Global Economics

Asia Eagerly Awaits Obama's APEC Debut


The President makes good on his promise to engage with the region with his trip, which includes his first ASEAN-U.S. Summit

Expectations are running high for U.S. President Barack Obama's debut at the Asia-Pacific Economic Cooperation, or APEC, meeting in Singapore this weekend. And nowhere is the optimism greater than among the 10 members of ASEAN, or the Association of Southeast Asia Nations, which will hold its first-ever summit with a U.S. President following the APEC leaders summit on Sunday, Nov. 15. "Obama is making true on his campaign promise that he wants to listen to the regional states, and work with the regional organizations," says Surin Pitsuwan, the ASEAN Secretary General. The U.S. is just as keen to have a successful meeting. Closer U.S.-ASEAN coordination matters more now than ever, as China's influence in the region keeps growing. The mainland has replaced the U.S. as the largest trading partner for several Asian countries. Next year, ASEAN and China will drop most duties on farm and manufactured goods. They have held annual summits for many years, and China has beefed up its role in other regional groupings that exclude the U.S., such as the ASEAN plus Three and the East Asian Summit. Opportunity for Obama

China has also extended its panda diplomacy to the region. "There is no doubt when you look back at the history of last 10 years, when the U.S. had its attention diverted by wars in the Middle East and Afghanistan, and China took perfect advantage of that period to advance its interests in Asia, particularly in Southeast Asia and within APEC," says Ernest Bower, senior adviser and director of the Southeast Asia Program at the Center for Strategic & International Studies in Washington. But he believes that now the U.S. has a chance to redress that imbalance. "Even the most hard-line Asian nationalists want the U.S. to be a beneficent power, and Obama has given back hope on that," says Bower. Commerce Secretary Gary Locke told BusinessWeek that the ASEAN meeting shows the President and the Administration "are not ignoring those countries." Locke adds: "We believe there are perfect opportunities, great opportunities for mutually beneficial trading relationships and government-to-government relationships." "The ASEAN countries have enormous needs, whether medical devices, to education, to technology, to high-value manufacturing products, and even food," Locke says. "It's an opportunity for win-win scenarios where U.S. companies can meet these demands both in terms of goods and services and help raise the standard of living and quality of life of people in the region while creating job opportunities back at home for Americans." Free-Market Jawboning

Greater trade liberalization is critical to companies with Asian operations such as Sealed Air (SEE), the Elmwood (N.J.) outfit that invented bubble wrap. "We trade among 18 out of 21 countries in APEC, and we decide where to manufacture and ship by a combination of transportation costs, duty costs, and currency," says CEO William Hickey as he produces a packaging sample from his pocket. "If you change any of those three variables, you change the equation." But Obama is likely to also find himself on the receiving end of a free-market jawboning from government leaders. During a keynote speech to APEC CEOs on Friday, Chinese President Hu Jintao warned that "we must resist protectionism in all its manifestations, particularly trade and investment restrictions imposed on developing countries." Those sentiments echoed remarks made on Friday by Singaporean Prime Minister Lee Hsien Loong. "Free trade was the original raison d'être of APEC," he said in an address to the opening session of the APEC CEO Summit. "APEC's role in promoting free trade would become more prominent post-crisis, as the Asia-Pacific is set to drive global growth." The International Monetary Fund projects Asia's economies will grow 6% next year compared to just 1.2% for the G3 economies of the U.S., the EU, and Japan.

Balfour is Asia Correspondent for BusinessWeek based in Hong Kong.

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