U.S. set to reinvigorate trade with SE Asia

U.S. set to reinvigorate trade with SE Asia

Karl Malakunas, Agence France-Presse, Singapore

The United States is set to reinvigorate its economic
interests in Southeast Asia after three years of stagnation
caused by terrorism, a struggling domestic economy and the lure
of China, U.S. business leaders and analysts say.

U.S. President George W. Bush's trip to the region this week,
with stops in Thailand, Singapore, Indonesia and the Philippines,
is expected to kick start the renewed commitment, U.S.-ASEAN
Business Council president Ernest Bower said.

U.S. business investment in the 10-member Association of
Southeast Asian Nations (ASEAN) has remained about the same at
US$52 billion in the past three years, according to Bower.

He cited the rise of terrorism in Southeast Asia as a reason
for the lack of growth, with small and medium sized U.S.
companies looking elsewhere around the globe to expand, as well
as the sluggish U.S. economy.

National University of Singapore economics professor Jose
Tongzon told AFP the massive interest in China in the past few
years had also diverted potential U.S. investment away from the
region.

But with the U.S. economy showing signs of sustained growth,
Bower and Tongzon said U.S. investment in Southeast Asia would
soon increase.

"You are going to see U.S.-ASEAN trade bump up pretty
aggressively over the next couple of years," Bower said, citing
this year's signing of the U.S.-Singapore free trade agreement
(FTA) and the rising U.S. economy as major reasons for the
turnaround.

Bower also pointed to this month's announcement by Ford that
it would invest extra $500 million in Thailand, with company
chairman Bill Ford describing the kingdom as "an outstanding
success story for us".

"That's an important bet because that is not just about
Thailand, that bet is about ASEAN," Bower said.

"That says one of the biggest blue chip companies in the
United States believes ASEAN is going to follow through on
economic integration. That's evidence exhibit A."

Bower said despite the headlines created by China's growing
economic interests in Southeast Asia, efforts by the United
States to increase trade with the region in recent years were
more significant.

China and ASEAN signed an agreement last year to implement the
world's largest free trade area in terms of population by 2010.

The free trade area will cover 1.7 billion consumers with a
combined gross domestic product of two trillion dollars.

But Bower said there was very little substance so far in the
China-ASEAN agreement compared with the Singapore-U.S. FTA.

"I basically challenge you to tell me some of the early
harvest on fruits and vegetables in the ASEAN-China FTA is more
significant than the U.S.-Singapore FTA, which is an 800-page,
very thorough agreement," he said.

Bower said the Singapore-U.S. FTA would serve as a blueprint
for future bilateral agreements with other Southeast Asian
nations.

Bush is expected to make progress on a free trade deal with
Thailand during the Asia-Pacific Economic Corporation summit in
Bangkok this week, and Bower said the U.S. would pursue FTAs with
most other ASEAN nations.

"There's a lot of ink in ASEAN-China, ASEAN-Japan and what
not, but from a business point of view we are moving towards a
U.S.-ASEAN FTA," he said.

"Our government doesn't use those words probably because of
political concerns over the Burma issue... but that's where we're
headed.

U.S. businesses are unable to do business with Myanmar,
Burma's official name, because of sanctions imposed to punish the
nation's military junta.

Tongzon backed Bower's comments that the U.S. would seek to
sign up as many ASEAN countries to bilateral FTAs as possible but
cautioned the process would take a long time.

He said it was "highly improbable" that most ASEAN countries
would sign a bilateral FTA with the U.S. before they committed to
a regional free trade area.

Singapore and Thailand are pushing for an ASEAN FTA to be
created by as early as 2012, but the other eight nations in the
group are reluctant to bring it forward any more quickly than the
original deadline of 2020.

Tongzon and Bower said ASEAN's internal integration was the
key to long-term increased U.S. investment.

Tongzon said integration would prove an attractive proposition
for U.S. businesses not just because of smoother access to the
region, but because of the opportunities it would provide as a
viable option to investing in China.