Thank you for your kind invitation and thanks to Joe Cochrane and other members of the Club for all your work in setting up today’s program.
It is great to be here with you and to have a chance to talk about U.S. foreign policy in ASEAN. America has long been a Pacific power. But early in his first term, President Obama saw the need to remind us of this and refocus American national attention on our relations with Asia.
It is true that America’s leaders continue to be very concerned about the situation in the Middle East and Ukraine and elsewhere. The U.S. has interests in many parts of the world, and we cannot control what crises will emerge. But, as we would say back home, the United States can “walk and chew gum” at the same time. So you can rest assured that the rebalance to Asia is in full swing.
ASEAN is a cornerstone of the Rebalance. As President Obama has said, “A strong relationship between the United States and ASEAN is essential to realizing our shared vision for the future of the Asia Pacific…”
The United States has a very full agenda in Southeast Asia. Let me offer a few specifics about our engagement that perhaps you have not heard about before. Over the past five years, United States development assistance in Southeast Asia has totaled more than $4 billion. This money is spent on programs that have had a real impact in the lives of ordinary people in the region.
For example, these funds have delivered clean water to a million people in Indonesia, on track to reach 2 million people this year. In the Philippines, Indonesia, and Cambodia, USAID has helped protect and conserve more than 250,000 square kilometers of forest and coast– a total area approximately the size of Laos! This preserves biodiversity and reduces the impacts of natural disasters on ordinary people.
A final example. We have English language programs that have trained thousands of officials from ASEAN countries and allowed them to better interact with their counterparts in ASEAN.
I could go on. We have programs to prevent infant death, preserve cultural heritage sites, train judges, improve education, feed children, and many more. And this doesn’t include any of the assistance our military provided after Typhoon Haiyan, for example, or in helping search for the victims of the Air Asia flight.
Why are we doing these sorts of things? Why are we spending our hard-earned tax payer dollars on things like this? And on me, for that matter?
The fact is that we are here, and we are engaged in Southeast Asia because we need to be. That is why you can count on us staying.
A prosperous, strong, integrated and unified ASEAN is good for the people of Southeast Asia. But it is also good for the United States, and, moreover, good for the world. I am here, hundreds of other U.S. diplomats are here, America is here and we are as active as we are because it is in our national interests to be here. Why? Let me count the ways.
First, the United States has deep economic interests in Southeast Asia. Our companies have been here, investing billions in facilities, infrastructure and in people, for many decades. As a result, the stock value of U.S. direct investment in Southeast Asia is greater than any other country’s; American private sector investment, over $200 billion, is more than China’s, Korea’s, and Japan’s combined. U.S. business invests considerably more in ASEAN than it does in China. ASEAN-American two-way trade is also enormous; if ASEAN were a country, it would be our fourth largest trading partner.
And let me tell you something interesting about our trade with ASEAN. I didn’t fully appreciate this until last week, I am embarrassed to admit. When looking at trade from a value-added perspective, the United States is the number one trading partner of many, if not all, the ASEAN countries. Let me give you a made-up but realistic example to explain.
Say that Malaysia imports raw materials for $1 and uses them to make a component which it exports to China for $10. China uses that component and exports a final good for $12 to the United States. In standard trade data, what is counted is Malaysia’s exports to China of $10, and China’s exports to the U.S. of $12. And therefore, in this example, China would appear to be Malaysia’s largest export market. When looking at trade from a value-added perspective, though, the value added in Malaysia ($9 in this example) is counted as an export to the United States. So Malaysia exports $9 to the U.S., and China exports $2 to the U.S. And when you look at the data in this way, which many think is more accurate given the globalized nature of trade, and the distributed supply chains in the region, the U.S. remains the number one trading partner of at least Malaysia, Vietnam, Singapore, the Philippines and Thailand. My staff is seeking data on the others.
Trade with ASEAN means jobs in the U.S., profits for our companies and products for our consumers. But it means good things for the regular people of ASEAN too: Jobs, training, skills, and technology. Our companies hire locally. In fact, there are relatively few Americans working in American companies here.
This robust economic relationship will continue. The growth picture around the world isn’t rosy in a lot of places. The U.S. is actually one place it is starting to look quite good again. Our unemployment rate is the lowest it’s been in years; our stock market indexes are the highest they’ve been in years or ever, and we’ve been creating hundreds of thousands of new jobs every month.
The economic future also looks very bright right here in Southeast Asia. The ASEAN middle class is growing by leaps and bounds; It is projected to increase by anywhere between 16% and 28% in the next five years alone. The work force is young. And the ASEAN Economic Community is bringing even more opportunities by reducing barriers to trade, services, investment, and skilled labor flow.
