ASEAN+6: Free Trade Across Asia
NEW YORK, October 23, 2012 — In the fourth and final installment of the HSBC series Changing the Game: Asia’s Emerging Markets, Asia Society hosted a panel discussion focused on the purpose and potential repercussions of the recent ASEAN+6 agreement which effectively creates the biggest free-trade market in the world.
Speakers included Clyde Prestowitz, Founder and President of the Economic Strategy Institute; Marc Mealy, Vice President-Policy of the U.S.-ASEAN Business Council; and Murray Hiebert, Deputy Director and Senior Fellow of the Chair for Southeast Asia Studies at the Center for Strategic and International Studies.
Formed on August 8, 1967, ASEAN is a geo-political and economic organization of ten Southeast Asian countries. ASEAN+6 includes the leaders of ASEAN as well as six other nations (China, India, Japan, South Korea, Australia, and New Zealand), who just three days ago announced that the Region Comprehensive Economic Partnership (RCEP) will be officially established at the ASEAN Leaders Summit in Cambodia from November 15-20.
According to Hiebert, the worry in the U.S. business community is that the RCEP will "leave America behind." The discussion explored the consequences of the possible realization of this worry, differentiating between the hypothetical impact on America versus American companies. American companies already stationed in China (like Apple) will benefit greatly from the ASEAN+6. However, America itself is a different story, playing a "completely different economic game" than China.
China is steering economic change in Asia, artificially lowering its currency in an "un-American" attempt to increase domestic growth, while moving low-cost manufacturing offshore to southeast Asia in an attempt to balance its budget. Prestowitz seemed to think that both of these goals are unrealistic, citing the examples of Germany, Japan, and Korea, all of which have been and continue to be export-led countries despite having sought balanced budgets.
Hiebert distinguished Asia's current situation from those of Germany, Japan, and Korea, stating that Asian exports don't have a place to go due to weak Western economies whereas, German, Japanese, and Korean exports do. Maybe China's plans to increase domestic growth and balance its budget are not so unrealistic, after all. We should hope that they're not, since growth in China almost certainly influences growth across Asia.
Reported by Renny Grinshpan
Video: Highlights from the program (4 min., 5 sec.)