Asean: Trade wars and Zopfan

AT the close of the 13th Asean Summit in Singapore on Nov 15, the prime minister of the island republic, Lee Hsien Loong, warned that the trade war between the United States and China may create circumstances “where Asean will have to choose one or the other”. He said, “I hope it does not happen soon”.

The current trade war between the two economic powers was triggered by President Donald Trump raising tariffs on a variety of Chinese goods and the Chinese government retaliating with its own counter-measures.

In spite of this, US companies based in China are not leaving the country in any significant way. Analysts are of the view that many of them are waiting for the outcome of the meeting between Trump and Chinese President Xi Jinping scheduled to take place during the G-20 meeting in Buenos Aires on Nov 30 and Dec 1.

Even if the trade war is not resolved, it may not have an immediate, adverse impact upon the present trade pattern where Asean states trade with both China and the US.

A major disruption of the supply chain which will force countries in the region to choose between the two is unlikely. What is more likely is that some US companies in China may transfer their operations to places like Vietnam, Thailand and Malaysia which have the infrastructure and are wellpositioned to manufacture low-end IT products.

Of course, if the trade war is prolonged and escalates, it may generate consequences that will go beyond trade. There may be serious implications for global politics and security. It is doubtful if the world will allow this to happen.

A more urgent challenge to Asean and Asia is the forging of alliances and the emergence of realignments which will undoubtedly increase distrust and suspicion between states leading to tension and friction.

On the sidelines of the Singapore Summit for instance the grouping known as the “Quad” consisting of the US, Australia, Japan and India met to re-affirm its “shared commitment to maintain and strengthen a rules-based order in the Indo-Pacific in which all nations are sovereign, strong and prosperous.”

Right from the outset, the Quad’s gestures and postures have been interpreted as directed against what is perceived as China’s growing