After TPP: Challenges for United States-ASEAN Relations
January 21, 2019
The Association of Southeast Asian Nations (ASEAN) represents the sixth largest economy in the world, with the third largest population in the world. The participating countries—Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam—collectively constitute the United States’ fourth-largest trading partner and together, represent a market with a GDP of more than $2.76 trillion and a population of 642 million people. The ASEAN Economic Community (AEC) has been under development since 1992 when it was under the moniker “ASEAN Free Trade Area (AFTA).” In 2003, at the Bali Concord II, ASEAN Leaders committed to greater regional integration and declared AEC one of the three pillars of the ASEAN Community; the other two are Political-Security Community and Socio-Cultural Community.
ASEAN leaders have created various regional cooperation agreements to support deeper integration. Some of the building blocks of the AEC include the ASEAN Trade in Goods Agreement and the ASEAN Framework Agreement on Service. These agreements facilitate greater trade between states: increasing investment volume, expanding production, and improving transparency in commercial exchanges. The United States has cooperated with ASEAN since 1977 and has launched various constituent programs focused on economic, technological, and educational integration between member states, such as the Fulbright U.S.–ASEAN Visiting Scholars Program. Through 40 years of cooperation, the United States has built an enduring alliance with a region of vital strategic interest.
The importance of ASEAN
Fixed between the Indian and Pacific Oceans, ASEAN countries occupy a critical geographical position for trade and for the navigation of international waters. Trade passing through the South China Sea is valued at over $3.4 trillion annually. Maritime security is thus a critical priority for both the United States and ASEAN. Maintaining a strong presence in the region is crucial to protect American allies and promote the right to freedom of navigation.
Since 2006, the US-ASEAN Trade and Investment Framework Agreement (TIFA) has boosted fiscal ties and investment between the U.S. and ASEAN nations. Trade with ASEAN in goods and services supports over 370,000 jobs for the United States. The United States is also cooperating with Southeast Asia on multiple fronts extending beyond just trade: disaster management, education, governance, anti-trafficking, and nuclear non-proliferation. While U.S.-ASEAN commitments have brought benefits to both parties, these partnerships are currently at risk.
The United States and Southeast Asian partnership currently faces a number of challenges, most prominently China. China has grown significantly in economic and military strength over the past decade. With regards to the current state of affairs in Asia, experts from the Council on Foreign Relations note that, “Beijing is increasingly using not only assertive militarization of regional waters but also economic coercion” to assert its dominance on surrounding United States allies.
China is conducting naval exercises and developing military infrastructure on the disputed Spratly and Paracel Islands in the South China Sea. Chinese power is also blunting ASEAN member countries’ ability to respond defensively. Despite a 2016 ruling from the International Tribunal for the Law of the Sea declaring Chinese territorial aggression in the region and as illegal, no country has stepped forward to enforce the verdict. Chinese soft power is visible through its influence on ASEAN; the failure of the bloc to oppose China’s naval actions is emblematic of internal strife and external influence. At the November 2017 ASEAN summit, national leaders failed to come to a consensus and release a joint statement condemning Chinese tactics as aggressive or illegal. This is in large part because Chinese economic ties with smaller member states allow Beijing to constrain ASEAN policies that contradict Chinese aims.
In addition to a rising China, the region faces receding engagement from the United States. The United States’ decision to withdraw from the Trans-Pacific Partnership (TPP) was severely damaging to U.S.-ASEAN relations and the economic security of Southeast Asia. The TPP was a crucial measure to counter China’s use of coercive tools to reprimand nearby nations that oppose its regional hegemony. Without the TPP, United States’ allies will have less protection from Beijing’s influence. Political leaders in Southeast Asia viewed TPP as a representative of American commitment to the region, and were unprepared for its demise after the election. Without the TPP, ASEAN states are more likely to dispute America’s willingness to defend their security and sovereignty following Trump’s decision to withdraw. As countries increase their economic engagement with China following a receding U.S. presence, the potential for greater Chinese influence only increases in the future. China is now in a stronger position to develop infrastructure in Asia as part of its One Belt One Road Initiative and to negotiate its Regional Comprehensive Economic Partnership. Both of these will increase China’s geo-economic leverage over its neighbors at America’s strategic expense. In sum, the current U.S.-ASEAN partnership is weakening due to diminishing regional American commitments and growing Chinese influence.
The Path Forward
For the United States to redress the current regional dissonance, Washington should reaffirm its commitment to a regional order where international norms are upheld and where disagreements are resolved peacefully. A conceivable first step could be recognition of Permanent Court of Arbitration’s ruling in Philippines v. China. The 2016 ruling clarified maritime claims by the Philippines and China in the South China Sea, explicitly noting that China had no legal or historical claim to the contested territories. The U.S. should insist claimants adhere to the principles — respecting international law, not militarizing disputed areas, and not occupying uninhabited islands, reefs, and shoals — as described in the Permanent Court of Arbitration’s ruling. In addition, the United States ought to reassure regional allies by reaffirming its commitment to the rule of law and increasing its military presence in the region. This will signal the US’ commitment to the freedom of navigation and overflight, lawful commerce, and the peaceful resolution and arbitration of disputes.
Another step for improving U.S.-ASEAN relations is through reaffirming international agreements. Following US withdrawal from the TPP free trade agreement, several Asian leaders have pushed forward with the TPP-11. This new trade agreement retains most of the provisions of the original TPP but without United States involvement. Even without TPP, the United States retains several options for engagement and rapprochement with ASEAN, whether through joining TPP-11 or the U.S.-ASEAN Connect initiative. The Connect initiative is built on improving U.S.-ASEAN relations through four pillars: business and commerce, energy, innovation and technology, and policy. These alternative channels for cooperation may allow for a stronger U.S.-ASEAN relationship.
Continuing and deepening economic integration is critical not only for ASEAN but also for American regional interests. While political opponents of free trade may worry that engagement with Southeast Asia could lead to any number of ramifications—job losses, foreign competition, currency manipulation, and more—few of these concerns are supported by evidence. However, even without larger economic policy commitments, organizational engagements are another way the United States can avoid the consequences of free trade while maintaining the partnership. Programs such as the Young Southeast Asian Leaders Initiative are critical for creating an enduring framework for U.S.-Southeast Asia relations. These socio-cultural partnerships build amity and cooperation as evidenced by the overwhelmingly positive view that ASEAN residents have of the United States. Other avenues for engagement include the Women’s Leadership Academy, which supports women leaders in business, government and civil society, and the English for All program, which provides language skills to students and teachers throughout the region. The U.S.-ASEAN relationship is societal as well as economic. Economic withdrawal and cuts to the State Department’s Bureau of East Asian and Pacific Affairs threaten these social initiatives and undermine the U.S. and ASEAN’s ability to establish longer-term partnerships.
In order to restore America’s standing in the region, U.S. policy makers should continue building on existing socio-cultural ties and reinforce economic partnerships such as US-ASEAN Connect. U.S. and ASEAN leaders should also resume talks on fostering other areas of cooperation such as cyberinfrastructure and law enforcement. Greater integration and endorsement of current bilateral trade and cooperation agreements might be able to remedy existing challenges. Otherwise, the United States risks alienating several of its most important strategic and economic allies.
Student Blog Disclaimer
The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.