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US President Barack Obama delivers the State of the Union address. Photo: Bloomberg

Don't let China hold trade sway in Asia, US president Barack Obama warns

President says American workers, businesses would pay if China prevailed in regional pacts

Barack Obama

The United States and not China should write the trade rules for Asia, US President Barack Obama said on Tuesday night as he called on his country to speed up regional trade deals.

In his annual State of the Union address in Washington, Obama warned that if China prevailed, American workers and businesses would be at a disadvantage. He said Congress should give the White House a freer hand in trade deals to protect American interests.

"We should write those rules. We should level the playing field. That's why I'm asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren't just free, but fair," he said, in an address usually reserved for domestic issues rather than international affairs.

Yifan Hu, from Haitong Securities International, said she believed Obama's remarks were closely tied to US efforts to promote an Asia-Pacific trade pact.

The US and China are pushing rival free-trade deals in the region, with the US-initiated Trans-Pacific Partnership (TPP) the centrepiece of Obama's effort to pivot the US towards Asia, and China promoting its own Free Trade Area of the Asia-Pacific.

Hu said the potential members of the pacts largely overlapped, but the key point was which country would lead.

She said the US was feeling more pressure as China became more active in foreign affairs.

Louis Kuijs, from Royal Bank of Scotland, said Obama was trying to convince people that the US Congress should grant him the "fast track authority" to negotiate international trade deals.

Tao Wang, chief economist with UBS Securities, said Obama's remarks seemed more like political rhetoric.

"China is part of the World Trade Organisation, whose rules are made under the leadership of the US. The US is engaging in TPP negotiations without China, so how is it that China is writing rules for Asia?" Wang said.

But Wang said it was also clear that both the US and China saw their economic futures in further global integration.

In the speech, Obama said that more than half of US manufacturing executives said they were actively looking to move jobs back from China to the US.

According to Boston Consulting Group's October 2014 survey of US-based senior executives at manufacturing companies with annual sales of at least US$1 billion, 20 per cent more respondents said their companies were "reshoring" jobs to the US from China compared with 2013.

This article appeared in the South China Morning Post print edition as: US must set Asia trade rules: Obama
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