US-China trade spat looms over regional WEF meeting

The mounting dispute looms over a regional World Economic Forum, where leaders from the Asean and business executives are meeting, that kicks off in Hanoi, Vietnam, on Sept 12, 2018.
The mounting dispute looms over a regional World Economic Forum, where leaders from the Asean and business executives are meeting, that kicks off in Hanoi, Vietnam, on Sept 12, 2018.PHOTO: EPA-EFE

HANOI (AFP) - Threats by United States President Donald Trump to slap more punishing tariffs on Chinese goods are set to dominate a meeting of Asian business bigwigs and leaders that opens on Wednesday (Sept 12) in Hanoi.

The escalating trade spat between Washington and Beijing has caused global ripples - and is being closely watched in South-east Asia where many export-focused economies are set to gain from the fallout.

Mr Trump has already imposed 25 per cent customs duties on US$50 billion (S$68 billion) worth of Chinese goods - triggering a tit-for-tat response from Beijing - and vowed last week to increase tariffs to hit US$200 billion in Chinese imports "very soon".

The mounting dispute looms over a regional World Economic Forum (WEF) kicking off in the Vietnamese capital on Wednesday morning, where leaders from the Association of South-east Asian Nations (Asean) and business executives are meeting.

"Asean countries don't want to count their chickens before they hatch, but I think they see it on a net basis as a gain for them because it means shifting manufacturing into South-east Asia that was... (earlier) in China," Mr Fred Burke, managing partner at Baker McKenzie in Vietnam, told AFP.

Rising labour costs in the world's second largest economy have already precipitated a push into countries like Vietnam and Cambodia where Adidas shoes, H&M T-shirts and Samsung phones are made on the cheap.

But the trade war has accelerated that process, with several Chinese firms turning to the region to produce items from bike parts to mattresses in a bid to avoid the new US tariffs.

 
 
 

PROTECTIONIST WOES

Although the spat is likely to boost foreign investment in South-east Asia, some analysts warned the long-term impact may be less rosy.

"There are concerns that protectionism is not good for Asia as a region because it's a very export-driven region, so any shift towards more trade barriers... is not good," Mr Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, told AFP.

Asean trade increased by a value of nearly US$1 trillion between 2007 and 2014, according to the WEF, as the bloc has enthusiastically embraced trade liberalisation - in contrast to the policies promoted by Mr Trump.

In one of his first post-election moves, the US President pulled out of the sprawling 12-nation Trans-Pacific Partnership (TPP), calling it a job killer.

The current edition of the WEF, which closes on Thursday, is officially themed "Entrepreneurship and the Fourth Industrial Revolution", with a focus on how economies should adapt to so-called "disruptive technologies" like automation and artificial intelligence that threaten to replace human jobs.

Several regional leaders are slated to attend the forum, including Singapore Prime Minister Lee Hsien Loong, Indonesian President Joko Widodo, Cambodia's newly re-elected Prime Minister Hun Sen and Myanmar's de facto leader Aung San Suu Kyi, who faces fresh global scrutiny over the Rohingya crisis.

She is scheduled to speak at the forum, though organisers have not said whether she will discuss last week's ruling by the International Criminal Court that allows its chief prosecutor to investigate the forced deportation of 700,000 Rohingya Muslims by Myanmar's military as a possible crime against humanity.

Myanmar has also faced international censure over the decision to jail two Reuters journalists for seven years for their coverage of a Muslim massacre, under a state secrets law.

South Korean and Japanese foreign ministers will also host a session touching on tensions with North Korea and regional security issues on Thursday.