Security likely to outweigh US-Vietnam trade ties

Significance The load was primarily symbolic, of Hanoi’s response to pressure from Washington to reduce Vietnam's 38.3-billion-dollar (2017) trade surplus with the United States, although there are likely to be further imports in this sector, including of soybeans. However, US-Vietnam trade ties face tensions: Vietnam is disillusioned that President Donald Trump withdrew from the Trans-Pacific Partnership (TPP); his subsequent reaffirmation of that decision reinforces Hanoi’s nervousness that the Trump administration will continue to take a hard line on trade. Impacts The Trump team will likely be keen to explore further new arms sales opportunities in Vietnam. Despite stronger Vietnam-Russia ties, Moscow will mostly be an arms source: Russia has limited money and resources for South-east Asia. Further Vietnamese regulatory reform and infrastructure improvements could reduce Vietnam’s US trade surplus. For the foreseeable future, India will lag China in deepening South-east Asian ties economically and militarily.

Subject China's options for retaliating against US firms during trade tensions. Significance US President Donald Trump tweeted yesterday that he is working with China's President Xi Jinping to get China's telecoms giant, ZTE, "back in business, fast" -- even though it was penal US sanctions that forced the company to announce last week that it was stopping operations. The Trump administration is divided on whether its objective in threatening imports tariffs on Chinese goods worth 50 billion dollars, effective May 22, is to strike a deal to cut China's trade surplus with the United States or to change China's industrial practices. Impacts Compliance costs will rise even if trade tensions subside. Investors in industries that China sees as strategic (eg, semiconductors and integrated circuits) may face unwritten screening rules. Investors in automobile, aircraft and shipping manufacturing and finance may find new opportunities to enter the market.


Significance The preferential US trade programme faces renewal or lapse by December 31. South-east Asia’s economies are structured to take advantage of the GSP and many of the products exported to the United States under GSP (such as light manufactures and seafood) are important for South-east Asia’s supply chains. Impacts Vietnam may make another application for inclusion in the US GSP programme. The more authoritarian South-east Asian countries could find it easier to gain US GSP preferences under Trump. The Trump administration could use the GSP as a bargaining chip in trade negotiations or renegotiations.


Subject US-ASEAN relations. Significance A US-ASEAN summit, proposed late last year by US President Donald Trump, is tentatively scheduled to be held in March in Las Vegas. After an ASEAN Foreign Ministers’ Retreat in Vietnam earlier this month, the South-east Asian regional bloc issued a statement welcoming the summit. However, only a few member states have formally signalled their intention to participate. Impacts For ASEAN leaders that attend, the summit may compensate for Trump’s likely absence from the 2020 East Asia Summit in Vietnam. The United States is unlikely to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership. Any violence in South-east Asia sponsored by Iran or its proxies will strengthen US cooperation with the region on counterterrorism.


Significance Both the Thai and Chinese militaries are participating. The Thai junta -- keen to bolster strategic cooperation with Beijing and to attract Chinese infrastructure investment -- has made much of Chinese participation in the exercise, to the consternation of Japan and Thailand's long-standing treaty ally the United States. Beijing, for its part, seeks to build alliances in South-east Asia and capitalise on Thailand's market and investment opportunities. Impacts US firms are unlikely to be marginalised in the Thai market, even though their presence in Thailand is limited. Security relations will dominate US-Thai relations for the foreseeable future. Japan will continue to boost security relations with South-east Asian partners.


Subject Outlook for Thai-US-China relations. Significance Chatchai Thipsunaree, Thailand’s permanent secretary in the Ministry of Transport, confirmed on May 17 that construction of the long-awaited Thai-China high-speed railway will begin this year. The project reflects the growing momentum in Thailand’s relations with China, and refiguring of ties with the United States. Impacts Trump administration officials see less strategic imperative in the US-Thailand alliance than previous administrations. China’s growing presence in South-east Asia, particularly on the Mekong, will trigger resistance from affected populations in Thailand. Thai officials will allow Chinese infrastructure projects to proceed despite local protests.


Subject Emerging US policy towards South-east Asia under the Trump administration. Significance On May 5, the 30th US-ASEAN Dialogue opens in Washington, to be co-chaired by US Secretary of State Rex Tillerson. This follows Vice-President Mike Pence’s visit to Indonesia of April 20-22, the first to South-east Asia by a cabinet-level official from the Trump administration. The White House used that occasion to announce that President Donald Trump will attend the APEC meeting in Vietnam and the East Asia Summit (EAS) in the Philippines in November. Impacts Trump may co-chair a US-ASEAN Summit with Philippines president on the EAS’s margins, which could improve frayed bilateral ties. Congress could frustrate any Trump administration plans to sanction countries with trade surpluses with the United States. An ASEAN-US free trade agreement is unlikely soon. Trump has invited Vietnam’s prime minister to visit Washington later, which could make Hanoi more bullish towards China.


Subject South-east Asian defence budgets. Significance The pressure of responding to the COVID-19 pandemic is prompting many South-east Asian governments to cut defence spending and postpone or cancel new arms acquisitions. Meanwhile, China and the United States continue to vie for influence in the region. Impacts Piracy attacks will increase across the region as socio-economic distress rises and budgets for navies and coast guards fall. ASEAN unity will fracture as tensions among member states increase. Economic problems will cause political instability across South-east Asia, possibly even leading to military coups in certain countries.


Subject Drone sales to South-east Asia. Significance Washington announced last month that it will lift its ban on selling armed/lethal unmanned aerial vehicles (UAVs, or 'drones') to allies and security partners. This decision has South-east Asian implications: many US allies and interests are there. South-east Asia also has a significant appetite for unarmed drones. Consequently, the region is becoming a fruitful ground for sales and use of both types of UAV. However, this brings mixed security implications. Impacts China will compete with major drone vendors the United States, the EU and Israel for South-east Asian sales. South-east Asian governments will update their laws to incorporate drone-related considerations. Authoritarian governments will probably attempt to control the use of drones by the media and civil society. ASEAN countries will expand domestic drone production, especially under the ASEAN Economic Community.


Subject Development of South-east Asian coastguards and their geopolitical implications. Significance Senior coastguard officers from Australia, Japan, the Philippines and the United States will meet later this year to discuss cooperation and capacity-building -- and the assertive actions of China's coastguard in littoral waters. With external partners' support, South-east Asian states are developing their coastguards to fight crime and assert maritime territorial claims. Impacts Fishing activities will probably trigger spats between South-east Asian and China's coastguards. Gradually, inter-operability between South-east Asian coastguards will expand. Tokyo and Washington will use coastguards to deepen ties with South-east Asian countries. There could be frictions between Indonesia's and Malaysia's coastguards over waters around Ambalat.


Significance Though the United States and South Sudan have a long history, the surprise election of Donald Trump could shift Washington’s posture towards Juba. The deepening crisis there has soured a a once-close relationship. Impacts US Africa policy may be determined in large part by Trump’s personnel picks for senior Africa posts. As observers warn of possible genocide, a US government in transition will find itself ill-prepared to respond. The proposed 4,000-strong Regional Protection Force may find less support from the new administration. US humanitarian funding levels should remain high despite potential policy changes.


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