of U.S. sanctions against Iran impacting Chinese banks.)
… The economies of these countries are growing, unlike the slowdown in Japan, South Korea and Taiwan.
… Thailand, Malaysia and Indonesia are very concerned about domestic corruption and have launched major programs to combat it.
Entry Sign to Indonesia.
The following are some conclusions:
… Thailand, Malaysia and Indonesia are focused on trade and investment opportunities in the United States.
… They are very concerned about trade issues with China but as well as with the EU and the U.S. They continue to oppose U.S. trade restrictions in the WTO  and  are concerned about potentially new restrictions on foreign direct investment into the United States.
… The WTO remains a primary vehicle for resolving trade issues for them. Indeed, the WTO is holding its next ministerial meeting in Indonesia this fall.
… Foreign corporate strategies can be effectively formulated to increase trade and investment in the United States by understanding the U.S. marketplace and often the disconnect between federal and state policies. (Firms from these countries want to trade more with the U.S. and invest more into the U.S. marketplace.)
… To me, the most surprising observation is their focus on outward trade and investment transactions are viewed as a means of greater domestic economic prosperity.
… China remains a great concern to these countries but the role of the U.S. in addressing this is not clearly understood and has not been fully articulated as part of U.S. foreign policy. Indeed, U.S. policies have not been seen to be very successful even after the Obama administration’s “pivoting” towards Asia.
(Global geopolitical and military issues between the United States and China seem to be a lesser concern to these countries, except for China’s territorial claims in the South China Sea. These countries are more interested in their own economic development during this global economic slowdown.)
… From the U.S. perspective, increasing trade and direct investment from these countries, especially as they move forward in creating a more integrated ASEAN community, seem to be perfectly consistent with the American need to create jobs and economic development within the United States.
In conclusion, the international business and investment firms in Thailand, Malaysia and Indonesia are united in focusing on outward global transactions geared to both the EU and the U.S. It is in our interest to help nurture these cross-border transactions. 
Thailand, Malaysia and Indonesia are working within the rules of the game (WTO). Better U.S. trade policies (less tendency to rely on restrictions in the name of national security and new bilateral trade agreements) and more effective U.S. foreign policy, especially toward the regional issues in Southeast Asia, are needed. 
 This would help them, the international political system, the multilateral trade system, and the U.S. with our own economic development and job creation. It is also in the interest of U.S. foreign policy and national security.
Better trade, better ties.

About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (Schar School of Public Policy).
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