Ameing for Asia

Is the United States Really Tilting Toward Asia?

By Ames Gross

The country can’t ignore the fact that Asia is the future of medtech growth.

As I have noted in my blogs and publications on Medtech Intelligence, future medtech growth will be the highest in Asia for the foreseeable future. There are many reasons for this, including the rising middle classes in Asia who have more money to spend on healthcare. In addition, the Asian governments are trying to bring better healthcare to residents, and specific market segments like cancer or cardiology are growing faster in Asia than any other place in the world.

Several years ago, President Obama tried to get the United States closer to the region by famously announcing the country would tilt more towards Asia. This tilt was meant to get the United States closer to the growing Asian markets and also to provide a stronger counterbalance to China’s domination in the region. As China has increased its business with other Asian countries and began setting up military bases in the South China Sea, the United States would expand its presence in the region, and such expanded presence would provide more security to our allies in Asia.

The problem is that some of these typical Asian allies have now begun to look to China instead of the United States. In the late summer of 2016, you may recall that President Obama decided not to visit the Philippines on his Asian trip due to disagreements (mostly due to drug trafficking) with President Rodrigo Duterte. Shortly thereafter, President Duterte decided to take a Filipino delegation to Beijing to improve his country’s standing with China. China and the Philippines signed multiple agreements (business, energy, communications, and infrastructure) to their mutual benefit.

Moreover, President Duterte has also called President Obama a “son of a whore” twice.  Duterte announced his separation from America, possibly meaning he would cut back on military and economic deals with the United States. Duterte even said in a speech last fall:“I will break up with America”. Obviously, these words seem rather harsh, and it is very still clear that if China were to put up new military bases closer to the Philippines, or threaten to invade the Philippines, President Duterte would immediately call the United States to protect them.

Besides the Philippines, the Malaysia prime minister, Najib Razak, also took a Malay delegation to Beijing for similar purposes. Najib spoke to the Chinese government about new projects including a high-speed rail project, as well as real estate and energy deals. In 2015, Malaysia and China had their first joint military venture, too.

Despite the above-mentioned jockeying to get closer to China, the United States is still the “stop gap” for almost all of the Asian countries. Throughout Southeast and East Asia, most government officials are still very concerned about China’s dramatic rise economically and militarily in the region.

Part of this tilt towards Asia also included the Trans Pacific Partnership (TPP) supported by President Obama. The TPP is a trade agreement between the United States and 11 other Asian and South American countries (Japan, Vietnam, Malaysia, Brunei, Singapore, New Zealand, Australia, Canada, Chile, Peru and Mexico) accounting for 40% of the global economy. The agreement aims to strengthen economies and foster free trade. Twenty-five percent of the exported U.S. health products were exported to the TPP region in 2015, and some medical products currently face tariffs up to 30% in Malaysia, 20% in Vietnam and 5% in Japan. The TPP agreement would cut nearly 100% of these import tariffs immediately in these key Asian and South American medtech markets. In addition to tariff cuts, the TPP would also establish provisions such as increased patent protection and data exclusivity periods, along with increased transparency during the healthcare product registration process. Notably absent for the U.S.-led TPP was China. The TPP was thought to increase the United States’ tilt towards Asia.

However, today, President-elect Donald Trump has said the TPP agreement is dead. China has offered their own alternate free trade agreement called the Regional Comprehensive Economic Partnership (RCEP). The RCEP would include all ASEAN countries along with China, Japan, South Korea, India, Australia and New Zealand. Peru and Chile have also expressed their desire to join the RCEP agreement. If signed, the RCEP would account for almost 50% of the world’s population and become the largest global free trade agreement. Similar to the TPP, the RCEP would cut tariffs and remove other non-tariff barriers for countries in the agreement. Also, unlike the TPP, the RCEP would make these tariff reductions without affecting other national policies in each Asian country such as labor or environmental laws. With the death of TPP, if the RCEP is implemented, this will be a significant loss for the United States’ mission to tilt towards Asia.

Again, Asia is the future for medtech growth going forward. Hopefully the United States will wake up quickly before it is too late.

About The Author

Ames Gross, Pacific Bridge Medical