See More on Facebook

Analysis, Economics

Collateral Advantage: Opportunities for Asean nations in the trade war

Quinn Libson looks at how ASEAN countries could prosper despite the trade war between the US and China.


Written by

Updated: June 10, 2019

Optimism about a potential trade deal between the United States and China faded in late May when President Donald Trump accused Beijing of backtracking on agreements.

Trump followed up the accusation with a punitive tariff hike of more than double to 25% on Chinese goods worth $200 billion.

He also threatened to increase tariffs on the remaining $300 billion worth of goods China exports to the US annually.

Early in June, China responded by raising tariffs to 25% on many of the $60 billion worth US export products.

When the world’s two largest economies exchange blows on goods worth billions of dollars, it’s impossible for other markets to avoid collateral consequences.

Asean countries have not been spared the shocks of this trade dispute. But many are also hoping to leverage the dispute by replacing Chinese production sources in American supply chains.

Vietnam is one such country looking to cash in on the opportunities provided by the China-US slugfest.

According to Brad W. Setser, Senior Fellow with US-based think tank Council on Foreign Relations, Vietnam has emerged as one of this trade war’s big winners.

In the first five months of 2019, Vietnam clocked 28%  growth in terms of exports to the US. Setser attributes the increase entirely to the ongoing trade dispute.

The Vietnamese currency (dong) has, however, been under US Treasury scrutiny.

If Vietnam is found to be artificially devaluing the dong to heighten its market competitiveness and is labeled a “currency manipulator”, it could lead to tariffs on Vietnamese imports which would hit growth.

Cambodia is another country that appears to see opportunities in the challenges posed by the trade war. As with Vietnam, Cambodian exports to the US have grown exponentially.

According to the Census Bureau of the US Department of Commerce, Cambodia’s exports to the United States for the first three months of this year were up 24% compared to the same period in 2018.

There is some concern, though, that Cambodian exports to the US could take a hit if any preferential trade arrangements come under review.

For, US lawmakers are reportedly closely following the review process for the European Union’s Everything But Arms (EBA) trade deal with Cambodia.

The EU began a formal EBA withdrawal procedure mid-February citing “serious human rights violations and a backsliding of democracy” in the Kingdom.

Thailand is another country which experts have cited as a replacement source for goods the United States would otherwise import from China.

The Council on Foreign Relations highlights the potential for Thailand’s broadcasting equipment and office machine-parts industries to fill the gap if the United States is buying less from China.

While Thailand’s Commerce Ministry has said it is setting its sights on replacing Chinese goods in the US market, at the moment that seems a far cry. The country’s overall exports are, in fact, declining thanks in large part due to a contraction of exports to China.

In the first four months of 2019, Thai exports to China have fallen by 8.1% compared to 2018. The decrease has led to a Thai trade deficit of $1.45 billion.

Many of these goods — automotive parts, computers and electronics — are still wrapped up in the supply chains that have been interrupted by the hike in tariffs by the US and China.

Thailand  knows shifting these supply chains will be a costly and slow process. But once new supply chains are created they won’t be easily upended.

If Thailand, Vietnam and Cambodia can stay ahead of the twists and turns of the trade war and fill the gaps in the US market where Chinese exports have died up, the collateral advantage, as it were, of the trade war would last long after it’s over.

 



Enjoyed this story? Share it.


Quinn Libson
About the Author: Quinn Libson is an Associate Editor at Asia News Network

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Analysis, Economics

S. Korea grapples with gender discrimination in workplace

Despite it’s high economic developments, critics say that South Korea has to improve workplace equality. South Korea has seen its female employment index improve steadily over the past 10 years, but continues to struggle with gender equality when it comes to parental leave and consequent career breaks, data showed Monday. Unlike in most developed economies which tend to see the employment rate of women in their 40s peak and start declining in the 50s, Korea has seen women in their late 30s and early 40s — the prime age for childbirth and childcare — being pushed out of the labor market. All seven of the so-called 30-50 club count