The second reason the United States is present in Southeast Asia is because we have significant security interests here. A more prosperous, more integrated Southeast Asia will mean a more secure and stable Asia-Pacific region. ASEAN has underwritten peace and stability in this neighborhood for a generation. That is why the countries here were able to lift millions out of poverty—because of that basic foundation of peace. In a region loaded with major powers, we want ASEAN to continue to play its critical role in promoting peace and security.
The U.S. believes that a rules-based order in Asia will benefit all, large and small countries alike. Rules provide predictability. They guide cooperation and set expectations.
ASEAN is all about rules and norms. The ASEAN Charter says that one of the purposes of ASEAN is to “enhance good governance and the rule of law,” and that one of the Principles of ASEAN is to “uphold the United Nations Charter and international law.” The rules-based order the U.S. wants in Asia starts with ASEAN.
There is another facet of our security interests. As President Obama often observes, no country can achieve security alone because many modern threats do not respect our national borders.
Officials here in Southeast Asia, are battling the destructive forces that threaten American citizens too, whether it be climate change, foreign terrorist fighters, illegal trafficking, or pandemic disease.
ASEAN, because it is multilateral, is exactly the partner we need to address trans-border threats. I don’t have to tell you that how the ten ASEAN member states act on these issues, individually and collectively, affects the U.S. and the whole world.
For example, ASEAN together is the 5th largest emitter of greenhouse gases. This is why in November ASEAN and the U.S. agreed to a joint statement on climate change. This is a big deal. We have never done anything like it before, and it was not easy. But this statement shows ASEAN taking leadership on a global issue, helping the world build momentum for a global climate change agreement in Paris at the end of this year.
Finally, the U.S. is present here because of the ties between our people. Many of our citizens came from Southeast Asia originally. Over three million Americans visit Southeast Asia each year and almost 50,000 ASEAN students are studying in the U.S.. So that is why America is here. Because it is in our national interest.
Now why am I here? In the first few months of his administration, back in 2009, President Obama decided to establish a permanent, separate U.S. Mission to ASEAN. We were the first non-ASEAN country to do this. And now the U.S. Mission to ASEAN works hard to help ASEAN realize its goals.
We at the Mission have three major priorities: Supporting ASEAN economic integration, deepening our maritime cooperation and nurturing the young leaders of ASEAN.
This is 2015, the year that the ASEAN Economic Community, or AEC, will be born. More integration will mean more opportunities and more economic growth. Integration will cushion countries here from external financial shock. And it will give more people a stake in their neighbors, which will strengthen political bonds. That, in turn, will allow ASEAN to play an even stronger role in keeping peace in the region. Thus America has a strategic stake in integration, not just an economic one.
A lot has been done already on the AEC. Nobody in 1992 would have believed that ASEAN would be a nearly tariff-free zone, ever. And yet here we are.
While intra-ASEAN trade has grown dramatically in volume over the last ten years, the percent of regional trade has hovered around 25%, which is low compared to NAFTA at 45% or the EU at 65%. This points to all the work remaining, which is considerable.
In my meetings with ASEAN leaders and thinkers, though, I sense a palpable political commitment to seeing the AEC process through to its end. There is a general consensus that ASEAN has to do this for its own good, and that it cannot turn back. The real question is on what timetable.
There are numerous implementation hurdles at the national level. The regulatory infrastructure remains weak in many Member States, and some lack the capacity to make progress on necessary reforms quickly. In some cases, counties are asking for more time to implement the Blueprint targets. In other cases, short-sighted domestic interests are creating resistance to the reforms needed for greater integration. But we’ve seen this movie before, in many countries; including, I daresay, the United States. I think this story will have a happy ending over the long term.
The United States has supported integration in a variety of ways. We have invested tens of millions of dollars on programs like the ASEAN Single Window to help goods move more freely across borders. I can talk more about that later if you are interested.
In the past few years we partnered with U.S. companies to train over 2,000 small and medium sized business owners in ASEAN to support economic development. Over half of those business owners were women. And we work with women entrepreneurs in ASEAN as well. We helped launch the ASEAN women’s entrepreneurial network because dozens of studies have shown how including women fully in the workforce adds measurable points to GDP and that investments in women benefits the whole society.
Much of the trade in this region moves via the oceans. ASEAN sits astride some of the world’s most important trade routes. $5.3 trillion in global trade passes through regional waterways each year. That brings me to our second priority, deepening maritime cooperation.
As a major maritime and Pacific power, America has national interests in freedom of navigation and overflight, free flow of lawful commerce and the peaceful settlement of disputes in accordance with international law.
As a matter of long-standing policy, the United States does not take a position on the sovereignty claims in the South China Sea and we are not, ourselves, a claimant. Nor does the U.S. comment on the specific merits of the Philippines-China arbitration case.
