International trade has been an engine of growth for many Asian countries, enabling them to create jobs and raise living standards faster than other countries that were not yet ready to take advantage of surging trade opportunities.

In pragmatic Asia, a nation’s standing is judged not only in terms of military power and diplomatic skill but also how it shapes up as a source of trade, investment and technology. By this yardstick, how does the United States measure up against in particular Asia’s rising giant, China?

Unfortunately the Obama administration has been hobbled in one key area where it should be showing leadership: trade policy. Beset by critics in Congress and the trade unions who claim trade agreements cause job losses and weaken the economy, the US is reviewing policy. The pace has been glacial.

As Mr Michael Green, a former National Security Council official in the Bush administration, wrote recently: “The complete lack of a trade strategy leaves the United States without any tools to counter the growth of exclusive regional economic arrangements within Asia.”

At the end of 2008, just over 400 bilateral and regional trade agreements had been notified to the World Trade Organisation.  Another 400 or so are scheduled to be notified by the end of 2010.  Of the total, 326 are in the Asia-Pacific area.

By far the biggest, the China-Asean Free Trade Area (Cafta) will take full effect in January 2010. With a combined GDP of US$6 trillion and a merchandise trade volume of US$4.5 trillion, Cafta will be the world’s third largest traing bloc after the European Union and Nafta (the North American Free Trade Area linking US, Canada and Mexico).

China says that despite the global slowdown, Cafta trade in the first nine months of 2009 approached US$150 billion, while China/South-east Asia investment reached US$60 billion. Meanwhile, US trade with the region has fallen, its investments have slowed, and it has become a small-time player in determining the future trade architechture in the region.

The US is party to just 20 of the 800-plus trade agreements registered with the WTO. Fifteen are in force and three – including a deal with South Korea – are stuck in Congress.

In March, a group of leading US-based organisations and businesses wrote to Mr Obama and top US trade negotiator Ron Kirk urging them to re-energise America’s leadership role in trade by proceeding with talks on US membership in the Trans-Pacific Strategic Economic Partnership Agreement (TPP).

Strait Times – Michael Richardson – 9th November 2009

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