Statement by US Secretary of State Mike Pompeo on China’s upriver dams on the Mekong River on Thursday and an assurance that the United States is not pressuring Southeast Asian states to choose sides between the US and China went down well. The summit agreed to forge closer links between ASEAN and America over the next five years.

The two-day meeting of ASEAN Foreign ministers in Bangkok this week came amid a Twitter bombshell from US President Trump as he ramped up the US trade war with China and real bombs in Bangkok on Friday morning leaving a number of people with slight injuries and extremely nervous Thai security forces. The events, however, served to highlight the growing strategic importance of the ASEAN bloc to Thailand as it navigates its way politically and economically between China and the United States.

Thailand’s Foreign Minister Don Pramudwinai (left) all smiles with US Secretary of State Mike Pompeo (right) yesterday in Bangkok on the sidelines of the ASEAN meeting of foreign ministers, which was also attended by the senior US official and the foreign ministers of Russia and China. The meeting saw a new 5-year agreement between ASEAN and the United States to forge closer links. At the summit, Mr Pompeo criticized the building of dams by China on the Mekong River, which has contributed to drought conditions in northern Thailand and other ASEAN countries. He also assured the Southeast Asian ministers that the United States is not pressuring any country to choose sides in the growing US-China trade spat that took a turn for the worse on Thursday night when US President Donald Trump took to Twitter to announce a 10% trade tariff on Chinese imports to the US from September 1st on an additional $300 billion worth Chinese goods entering America.

On a day when bombs went off in Bangkok in which thankfully no one was killed or seriously injured, Thailand found itself at the centre of world diplomacy on Friday as it hosted the ASEAN foreign ministers meeting. At the meeting on Friday, the joint chair of the ASEAN-US Ministerial Council, Lao’s Foreign Minister, Saleumxay Kommasith revealed that, based on 2018 figures, the Southeast Asian community of nation’s biggest trading partner is, in fact, the United States with $260 billion of two-way trade. This figure made the ‘US our largest trading partner. We look forward to increasing economic cooperation with the US in the coming years,’ the statesman said.

US Secretary of State criticised China over Mekong river dams while in Bangkok

The US Secretary of State on Thursday, also in Bangkok, criticised China for its role in contributing to drought conditions in northern Thailand and other ASEAN countries with its upriver dams on the Mekong river. The senior US administration official and leader was meeting Thailand’s Foreign Minister Don Pramudwinai on the sidelines of the international conference which has seen foreign ministers from all 10 ASEAN states in Bangkok together with the American Secretary of State, the veteran Russian Foreign Minister Sergey Lavrov and the Chinese Foreign Minister Wang Yi when he said: ‘The river is at its lowest levels in a decade, a problem linked to China’s decision to shut off water upstream.’

Contributing to devastating drought conditions faced by many northern Thai farmers

The damming upriver in the Mekong has been an exacerbating factor in the chronic situation that Thailand’s farmers and rice growers in northern Thailand find themselves in. They have suffered from low rainfall or in some cases, little at all, in the last few months. This has caused severe hardship for already hard-pressed farmers and many families living on the land. The Thai government has extended a plea to farmers in the region to delay planting rice crops for fear of further devastation adding to that already caused. Some observers are reporting it to be the driest season in at least 10 years.

Chinese foreign minister also in Bangkok – critical of US President’s tariffs bombshell on Thursday announced via Twitter

The Chinese foreign minister had his own comments to make in Bangkok. Reacting to the Twitter announcement by the US President on Thursday that America was readying to impose a 10% tariff on the remaining $300 billion of Chinse exports to the United States from September the 1st, he said this: ‘Imposing tariffs is definitely not the right way to resolve trade frictions.’

US claims China failed to keep June promise to buy soybeans and produce from US farmers

The move by President Donald Trump is reported to be in retaliation for failure on China’s behalf, to keep the June agreement between the two world powers to buy more US agriculture produce. Speaking in Bangkok, the US Secretary of State said that the best way for China to avoid the tariffs would be to adhere to the June promise. 

