The View From Asia

Asia winces as trade war threat escalates

Asia News Network commentators discuss protectionist measures and the solutions as they brace themselves for the fallout from a possible US-China trade war. Here are excerpts:

Will Chinese steel flood Indonesia?

Editorial
The Jakarta Post, Indonesia

Indonesia will unlikely feel any immediate direct impact from the threatened trade war between the United States and China caused by US President Donald Trump unilaterally slapping punitively high tariffs on steel and aluminium imports from China, which could effectively block an estimated US$60 billion (S$79 billion) worth of Chinese products from entering the American market.

But the risk of an escalated and prolonged trade war between the world's two largest economies, which happen to be Indonesia's first-and second-largest export destinations, deserves close monitoring as the dispute could affect the global economy and more Chinese goods might inundate the Indonesian market.

Indonesian steel producers have long complained about what they allege to be unfair competition from dumped steel from China and the government may have to postpone its plan to ease import restrictions on steel by shifting the Customs check from border to post-border checks.

Even now with import restrictions still in place, steel imports already account for about 55 to 60 per cent of our annual steel consumption of around 12 million tonnes, while the domestic steel industry operates only at 40 per cent of its capacity, according to the industry association.

Trade Ministry data shows Indonesia is now the world's third-biggest net importer of steel and the steel trade deficit last year exceeded US$6 billion, the second largest after the oil and gas trade deficits.

A steel plant in China's eastern Shandong province. Before resorting to punitive tariffs on Chinese steel and aluminium, the Trump administration should have first taken its case to the World Trade Organisation, which is tasked with policing the over
A steel plant in China's eastern Shandong province. Before resorting to punitive tariffs on Chinese steel and aluminium, the Trump administration should have first taken its case to the World Trade Organisation, which is tasked with policing the overall system and punishing cheaters, says The Jakarta Post in an editorial. PHOTO: AGENCE FRANCE-PRESSE

Before resorting to punitive tariffs, the Trump administration should have first taken its case to the World Trade Organisation (WTO), which is tasked with policing the overall system and punishing cheaters.

Instead of retaliating against the imposition of the American import tariffs, China needs to look into the allegations that its companies flooded the US market with metal goods sold at artificially low prices. China also should look into ways of reducing its trade surplus with the US, which was reported to be over US$375 billion last year.


New trade strategy key for Japan

Editorial
The Yomiuri Shimbun, Japan

If concern grows over a trade war between the world's top two economic powers - the United States and China - it will have a serious impact on the world economy.

The US should re-examine its unilateral protectionist policy, while China and other US trade partners should deal with the situation with cool heads and based on international rules.

The Nikkei Stock Average temporarily plunged by more than 1,000 points on concern about stagnation of world trade, among other things.

After the adoption of protectionist policies by the US government, other countries also need to think about the policy of free trade. Free trade cannot be one-sided. We have to espouse our trade policy based on trends in other countries.

Japan is not included in the current list of countries that are exempted from US steel import restrictions. There is no alternative but to persistently call for the US side to add Japan to the list.

The relationship of mutual trust between Prime Minister Shinzo Abe and US President Donald Trump is the basis for the two countries to deal with foreign policy and security issues. But when it comes to trade policy, Mr Trump has taken a serious view of trade deficits with Japan and adopted an obstinate stance, so special consideration to Japan cannot be expected from him.

Keeping this reality in mind, Japan is called on to rebuild its trade strategy.

To begin with, it is urgent to have the Trans-Pacific Partnership (TPP) free trade agreement among 11 countries, excluding the US, take effect. This would provide a foundation for the US to return to the free trade framework. Tokyo must study concrete plans to enter bilateral free trade negotiations with Washington based on the TPP agreement.


S. Korea should diversify markets

Editorial
The Korea Herald, South Korea

A US-China trade war is brewing.If the Group of Two's fight for economic hegemony rages, South Korea cannot but bear the brunt of it. China and the US are South Korea's two largest trading partners, with China accounting for 25 per cent of its exports and the US, 12 per cent.

If the nation's exports shrink as the two superpowers bump into each other, its export-driven economy will be severely hit. Trade accounted for 68.8 per cent of South Korea's gross domestic product last year.

Furthermore, the share of intermediary goods in the nation's exports to China is as high as 79 per cent. China processes them into finished products to export to the US. If the US restricts imports from China, the nation's exports of intermediary goods to China will inevitably suffer heavy damage.

The problem is that Washington and Beijing are pressing their trading partners to take their side.

If it takes one side rashly, South Korea will face harsh consequences, such as US tariffs and China's economic retaliations as it did for hosting a US Terminal High Altitude Area Defence anti-missile system. When the two giants clash, South Korea will inevitably be caught in the crossfire. In the long term, efforts should be accelerated to diversify export markets.


Free trade good in theory

Ashwani Mahajan
The Statesman, India

A point of major concern is that because of offensive trade by China in the last more than 15 years, markets all over the world are overshadowed by Chinese products.

In India, it is an open secret that due to mass-scale dumping of Chinese products into India, most non-ancillary industries closed down. India's electronics and telecoms industry could not really take off; and established machinery, chemical and consumer goods industries were badly hit.

Despite this, no effort was made to safeguard industry from the Chinese onslaught by imposing tariffs or even anti-dumping duties. One reason for the lack of action from policymakers was their fear of action from the World Trade Organisation if China filed complaints in the dispute settlement panel there.

Another major reason for inaction was the overwhelming fervour of policymakers and mainstream economists in India for the doctrine of free trade.

However, in the recent past, voices against free trade have become more pronounced in view of the adverse effects of globalisation on various economies.

After the adoption of protectionist policies by the US government, other countries also need to think about the policy of free trade. Free trade cannot be one-sided. We have to espouse our trade policy based on trends in other countries.

Ultimately, while free trade is good in theory, its success depends on the honesty with which different countries practise it.


EU has role to play

Fu Jing
China Daily, China

The European Union knows full well that global governance has suffered a setback because of the anti-globalisation and protectionist decisions made by the Trump administration.

The EU has not been directly targeted by the US. In fact, the European bloc has been seeking "permanent exemption" from such US actions, and Washington might accommodate the request, probably because the two sides are security allies.

But being one of the champions of multilateral and free trade, the EU also has a global responsibility. Besides, the EU has a high stake in what appears to be the beginning of a global trade war because of the close inter-dependency of economies in today's world. The EU should organise a global debate on the possible impact and consequences of US trade policies.

If China takes retaliatory action against the US, many experts say, China might increase its trade with the EU in order to maintain its trade balance. But those would be short-term measures and cannot control the storm generated by a Sino-US trade conflict, which would create lasting uncertainties and fluctuations in the global market and dent market confidence. Beijing and Brussels have already set a good example, by solving their solar panel trade dispute through consultations.

Now they can also work together to drive sense into the Trump administration, and make Mr Donald Trump realise that the threat to destabilise global trade is not the right card to play to make the US "great again".


 • The View From Asia is a compilation of articles from The Straits Times' media partner, Asia News Network, a grouping of 23 news media.

A version of this article appeared in the print edition of The Straits Times on March 31, 2018, with the headline 'Asia winces as trade war threat escalates'. Print Edition | Subscribe