US sells business engagement with Asia as trade war drags on

U.S. Commerce Secretary Wilbur Ross and a raft of other American officials are showcasing the commitment of U.S. businesses to Asia with a gathering on the sidelines of a regional summit that President Donald Trump opted to skip. Ross told a gathering of about 1,000 people at the privately led but government-supported Indo-Pacific Business Forum on Monday that the Trump administration is “extremely engaged and fully committed to this region.”

Trump sent his national security adviser, Robert O’Brien, as his special envoy to the summit of the Association of Southeast Asian Nations. He read a letter Monday at an ASEAN-U.S. meeting, attended mostly by foreign ministers and host Thai Prime Minister Prayuth Chan-Ocha, inviting ASEAN leaders to the U.S. for a special summit next year.

On Sunday, host Thailand announced a rough agreement on plans for reaching a deal on a 16-nation trade pact, dubbed the Regional Comprehensive Economic Partnership, that does not include the U.S. but does include Japan, China, and India.

“Look. Showing up is important,” said Charles Freeman, senior vice president for Asia for the U.S. Chamber of Commerce. But he added, “it’s more about substance than symbolism.”

“We really need a whole of government approach from the United States,” he said.

Trump has said he favors country-to-country free trade arrangements rather than multilateral deals. More than a year ago, he launched an effort to get Beijing to negotiate an agreement with Washington on changing its industrial planning strategy to end policies and practices that U.S. officials say are unfair and contribute to the huge U.S. trade deficit with China.

Since then tensions have escalated, with both sides imposing punitive tariffs on billions of dollars’ worth of each other’s exports.

Describing that dispute with Beijing as the “elephant in the room,” Freeman said the two sides need to reach not just a “thaw, but a comprehensive agreement.”

Ross has joined U.S. Trade Representative Robert Lighthizer in negotiating with Beijing on the dispute. Trump and Chinese President Xi Jinping agreed last month to put further tariff increases on hold after saying the two sides had a basic agreement. But so far, no deal has materialized and the cancellation of a Pacific Rim summit that had been planned for later this month in Chile means Xi and Trump have no immediate plans to meet.

“We are very far along with Phase 1,” Ross said of the trade talks.

“We continue to negotiate trade deals with this region,” he said, mentioning revised trade deals with Japan and South Korea.

But his decision to pull out of a rival arrangement, the Trans-Pacific Partnership, did not sway the other 11 nations in that trade pact, which have persisted with a plan minus the U.S.

If realized with all 16 members, the RCEP trade bloc would be one of the world’s biggest, encompassing a market of 3.6 billion people accounting for roughly a third of world trade and of world business activity.

The Indo-Pacific Business Forum parallels a U.S. geopolitical strategy emphasizing relations with India, Southeast Asia, Australia, New Zealand and other Pacific Rim nations that aims to counterbalance China’s rising power and expanding investments in the region.

Organizers pointed to 3.4 million U.S. jobs related to exports to Asia and $1.8 trillion in trade with the Indo-Pacific region.

The friction between the U.S. and China has made a dent in two-way trade, which has fallen by about 15% this year as average tariffs rose to about 20% in September from 3%-8% in early 2018. Some of that trade has been displaced to other Asian markets, with exports from Thailand and Vietnam rising sharply.

Trump’s America First policies reflect in part a backlash against globalization and the shift of U.S. manufacturing to overseas markets in China and beyond.

But more than two-thirds of world trade involves supply chains based in more than one country.

And it was that same transformation of an industry that enabled China and its neighbors to grow their economies, Malaysian Prime Minister Mahathir Mohamad said at an ASEAN-led business conference on the sidelines of the summit.

After preaching to the world about the benefits of free markets “now they want to close down their borders,” he said. “In fact, some are already building walls.”

“There is a fear now that competition would benefit countries of the east rather than developed countries of the west,” he said.