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Asia Unbound

CFR experts give their take on the cutting-edge issues emerging in Asia today.

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Showing posts for "Trade"

Southeast Asia: What to Expect in 2012

by Joshua Kurlantzick
Women use sparklers to draw "2012" for photographers as they celebrate New Years Eve in Manila December 31, 2011.

Women use sparklers to draw "2012" for photographers as they celebrate New Years Eve in Manila December 31, 2011 (Romeo Ranoco/Courtesy Reuters).

The year 2011 saw some of the biggest political developments in Southeast Asia in decades. Burma finally seemed poised for real change, while Thailand continued to move closer to the brink of self-immolation, as political in-fighting worsened. The United States, China, and ASEAN nations continued to raise the stakes in the South China Sea, to a point where, now, it seems unlikely anyone can back off their claims and truly sit down at the table to negotiate some kind of agreement. Singapore had its most competitive election in generations, while in Malaysia massive street protests clearly have rattled the government. Even smaller states faced political turmoil: Papua New Guinea went for weeks with two prime ministers and the potential for civil strife, before the situation was resolved.

What, then, should we expect for an encore? Here are several trends to watch:

  1. China will bring back the charm. Over the past two years, Beijing has cost itself much of the gains it made in Southeast Asia in the late 1990s and early 2000s, when it appeared to be a good neighbor, trading partner, and investor. Through its belligerent approach to the South China Sea and, to some extent, the Mekong River, Beijing has scared many Southeast Asian nations enough that they have welcomed back a greater role for the United States in the region, even though their populations have not exactly become pro-American. Read more »

The KORUS-FTA Ratification Stalemate: Implications for Korea’s Election 2012

by Scott A. Snyder
Union workers from Korean Confederation of Trade Unions shout slogans during a demonstration in Seoul

Union workers from Korean Confederation of Trade Unions shout slogans during a demonstration in Seoul. Banners read: "Abolish the South Korea-U.S. FTA!" (red) and "Can't tolerate! Lee Myung-bak out!" (blue) November 13, 2011 (Jo Yong-hak/Courtesy Reuters).

South Korean president Lee Myung-bak showed admirable patience in the months he waited for the U.S. Congress to ratify the Korea-U.S. Free Trade Agreement and two other trade pacts on October 12. In the end, his visit to Washington was the action forcing event that broke the congressional stalemate. But the political ground in Seoul has shifted in recent months as represented by the outcome of October 26th Seoul mayoral bi-election, is posing new obstacles to Korean National Assembly ratification. In the first of a series of essays examining South Korean public opinion and implications for issues in U.S.-Korea relations, Kim Chi-wook analyzes the implications of this shift in South Korean public opinion from policies that emphasize growth to those that emphasize distribution.

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The United States in the New Asia … Revisited

by Evan A. Feigenbaum

For the next several days, President Obama is hosting leaders from around the Asia-Pacific region in Hawaii for the annual summit of the Asia-Pacific Economic Cooperation (APEC) forum. So this seemed like a good time to repost a Council on Foreign Relations special report on Asian regionalism that I co-wrote with my colleague, Bob Manning, in the run up to the 2009 meeting.

Our report, The United States in the New Asia, is two years old. But in my view, it’s still deeply relevant.

You can download the report here.

Some good things have happened since we wrote our paper in 2009. For one, the United States has joined the Trans-Pacific Partnership (TPP) negotiations, and that is a decidedly good thing. There isn’t likely to be a successful Doha Round nor is another global trade round likely anytime soon. So TPP can fill in some of the gaps between global trade liberalization and bilateral and regional agreements. The United States has also—finally—completed the Korea-U.S. Free Trade Agreement (KORUS).

And yet the larger questions Bob and I raised about the United States and Asian regionalism remain important and mostly unanswered.

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South Korea’s Mayoral Election: Setback for KORUS-FTA?

by Scott A. Snyder
Lawmakers from opposition parties and civic group members chant slogans during a rally opposing the U.S.-South Korea Free Trade agreement (FTA) talks at the National Assembly in Seoul October 12, 2011.

