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US looks to ASEAN for 'friendshoring', but remains selective
The United States’ Inflation Reduction Act (IRA) could bring elements of US production lines to ASEAN countries, according to the US Trade Representative.
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Katherine C. Tai speaks on Feb. 25, 2021, during the Senate Finance committee hearings to examine her nomination to be the United States Trade Representative, which holds the rank of ambassador, in Washington, DC. (Agence France Presse/Bill O'Leary/Pool)
T
he United States’ Inflation Reduction Act (IRA) could bring elements of US production lines to ASEAN countries under a concept known as “friendshoring”, the US trade representative revealed.
Speaking to The Jakarta Post on the sidelines of 55th ASEAN Economic Ministers’ (AEM) Meeting, Katherine Tai said the US was open to implementing friendshoring with allied countries, including ASEAN member states.
“Friendshoring is about trusted relationships. […] There's tremendous potential to build trusted relationships within ASEAN,” Tai told the Post on Monday at the AEM venue, the Padma Hotel in Semarang, Central Java.
The ASEAN country that stands first in line to benefit from this, however, is subject to change, according to the trade ambassador, who said this depended on each country’s strength in specific sectors.
“What you’re looking for is complementarity. So, what your economies have to offer to each other, [how they] complement each other, and that may change [from] sector to sector, because what we will bring to a particular supply chain will be different strengths and different needs,” said Tai.
Signed by US President Joe Biden in August last year, the IRA regulates three supply chain goals aimed at diversifying the country’s foreign production locations instead of concentrating them in one country.
The first of which is friendshoring, which, in a nutshell, means getting American businesses to relocate or open production facilities in countries deemed “friendly” to avoid the risk of disruption caused by another country’s actions or unforeseen events, such as the pandemic.
