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Policy Challenges and Commercial Opportunities Beckon in East Asia

A series of recent events this fall—including visits to China, Japan, Singapore, and South Korea by President Obama and meetings of the U.S.-China Joint Commission on Commerce and Trade and the Asia-Pacific Economic Cooperation Forum—underscore the importance of trade with East Asia to U.S. companies.

by John Ward

The closing months of 2009 brought several high-profile events that served as reminders of the importance that the Pacific Rim holds for the U.S. economy in general and for U.S. exporters in particular. Those events included a meeting of the U.S.–China Joint Commission on Commerce and Trade (JCCT), in Hangzhou, China, on October 28–29; the 17th annual leaders meeting of the Asia–Pacific Economic Cooperation (APEC) Forum in Singapore on November 14–15; and visits by President Barack Obama to China, Japan, Singapore, and South Korea on November 14–21.

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During his visit to four Asian countries in November 2009, President Barack Obama joined Chinese President Hu Jintao at a reception before a formal state dinner at the Great Hall of the People in Beijing, China. “If we can increase our exports to Asia–Pacific nations by just 5 percent,” noted Obama, “we can increase the number of American jobs supported by these exports by hundreds of thousands.” (White House photo by Pete Souza)
During his visit to four Asian countries in November 2009, President Barack Obama joined Chinese President Hu Jintao at a reception before a formal state dinner at the Great Hall of the People in Beijing, China. “If we can increase our exports to Asia–Pacific nations by just 5 percent,” noted Obama, “we can increase the number of American jobs supported by these exports by hundreds of thousands.” (White House photo by Pete Souza)

 

The importance of East Asia—especially the changes to its political and economic fortunes in recent years—was emphasized by President Obama in a speech he gave in Tokyo, Japan, on November 14. “Perhaps no region has changed as swiftly or dramatically. Controlled economies have given way to open markets. Dictatorships have become democracies. Living standards have risen while poverty has plummeted. And through all these changes, the fortunes of America and the Asia–Pacific have become more closely linked than ever before.”

Four Economies, Prodigious Growth

U.S. trade with Asia is huge and growing, as the fall meetings and visits amply attest. For example, U.S. exports of goods to China were $69.7 billion in 2008. That figure capped nearly a decade of growth since the United States granted permanent normal trade relations to China in 2000 and China’s subsequent accession to the World Trade Organization in 2001.

Likewise, Japan is an important market for the United States. It is the second-largest U.S. trading partner outside North America, with exports of goods reaching $65.1 billion in 2008. The city-state of Singapore, where the APEC leaders meeting was held, has had a long-standing, close trading relationship with the United States. In 2004, a free trade agreement (FTA) between the two countries was implemented. U.S. exports of goods to Singapore totaled $27.9 billion in 2008.

South Korea, which hosted a visit by President Obama November 19-20, has been a significant U.S. export market for many years. It has a pending FTA with the United States, and it imported $34.7 billion of U.S. goods in 2008.

Anti-piracy, Clean Energy, and Agricultural Agreements with China

The East Asia events started with bilateral talks with China during the 20th session of the JCCT, which took place on October 28–29, 2009, in Hangzhou, China. Secretary of Commerce Gary Locke, U.S. Trade Representative Ron Kirk, and Chinese Vice Premier Wang Qishan cochaired the meetings. Secretary of Agriculture Tom Vilsack led discussions on key agricultural issues.

Established in 1983, the JCCT is the main forum for addressing bilateral trade matters and for promoting commercial opportunities between the United States and China. It meets annually and alternates locations between the United States and China.

At the meetings, China agreed to reopen its market to U.S. pork products and live swine, to remove some barriers facing U.S. firms seeking to participate in China’s growing clean-energy market, and to clamp down on Internet piracy. The U.S. and Chinese governments also signed nine bilateral agreements and witnessed two commercial signings in areas that included aviation, energy, environment, high-technology trade, investment promotion, statistics, and travel and tourism.

The signing of a commercial memorandum of intent supporting the establishment of the U.S.–China Energy Cooperation Program (ECP) was a key highlight. The ECP is an innovative public–private partnership supported by the U.S. Trade and Development Agency that leverages the expertise of U.S. companies to develop clean-energy solutions in China. The two governments also agreed to cooperate on initiatives for the environment, transparency, global distribution services, and standards.

