Barack Obama

Ask what Asia can do for the US and Obama

PUBLISHED : Tuesday, 14 December, 2010, 12:00am
UPDATED : Tuesday, 14 December, 2010, 12:00am

The agreement on free trade concluded this month between the United States and South Korea is important not only for the two countries; there are wider implications for the US and Asia.

Pushing the Korea-US agreement - which still has to win approval from both countries' legislatures - was seen as a test of the Obama administration's commitment to free trade. With jobless figures still high, appealing to the US voter to support free trade will be tricky. Many Americans think they do not gain from trade, as their jobs are exported to cheaper locations in Asia. To them, globalisation has an ugly face - one that is Asian.

US President Barack Obama will need to talk up the Korea-US Free Trade Agreement (FTA) as a big win for the US. He argues that annual exports of American goods will go up by up to US$11 billion and that agreed concessions could support at least 70,000 American jobs. The Korean economy is sizeable and can help Obama in his goal to double American exports to Asia.

This comes on top of Obama warning Asians that their economic growth cannot centre on increasing exports to US markets. A fundamental change in the economic terms of US-Asian interdependence is being signalled.

Asians will need to consider anew how much they want and need the US and what price they might be willing to pay. For Seoul, the situation with North Korea has tipped it towards the FTA.

India welcomed Obama in early November and signed off on US$10 billion in deals that could create an estimated 54,000 jobs in the US. For Southeast Asians, an American assurance against possible Chinese assertions on contested areas of the South China Sea shows the continuing relevance of the US to the region's security. The US-Asean Summit will need to develop an economic agenda to ensure balance and continuing relevance.

What can and should Asians do for the US and Obama? This may seem a strange question when America remains the world's leading power. But the mid-term elections show a turn against trade and globalisation, and this could potentially turn against Asians.

If it does, Obama or his successor will turn inward. And, when Americans do look across the region, it will be only to assert terms to their sole benefit.

Asians would do well to make efforts to counter those negative perceptions. If trade with the US is really a win-win, Asians must not shy away from being fair and explicit in ensuring that Americans do - in fact and perception - win.

The South Koreans are tough negotiators who have pushed through trade deals with almost all major economies, including the European Union.

They should do their part to ensure the FTA is approved by both sides, for mutual and equitable benefit. This would be good not only for the US and South Korea but others in Asia.

Simon Tay is chairman of the Singapore Institute of International Affairs and author of Asia Alone: The Dangerous Post-Crisis Divide from America. This is an edited version of comments published in Singapore's Today newspaper