Experts: Asian Trade Deals Mean Success for US, but China Truce Could Be Fragile
Asia Society think tank experts, in an analysis of President Donald Trump's visit in Malaysia, Japan and Korea, called the trip very successful.
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Asia Society Policy Institute Vice President Wendy Cutler said during an Oct. 31 webinar that negotiators at the Office of the U.S. Trade Representative, where she spent much of her career, pushed Malaysia and Cambodia to accept a lot of its terms.
"Frankly, when I read the Malaysia agreement I was pretty shocked that Malaysia could agree," she said, not just to harmonize export controls, but on the treatment of Chinese companies in Malaysia.
The agreement said:
Malaysia shall adopt and implement measures, in accordance with its domestic laws and regulations, to address unfair practices of companies owned or controlled by third countries operating in Malaysia’s jurisdiction that result in ─
(a) the export of below-market price goods to the United States;
(b) increased exports of such goods to the United States;
(c) a reduction in U.S. exports to Malaysia; or
(d) a reduction in U.S. exports to third-country markets.
Cutler asked, "How does China respond to these provisions? Does that invite China’s wrath?"
Shay Wester, director of Asian Economic Affairs at ASPI, agreed. He said it was really interesting how broad the economic security terms were in the Malaysian and Cambodian agreement.
The panel also talked about the China deal, which Cutler called a de-escalation pact. She said observers are already asking if there will be flareups during the next year. "My personal view is: there will be flare-ups."
Similarly, Sidley Austin trade co-lead Ted Murphy wrote in a note to clients: "These types of agreements tend to last only until one side thinks it is no longer in its interest to honor the agreement (i.e., the agreement is not cast in stone and the commitments made here could change at any time). Companies should act accordingly."
Still, Cutler said, given the plans for trips to China and the U.S. by each country's president next year, "In 2026, I think there’s going to be a huge incentive on the part of both countries to keep this truce [or] détente intact."
She said if Trump were to threaten higher tariffs on China again, China would say its critical minerals export licensing would begin. "I think this will tie the president’s hands," she said.
The group also talked about the Korean deal, which came together at the last minute. Cutler said she thought the Koreans had to reach an agreement while Trump was in town, so they got the best deal they could.
"The major sticking point was this $350 billion investment fund," she said. "It appears that he did get better terms, but I’m not sure this part of the deal is really out of the woods. Because it is very controversial. At the end of the day, the United States will be making decisions on how the money from Korea will be spent in the United States."
She said the National Assembly will have to approve the deal.
"There still is a bitterness [in Korea] about the FTA commitments being set aside," she said.