Asian Nations Push Ideas for Trade - Article Example

Asian Nations Push Ideas for Trade James Hookway, Wall Street Journal, October 26, 2009 The article is about a proposal of Asian nations to create anEU-style trade bloc in Asia during a regional summit of Asian leaders in Thailand. The summit was attended by 10 Southeast Asian nations, China, South Korea, Japan, India, Australia and New Zealand. When the global economic crisis occurred, Asian nations were not spared. However, the region has recovered early and was not badly hurt, unlike their Western counterparts. Inspired by the triumph over the recession, the member nations wanted to create a trade bloc in the future in order to respond to future economic threats and sustain the region’s financial environment. Competing visions about the trade bloc were laid out in the summit by China and Japan. China presses on creating stronger trading ties among member nations especially with Southeast Asian nations while Japan pushes for the integration of US in the proposed East Asia regional trade group. It has been noted that China spearheaded the export activities to US, at $184.9 billion; followed by Japan at $59.1 billion; and other countries laggard behind. China has dominated the export market to US and wanted to gain economic growth by saturating the neighboring nations. Japan, on the other hand, needed US support for economic sustainability as well as political stability where the country has agreed to reorganize America’s military presence in its territory. Furthermore, aside from US, Japan pushed for bringing in other nations such as India, Australia and New Zealand into the East Asian community. The goal of the EU-style regional trade bloc is to integrate and strengthen the regional economic ties and reduce its traditional dependence on US consumers. Nevertheless, US felt that it was marginalized in the summit and yearned for more involvement in the future. The Cost of Trade ‘Enforcement’ Wall Street Journal, October 23, 2009 The Ministry of Commerce in Beijing imposes antidumping duties on imports of nylons from Taiwan, EU, Russia and US. However, American companies were compelled stiffer duties as compared from the other nations. It seems that China is emulating America’s bad trade habits of imposing antidumping duties. Antidumping laws in the international trade punish foreign companies for selling products into a country where the price of the product is less than the cost of producing it. The basis of such laws is to promote fairer trading practices between nations and to create agreeable domestic politics. However, enforcing such laws between nations also initiated a bilateral trade war and increased the cost of trade. US have imposed forty-two antidumping duties on China in the last three years. On the other hand, the Chinese government has responded to domestic pressure from US trade enforcements by protecting its own. China imposed seventeen antidumping duties on US companies. According to the World Bank Research Group, the practice of protectionism has increased antidumping investigations by 53% and has increased the number of antidumping duties by 21% around the globe. As a result, US consumers will bear the costs of trade as other countries enforce antidumping practices on American companies. Trading Away Seoul Wall Street Journal, October 15, 2009 While US have entered into trade protectionism, EU and South Korea have entered into trade liberalization. The initial Free Trade Agreement between EU and South Korea tears down tariff barrier between the two partners. Korea has agreed to address its standards and regulations that blocks import for products and consumer electronics and to opened its doors to trade in service such as telecommunications, finance and law. The free trade agreement is estimated to generate $28 billion for European companies. Ironically, the EU-South Korea trade pact is patterned with the pending US-South Korea trade agreement. It has similar provisions tariff rates and market access. However, unlike the US deal, the EU pact has higher likelihood of coming into effect. Amidst fierce politicking regarding increased threats in European carmakers, the European Commission expects that the deal could take effect by next year. It seems that the US government is trading away Seoul as well as other potential trading partners like Colombia and Panama because of protectionism and politicking. President Obama and the US Congress have given in to American carmakers and labor union pressure by safeguarding its own economy and disregarding bilateral trades. This practice may lead to competitive disadvantage of US companies from their European counterparts. It would also lead to strategic costs of not approving trade deals with key US allies. US need to expand its trading opportunities in order for American companies to remain competitive in the global market. The opportunities losses of US and its companies will become gains for other nations. German Firms Feel Pressure over Tehran Trade Vanessa Fuhrmans, Wall Street Journal, October 23, 2009 Germany is second only to China in terms of dollar exports to Iran. German companies have been key trading partners with Iran’s need to improve its infrastructure. These companies provide the country with machineries and engineering expertise for its modernization efforts. More than 7,000 German companies conduct business in Iran through local representatives and another 85 big companies are actually operating inside the territory. Germany has exported $5.7 billion in 2008, which is 9% higher than 2007. However, Iran has in recent years been sanctioned by UN for their nuclear ambitions and uranium proliferations. US have influenced the international community through their firm warnings against Iran. In lieu of these sanctions, Germany has supported the US-led sanctions while maintaining trade relations with Iran. In recent months, the German government has imposed harder restrictions on German companies trading with Iran, in response to economic and political pressures from the international community. They are slowing down regulatory approvals and cutting down export guarantees while increasing discouragement strategies to stop companies from trading with Iran. As a result, exports to Iran are down this year by 17%. Aside from political pressures from their government, German companies that are operating both in Iran and US have been criticized. Companies like Siemens AG were scrutinized by US critics and activists for supporting and providing Iran government with technology to monitor its citizens. Beijing Plans Tariffs on an Industrial Acid Wall Street Journal, October 31, 2009 China plans on imposing antidumping duties on imports of adipic acid from US, Europe and other nations. The industrial acid is an organic compound that is used for manufacturing nylon. Previously, China has imposed antidumping tariffs on certain nylon imports of as much as 36% from US. The suggested tariffs of adipic acid range from 16.4% to 35.4% on imports from different US companies; an 11.3% to 30.3% tariffs on imports from European Union; and 6% to 16.7% tariffs on imports from South Korea. Such duties imposed may last for five years. The enforcement of antidumping tariffs resulted from an investigation into imports of the chemical compound. Foreign companies were found guilty of dumping the organic compound or selling it below market price in China. Furthermore, the latest tariff enforcement is a clear sign of trade tension between China and US. It has been noted that the US government has imposed punitive tariffs on imports of Chinese made tires in September. In response, China has imposed antidumping duties against US companies for imports of chicken, auto products and nylon. Analysts believe that the antidumping practices between the nations will likely to increase due to continued high unemployment rates in major exporting economies. US and China are building trade talks in order to resolve their trade differences and reduce trade barriers in sectors ranging from agriculture to technology to travel. The trade talks may relatively restrain their enforcement of antidumping duties from each other. Read More