Monday, July 4, 2011

U.S. Trade Policy in Asia Shuffles Forward While Others Pace Ahead

Last week there were many FTA-related developments in Asia, positive for ASEAN and Asia, but mixed for U.S. trade policy in the region.  On Friday the Korea-EU FTA (KOREU) took effect, with the EU accelerating ahead of the U.S. in Korea while the Korea-U.S. FTA (KORUS) remains in the legislative process in the U.S. Congress.  Also on Friday, the India-Malaysia Comprehensive Economic Cooperation Agreement took effect, adding broader coverage of industry sectors than the ASEAN-India Free Trade Agreement (AIFTA) covers, and including services, which AIFTA currently does not cover.   Finally, more details emerged on the proposed EU-Indonesia Economic Partnership Agreement talks to begin in November, joining the existing EU FTA talks with ASEAN members Singapore and Malaysia.

Meanwhile the U.S. continued to struggle to pass already-negotiated FTAs with Korea, Colombia and Panama.  While the Obama Administration announced a compromise to move the FTAs as a package with trade-related labor assistance legislation, opposition Republican legislators voiced objections to the compromise. Earlier, when Republicans proposed giving President Obama expanded “trade promotion authority” to negotiate FTAs and other trade agreements as part of the FTA-trade assistance package, the Obama Administration and Democrats rejected this as complicating the compromise.  When compared to FTA developments in the Asia, U.S. trade policy appears rather chaotic at the moment.

With one bright, perhaps Quixotic, perhaps inspirational, exception.  U.S. Senator Richard Lugar, one of ASEAN’s greatest supporters, re-introduced legislation encouraging the negotiation of a U.S.-ASEAN FTA.  Putting aside the problems noted earlier in the U.S. Congress, particularly the lack of trade promotion authority, and assuming that a way can be found to deal with Myanmar/Burma, this proposal recognizes that the U.S. needs to encourage economic ties with ASEAN.  It recognizes that the Trans Pacific Partnership (which includes ASEAN members Singapore, Brunei, Malaysia and Vietnam) is a positive development, but is not a substitute for a U.S.-ASEAN FTA. 

The legislation is not binding and not likely to be passed anytime soon, but Senator Lugar has made far-sighted proposals before.   After all, the Senator first proposed the appointment of a U.S. ambassador to ASEAN before there was an ASEAN Charter that allowed ASEAN to accept her or his appointment.  The proposal thus helps remind U.S. policymakers to maintain focus on ASEAN, even if other trade issues of the day may occupy their immediate attention.  Otherwise competitors like the EU will continue to steal a march in the region.