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.