At the same time, the United States does have a national interest in howclaimants deal with their disputes and whether claims around the world comport with the international law of the sea. We call on all claimants to bring their claims into conformity with international law, and we reaffirm our support for nations to exercise peaceful means to resolve maritime disputes without the use or threat of force, intimidation, or coercion.
Under the Law of the Sea, all States have the right to avail themselves of international dispute resolution mechanisms. We support parties’ utilizing these legal mechanisms as a means to help further peace, stability, and security in the region. In the 2002 Declaration of Conduct, ASEAN and China committed themselves to “exercise self-restraint” when it comes to activities that could “complicate or escalate” disputes.
Large scale construction or major steps, such as dramatically expanding the actual size of a disputed feature through land reclamation, would have the effect of complicating or escalating disputes. We think that an agreement by the claimants that they would avoid certain actions during the Code of Conduct negotiations would create a conducive and positive environment for the negotiations.
In any event, we hope that these negotiations are concluded rapidly and result in tangible steps to reduce tensions. As I said earlier, one of the most important reasons for growth and prosperity has been peace and stability in the region. Not just the countries of East Asia, but the entire world, have a huge stake in seeing that these conditions continue. We support ASEAN’s strong and unified voice on these issues calling for peaceful resolution in accordance with international law.
There are other marine issues that are important to the United States including biodiversity and fish. Americans love their tuna fish sandwiches, and their tuna sashimi, and a large portion—some studies say 40%– of the world’s tuna are born in the South China Sea. But this resource is under severe threat from overfishing and illegal fishing. In fact, some studies suggest that 90% of all the species of edible fish in the SCS will collapse by 2040. Needless to say, this is a real problem for the regular people in this region who make a living fishing and who need fish for protein.
Southeast Asia is also home to more marine biodiversity than anywhere else in the world. Who knows what life-saving drugs could be found in a species of algae or seaweed that has yet to be discovered? For these reasons, this year the U.S. will commit to spend tens of millions of dollars on regional and bilateral programs designed to conserve marine biodiversity and help combat illegal fishing.
Last, I want to talk about our work with the young leaders of Southeast Asia. This topic always brings a smile to my face because these young people are so inspiring. A little over a year ago President Obama established the Young Southeast Asian Leaders Initiative – YSEALI. YSEALI already has 25,000 members ages 18-35. It offers regional events and exchanges with the U.S.. President Obama announced in November that the number of fellowships in the U.S has been increased to 500 per year.
YSEALI is also funding small grants for projects run by members to address cross-border issues in education, environmental protection, and economic and community development. These programs are helping young leaders get to know their counterparts in other ASEAN countries and learning how much they have in common. More than one participant has said to me “I didn’t really think about ASEAN until I joined this workshop!”
We are investing tens of millions of dollars annually in helping build an ASEAN identity through programs like the YSEALI program, support for the ASEAN Youth Volunteer Program, and the Fulbright U.S.-ASEAN Visiting Scholar Initiative.
Living in an ASEAN community that is more inter-connected and inter-dependent is not a new thing, but is in line with the history of movement, migration and commerce in the region for hundreds of years.
In 1967, many, including the United States government, welcomed the formation of ASEAN. But most observers believed the organization would be (as historian Robert McMahon wrote) “a brittle alliance containing a strange mix of aligned and non-aligned nations.” It was fairly easy to be skeptical of the regional grouping because of the vast differences in their political systems; their religions; and their cultures and identities. Indonesia and Malaysia had just ended a bitter, three year confrontation, and Singapore had become independent just two years earlier.
But despite differences, I think we can all agree that ASEAN has proved to be far more dynamic and durable than anyone at the time could have imagined. ASEAN has its share of challenges, but it has a good record to build on and a wonderful community of people to serve.
In closing, I would like to remind you that you, as journalists covering Southeast Asia, have a critical role to play in helping move the integration of ASEAN forward. As they say, you are writing the first draft of history – and you are right in the middle of a significant historical process.
So I ask you, when you do your research and write your stories, think about the regional angle.
Watch this fascinating process of regional integration, and tell the success stories as well as report on the barriers. It’s up to you to help the citizens of ASEAN, and the world, know more about each other and about the institutions that are going to shape their future. We are building up our public affairs office at the U.S. Mission to ASEAN.
Please don’t ever hesitate to contact us if we can help with any information. We really want ASEAN to continue to succeed.
Thank you for your work in reporting on ASEAN affairs. I am counting on you to educate the public about ASEAN issues.
And thank you again for your warm welcome today. With that, let me end my remarks. I am eager to hear your ideas, thoughts and questions about ASEAN and the United States.