Lawmakers from opposition parties and civic group members chant slogans during a rally opposing the U.S.-South Korea Free Trade agreement (FTA) talks at the National Assembly in Seoul October 12, 2011. The front banner reads: "Oppose the handling without debate over the U.S.-South Korea FTA talks!" (Jo Yong-Hak/Courtesy Reuters).

South Korean president Lee Myung-bak’s visits to Washington, we have learned through hard experience, may not always have the same positive effects in South Korea that they have had in the United States. Lee’s first visit to Washington in the spring of 2008 resulted in a strong endorsement of the alliance, but it also resulted in a backlash over opening of the Korean beef market that resulted in weeks of public protests and gridlock in Seoul.

President Lee’s state visit to Washington two weeks ago catalyzed Congressional ratification of the Korea-U.S. Free Trade Agreement (KORUS-FTA), but it has coincided with a Seoul mayoral bi-election won by independent opposition candidate Park Won-soon over ruling party candidate Na Kyung-won in a campaign that has marked the unofficial opening of a year-long presidential election campaign. This has complicated calculations regarding how and whether South Korea’s National Assembly will be able to ratify the KORUS-FTA as the last step required for the agreement to go into effect.

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Asia’s Landlocked Spaces

by Evan A. Feigenbaum

A Kyrgyz customs officer talks on a radio in front of workers as they reload cargo from a Chinese truck to Kyrgyz one at the Irkeshtam border crossing in southern Kyrgyzstan. Courtesy Reuters/Vladimir Pirogov.

Chris Rickleton, a Bishkek-based journalist, has a fascinating piece up on EurasiaNet about prospective Chinese rail construction in Kyrgyzstan. The piece cuts directly to tough political choices—namely, the push and pull between Russian and Chinese interests in Central Asia and, more important, how politicians in landlocked countries, like Kyrgyzstan, must try to balance among the larger countries on whom their economies depend for transit.

I’ve written a lot on efforts to reconnect trade and transit routes across continental Asia. You can read some of what I’ve argued herehereherehere, and here.

But Rickleton’s piece got me thinking about two questions:

(1) Since the obstacles to continental trade and transit are so high, is the game really worth the candle?

This is especially relevant because Secretary of State Hillary Clinton is vigorously promoting a “New Silk Road” concept, drawing heavily on a decade of prior efforts and experiences.

(2) With so much focus on the interests of the outside powers—Russia, China, Iran, and the United States, among others—what about the interests of the landlocked countries themselves?

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“Paulson’s Principles” for the United States and China

by Evan A. Feigenbaum
U.S. Treasury Secretary Henry Paulson leaves after making closing statements after the 5th U.S.-China Strategic Economic Dialogue in Beijing, December 5, 2008. (Jason Lee/Courtesy Reuters)

U.S. Treasury Secretary Henry Paulson leaves after making closing statements after the 5th U.S.-China Strategic Economic Dialogue in Beijing, December 5, 2008. (Jason Lee/Courtesy Reuters)

With the glaring exception of Japan, Asian economies are recovering earlier and stronger from the crisis than nearly all others. And China has now cemented its place alongside the United States and Europe as a growth engine.

But China faces large—and intensifying—vulnerabilities.

Readers of Asia Unbound will know that I’ve talked here and written here about some of these challenges.

And so I thought I’d flag for interested readers a major speech delivered this morning in Washington by former Treasury Secretary Hank Paulson (full disclosure: my boss).

He has a deep history with the U.S. and Chinese economies—at Goldman Sachs, and then as the Treasury Secretary. As a banker, he worked on historic but thorny issues in China, like privatizations. And at the Treasury, he established the Strategic Economic Dialogue and played a central role in the creation of the Ten Year Energy and Environment Cooperation Framework.

The basic thrust of his speech is twofold:

First, both countries face growing economic challenges and vulnerabilities. And for its part, it is decidedly in the U.S. interest for China to get ahead of these challenges. As Paulson puts it, “China’s success at sustaining growth, fighting inflation, and transitioning from an economic model too dependent on exports and fixed asset investment is closely connected to our own success.”

Second, “the U.S. and China need to take steps—mostly individually, sometimes together—that will have the mutually beneficial effect of supporting and sustaining economic growth.”