By The Korea Herald
October 22, 2019

Analysis, Economics

New Delhi slams Islamabad for unilaterally stopping postal services

Prasad further said that Pakistan ‘without any prior notice or information has stopped sending postal department’s letter to India’. Union Minister Ravi Shankar Prasad on Monday said that Pakistan had stopped postal service from India for the last two months and slammed the move saying that it was in contravention of international norms. “For the last two months, Pakistan has stopped postal service from India. It’s directly in contravention of the World Postal Union’s norms,” Prasad told reporters. “But Pakistan is Pakistan,” Prasad, who is the Minister for Communications and IT, added. He said that Pakistan “without any prior notice or information has stopped sending postal department’s letter to India”. Pakistan has upped the ante against India ever since Parliament withdrew special category status to Jammu and Kashmir by revoking Article 370 of its Constitution.


By Dawn
October 22, 2019

Analysis, Economics

Hong Kong march spirals into chaos, again

Violence begets violence as more protests hits Hong Kong on the weekend. An illegal protest rally through Hong Kong’s Tsim Sha Tsui spiraled into chaos on Sunday, as protesters began to engage in acts of vandalism and arson even as the police warned of a response. Signs of trouble began to emerge towards the end of the march near the West Kowloon terminus in a now familiar pattern. Protesters were seen spraying over the MTR logo with black paint, building barricades and digging up bricks from the ground. At Tsim Sha Tsui Police Station, demonstrators tossed multiple rounds of Molotov cocktails at the station and police responded with multiple volleys of tear gas from the upper floors of the building while warning protesters over a loudspeaker to stop. Two hoses were constantly spraying water to douse the flames. A similar scene played out at the Mong Kok police station, prompting officers insid


By Asia News Network
October 21, 2019

Analysis, Economics

More changes friendly to foreign investors on way in China

China is courting more FDI as their cash reserves run lower. China will roll out more measures friendly to foreign investors, including further removing business restrictions and leveling the playing field for foreign businesses, to foster a more enabling business environment and attract overseas investment. The decision was made on Wednesday at a State Council executive meeting chaired by Premier Li Keqiang. Meeting participants decided to open up more areas. Restrictive measures outside the national and FTZ negative lists on foreign investors’ market access will be consolidated. Restrictions will be lifted on the business scope for those foreign-invested banks, securities companies and fund management firms that are already operating in China. Policies on foreign investment in the automobile industry will be refined, including giving equal treatment in market access to domestic and foreig


By China Daily
October 18, 2019

Analysis, Economics

Malaysia’s PM Mahathir says rail line RTS linking Johor Baru to Singapore to proceed

The rail line has been on again and off again. Prime Minister Mahathir Mohamad on Thursday (Oct 17) said Malaysia will proceed with the 4km Johor Baru to Singapore rail line. His comments about the Rapid Transit System (RTS) rail link followed that of Malaysian Transport Minister Anthony Loke on Tuesday that details of the project will be decided by the Malaysian Cabinet within two weeks. Tun Dr Mahathir said when asked by reporters on Thursday: “We will proceed with the RTS but we will take some time.” Asked if this meant the Malaysian government had resolved 


By The Straits Times
October 18, 2019

Analysis, Economics

BOK slashes key rate to record-low 1.25%

The government hopes to stimulate a stagnating economy. South Korea’s central bank on Wednesday cut the country’s key interest rate to 1.25 percent, reflecting the sluggish economic growth, low inflation and declining exports. Its second rate cut in three months — to the lowest ever level — is in line with the global trend toward monetary easing. “We have cut the base rate considering the lower-than-expected growth outlook and low inflation,” said Bank of Korea Gov. Lee Ju-yeol in a press conference.The BOK’s rate-setting Monetary Policy Board decided to lower the base rate by 25 basis points from 1.5 percent that it had set three months ago. The move paralleled the US Fed Reserve’s decision last month to lower its key interest rate to the 1.75-2 percent range, down 25 basis points from the previous 2-2.25 percent range. The BOK board cited contractions in trade, sl


By The Korea Herald
October 17, 2019