U.S. Secretary of State Hillary Clinton has reassured China and other Asian nations that American lawmakers will reach a deal to avoid a credit default. There was hope that U.S. lawmakers and President Barack Obama would reach an agreement before markets opened in Asia on Monday. But talks have stalled once again.
In a speech Monday to the U.S. Chamber of Commerce in Hong Kong, Secretary of State Hillary Clinton predicted that lawmakers and the president would reach a debt deal before the August 2 deadline.
"As I have travelled around the region, a lot of people have asked me about how the United States is going to resolve our debt ceiling challenge," she said. "Well, let me assure you, we understand the stakes. We know how important this is for us, and how important it is for you. The political wrangling in Washington is intense right now but these debates have been a constant in our political life throughout the history of our republic."
High-ranking U.S. officials say that China has repeatedly raised concerns about the debt issue. In public, Chinese officials have voiced their concern about the long-term direction of the U.S. economy and urged America to protect the interests of investors.
Asian markets traded lower on Monday and the breakdown of talks in Washington over the weekend sent the value of the U.S. dollar down and the price of gold to record highs.
Clinton said she was confident the United States would make it through its current situation. She said the U.S. has made it through crises in the past and is what she called an opportunity society. She also held up America as a model for Asia - despite the challenges it is facing.
“Countries in this region are grappling with challenges," said Clinton. "But we are bullish on Asia’s future. And while the United States is facing its own challenges, make no mistake, we are bullish on America’s future, too.”
Clinton said that to balance the global economy changes are needed both in Asia and the United States. The U.S. needs to borrow less and save more, she said, and Asia needs to boost and broaden domestic demand.
She also urged Asia to embrace and work more closely with the United States to promote principles of transparency, openness and free and fair markets.
One of the ways the U.S. is trying to make that happen, she said, is by promoting what she called cutting-edge trade deals that raise standards for fair competition even as they open new markets. One example of this, Clinton said was the Korea-US Free Trade Agreement, or KORUS.
She said the agreement is not just about who pays what tariffs at our borders. The deal, she said, includes significant improvements on intellectual property, fair labor practices, environmental protection and regulatory due process.
"In fact, all who benefit from open, free, transparent and fair competition have a vital interest and a responsibility to follow the rules," said Clinton. "Enough of the world's commerce takes place with developing nations, that leaving them out of the rules-based system would render the system unworkable. And that, ultimately, would impoverish everyone."
The KORUS agreement has yet to receive final approval from U.S. lawmakers, but once it does, U.S. officials note that it could eventually increase exports of American goods to South Korea by more than $10 billion and help South Korea’s economy grow by 6 percent.
Clinton said that while Asian nations have already ratified over 100 bilateral trade deals in less than a decade, many fall short on key protections for businesses, workers, and consumers.
She said the United States is in the process of putting together a new trade framework, the Trans Pacific Partnership, that aims to promote more integration in the region. Clinton said the United States hopes to unveil an outline of the plan by the time it hosts this year's APEC meeting in Hawaii.
After delivering her speech in Hong Kong, Clinton met with Dai Bingguo, China's state councilor, in the nearby Chinese manufacturing hub of Shenzhen.