This blog previously commented on rising opposition to and grumbling over the China - ASEAN Free Trade Agreement in Southeast Asia, which went into effect on 90 percent of products, on January 1, 2010   Times Magazine Online has an article concerning more of the downsides of the FTA.   For example, Indonesian Trade Minister, Mari Pangestu has already informed ASEAN that his nation wants to exclude 228 domestically produced items for another 2 years.  These items include such things as textiles, food stuffs, chemicals, and electronics due to the fear that they cannot compete with Chinese competition.

Indonesian Industry Minister M.S. Hidayat stated:

“If there aren’t any protective steps taken for these industries we’re afraid that there will be … layoffs and even the closure of those industries,” he said.

Some opponents are even re-stating the classic anti-free trade argument that the FTA will cause a “race to the bottom” where quality will be trumped by price.  To a certain extent this is likely, especially in ASEAN nations with extremely law product safety and health regulations, but there is little evidence being presented that this existing issue will be made worse by the FTA.

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ASEAN and U.S.:  As predicted by this blog, the Obama Administration is moving to create a comprehensive political-economic rapprochement with East and Southeast Asia.  The economic arm of this policy direction will branch off of the existing Trans-Pacific Partnership (TPP).  So far, the TTP includes a free-trade agreements (FTA) with Brunei, Chile, New Zealand and Singapore, which  was concluded in 2005, but Washington hopes to expand Australia, Peru, South Korea, and Vietnam in the near term. Long term, the idea is to incorporate most of Southeast and East Asia.  The U.S. does not want to see a line drawn down the middle of the Pacific with China in a leading roll opposite the U.S., similar to the situation between the U.S. and the EU, with the U.S. outside the bloc.

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ASEAN and China:  This blog has spent considerable time following the

Map of Myanmar and the Bay of Bengal

ASEAN+China free trade deal from the perspective of various nations in the region.  The Asia Times has a new article concerning the “win-win” possibilities of the deal and what the incentive is for ASEAN nations.  It also provides some telling data:

According to estimates of the Central Intelligence Agency in the United States, all of ASEAN together in 2008 had only one-third of China’s gross domestic product (GDP) in terms of purchasing power parity (PPP). The economy of Shanghai is one-and-a-half times that of Singapore. Guangdong’s GDP exceeds that of Indonesia, while the combined economies of Guangxi and Yunnan, middling provinces by Chinese standards, exceed those of their neighbors Vietnam, Laos and Myanmar.

Therefore, Southeast Asia is necessarily more alert to the risks as well as the opportunities of its relationship to China. Proportionally, it has more at stake, and the sense of risk as well as opportunity is all the more vivid to individual states in Southeast Asia.

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