Does Southeast Asia have to pick a side in the trade war?  | DW News

Summary of YouTube Video:

Key Concepts:

• ASEAN's stance on the US-China trade war: neutrality, balance, and diversification.
• Trump's tariffs: impact on ASEAN and the US, ASEAN's response.
• WTO: its current state and ASEAN's commitment to multilateral trading systems.
• China's engagement with ASEAN: strengthening trade, investment, and infrastructure cooperation.
• Trade in goods vs. trade in services: the importance of considering services in trade discussions.
• US economic issues: rising debt, fiscal deficits, and income inequality.
• ASEAN-EU Comprehensive Economic Partnership Agreement (CEPA): key issues for conclusion (market access, labor mobility, sustainability).

1. ASEAN's Position in the US-China Trade War:

• ASEAN aims to maintain a neutral stance, balancing relations between the US and China.
• ASEAN rejects the notion of being pro-China, emphasizing its openness to engagement with all countries.
• ASEAN seeks to diversify its partnerships beyond the US and China, including Europe, the Middle East, Africa, and Latin America.
• ASEAN countries are not trying to steal American jobs, but are providing jobs for millions of Americans in the services sectors.

2. Impact of Trump's Tariffs and ASEAN's Response:

• Trump's tariffs were a shock to the region, but the US itself was most affected.
• ASEAN asserts that Trump's tariff attack is unjustified and detrimental to the global economy.
• ASEAN will not resort to confrontations but will pursue forward-looking strategies, including deepening intra-ASEAN trade and expanding partnerships.
• ASEAN supports free, transparent, predictable, inclusive, sustainable multilateral trading systems with the WTO at its core.

3. The Role of the WTO:

• The WTO's dispute resolution mechanism is currently impaired due to the US blocking the appointment of dispute settlement body members in December 2019.
• Despite this, the WTO's agreements on trade and investment facilitation remain functional.
• ASEAN firmly supports the multilateral trading system with the WTO at its core.

4. China's Engagement with ASEAN:

• China's appointment of a trade negotiator with WTO experience (Lie Jenken) is seen as a positive move, signaling China's readiness for trade negotiations.
• Xi Jinping's visits to Southeast Asian countries demonstrate China's commitment to strengthening trade, investment, and infrastructure cooperation with ASEAN.
• ASEAN established a partnership with China in 2010 and has since formed FTAs with other countries like Japan, South Korea, Australia, New Zealand, and India.
• The Regional Comprehensive Economic Partnership (RCEP), concluded in November 2019, includes the 10 ASEAN countries plus five main trading partners.

5. Trade in Goods vs. Trade in Services:

• The focus on trade in goods in the US-China trade narrative is attributed to Trump's "ignorant policy."
• The US consistently records trade surpluses in services, with Southeast Asia and East Asia absorbing a significant portion of these services.
• In 2024, US exports of services totaled $1 trillion, with 32% absorbed by Southeast Asian countries.
• ASEAN countries absorbed about $330 billion of US exports in services.
• The services sector contributes 81% of the current US economy.
• Indonesia is the largest Boeing customer, with a $22 billion purchase in 2012, highlighting the importance of considering factors beyond trade in goods.

6. US Economic Issues and Their Impact:

• The US faces significant economic challenges, including rising debt (119% of federal debt to GDP and 143% of private debt to GDP), fiscal deficits (5.6% of fiscal deficits to GDP), and persistent income inequality.
• Tariffs will not solve these underlying issues.
• American people should fight for more inclusive income distribution systems, increased income tax and wealth tax, and improved welfare.

7. ASEAN-EU Comprehensive Economic Partnership Agreement (CEPA):

• ASEAN and the EU initiated CEPA negotiations in 2007, but progress stalled, leading to postponement in 2009.
• Diversifying trade and investment partners is crucial, making the conclusion of the ASEAN-EU CEPA more urgent.
• Three key issues need to be addressed at the ministerial and leaders level:
  • Market Access: Technical standards implemented by the EU are too high for ASEAN products; ASEAN needs time to adjust.
  • Labor Mobility: EU faces declining and aging populations, while ASEAN has a growing labor force; facilitating labor mobility could benefit both regions.
  • Sustainability: Addressing concerns related to palm oil exports from Indonesia and Malaysia; learning from the Indonesia-EFTA agreement on certification processes.

8. Notable Quotes:

• "ASEAN always tried to strike a balance between these two major countries."
• "We are really providing jobs for millions of us in the services sectors."
• "What we do not agree is Trump's destructive tariff policy."

9. Synthesis/Conclusion:

ASEAN is navigating the US-China trade war by maintaining neutrality, diversifying partnerships, and advocating for multilateral trading systems. The region emphasizes the importance of considering trade in services and addressing underlying US economic issues beyond tariffs. Concluding the ASEAN-EU CEPA is a priority, requiring political decisions to address market access, labor mobility, and sustainability concerns. ASEAN's long-term partnerships with the US have contributed to the growth of America.