April 18, 2017 2:00 am JST

Southeast Asian capitals bristle at Trump's trade probe

Jakarta, Bangkok, others deny claims of currency advantage

TAKASHI NAKANO, Nikkei staff writer

SINGAPORE -- The Trump administration's order to probe U.S. trading partners for unfair practices has provoked outrage in the Southeast Asian nations under scrutiny, and threatens to deepen a divide that leaves the region more exposed to Chinese influence.

Indonesia, for one, has challenged the notion that it merits investigation under an executive order signed by U.S. President Donald Trump on March 31, with the aim of determining the causes of significant American trade deficits.

The Southeast Asian nation's trade surplus with the U.S., economy minister Darmin Nasution said earlier this month, is far smaller than America claims. Nasution also rejected the idea that Indonesia intervenes in the foreign exchange market to weaken its currency.

No specific countries were named in the order itself, but Commerce Secretary Wilbur Ross referred to 16 trading partners. The nine Asian partners on the list include Japan, China, Thailand, Indonesia, Malaysia and Vietnam.

Other Southeast Asian countries have spoken out against the order. Thailand's central bank governor, Veerathai Santiprabhob, told U.S. media that his country does not manipulate its currency for trade advantage. Malaysian Trade Minister Mustapa Mohamed denounced the implication of cheating and said the country would conduct its own investigation of trade with the U.S.

For Vietnam and Indonesia, being placed on a list of suspected trade cheats is doubly galling after Trump's decision to withdraw the U.S. from the Trans-Pacific Partnership, a free trade deal for which the Southeast Asian nations were pressured to ease capital restrictions and reform state-owned enterprises. They have yet to get over America's about-face, which has sunk the chances of the agreement entering into force. U.S. accusations threaten to add to the discord.

With the TPP going nowhere, the Association of Southeast Asian Nations hopes to reach an agreement this year on an alternative trade and investment bloc, the 16-nation Regional Comprehensive Economic Partnership. This grouping includes China, but not the U.S. Freer trade among these partners would only add to the Trump administration's worries over sluggish U.S. exports to Asia and weak job growth at home.

China already wields economic and security influence over Southeast Asian nations, to varying degrees. In response to Trump' executive order, Beijing urged the U.S to follow international rules itself. A topsy-turvy state of affairs is playing out in which Asian nations press for a continuation of the trade liberalization efforts that America once spearheaded.

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