Mesmerized by the Spectacle of Akio Toyoda

Dear Colleagues,

I am old enough to be mesmerized by the spectacle of the Chairman of Toyota Motor Corporation, Akio Toyoda, the company’s namesake and son of its founder, testifying in front of the House Oversight Committee on Capitol Hill.  Toyoda-san’s image on CNN flicked across omnipresent and, if we’re honest, Orwellian monitors around the building at 18th & K.   Globalization has certainly come a long way – the Japanese scion’s presence on the Hill underlines the amazing level of economic integration that is already in place between the United States and Asia.

Washington was busy this week.  President Obama regained some important momentum, getting ready to pass a $15 billion “jobs” bill (by the way, no erstwhile legislation in the current milieu is worth its salt if it doesn’t have the word “jobs” prominently featured in its name – a good hint for those who would like to see a trade strategy unveiled as soon as possible) and cleverly lured Congressional Republican leadership into a televised Health Care Summit that was a precursor to what seems to be a clear decision by the White House to go it alone and pass Health Care legislation without any Republican support.   That is a big gamble with elections coming in November, but given the bitter partisan grist of DC as this long unusually cold winter languishes, it may be the only option for the President.

All of this matters to friends in Asia.  Policy makers and business leaders from Jakarta to Makati are concerned about the health of the US economy, watching President Obama’s momentum carefully and weighing whether they believe the US will follow through on near-term promises to be a major player in the region.  John Pomfret’s piece, "Poll Shows Concern about American Influence Waning as China's Grows", in the Washington Post explored some of these questions in the context of China’s rise. At the same time, there are real signs that China may be overplaying its hand in ASEAN and

The Week That Was

The Southeast Asia beat was very active this week, with regional developments testing US policy makers and underlining the need for a clear American strategy for the region.    The biggest push is preparation for the President’s trip to Indonesia, Australia and Guam.  Because the visit was moved from mid- summer to March, interested parties in Washington, Canberra and Jakarta are scrambling to firm up good ideas and deliverables they thought they had three more months to develop. 

In addition, regional developments tested the efficacy of US policy.  To be kind, progress in the region on key areas isn’t linear – regional analysts all have this arrow in their quivers – “one step forward, two steps back.”  To be consistent and follow through requires a clear articulation of US goals and interests.  This will allow the United States to work with ASEAN colleagues, official and other, to address hard issues and make progress.   It will also prevent well-founded policies from being diverted by short term reactions to crises. 

It was a challenging week around ASEAN.  

1. In Burma, the ruling SPDC took another step backward when opposition leader Aung San Suu Kyi’s appeal was denied on Thursday.   UN Special Envoy for Burma  Tomas Ojea Quintana  was stuffed on his inaugural visit.  He got few meetings and none of real significance underlining the regime’s clear distain for the UN and interest in working directly with sovereign powers.
2. In Cambodia, House members Delahunt and Rohrbacher are considering legislation called the Cambodian Trade Act of 2010 that would enact sanctions limiting US aid and military training based on concerns over the return of 20 ethnic minority Uighur asylum seekers to China.  Just after the, Uighurs were returned under heavy Chinese pressure, China’s Vice President  Xi Jinping visited Cambodia and signed $1.2 billion in soft loans and investments.  This will present a policy test – does the US gain leverage and influence by punishing Cambodia for knuckling under to Chinese pressure?  Or does cutting its ties reduce US influence and push Cambodia into China’s hands?  Is there a proportional policy response aimed at China for its role in the incident?
3. In Thailand, the Supreme Court decided to seize over half of the 76 billion baht ($2.3 billion dollars) of former Prime Minister Thaksin’s frozen assets, keeping $1.39 billion for the Thai Government and making over $900 million available (at some point) to Dr. Thaksin.  While no violence erupted, the Red Shirts (traditional Thaksin supporters) indicated they would move their planned protests to March 14-21.   What is clear is that the Democrat led coalition remains under pressure and the Red Shirt movement is not going to fade away.
4. Malaysia continued with its own political high drama as the trial of former Deputy Prime Minister Anwar Ibrahim continues.   His legal team’s moves to have the case dismissed where denied and the case continues.  Anwar may make a visit to Washington, DC and CSIS has offered to host him to share his views on developments in Malaysia and regionally.  As the Anwar trial progresses, Malaysia’s traditional political vehicles, including coalitions and constituent parties, have come under enormous internal pressure from constituents seeking reforms.  Malaysia’s political landscape is transforming itself and the process is creating understandable controversies as tempers flare and groups seek any levers possible to try to rally party faithful. 
5. Philippine news continues to be dominated by national elections set for May 10.  The gap between Presidential frontrunner Senator Begnino “Noynoy” Aquino III and Senator Manny Villar has closed earlier than most analysts expected.   While foreign policy has not been a key issue in the race, it is possible that Aquino, whose camp seeks to undo much of the Arroyo agenda and expose what they view as illegitimate contracts and agreements signed during her term, may dial back the Philippine-China relationship.  Villar’s plans in this regard are less clear.
6. CSIS leadership met this week with Indonesia’s  Gita Wirjawan, the Chairman of the Investment Coordinating Board (BKPM).  The Minister is working on creating opportunities to expand US investment in Indonesia as well as addressing some of the challenges existing investors face.  He says coordination among Indonesian ministries is at a new level and that he has succeeded in instilling more efficient systems including an “email culture” in the Ministry.