21 Economies Pledge Trade Facilitation

The subsequent leaders' meeting of the APEC Forum, held in Singapore on November 14–15, 2009, brought together a wider group of countries from throughout the region. APEC is an organization of 21 Pacific Rim economies that was founded in 1989. It works to bring voluntary commitment by its members to market-opening policies. (See the June 2009 issue of International Trade Update.)

“APEC is home to 2.7 billion people. And APEC economies contribute 53 percent of world [gross domestic product] and 46 percent of global trade,” noted Locke in remarks to the American Chamber of Commerce in Singapore on November 13. “This represents enormous market potential. And it’s an opportunity American companies have to capitalize on if we’re going to help the U.S. economy get back on its feet.”

Key accomplishments at the APEC leaders meeting included commitments to strategies that will facilitate trade in the region, such as simplifying customs procedures, improving the enforcement of intellectual property rights, and speeding up the movement of goods across borders. The United States will host the APEC leaders meeting in 2011.

Economic Growth through Trade

Along with the substantive discussions and meetings that took place under the auspices of the JCCT and APEC, the visits to China, Japan, Singapore, and South Korea by President Obama reinforced existing commercial relationships and laid the groundwork for their continued growth.

Speaking in Seoul, South Korea, President Obama pointed out how trade can have concrete effects on the most basic workings of the domestic U.S. economy, particularly job creation. “Asia is a region where we now buy more goods and do more trade with than any other place in the world—commerce that supports millions of jobs back home. We … need to place a greater emphasis on exports that we can build, produce, and sell to other nations—exports that can help create new jobs at home and raise living standards throughout the world.”

The implementation of the agreements, as well as the follow-up that U.S. companies engage in during 2010 with the help of U.S. government resources (see sidebar on Commerce Department resources), will determine how successful these efforts have been in supporting the growth of U.S. exports and, ultimately, the U.S. economy.

John Ward is a writer in the International Trade Administration’s Office of Public Affairs. Joshua Wu of the International Trade Administration’s Market Access and Compliance unit assisted in the compilation of this report.

 

 

Commerce Department Resources Help U.S. Businesses Export to Asia

The International Trade Administration offers a wide array of resources to help U.S. companies of any size or industry to enter or expand their sales in Asian markets. Foremost among those resources is the Trade Information Center, which is available through a toll-free telephone number at 1-800-USA-TRAD(E) (1-800-872-8723) and on the Web at Export.gov, the U.S. government’s export portal.

Other resources include the China Business Information Center (BIC), which offers China-related trade news, sales leads, and information on upcoming trade events on its Web site at www.export.gov/china. It also publishes a monthly e-newsletter, ChinaPulse. The China BIC can be contacted by e-mail at chinabic@mail.doc.gov.

A variety of other export counseling services is available through the U.S. and Foreign Commercial Service, which has a network of more that 100 Export Assistance Centers located throughout the United States, as well as offices in every major Asian market. A list of those centers is available at www.export.gov.

 

On Intellectual Property Rights, “More Can and Should Be Done”

Secretary of Commerce Gary Locke at the Pearl River Delta International Forum on Innovation and Intellectual Property in Guangzhou, Guangdong Province, China. (U.S. Department of Commerce photo).
Secretary of Commerce Gary Locke at the Pearl River Delta International Forum on Innovation and Intellectual Property in Guangzhou, Guangdong Province, China. (U.S. Department of Commerce photo).

 

On October 27, 2009, before the JCCT meeting in Hangzhou, China, Secretary of Commerce Gary Locke addressed the Pearl River Delta International Forum on Innovation and Intellectual Property in Guangzhou, Guangdong Province. Speaking to government officials and business leaders, Locke stressed the importance of strong intellectual property rights protection and enforcement and support for a system that rewards and protects those who take risks to develop new innovations. Here is an excerpt of his remarks:

While China has made strides in its intellectual property protection, more can and should be done both to entice U.S. companies to invest here and to encourage homegrown Chinese entrepreneurship. For instance, the elimination of overlapping jurisdictions between different Chinese agencies would help streamline the remedy process. This change would benefit both Chinese and American copyright holders.

Additionally, there is room for improvement with regard to enforcement matters. Consistent application of the law to intellectual property infringement and misappropriation cases would foster more certainty among users of the legal system. And seeking criminal penalties more frequently for intellectual property and trademark infringement violations would add an important level of deterrence. Today, 99 percent of copyright and trademark counterfeiting cases are enforced administratively, rather than criminally. So long as the cost of breaking the law is low, illegal behavior will thrive. But when laws are enforced at all levels of government, including the local levels, the incidence of bad behavior will sharply decline.