Asia uneasy over Obama's tough stance on trade

http://www.businesstimes.com.sg/sub/...04464,00.html?

Published November 6, 2008

US PRESIDENTIAL ELECTION

Asia uneasy over Obama's tough stance on trade

But some analysts say he'd likely adopt a moderate line like previous US presidents


(BEIJING) Asian business people and analysts expressed hope yesterday that US president-elect Barack Obama will tackle the financial crisis with fresh vigour but anxiety over whether Washington will embrace more protectionist trade measures.

'The financial crisis has a great impact on the world. If Obama can reverse the tide, then certainly it's good,' said Liao Yi, deputy general manager of CHiNT Electronics Group, one of China's biggest producers of power-transmission equipment.

Japanese investors are hopeful that Democrat Obama's win, as well as his party's bigger majorities in the US Congress, will help speed along further measures to lift the US out of its economic woes, said Toshikazu Horiuchi, equity strategist at Cosmo Securities in Tokyo.

'There are expectations now for prompt economic stimulus measures,' he said.

Still, Kazuo Mizuno, chief economist at Mitsubishi UFJ Securities Co in Tokyo, cautioned that a new president could not deliver a quick fix for the US financial meltdown, which is dragging on global growth. He said the United States will likely need foreign financing - from Japan, China and the Middle East - to pay for bailouts of financial firms saddled with bad debts and other measures.

'Changing the president is not going to be enough to save the American economy,' Mr Mizuno said. 'Even the president is not going to be able to change America without help from the world.'

Many expressed unease about Mr Obama's pledges to vigorously enforce trade laws and criticism of a pending trade pact with South Korea that he says fails to address an imbalance in car shipments. The Democrats, traditionally viewed as more protectionist on trade than Republicans, now control the presidency and Congress.

Asia's leaders, led by an ascendant China, say they hope Mr Obama didn't really mean those campaign promises to protect American trade. And if he did, they are in better shape to object than ever before.

To Asian ears, Mr Obama's calls for tougher labour and environmental rules and steps to reduce the US trade deficit sound like thinly veiled protectionism, just as a global financial crisis makes exports more crucial than ever.

'The immediate concern with Obama will be economic relations,' said Wu Xinbo, deputy director of the Center for American Studies at Fudan University in Shanghai. 'The US will be less forthcoming in pursuing economic liberalisation in the Asia region' because of concerns about jobs lost to trade.

Mr Obama has said he is in favour of free trade agreements if they benefit the United States. He also has said he would pressure China to end what he calls the manipulation of its exchange-rate system. Washington and other trading partners say Beijing's currency, the yuan, is kept undervalued, giving its exporters an unfair price advantage and adding to China's multibillion-dollar trade surplus.

Other analysts said that despite Mr Obama's pre-election comments, he was likely to follow the example of previous US presidents and take a moderate line in office to preserve important trade relations with Asia.

'I'm not worried about what might happen after Obama's win,' said Qiang Yongchang, a professor at the Economy Institute at Shanghai's Fudan University. 'He may have talked tough, but based on past experience, that's just a tool to win over voters. Every candidate does that.'

Chinese expect that the change Mr Obama speaks of might involve some shift of policy on financial markets, and that would not necessarily hurt trade, Mr Qiang said.

'I think Mr Obama will soon find out how important China's economy is, not just for the US but for all the world,' Mr Qiang said. 'Obama will need us, as the US needs China.' - AP, Bloomberg

http://www.businesstimes.com.sg/sub/...04461,00.html?

Published November 6, 2008

US PRESIDENTIAL ELECTION

Local businesses greet Obama with caution

Some are worried that a Democrat implies a shift to protectionism

By CHEN HUIFEN


(SINGAPORE) Barrack Obama's presidential win came as no surprise to the Singapore business community, which is largely positive on the change in US leadership but waits to see how the new man will manage the many challenges that await him.

Some are also concerned that having a Democrat president could imply a shift toward protectionism, as a great amount of attention is expected to be paid in fixing its domestic economy.

'Whilst we expect President-elect Obama to focus on fixing the immediate domestic challenges that are weighing heavily on the American people and businesses, we would like to remain optimistic that his administration will reaffirm the US's strong commitment to global trade,' said Singapore Business Federation CEO Teng Theng Dar.

Local businesses are keeping their eyes on how foreign trade policies could pan out. To a certain degree, the Democrats are opposed to free trade deals and have spoken about revisiting the North America Free Trade Agreement.

'I think we may see more insularism on the part of the US than under the Republican administration,' said Singapore International Chamber of Commerce chief executive Philip Overmyer. 'As far as international trade and free trade agreements, the expansion of American companies' business outside of US go, I think we will see that it will be harder for them to do these.'

But Predeep Menon, executive director of the Singapore Indian Chamber of Commerce and Industry said that Mr Obama may be playing to the gallery by blaming free trade deals as the root of America's problems. Now that the campaign is over, he is hopeful that the new US president would not reverse the trend towards freer trade.

'It's also in US' own interest to do so because you may be importing a lot from the outside world, but American MNCs are also going overseas and making a lot of money,' he added. 'So I don't think it's as clear as shutting plants and stopping imports. The sense is that they need to keep channels open. However I think he will definitely want to try and force the emerging economies like China and India to open up faster to make it seem fairer for American companies.'

Echoing similar views, Bain & Co director Charles Ormiston said: 'I do not anticipate that Obama will undertake overt protectionist measures, but I do believe he will be tested hard by key constituencies which helped to get him elected. I think his primary challenges will be domestic: health care, creating a bottom to the housing price drop, re-building and re-regulating the banking system, developing an energy and infrastructure policy and trying to reduce the large deficits (government and trade). This is an extremely full plate.'

A few are of the view that a childhood study stint in Indonesia would make Mr Obama friendlier to this part of the world. The Singapore Chinese Chamber of Commerce & Industry said it expects more attention given to Asean as a whole, 'given Obama's background'. Added EMC Corp Asia Pacific & Japan president Steve Leonard: 'While it is early to predict the impact of his presidency on international trade, people will be carefully watching whom he will appoint to key cabinet portfolios.'

That domestic issues are of utmost importance to the US now is a no-brainer. And local businessmen agree that if it can address them, Asia and Singapore will grow in tandem.

'It is clear now that there is no de-coupling of the US and global economies,' said KPMG managing partner Danny Teoh. 'So the faster he gets the US economy stabilised, the better it would be for Singapore and the world at large.'

The US is a key trading partner of Singapore, having signed a free trade agreement with the island in 2003. Between 2004 and 2006, bilateral trade grew 40 per cent to $90 billion.


'Your extraordinary journey to the White House will inspire people not only in your country but also around the world.'
- Manmohan Singh, Prime Minister of India


'The Chinese Government and I myself have always attached great importance to China-US relations. In the new historic era, I look forward to working together with you to continuously strengthen dialogue and exchanges between our two countries.'
- Hu Jintao, President of China