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Updated Thursday, November 6, 2008 10:41 am TWN, By Joe McDonald, AP

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Asians uneasy over potential Obama protectionist trade stance

Obama has said he is in favor of free trade agreements if they benefit the United States. He has criticized the one with South Korea, saying it does not adequately address an imbalance in auto trade. South Korean automakers sold 772,482 vehicles in the United States in 2007, while the U.S. sold 6,235 in South Korea, according to industry statistics.

“He appears to be a protectionist,” said Chea Mony, president of the Free Trade Union of Workers in Cambodia, which has an export-driven textile industry. “I am quite concerned about that because most of our clothing products are exported to America.”

In an Oct. 24 letter to the U.S. National Council of Textile Organizations, Obama pledged “strong enforcement” of trade remedy laws, which can include added tariffs on imports that are deemed to hurt American businesses. Obama said he would include labor and environmental standards in free trade agreements — a measure that many in Asia view as a possible pretext to shield U.S. companies from foreign competition.

Obama also has said he would pressure China to end what he calls the manipulation of its exchange-rate system. Washington and other trading partners say Beijing’s currency, the yuan, is kept undervalued, giving its exporters an unfair price advantage and adding to China’s multibillion-dollar trade surplus.

Frank Gong, a Hong Kong-based managing director for JP Morgan Securities, warned of possible conflict if Democrats in Congress try to support American businesses and workers by curbing Asian imports.

“That could mean trade friction and the risk of rising protectionism,” Gong said.

Analysts said, however, that despite Obama’s pre-election comments, he was likely to follow the example of previous U.S. presidents and take a moderate line in office to preserve important trade relations with Asia.

“I’m not worried about what might happen after Obama’s win,” said Qiang Yongchang, a professor at the Economy Institute at Shanghai’s Fudan University. “He may have talked tough, but based on past experience, that’s just a tool to win over voters. Every candidate does that.”

Chinese expect that the change Obama speaks of might involve some shift of policy on financial markets, and that would not necessarily hurt trade, Qiang said.

“I think Mr. Obama will soon find out how important China’s economy is, not just for the U.S. but for all the world,” Qiang said. “Obama will need us, as the U.S. needs China.”

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