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Concern over US protectionism in Asia

By Bill Smith and Peter Janssen, DPA,

Bangkok/Beijing : US President Barack Obama and Secretary of State Hillary Clinton made much last year of the new administration’s return to Asia and re-engagement with the region. But after a year in power, the region’s main worry about Obama was that his administration would revert to protectionist policies in its bid to get the US economy back on its feet and provide jobs for fellow Americans.

US trade policy towards China has become increasingly protectionist in recent months. On Jan 5, the US commerce department announced a hike in duties from 43 percent to 289 percent on imports of Chinese steel wire decking valued at some $300 million.

That followed US anti-dumping duties on imports of Chinese steel pipes in late December, which Chinese industry officials claimed could cost the country up to $2.8 billion.

Obama approved import tariffs on Chinese tyres last year, when there were also wrangles over poultry, auto parts, copper and paper. With Chinese exports to the US on a relentless rise, growing from 2 percent of total US imports in 1989 to 20 percent last year, Obama is understandably under political pressure to do something to curb the inflow, or at least to appear to be doing so.

“These types of policies send a negative signal, but don’t have a significant impact on trade,” said James McCormack, head of Asia-Pacific Sovereign Ratings at Fitch Ratings in Hong Kong.

“Moreover, with so many US companies reliant on Chinese production platforms we believe there are strong interests in the US in preventing the adoption of an overly protective trade agenda,” he said.

That view is shared by Yu Yingli, an Asia-Pacific analyst for the Shanghai International Issues Institute.

“We can say that trade cooperation between the two countries was stable and kept bilateral relations moving forward,” Yu said of Obama’s first year in office.

In other words, not much has changed since the Bush era. For most Asian governments, no change on the US trade front is just fine.

Members of the Association of South-East Asian Nations (ASEAN) will be more focussed this year on pursuing new opportunities in their own region this year, which saw a full-fledged free trade agreement fall in to place Jan 1.

A similar free trade agreement (FTA) has also been implemented between ASEAN and China this year, along with Australia, New Zealand, South Korea and Japan. Even the EU has been more progressive than the US in pushing for FTAs with Asia. Last year, the EU inked an FTA with South Korea and Singapore and the group is pushing for similar deals with Vietnam and Thailand.

“The EU is much bigger than the US in terms of potential as a trade partner for ASEAN,” Thai Commerce Ministry deputy permanent secretary Krisda Piampongsant said.

That said, all Asian countries will be happy if the US continues to be a major importer of their goods, and this requires Obama putting his own house in order.

“Maybe the word ‘change’ in the Obama administration is more about change in domestic policy, with the health care, mortgage bailouts and helping workers,” said Surat Horachaikul, a lecturer of international relations at Thailand’s Chulalongkorn University.

And if the US hopes to remain the world’s leading economy, solving its domestic problems is crucial.

“One thing China cannot claim to be superior to the US and Europe in is the hard fact that democracy is not available in China and poverty still looms in parts of the country,” Surat said. “You need your domestic policies refurbished and re-engineered sometimes in order to exercise power.”