america needs a business pivot toward asia
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America Needs a Business Pivot Toward Asia
Publication — The Wall Street Journal
Author — Curtis S. Chin
Date — August 8, 2012
Website — http://online.wsj.com
Much has been made of the Obama administration’s policy “pivot” to Asia, increasing
diplomatic outreach, and rebalancing and repositioning of military assets in the Asia-Pacificregion. Missing from this shift is a “business pivot”— a more concerted effort to increasetrade and investment between America and its allies in the region. This would be goodstrategy, and good economics too.
So far, Washington appears to be thinking of Southeast Asia — and particularly the problem of growing Chinese assertiveness in the South China Sea — primarily in military terms. In June,U.S. Secretary of Defense Leon Panetta announced plans to base 60% of U.S. naval forces inthe Asia-Pacific region by 2020.
Yet adding a pro-growth, pro-business component to U.S. strategy could help Asian countries become stronger, more confident partners. Commercial ties also can help cement friendships.Beijing understands this, which is one reason Chinese companies have been investing heavily
in the region.
This would not mean starting from scratch: A significant U.S.-Asia economic and tradefoundation exists that can be built on. In Southeast Asia, for example, U.S. exports exceeded$76 billion in 2011. American companies also have invested twice as much in the region asthey have in China.
To cite one example, Ford is investing $450 million in a new Thai plant that will employ2,200. Ford is the second-largest automotive investor in Thailand after Toyota, having
pumped in $2.5 billion over the years. Its success in Asia is to the benefit of the UnitedStates.
But whereas the Chinese are now actively encouraging greater overseas investment to catchup, Washington has lost focus. America needs more than the occasional trade mission.
The first step in a business pivot needs to be an explicit recommitment to free trade broadlyand to free trade agreements (FTAs) specifically. For the past three years, too little has beendone to advance a free-trade agenda beyond ratifying — after long delays — agreementsinitiated by prior U.S. administrations.
In the Asia-Pacific region, the U.S. has free trade agreements with only Australia, Singaporeand South Korea. Negotiations continue toward a regional Trans-Pacific Partnership (TPP)
multilateral trade agreement. Yet the U.S. commitment to this agreement, while welcome,again predates the present administration.
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New initiatives are warranted. Washington could set a firm deadline for concluding TPPtalks. Recently the focus seems to be more on expanding the number of participants — Canadaand Mexico recently joined, and Japan might — than on concluding negotiations. While
businesses would benefit from a deal covering as many countries as possible, the number of countries is irrelevant if expanding participation means there’s no deal at all.
Washington also should look for opportunities to improve trade on a day-to-day basis.Logistics and transport are obvious cases. A low-profile but important move would be to
boost negotiations on open skies agreements in Asia. Such deals allow airlines, includingfreight carriers, greater freedom to set routes and schedules between signatory countries.
As of late 2010, the U.S. had more than 100 open skies partners. Conspicuously missing fromthe list, however, are several Asian nations. The Philippines and Vietnam each could providefuture opportunities for partnership agreements if governments on both sides understand the
benefits of greater cooperation and competition, and of encouraging the building of businesses across borders.
Finally, a business pivot should consist not just of actions but also of words. It means ceasingto demonize companies that trade and invest overseas.
It’s difficult to excite business leaders about the prospect of additional trade with Asia if they
have to worry about becoming political whipping boys. Partly this would be a matter of politicians exercising some restraint, but partly also a matter of putting some leaders inWashington who understand the strategic and economic importance of trade with andinvestment in Asia and are willing to help businesses make that case at home and push for expanded opportunities abroad.
Unfortunately, there’s hardly anyone in Washington right now making the case that
protectionism hurts both the U.S. economy and American interests abroad. And no one is positioned to communicate with the business community on how best to expand commercialties in Asia.
A central benefit of peace and stability in Southeast Asia — which is a goal of the U.S.administration’s strategic pivot— would be to open the way for greater commercialopportunities on both sides of the Pacific. It’s time for Washington to understand that trade
and economic ties can be part of the means to a strategic solution in the region, and not justthe ends.
Mr. Chin, a senior fellow and executive-in-residence at the Asian Institute of Technology, is a
managing director with RiverPeak Group. He served as U.S. ambassador to the Asian
Development Bank from 2007 to 2010.