On the 26th of this month, Trump will fly to Malaysia.
During this trip, the White House had a good plan to win over Southeast Asian allies to consolidate the economic front while the Sino-US trade war was in full swing. Unexpectedly, the three most anticipated trade agreements were directly lost.
I have to start talking about this since July.At the time, Trump announced on social media that he had reached historic trade agreements with Vietnam, Indonesia and the Philippines.
He said the United States would reduce tariffs and the three countries would also make major concessions.
The White House team also added overtime points and crazyly defined the trade framework before raising the tariffs they had set.
It was thought to be a great joy for everyone, and as a result, except for Indonesia to publish a "facts list", the rest of the content is untold.
What's more interesting is that the governments of the three countries "slapped in the face" on the spot and publicly denied some concessions claimed by the US. At that time, the outside world blew up the pot.
I think the Trump administration was a little too eager for success at the time, wanting to engage in a "mass-production" handshake agreement, but did not consider how complex the actual issues were.
All three people familiar with the matter broke the news that this time Trump was in Kuala Lumpur, and he couldn't announce any substantial progress with these three countries.
Negotiations are stuck, and the White House can only turn to hype about new "preliminary agreements" with Cambodia and Malaysia, which is obviously to save the face.
The agreement of the three countries "evaporates", and the core contradiction cannot avoid "sensitive issues related to China"
Former U.S. Ambassador to Vietnam Krittenbrink said quite frankly that these trade issues are extremely complex and cannot be solved with the wave of a magic wand.
On the surface, the tariff summit is quickly negotiated, but the implementation of the details will be much more difficult.
The most difficult thing is that the U.S. is demanding that Southeast Asian countries block China’s “transit trade.”
The U.S. is not only to add "the rules of origin", but also to strictly check the source of the parts, to prevent other country enterprises from "disassembly parts assembly" drilling.
However, Southeast Asian countries have repeatedly stated that they are not willing to choose a side team between China and the United States.
Barbara Wessel's warning is very reasonable. These reciprocal trade agreements may force Southeast Asian countries to choose sides, directly get involved in the crossfire zone of the Sino-US trade war, and become victims of the game between the two powers.
Who wants to change?
The situation in Vietnam is feared to be most noticeable, since 2017, the global manufacturing industry has moved to Vietnam, and Vietnam's exports to the United States have increased, which would have been a good thing.
However, the U.S. government suspects that some enterprises are "backdooring" Vietnam for exports, which puts Vietnam in a dilemma.
What’s worse, in August, Trump imposed high tariffs on almost all of Southeast Asia, not even Vietnam, Indonesia, and the Philippines, the countries that had supposedly signed the agreement could be exempt.
Vietnamese officials are probably stunned. Before the agreement was officially accepted, high tariffs and re-export penalty taxes came.
Until now, the two sides are still quarreling over the bottom line of tariffs, and even the most difficult "entrepot trade" has not started to talk about.
The U.S. side takes a two-pronged approach to "entrepot trade". On the one hand, it demands to crack down on illegal "washing of origin", and on the other hand, it needs to find out the source of parts and components.
Kritenblink said directly that the president said "transition", in fact, more attention to foreign components, especially Chinese components.
This is not only difficult to control, but more difficult to monitor and measure.
Wesel also pointed out that the U.S. will ultimately strictly define the "rule of origin", will not unilaterally expand the scope of "transfer trade", so far is a mystery.
Southeast Asian countries are still resisting the "economic security" clause requested by the United States. What alarms them even more is that the United States constantly launches investigations into ASEAN goods according to Article 232 of the Trade Expansion Act of 1962 on the grounds of "national security", and may add new tariffs at any time.
Just signed a bilateral agreement, a few months later was investigated again to raise taxes, who can not be exchanged in the country.
Can Cambodia's Malaysia "subsidies" support Trump's Southeast Asian chess team?
Although the three core agreements are yellow, Trump's trip is not completely fruitless.
Cambodia and Malaysia have become the "new breakthrough point" in the White House, which is more like a block of "sham cloth", after all, the three major agreements have to put something out to say.
U.S. Trade Representative Jameson Greer revealed earlier this month that significant progress has been made in negotiations with Cambodia and that the two sides are working to break down long-standing trade barriers and high tariffs.
Although Cambodia is small, it is highly dependent on American exports.
Last year, the United States exported only over US$300 million to Cambodia, while Cambodia exported as much as US$12.3 billion to the United States, mainly textiles and agricultural products.
With this trade gap, Cambodia has indeed the momentum to negotiate with the United States.
What deserves more attention is Malaysia. Two people familiar with the matter revealed that the US-Malaysia negotiations are progressing smoothly and Trump may announce a trade agreement on site in Kuala Lumpur.
Former Ambassador Kritenbrink also confirmed that the two sides have made substantial progress.
But then again, even if these two agreements can be concluded, it will not change the embarrassing situation of Trump's Southeast Asian trade strategy.
The total bilateral trade between the United States and the ten ASEAN countries was about 475 billion dollars last year, far lower than the 582 billion dollars with China.
China is ASEAN’s largest trading partner, with bilateral trade worth $984 billion last year.
Among ASEAN countries, Vietnam, Thailand, Malaysia and Singapore account for 80% of trade, followed by Indonesia and the Philippines.
These countries are like a mirror in their hearts, sandwiched between China and the United States, and choosing sides is asking for trouble.
The White House has been suggesting in recent months that whoever can lead the deal with the U.S. will seize the “pre-emptive advantage” and get an exemption before Trump announced the fall of the global “reciprocal tariffs” in April.
As a result, the three countries of the Philippines, Indonesia and Vietnam thought they were "fast forward" and were finally hit by high tariffs.
So it seems that the American promise is not so reliable.
An unnamed industry executive said that there is very little chance of a “final” reciprocal tariff agreement with most ASEAN countries by 2025.
Multiple obstacles are stacked, coupled with the fact that the United States is negotiating with many countries at the same time, and its energy is scattered, making it almost impossible to quickly implement a formal agreement.
I think the problem with the Trump administration is that it too wants to reach an agreement quickly through high-pressure policies, but ignores the actual interests and concerns of Southeast Asian countries.
The handshake agreement for mass production itself is very fragile, the key differences have not been negotiated, and it is simply unrealistic to want people to choose sides between China and the United States.
Southeast Asian countries want balanced development, not the ashes of the game of great powers.
Trump's "Southeast Asian trade chess station" is currently only two shadows of Malaysia and Cambodia.
The "missing agreement" of Vietnam, Indonesia and the Philippines has become an embarrassment for the White House. The smell of gunpowder in the Sino-US trade war is getting stronger and stronger. Southeast Asian countries carefully weigh the pros and cons in the cracks. This caution is actually very wise.
After all, in the face of national interests, no one will be easily led by the nose. Trump wants to harvest the Southeast Asian market with one trip, but I'm afraid it's not that easy.