That’s a striking formulation because it’s not focused on “cooperation” for its own sake. Rather, as Paulson argues, the U.S. and China “don’t always need to act jointly.” They can take separate and self-interested steps that, in the bargain, put their two economies onto a more complementary footing.

You can read the entire speech here, or watch it delivered here.

But for the central message, here are his five principles—let’s call them, ”Paulson’s Principles”—quoted verbatim from the speech:

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Can India “Go It Alone”?

by Evan A. Feigenbaum
India's BSF soldiers ride their camels in front of the Presidential Palace during the full-dress rehearsal for "Beating the Retreat" ceremony in New Delhi . (B. Mathur/ Courtesy Reuters)

India's BSF soldiers ride their camels in front of the Presidential Palace during the full-dress rehearsal for "Beating the Retreat" ceremony in New Delhi. (B. Mathur/Courtesy Reuters)

Liz’s post on India got me thinking about an article I published last year in Foreign Affairs on the fate of the U.S.-Indian partnership.

Liz bluntly titled her post, “India’s message to China and the United States: we’ll go it alone.” And that could mean two things:

(1)  India’s fate is in India’s hands, not yours, or

(2) We’ll stay non-aligned, thank you very much.

But the fact is, India has moved well beyond non-alignment. And Indian policy will increasingly intersect with Chinese and American policies in important ways.

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Anyone But Huawei

by Adam Segal

Headquarters of Huawei Technologies Co. Ltd. in Shenzhen, Guangdong province June 29, 2009. (Stringer Shanghai/Courtesy Reuters)

A new report about Huawei’s connections to the Chinese military and intelligence agencies will make it even more unlikely that the telecomm company will ever be approved for a major acquistition in the United States (it should be noted that Huawei already supplies many smaller companies throughout the United States). Actually, given all the previous reports on Huawei, the letter eight Republican senators sent to the Obama administration urging an investigation of the company, and given that Rick Perry’s presence at a ribbon-cutting ceremony in Texas has become a campaign issue, the claim that Huawei has links to the Ministry of State Security just seems like unnecessary piling on.

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America’s Free Trade Champion: Lee Myung-Bak

by Scott A. Snyder
U.S. President Barack Obama addresses a Joint Session of Congress inside the chamber of the House of Representatives on Capitol Hill in Washington September 8, 2011.

U.S. President Barack Obama addresses a Joint Session of Congress inside the chamber of the House of Representatives on Capitol Hill in Washington September 8, 2011 (Jason Reed/Courtesy Reuters).

The Obama administration has always been conflicted about free trade agreements. Candidate Obama didn’t outright condemn the Korea-U.S. Free Trade Agreement (KORUS-FTA), but he publicly let it be known that it could stand some improvement while privately offering body language suggesting support for free trade. The inheritance of the deepest recession and unemployment levels in decades conspired against consideration of FTAs as the administration poured itself into the task of getting Congress to pass the stimulus package.

During his first trip to Asia in November 2009, President Obama got an earful from Asian leaders who were aghast at the apparent absence of a U.S. trade policy, widely viewed as a strategic necessity to counter Asia’s growing trade dependency on China. The best stop of the trip was Seoul, and Lee Myung-bak’s primary request was support for the KORUS-FTA. Despite positive body language and the appearance of a commitment from President Obama to get KORUS done, nothing happened. No exchanges of negotiators ensued.

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Can India and America Up Their Investment Game?

by Evan A. Feigenbaum
Commuters on a suburban train during the morning rush hour in Mumbai.

Commuters on a suburban train during the morning rush hour in Mumbai.Danish Siddiqui/Courtesy Reuters.

My latest column is out in India’s financial daily, the Business Standard. I used this month’s column to talk a bit about structural impediments hindering U.S. investment in India. These challenges will grow if, as many economists suspect, India’s growth continues to slow from its restored post-crisis clip of 8 to 9 percent a year to something more on the order of 7 to 7.5 percent. And in that context, it’s worth noting that Indian stocks have just completed their worst quarter since 2008. And of course food price inflation remains as stubborn as ever.

Here’s my argument, which reflects in part a perspective from my new perch in Chicago rather than Washington, DC:

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