Trump signed an order that he promises will stop ‘foreign importers that cheat.’

Under the executive order, countries with large trade imbalances with the United States will be closely scrutinised for a 90 day period while the administration holds talks with manufacturers, service providers, farmers and consumers to identify ongoing problems.

Among the Asian countries singled out by Trump as the largest abusers of free trade were China, Japan, Thailand, Korea, Malaysia, India, Taiwan and Indonesia. “They’re cheaters! From now on, those who break the rules will face the consequences and they’ll be very severe consequences,” the president said.

Trump was due to meet the President of China, Xi Jinping, at his Florida estate. Long singled out as a country that has taken the most advantage of trade loopholes, Trump’s trade agenda will likely be a major talking point.

Uncertainty in Asia

But for the rest of Asia, Trump’s trade order has officials baffled and unsure of what steps to take. Some have chosen to ignore the executive order altogether while others have blasted the move and said it would affect US companies operating in Asia.

US President Donald Trump’s executive order on what he describes as trade ‘cheaters’ has many countries in Asia scratching their heads and questioning US policy in the region

In Indonesia, Coordinating Economic Minister Darmin Nasution said that the country had nothing to worry about regarding the order because it exported commodities and manufactured goods to the US that did not compete with those produced in that country.

“What we produce are not goods that compete with theirs, not like those from China. [The US] might think that the things they import are goods that beat out their own products, but the products from Indonesia are not the same as they make,” he said.

Malaysian International Trade and Industry Minister Ong Ka Chuan said that his country was neither responsible for nor taking advantage of the United States’ trade deficit.

“Perhaps US president Donald Trump does not know there is a huge presence of American manufacturers in Malaysia such as Intel and Western Digital due to the low production cost here,” he said. Ong added that American firms based here would be affected if the administration led by US president Donald Trump were to punish Malaysia for its low production costs,

“If Trump were to punish us for this, the American firms will be the ones dealt a severe blow,” he said.

Meanwhile senior officials from Thailand and the United States held a meeting in Bangkok last Monday to discuss the executive order according to Commerce Minister Apiradi Tantraporn.

Apiradi said that problems between Thailand and the United States could be thrashed out in ongoing negotiations on a trade and investment partnership known as the Trade and Investment Framework Agreement.

But exporters in Thailand continued to express their concern that protectionism by the United States could threaten their business.

“What concerned me the most is that the image of Thai products in the US market could be tarnished in the eyes of consumers, should they be misled into believing that Thai traders cheat their counterparts,”said Nopporn Thepsitha, president of the Thai National Shippers’ Council.

Nopporn added that all businesses and trade groups should be prepared to review their policies regarding exports to the United States.

The way forward

Speaking at an Association of Southeast Asian Nations summit in the Philippines, Lord Desai, professor of the London School of Economics and Political Science, said President Trump’s protectionist policy may have shaken the world but eventually, he will need to work with economic players.

“Nobody can control an economy as large as America,” he said.

Danny Quah, professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, added that Asia believes in a world of full of win-win propositions. This narrative should be shared to President Trump.

“Trump thinks that America is losing because Asia is winning. We need to tell him of this win-win proposition,” said. ANN News Desk

Published in Dawn, Economic & Business, April 10th, 2017