U.S. Strategic Alignment: Squaring Trade and Grand Strategy in Asia

The United States has all the tools at hand to build an enduring and sustainable strategy for engagement in the Asia Pacific. But some careful work is needed to fit the key parts of this policy together. The most compelling requirement is to ensure that trade policy supports a comprehensive U.S. strategy. Washington must make sure that the Trans-Pacific Partnership (TPP)-led trade approach avoids weakening or dividing ASEAN. That is vital because the engagement strategy outlined and articulated by the Obama administration is focused on strengthening ASEAN as “the fulcrum” of new Asia-Pacific regional economic and security architecture.

Geostrategic Clarity—A Strong ASEAN

From a U.S. geostrategic point of view, a stronger ASEAN represents a stronger foundation for regional institution building. An integrated ASEAN is also consistent with pursuing a regional rules-based approach to development and dispute resolution. This concept is at the core of Secretary of State Hillary Clinton’s historic intervention at the ASEAN Regional Forum in Hanoi in July 2010. The United States is investing in ASEAN-based institutions such as the East Asia Summit (EAS), the ASEAN Regional Forum (ARF), and the ASEAN Defense Ministers Meeting Plus (ADMM+). It has signed the Treaty of Amity and Cooperation and has assigned a full-time resident ambassador to the ASEAN Secretariat in Jakarta.

A bet on ASEAN-based architecture is a long-term commitment. ASEAN is evolving, but it is not currently structured for, nor is it culturally accustomed to, results-based dialogue and diplomacy. However, ASEAN has shown signs it wants to step up its efforts and has begun to deliver clear strategic value.

Remaining committed to the EAS and regional architecture at the appropriate political level will challenge the United States in the near to midterm. In a region as important as the Asia Pacific, how can the United States commit annual participation of the president with institutions not yet structured to guarantee that the most pressing issues—even if they are highly sensitive—will be on the agenda with a clarity that allows senior officials to prepare leaders to resolve problems and make decisions? The answer lies in an increased U.S. investment in relationships with its five allies in the Asia Pacific (Australia, Japan, Korea, the Philippines, Thailand) to help strengthen ASEAN and drive a results-based agenda. That agenda includes developing new partnerships with countries such as Brunei, India, Indonesia, Malaysia, Singapore, and Vietnam that share the United States’ strategic alignment, and building capacity and confidence in less-developed countries such as Cambodia, Laos, and Myanmar.
At the same time, the United States must continue to invest in building relations with China. It already has many of the right structures in place to communicate and exchange views, which will build trust and capability to collaborate in more and more areas over time. The notable weak link in U.S.-China relations remains military-to-military dialogue—an area in which the United States continues to press for progress.

Trade: Forward Deployed, but Misaligned

For those with reason to question or challenge the U.S. resurgence in strategic engagement in the Asia Pacific, the important inconsistency is trade. They argue that the United States is supporting a strong ASEAN on the security and political front, but that it is happy to divide ASEAN when it comes to trade.

The problem is that only four ASEAN members (Brunei Darussalam, Malaysia, Singapore, and Vietnam) are included in the nine-country TPP negotiation the United States says is the core of its trade policy in Asia. TPP members have declared that only members of the Asia-Pacific Economic Cooperation (APEC) forum will be considered for accession. But three ASEAN countries—Cambodia, Laos, and Myanmar—are not members of APEC and therefore are not eligible for accession.
In other words, there is an apparent contradiction between U.S. strategy in the Asia Pacific and U.S. trade policy. While the United States says it wants a strong and integrated ASEAN, its key trade platform for the region includes only 4 of ASEAN’s 10 member countries, and only 7 of those 10 are even eligible for inclusion.

Squaring the TPP with Broader Strategy

Some leading Americans concerned with the U.S. position in Asia have called for the United States to articulate a long-term goal of a U.S.-ASEAN free trade agreement (FTA) to help bridge this gap. U.S. senator and ranking member of the Senate Foreign Relations Committee Richard Lugar (R-Indiana) and the CSIS U.S.-ASEAN Strategy Commission have endorsed that idea.

Countries including China, Japan, South Korea, Australia, New Zealand, and India have FTAs with ASEAN. In addition, all members of the EAS, the United States and Russia excepted, have some economic agreement with ASEAN. Most of those countries’ definitions of FTAs, however, differ from the U.S. definition, and none takes as comprehensive, high-level, and legally binding an approach to free trade agreements as the United States does. The Office of the U.S. Trade Representative is granted authority to negotiate free trade agreements by Congress, but it has no legal authority to negotiate agreements with lower-level criteria not approved by the legislature.