The Week Ahead

ASEAN Economic Ministers have gathered for their annual retreat in Bangi, Malaysia.  They are playing golf at the Equatorial outside of KL.  All countries sent a minister except Thailand, who will be represented by a Vice Minister.  The focus is on trying to enhance regional economic integration and getting intra-ASEAN trade up from around 25% to near 35%.  This goal is laudable and recognizes that the US cannot continue to be the market of last resort and China is still not yet able to fulfill its potential as a consumer of exports.  ASEAN now has FTA’s with China, India, Australia & New Zealand, Japan and South Korea. 

The US is not in the game yet, and has a Trade and Investment Framework Agreement (TIFA) with ASEAN.  The Burma issue and the wide diversity of ASEAN members’ economic development has kept the US out of the FTA club in Asia.   The US does have a world class FTA with Singapore and will join Trans Pacific Partnership (TPP) negotiations in Melbourne from March 15-19.

CSIS Southeast Asia is developing a paper on whether as US ASEAN Free Trade Agreement (USAFTA) provides enough value both economically and strategically to warrant working through the challenges and moving forward.   For instance, could the US and ASEAN accelerate the TIFA discussions to the level of FTA negotiations with the TPP-like goal of establishing a world class agreement that would build upon the US Singapore FTA model and allow like minded ASEAN members to join, while creating a capacity building work plan to and road map to define the path for accession for other countries along with training and support to help them join as soon as possible?   This policy approach would require careful assessment of resources and value and would have to be complimentary to the TPP process which is ultimately aimed toward a Free Trade Area for the Asia Pacific (FTAAP).

The ASEAN Economic Ministers are planning an investment promotion tour to the US in May with the help of the US Government and the US ASEAN Business Council. 

ASEAN Ambassador to the United States:  Another question CSIS Southeast Asia is exploring is should ASEAN send an Ambassador to the United States?  The US is sending its Ambassador for ASEAN to Jakarta later this year.  Should ASEAN reciprocate?   There is an active ASEAN Washington Committee comprised of the ten ambassadors from ASEAN countries to the US and designed as a forum to promote and discuss ASEAN issues in Washington, DC, but would an Ambassador from ASEAN help augment that work and ensure that the ASEAN agenda was consistently and proactively promoted in the US?  Is the value of such a position worth the time and investment to sustain and ASEAN Mission in Washington, DC?    What are the financial, legal and diplomatic challenges associated with taking this step?

The ASEAN Defense Minister Meeting  (ADMM) will take place in May in Vietnam.  The Minister will be generally guided by the ASEAN Political and Security Blueprint and will consider important questions about Asian regional security architecture including inviting “+ X” dialogue partners to join them.  The US has a strong interest in being a core “+ X” partner, and if that goes forward, US Secretary of Defense Robert Gates will need to schedule an annual trip to the region to participate in talks.  This move would help strengthen the ASEAN Regional Forum process and takes a very important and practical step toward the concept of ASEAN’s centrality in regional architecture.

March 5  > CSIS will host US Ambassador to Thailand The Hon. Eric John for consultations on March 5.   The format for the meeting is likely to be a private discussion with CSIS members and experts, but interested parties should contact  SoutheastAsiaProgram@csis.org

March 8-12  > The CSIS Asia Team Road Show will visit San Francisco and Silicon Valley, Seattle and Chicago.  CSIS Asia chairs Mike Green, Charles Freeman and Ernie Bower will visit with the top management in America’s top companies to discuss trends across Asia, US policy responses and look ahead at opportunities and challenges.March 15  >   CSIS Expert Mike Green and Ernie Bower will conduct a Media Briefing on President Obama’s trip to Indonesia, Australia and Guam at CSIS.  Interested parties should contact Neal Urwitz at CSIS Public Affairs at nurwitz@csis.org

For more details on our programs and to follow CSIS with real time updates, sign on for CSIS Southeast Asia Program on Facebook and follow us on Twitter@SoutheastAsiaDC. 

Thank you for your interest in US policy in Southeast Asia and CSIS Southeast Asia.  Join the conversation!