A U.S. Strategy for ASEAN
Is the United States missing out on trade relations with one of Asia’s largest trade blocs?
May 26, 2010
While the United States is unquestionably a Pacific power, it lacks a comprehensive Asia strategy. In fact, the U.S. approach to Asia has focused primarily on Northeast Asia — Japan, China and South and North Korea.
Appropriately, significant focus has also been given to India in the last five years. However, since the end of the Vietnam War, U.S. focus on Southeast Asia has been episodic and crisis-driven.
While the United States has a substantial reservoir of strength in the region, U.S. policy has failed to connect the dots and develop them into a rational and well-articulated strategy. The missing piece of a smart Asia strategy has been a durable, serious and balanced strategy for Southeast Asia.
Now is the right time to focus on the development of such a task. The lack of a consistent U.S. focus in the region has enabled the ascendance of Chinese power and the slow undermining of U.S. business interests, both of which will eventually degrade U.S. security capabilities. In that context, a refocusing of American engagement in the region is overdue.
The Obama Administration has indicated a strong interest in addressing this gap. President Obama has declared himself the “first Pacific President of the United States” and has inaugurated a U.S.-ASEAN Summit that includes all ten of ASEAN’s leaders.
The ASEAN countries are currently home to far more U.S. investment than China or India. The region is also a bigger market for U.S. goods and services than either of its larger neighbors. The United States also has significant social and cultural ties with the region that range from education to the arts to people-to-people ties.
ASEAN is comprised of ten countries, home to over 600 million people with a combined GDP of approximately $1.3 trillion. Together, the ASEAN countries are committed to global engagement.
They are the most trade-dependent formal grouping of nations in the world, with trade accounting for just less than 100% of their aggregate GDP. Indonesia, which anchors ASEAN as its largest member, is the fourth-largest country in the world and home to the world’s largest, moderate Islamic population.
On the trade and investment front, ASEAN is home to more than $153 billion in U.S. investment — more than three times our $45 billion in China and nearly ten times our $16 billion in India.
That figure does not even count investment in the oil and gas sector, which could nearly double the total. The United States is ASEAN’s largest market, and ASEAN is the fourth-largest U.S. market after NAFTA, the EU and Japan.
Even though President Obama has alluded to the importance of trade in Asia in his 2010 State of the Union speech and during his Asia trip in November 2009, the fact is that a coherent trade strategy is still not in place. Focusing on this important issue in the context of a broader U.S. strategy for the region is timely and will be a catalyst for progress.
In terms of security and strategic interests, ASEAN includes two of the five U.S. allies in Asia — the Philippines and Thailand. Singapore works very closely with the United States, providing key access to military assets.
Other countries such as Indonesia and Vietnam have important common interests with the United States and are likely to become more engaged security and strategic partners in the coming years.
In addition, some of the world’s most important shipping lanes are in Southeast Asia — the Straits of Malacca and the South China Sea. The region also is the source of significant natural resources including oil and gas, as well as some of the richest sources of biodiversity on the planet.
Culturally, despite the fact that over the last decade some U.S. policies have been unpopular, notably our Middle East policy and wars in Iraq and Afghanistan, the United States is still considered a model for governance, civil rights and political and economic freedom.
English is still the predominant language used in business and education — and a large number of ASEAN students study in the United States.
None of these strengths in ASEAN can be sustained if U.S. policy does not recognize and build on them. With the rising influence of China and India, there is increasing competition for markets, minds and militaries in the region. This is a competition the United States should welcome, given its significant leadership position.
That is why a comprehensive U.S. strategy for Asia is incomplete without a strong, well-defined core strategy for ASEAN. ASEAN is the place where the most important countries of the Asia-Pacific meet and compete — and the United States cannot afford to cede or underestimate its foundational interests in this vital region.
In this sense, an ASEAN strategy has to factor in the rise of both China and India as well as key interests with U.S. alliances in Japan, Korea and Australia. The traditional post-colonial mindset of separating East Asia from South Asia no longer applies.
India has traditional cultural, trade and economic interests in Southeast Asia comparable to China’s. While India has been more internally focused than China in the last two decades, its policymakers, business executives, educators and movie producers have rediscovered ASEAN.
The United States will benefit from including India in regional architecture in Asia, if for no other reason than as ballast helping to balance a fast-growing and focused China.
In the area of trade and investment, ASEAN is at the center of the global free trade movement. For ASEAN, this is a matter of survival since its member countries are collectively the most trade-dependent in the world. Indeed, countries like Singapore, whose trade is over three times its GDP, would starve without trade and would languish if trade does not continue to expand.
On January 1, 2010, the ASEAN-China Free Trade Agreement took effect. ASEAN has signed a free trade agreement with Australia and New Zealand — as well as an FTA with India. Versions of FTAs are also in place with Japan and Korea.
ASEAN members Singapore, Brunei and Vietnam comprise three of the founding eight members of the Trans Pacific Partnership (TPP), and ASEAN members constitute one-third of the Asia Pacific Economic Cooperation (APEC) forum’s members.
The United States currently has a Trade and Investment Framework Agreement (TIFA) with ASEAN, though talks are relatively inactive. A good U.S. plan for ASEAN should be based on an assessment of whether the economic and strategic value of a U.S.-ASEAN FTA would be worth working through the impediments blocking negotiations at this time.
ASEAN is also a key partner on transnational global issues such as the fight against terrorism. While ASEAN’s Islamic population is overwhelmingly moderate, extremist groups have exploited weak borders and out-of-date police and national security structures.
They have managed to radicalize small groups and have struck several targets, including in Indonesia, the Philippines and Thailand. In addition, ASEAN countries are key stakeholders in transnational issues such as nuclear proliferation, climate change, energy policy and development of sustainable and renewable energy, management of disease, humanitarian assistance and disaster relief.
In conclusion, the United States must end the policy drift that has taken place since the close of the Vietnam War in Southeast Asia. U.S. interests in ASEAN are significant. A well-balanced and clearly defined strategy for ASEAN is the foundation for a realistic and enduring Asia policy.
Without such an approach, U.S. national security and the future wealth and prosperity of the country will be exposed to serious risk and an eventual downgrading of our status as a Pacific power.
The traditional post-colonial mindset of separating East Asia from South Asia no longer applies.
A comprehensive U.S. strategy for Asia is incomplete without a strong, well-defined core strategy for ASEAN.
In the area of trade and investment, ASEAN is at the center of the global free trade movement.
Although over the last decade some U.S. policies have been unpopular in Southeast Asia, the United States is still considered a model for economic freedom.
President Obama has declared himself the "first Pacific President of the United States" and has inaugurated a U.S.-ASEAN Summit that includes all ten of ASEAN's leaders.
Ernest Z. Bower
Senior Adviser and Director, Southeast Asia Program, CSIS Ernest Bower is senior adviser and director of the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C. Prior to joining CSIS, he formed BrooksBowerAsia, a consulting firm specializing in the Asia-Pacific region. Earlier, he served for a decade as president of […]