Nonetheless, there is a path open to the United States. The good news is that Laos is on track to accede to the World Trade Organization (WTO), possibly by the end of 2012, and when that happens, all ASEAN members will be WTO members. In addition, if Myanmar continues to make progress on its political and economic reforms, U.S. sanctions could be eased and the United States would have a structurally unfettered capability to engage ASEAN on the economic front and to work to connect its TPP-based goals not only to ASEAN, but to all members of the EAS.

Linking the intent of the TPP effort to establish a comprehensive, high-level trade agreement throughout the Asia Pacific to U.S. engagement in the EAS and ASEAN is the breakthrough needed to square U.S. trade policy with the country’s broader strategy. It is also a necessary step toward convincing China to play by the rules and be guided by norms it establishes in consultation with other nations in the Asia Pacific.

Key actions for the United States to take to accomplish this goal include the following:

1. Announce a U.S.-ASEAN Economic Partnership at the U.S.-ASEAN Leaders’ Meeting in Phnom Penh in November 2012. To prepare for the announcement, the United States should consult the ASEAN countries collectively and bilaterally and seek their support (a) to announce an acceleration of the U.S.–ASEAN Trade and Investment Framework Agreement (TIFA) and (b) to create a vehicle called the U.S.-ASEAN Economic Partnership. This would be a framework in which the United States and ASEAN’s TPP countries would brief other ASEAN members on the status of the TPP negotiations; create a U.S.-ASEAN working group to support member countries wishing to accede to the TPP; and develop a focused and well-resourced capacity-building plan for members who would like to join but need support.
   
   
   The U.S.-ASEAN Economic Partnership should build and expand on the model of the U.S.-Philippines Trade Facilitation Agreement signed last November. This would allow the United States and ASEAN member countries to negotiate and make binding commitments to the customs chapter of a world-class FTA. This should be gradually expanded to include other chapters, which would serve as the building blocks to prepare for TPP accession.
2. Revise TPP accession eligibility. The United States should quietly work with other TPP members to revise accession language to open membership to members of APEC and the EAS. This does not mean all APEC and EAS members are ready to seek TPP membership in the near term, but it avoids the trap of institutionally excluding them and of pitting a strong and proactive trade strategy against a sensible and enduring regional strategy.
3. Initiate an EAS Economic Partnership. Build support within the EAS for an economic integration plan that would be consistent with a U.S.-ASEAN Economic Partnership and provide capacity building so all EAS members could eventually aspire to join the TPP.
   
   
   The plan should include a focused effort to coordinate assistance programs within the EAS on building capacity for less-developed members, preparing them to join the TPP as full members. This is a long-term process, but one that could build trust, cooperation, and a sense of common mission among EAS member countries.
4. Refocus the U.S.-Indonesia trade and economic development discussion under the existing U.S.-Indonesia Comprehensive Partnership. Experts will recognize that alignment with Indonesia is a vital aspect of this strategy. Indonesia has clearly indicated that it is not ready to negotiate new free trade agreements. The ASEAN-China FTA was a factor in costing the country’s last trade minister her position. Indonesia has clear goals for foreign direct investment, and trade is becoming increasingly important to ASEAN’s largest economy. Changing the discussion from TPP membership or an FTA to how to better align and adapt U.S. and Indonesian trade promotion agencies to fit current needs, identify common goals (there are many), and focus on these issues in the near to midterm will empower reformers and prepare both countries to move forward after their national elections in 2012 and 2014.
5. Invite China. The United States should take the lead to ensure that China and its companies are welcome to join the TPP and the EAS Economic Partnership. The long-term U.S. objective of Asia-Pacific economic integration must by definition include the region’s largest economy. Sending this signal seriously and with mantra-like repetition will help reassure U.S. partners around Asia that the United States is not asking countries to choose between China and the United States, but instead to help find ways to get all participants engaged in a rules-based regional integration effort.

It is important for the United States to square the perceived contradiction between its Asia-Pacific strategy and its trade policy for the region. The levers to accomplish this goal are well within reach. Working them carefully will require focused diplomacy, coordination of message and approach among U.S. agencies and between the administration and Congress, and high-level political commitment to the region. The investment is worthwhile: aligning trade and economics with broader strategy is key to enhancing regional security and resolving disputes in sensitive areas such as the South China Sea.

Ernest Z. Bower is a senior adviser and director of the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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