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Q&A: US-ASEAN Business Council Vice President Marc Mealy Says US-ASEAN Trade to Increase

FILE - U.S. State Secretary Rex Tillerson (4th-R) link arms with ASEAN foreign ministers and their representatives as they take part in the ASEAN-U.S. Ministerial meeting during the 50th Association of Southeast Asia Nations (ASEAN) Regional Forum (ARF) in Manila, Philippines August 6, 2017.
FILE - U.S. State Secretary Rex Tillerson (4th-R) link arms with ASEAN foreign ministers and their representatives as they take part in the ASEAN-U.S. Ministerial meeting during the 50th Association of Southeast Asia Nations (ASEAN) Regional Forum (ARF) in Manila, Philippines August 6, 2017.

[Editor’s Note: VOA Khmer reporter Men Kimseng interviewed Marc Mealy, vice president for policy at the US-ASEAN Business Council, on the 50th anniversary of the creation of the Association of Southeast Asian Nations (ASEAN) and the 40th anniversary of the establishment of US-ASEAN relations. The Council, based in Washington, D.C., is a trade association that promotes business links between the US and the 10 countries that make up the ASEAN bloc.]

VOA: This year is the 50th anniversary of the establishment of ASEAN. How is the region doing in terms of trade and regional security?

Mealy: Well, on the trade side, I think ASEAN is a very positive story: 10 countries at various levels of development which have collectively become the Asia-Pacific region’s number one regional economic hub. If you look at the 10 countries combined, you’re talking about a regional population of over 600 million people, a combined GDP of over $2.5 trillion and an average rate of growth in the region between four or five percent per year. So I think that’s a very impressive set of economic indicators that ASEAN can be proud of as it celebrates its 50th anniversary.

With regards to security, that was actually the primary original rationale for coming together in ASEAN: to really foster a community that would enhance security, prevent conflicts between nations, and those kind of factors 50 years ago. Again, the record of success for the region is, I think, a very positive one. Since ASEAN’s founding there have not been any major wars between individual countries in the region. There are security challenges within individual ASEAN countries. There are those who argue that ASEAN as a region hasn’t put in place a kind of regional mechanism that could help handle challenging security situations in individual countries. I think that does remain an area where more work that needs to be done over the next 50 years by the 10 nations.

VOA: Turning to the US, this year also marks the 40th anniversary of US engagement with ASEAN. How much benefit do you think the US has gotten from its relationship with the region?

Mealy: Well, that’s a really excellent point because when you speak about America’s economic interest in a global economy, many people are often surprised when they learn that the 10 ASEAN countries combined represent one of America’s five largest trading partners in the world. In 2016-2017, America’s two-way trade with the 10 countries in Southeast Asia exceeded $200 billion per year, which is a significant amount of goods and services that are moving back and forth between the United States and the 10 countries.

You can also note that approximately 21 of the 50 United States actually have exported to ASEAN in excess of $1 billion per year. States like California, which exports between $13 and $14 billion a year to Southeast Asia. States like Florida, which exports about $1.3 or $1.5 billion to Southeast Asia. Those exports support a lot of jobs and a lot of economic activities in those individual states. The US-ASEAN relationship always included a large amount of American foreign direct investment into the various countries in Southeast Asia, but in recent years we’ve begun to see greater foreign direct investment into the United States from the ASEAN region as well. So as the 40 years is celebrated this year, we expect that trend to continue over the next 40 years, where we’re not only going to see Americans investing in Southeast Asia, but we’re going to see an increase in Southeast Asia investing in America.

VOA: With all the positive aspects that you have brought up, the US still has a trade deficit with the region. The latest figure that I have is around $100 billion in exports to the region and over $140 billion back to the US. How should the US address this challenge?

Mealy: That’s also a very interesting question. I think we’re in an interesting period right now. I think historically, the fact that there was a trade deficit was not really perceived as a real problem or challenge to America, because it primarily reflected that a lot of capital was flowing into the United States, which in a sense financed that deficit. But as you know, in the current environment the trade deficit has become more of a priority for the new US administration. We would propose that the best way to try to reduce America’s deficit with ASEAN countries would involve an effort—whether it be a policy or other initiative— that would continue to expand trade, because we believe a trade expansion effort would be one way of reducing the actual deficit within the trade relationship. And then secondly, a continued effort to address the constraints that some American goods and services do face when they’re exported to the ASEAN market. So I think that’s also going be an important part of the relationship, to find a way where we can try to get those constraints or trade irritants that impact US exports to be reduced or perhaps eliminated as another way of reducing that trade deficit within the overall relationship.

