KUALA LUMPUR: The United States is likely to re-engage on various trade treaties with the Asia Pacific Economic Cooperation (Apec), following optimism spurred by Joe Biden's victory at the US presidential election.
Market experts said president-elect Biden might make a strong impact in international trade relations with much friendlier policies compared to the outgoing US president Donald Trump's protectionist era.
CIMB Asean Research Institute chairman Tan Sri Dr. Munir Majid said there was likely to be better and not intermittent engagement for Malaysia and Asean.
"Asean summits should see high-level American representation. Diplomatic engagement will not be limited to when America wishes to push a particular line or matter," he told the New Straits Times (NST) recently.
Munir is hopeful that the new US policies under Biden would not be directed at a particular country, like China, which could place Malaysia and Asean in a difficult position of having to make a choice between the two countries.
"Whether or not there will be a kind of permanent involvement through initiatives such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), or a revival of the Trans-Pacific Partnership (TPP) remains to be seen.
"I believe there will be greater American activism first before any kind of commitment to economic associations like the CPTPP at this stage," he said.
However, Munir said Biden's intention would prioritise to revive American global leadership, as in a recent article he wrote in Foreign Affairs.
"There is a lot of ground to make up after Trump's America First policy and with China's rise. It will not be: America is back. It will be America is beginning to come back," he said.
Munir said Biden would bring a more civilised style and a less strident tone in the conduct of foreign policy.
There may also be a change in trying to achieve mutual substantial benefit even if there are different interests involved.
Citing an example, he said: "I do not think he (Biden) will continue with the trade war (with China) to secure American interests (which he has said it does not) but he will still push Beijing to be compliant on Intellectual Property protection and on opening up China's market, particularly in the services industry," he said.
Apec Business Advisory Council (Abac) said it was important for 21 Apec economies to jointly address the needs of regional recovery and build greater resilience for future shocks while revitalising economies post-pandemic.
Abac chair Datuk Rohana Mahmood said the council expected some changes in policies from Biden but ruled out that the US would have its own set of domestic priorities.
"We are optimistic at least there will be an improvement on the US-China trade relations. We look forward to that as it is critical for all the Apec economies.
"Malaysia and the US, as well as other Apec economies, will also probably look at improving relations. But we have to wait and understand how their priorities will be," she told the NST.
Rohana said it was still early for Abac to determine on the US plans but was hopeful the country would consider resuming its participation in the Paris Agreement on Climate Change mitigation and relooking the CPTPP.
"Those are the things that we would monitor very closely with regards to the US and its position and role in trade matters in the Apec region.
"US and China combined accounted for 40 per cent of the global trade. Obviously, there are important trading partners," she added.
OANDA senior market analyst for Asia Pacific Jeffrey Halley said Biden had not been declared an official winner yet as the inauguration would not happen until January 20 next year.
"Trump is still the US president until then. We cannot discount surprise behaviours such as new executive orders that will make the news administrations transition to power difficult from the start. We have two months of Trump remaining and a lot of electoral water to pass under the bridge before Biden starts work officially," he told the NST.
Halley said normal protocol was for the old administration to be as helpful as possible to the new administration.
"Nothing about the last four years has been normal though. We may still get some negative surprises on trade yet," he cautioned.
He said the president would likely to struggle to enact an aggressive legislative agenda as if the Senate remained Republican, and this could effectively become a block to some of Biden's biggest policies.
"There will likely be no multi-trillion dollar fiscal stimulus, with the Senate Leader already indicating that is their position after strong jobs numbers on Friday. Nor will there be a rapid pivot to clean energy, with its potentially positive effects on commodity prices," he said.
Halley explained that there would be no immediate boon for Asia economically in the short-term, adding that the US-Malaysia trade was balanced and on good terms, having remained so through the Trump regime and the Covid-19 pandemic.
"If anything, Biden having greener environmental credentials is likely to be harder on commodities such as palm oil and their environmental destruction. That may weigh on Malaysia trade with the US, although electronic exports should increase," he said.
Halley said in Malaysia's case, Biden could be neutral to slightly positive. However, he said If Biden would be easier on Iran leading to Iranian oil coming to market in greater volumes, that could also negatively impact Malaysia if prices are pushed down.
"Biden should be good for the ringgit though, along with Asian currencies in general. Unless they gain control of the Senate, which is unlikely, the onus for stimulus will fall on the Federal Reserve visa monetary policy.
"More easing from the Fed will weaken the US dollar and strengthen regional currencies, a trend I expect to persist through 2021," he added.
Axi chief global market strategist Stephen Innes said currently the markets were betting that the transition would go well but the big issues were less stimulus for global risk including Malaysia as it could have been a boon for export sectors and commodity-producing depending on the vaccine to compensate.
"I actually see Biden pulling in United Kingdom ,European Union and Australia to push back. The US drops sanctions with allies and keeps them on China.
"Malaysia benefits from a redirected foreign direct investment out of China into other parts of Asia, Kuala Lumpur is a prime destination as its friendly as English is used throughout and infrastructure is in place and what isn't can be built," he told the NST.