Why the U.S. shouldn’t sign an Asian free trade agreement

If you want to understand the truly upside-down nature of the thinking of Washington’s foreign policy elite on Asia, take a look at the just released report and press commentary by the U.S.-ASEAN Strategy Commission of the Center for Strategic and International Studies (CSIS). Like all of these think tank commissions, this one is studded ...

Joshua Roberts/Bloomberg via Getty Images
Joshua Roberts/Bloomberg via Getty Images
Joshua Roberts/Bloomberg via Getty Images

If you want to understand the truly upside-down nature of the thinking of Washington's foreign policy elite on Asia, take a look at the just released report and press commentary by the U.S.-ASEAN Strategy Commission of the Center for Strategic and International Studies (CSIS).

Like all of these think tank commissions, this one is studded with former high ranking officials now consulting for a variety of global corporations both American  and foreign. Particularly prominent in their remarks were former U.S. Trade Representative Carla Hills and former Defense Secretary William Cohen. Hills urged negotiation of that philosopher's stone of modern international relations, a free trade agreement, in this case between the United States and ASEAN. Breaking down barriers to trade and capital flows would encourage further investment in the region by U.S. corporations, she said.

In light of the fact that the ASEAN region is drowning in investment while the United States is starving for it, it's not clear why Washington should want to encourage further investment in ASEAN, but maybe Hills thinks the deal would encourage a two way flow of investment that would also be beneficial to the United States.

If you want to understand the truly upside-down nature of the thinking of Washington’s foreign policy elite on Asia, take a look at the just released report and press commentary by the U.S.-ASEAN Strategy Commission of the Center for Strategic and International Studies (CSIS).

Like all of these think tank commissions, this one is studded with former high ranking officials now consulting for a variety of global corporations both American  and foreign. Particularly prominent in their remarks were former U.S. Trade Representative Carla Hills and former Defense Secretary William Cohen. Hills urged negotiation of that philosopher’s stone of modern international relations, a free trade agreement, in this case between the United States and ASEAN. Breaking down barriers to trade and capital flows would encourage further investment in the region by U.S. corporations, she said.

In light of the fact that the ASEAN region is drowning in investment while the United States is starving for it, it’s not clear why Washington should want to encourage further investment in ASEAN, but maybe Hills thinks the deal would encourage a two way flow of investment that would also be beneficial to the United States.

If that is the case, however, the commission’s proposals do not include any recommendations on exchange rate manipulation, reciprocity on investment incentives, or other tax and regulatory tools often employed by the ASEAN countries in ways that tend to promote their trade surpluses and the U.S. trade deficit with its consequent impact on U.S. unemployment.

More important and much more revealing, however, were the comments of Cohen who called for the ASEAN countries openly to welcome the presence of U.S. military deployments in their waters and territories and openly to confront China by telling it that they will not be bullied into shrinking from closer ties with America by pressure from Beijing. Cohen went on to emphasize that the United States (despite its rapidly rising debt and fiscal problems) should in no way reduce its military presence in Asia. Said he: "Nature abhors a vacuum. If the U.S. withdraws, who will fill it? Are the Chinese going to fill it without some contest from the Japanese. Are the Indians going to sit on the sidelines? You would have substantial instability and with that the loss of prosperity  because capital takes flight when it loses stability." 

So, if I understand this correctly, Cohen is saying the United States needs to assure Asia’s continued prosperity by keeping Asia safe from the Asians.

I wish former U.S. officials would spend as much time thinking about what’s good for America as they do urging what’s good for Asia and other parts of the world.

It’s not clear to me why Cohen thinks the ASEAN countries would be at all interested in confronting China as he suggests. They already have their cake and are eating it as well.  Washington has already assured the ASEAN states that it is "pivoting" to the Asia-Pacific region even without any commitment from them of willingness to confront China. Indeed, Washington is anxious to assure the ASEAN countries that "America is back" in the Pacific.

So ASEAN is getting what it wants without making uncomfortable statements or taking uncomfortable actions re: China.

What Cohen and Hills and their strategy commission might better do is get some statements and commitments from ASEAN with regard to increasing imports from the United States and increasing ASEAN investment in the United States, with ASEAN corporations undertaking to actually produce things in America as Japanese and German and even Korean corporations are beginning to do.

At this critical moment in its history, America needs its former top officials promoting America. How about a Cohen and Hills led CSIS commission on a strategy for promoting investment in America and for eliminating the U.S. trade deficit?

Clyde Prestowitz is the founder and president of the Economic Strategy Institute, a former counselor to the secretary of commerce in the Reagan administration, and the author of The World Turned Upside Down: America, China, and the Struggle for Global Leadership. Twitter: @clydeprestowitz

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