The consequence of this [Chinese action and U.S. fiscal management] are not just tomorrow's market shift. This is tectonic, the big stuff that is starting to unfold because we are playing fast and loose with our household management.
Washington, DC (PRWEB) October 15, 2013
On the verge of the United States defaulting on its debts, the Korea Economic Institute of America (KEI) hosted an October 15 program with the Center for Strategic and International Studies (CSIS) and the Carnegie Endowment for International Peace titled "Impact of the U.S. Government Shutdown and Debt Default on Foreign Policy and Trade in Asia."
Matthew Goodman, the William E. Simon Chair in Political Economy at CSIS, discussed how President Obama's absence at last week's APEC and the East Asia Summit setback U.S. trade relations with the region. Goodman recommended that as soon as possible, President Obama should plan a trip to Asia to meet with Asian leaders. Douglas Paal, Vice President at Carnegie, added that "these are missed opportunities and the Chinese are pretty glad that he [President Obama] didn't come [...] The consequence of this are not just tomorrow's market shift. This is tectonic, the big stuff that is starting to unfold because we are playing fast and loose with our household management." Dr Paal suggested that it is not the cost of debt default that will be an issue, but rather flirting with debt default that will eventually erode confidence in the U.S.
Both agreed that the Trans-Pacific Partnership (TPP) is an important tool in restoring America's position in Asia. Because economic relations contribute to the backbone of the U.S. relationship with Asia, the passage of TPP is crucial as it is the "most important new thing" for the U.S. rebalance to Asia and will set the framework for the "rules of the road" for Asia and internationally. Despite President Obama's inability to attend last week's meetings in Asia, the speakers were optimistic that TPP will eventually pass in Congress, with negotiations coming to a conclusion as early as this year.
While Mr. Goodman stated that there will be challenges in the medium-term, he was optimistic in the U.S. prospects in Asia in the long-term. Dr. Paal added that the fundamentals of the U.S, economy are already in place.
Found in 1982, KEI is a not-for-profit, educational organization based in Washington, DC affiliated with the Korea Institute for International Economic Policy (KIEP), a public policy research institute located in Seoul. KEI's main mission is to broaden and deepen understanding about developments in Korea and the value of the U.S.-Korea relationship. KEI does not lobby and welcomes a diversity of views.