VOA: President Trump will soon make his first visit to attend the ASEAN-US Summit. Do you expect the president will address these issues? Or what do you expect the president to focus on when he is there?

Mealy: I think the president is likely to focus on America’s economic interest in a range of areas including security, trade and investment. There are other international challenges that might also be part of the agenda. I think it remains to be seen, not only which one of those issue areas will be raised, but what are some of the other ideas or proposals that the Trump administration will propose to the ASEAN leaders, perhaps as ways to move forward on some of those agendas. So we’re not expecting new announcements, for example, about free trade agreements in terms of the economic agenda. I think on the security front, the United States does have very robust security relationships with a number of ASEAN countries, so perhaps there’s an opportunity to expand or broaden those security relationships in ways that can add to the effort around addressing the security concern around North Korea, or freedom of navigation in the South China Sea area. I think those will be interesting areas to watch as those meetings take place in November.

VOA: Anti-US rhetoric seems to have increased recently in the region. We have heard it from the Philippine president, and in the past year we have also heard it from the Cambodian prime minister. So is this a concern for the US businesspeople when they invest in the region?

Mealy: As you can imagine, when governments are navigating their bilateral relationship at the G-to-G level, there often can be upwards and downwards movement in the relationship, particularly when there are changes in governments and those changes in government lead to changes in policy. I think what we’ve seen with regards to the economic relationship with Southeast Asian countries is that those relationships have tended to remain pretty steady, even when the bilateral diplomatic relationships may be becoming hotter or colder due to changes in governments or policy. So far we don’t expect and we’re not seeing changes in economic relationships of ASEAN countries with American businesses, even if perhaps there are changes in the diplomatic relationship at the G-to-G level.

VOA: What other things should the region do to become more business friendly, not just for the US, but for everyone?

Mealy: You know, as ASEAN celebrates its 50th anniversary they are continuing to try to move forward in the formation of the ASEAN Economic Community (AEC), and I think that process does really remain the fundamental initiative or vision for the 10 countries. The reality is that ASEAN still has more work to do in order to create a truly regional marketplace where it’s easier for not only international companies, large and small, but also businesses within the region both large and small to more easily to send their goods or services across borders to wherever the consumers might be in those opportunities. So there are efforts on the way to continue working on making the customs procedure between the ASEAN countries easier and more efficient.

There are efforts on the way in the area of transportation to make standards and regulations for trucks that move goods between the countries, for the railway lines that are going to run between countries to be more standardized and harmonized among all 10 countries, which will therefore reduce the cost of doing international activities within the region. There are efforts on the way in the region to try to create more harmonized rules and regulations for agricultural commodities or food products or manufactured goods. All of these types of efforts are what ASEAN countries must continue to work on together in order for this region to reach its full economic potential.

And then, lastly, I would suggest that another very, very important area for ASEAN that it has to really make progress on is to really, in a proactive way, ensure that its less developed countries like Cambodia, Laos and Myanmar are able to fully participate and really benefit from the creation of the ASEAN Economic Community. In other words, the benefit of greater regional economic integration must be able to flow more directly to ASEAN’s less developed countries and not to ASEAN’s more developed countries. If this happens I think ASEAN will be really successful in the next 10 to 15 years and become Asia’s leading economic community. If not, I think ASEAN will run the risk of reproducing one of the mistakes that the European nations made when they formed their economic union. When the countries of Europe came together, the benefit of coming together tended to go to the more advanced countries—Germany, Britain, France—and really were not sufficiently distributed by less developed countries like Greece. I think ultimately this became one of the weaknesses of the European Union’s efforts. So ASEAN has the opportunity to learn lessons from others as it pursues its own unique vision of forming the ASEAN Economic Community over the next 50 years.

VOA: Thank you so much Mr. Marc Mealy, vice president for policy of the US-ASEAN Business Council, for talking to VOA.

Mealy: It’s my pleasure. Thank you.

Note: This interview has been edited for length and clarity.