US President warns of further tariff measures

In Washington, the US President let it be known that he could lower the tariffs or even take them to 25% and then even higher depending on the progress with China on trade which has so far not been forthcoming. The President said he was expecting and prepared for the consequences of his decision to impose further tariffs.

Wall Street lost 1% of its value

The move sent Wall Street into a spin last night losing 1% of its value in reaction to the move which is expected to hit many retail items in the United States. However, there are now a growing number of voices who have begun to appreciate that the US moves in relation to China are bearing fruit.

Gambit by US President the only way to a viable  US-China trade deal but may backfire

One US-China expert told the AFP news agency yesterday that the US President was applying pressure on China and that it was the only way that could produce a workable US-China trade deal. Derek Scissors of the American Enterprise Institute said this: ‘the talks weren’t going to go anywhere without more pressure on the Chinese.’ But he also warned that the gambit by the US President could backfire and bring a halt to all trade talks. He described this as a ‘measured risk’ being taken by the administration.

Pompeo in Bangkok: ‘China has for decades been taking advantage of trade from the US’

In Bangkok, on Friday, the US Secretary of State was standing fully behind his boss on the issue. ‘China has for decades been taking advantage of trade from the US and that has to stop,’ Mike Pompeo said. ‘President Trump’s head-on approach to solving this issue has been effective and we are working hard to make sure that China starts trading freely not only with the US but also with its neighbours in Asia.’

New challenge of Thailand’s Commerce Ministry but it has a bigger budget announced this week

For Thailand, it probably does represent bad news. However, this week the acting Thai Commerce Minister, Jurin Laksanawisit, announced a budget of ฿954 million from the International Trade Promotion fund to begin promoting Thailand’s exports. On the face of it, more US tariffs could lead to weaker world trade and more of the same devastating consequences that have ravaged Thailand’s export sector since July 2018.

Thailand’s exports must pivot at least in the short term

Contrarily, there are reports of some opportunities for Thailand to replace Chinese exports to the United States. At some point, it may be time to consider that the US-China trade war may develop into a US-China trade rift leaving two competing economies and spheres of economic activity. It is certainly not what Thailand’s economic leadership or other world leaders want to see happen but one thing is clear, Thailand must pivot and realign its export drive at least in the short term.

ASEAN may be part of the answer Thailand needs

ASEAN may hold the answer for Thailand. The regional Southeast community of nations is currently in negotiation with the European Union for a free trade deal and the visit by US Secretary of State Pompeo this week signals stronger cooperation between Thailand, ASEAN and the United States. Foreign Ministry spokeswoman Busadee Santipitaks confirmed that the United States and the Southeast Asian bloc were working to forge an even closer strategic partnership and ties. She revealed that a new five year plan to achieve this was being drafted to cover 2021 to 2025.

Bloc is the fifth largest economy in the world

The ASEAN group of nations together is the fifth largest economy in the world with a GDP of over $3 trillion and a population of over 650 million people. The challenge for the block is to maintain a collective unity in particular in relation to maritime disputes which a number of members states have with China over the South China sea. The same unity will also be needed in forging beneficial trade agreements with Europe, the United States and China if the Regional Comprehensive Economic Partnership deal is delayed any further. This a broader free trade area agreement that covers much of Asia including India, China, South Korea, Japan and New Zealand. This is being pushed by Thailand’s government as a priority as it leads the ASEAN community and highlights the importance of the bloc to the country’s economic future.

United States not pressuring Southeast Asian states to choose sides in trade struggle

The US Secretary of State, Mike Pompeo, meanwhile assured the ASEAN foreign ministers that the United States was not seeking to pressurise the nations in Southeast Asia to choose sides in the emerging tussle between the US and China. He said frankly: ‘Look, we don’t ever ask any Indo-Pacific nations to choose between countries.’

He emphasised the respect that the United States has for the sovereignty of all countries in the community and was committed to upholding the rule of law, human rights and achieving sustainable economic growth.

For further reading:

US China trade war may have some silver lining or upside for Thailand if firms can be agile and adjust

Thailand’s PM commits to a global world vision as the country signs up to China’s belt and road

Thailand’s economy impacted by the whims of the US President as much as its political future in 2019