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2/11/16

U.S.-ASEAN Relations: Hiding in Plain Sight - by James L. Schof

U.S. President Barack Obama will host the leaders of the ten countries that make up the Association of Southeast Asian Nations (ASEAN) in an unprecedented U.S.-ASEAN summit meeting on February 15 and 16 at Sunnylands in California. Since 2013, shorter meetings have taken place annually in Southeast Asia on the sidelines of broader East Asia summits. Obama took the unusual step of inviting all of the ASEAN leaders for this two-day gathering in the United States at the 2015 ASEAN summit meeting in Malaysia, during which they agreed to elevate their relationship to an “ASEAN-U.S. Strategic Partnership.”

While some experts might be skeptical that this kind of photo-op get-together and lofty diplomatic language can produce meaningful outcomes, in this case the ever-present symbolism obscures an underlying fact that the U.S. rebalance to Asia strategy is yielding stronger U.S. economic and security ties in the region. Moreover, burgeoning U.S.-ASEAN relations are moving in concert with key U.S. ally Japan stepping up its own outreach to the region in ways that complement American diplomacy. This is in contrast to decades earlier when U.S. and Japanese interaction in Southeast Asia was marked as much by competition as it was by cooperation. If not revolutionary, this is at least an evolutionary change that is good for both Southeast Asia and the United States and Japan, as long as the two countries can effectively align priorities and maintain focus.

The United States has long been an active investor in and trader with ASEAN members, but these economic ties across the Pacific have increased steadily since the end of the Cold War.  U.S. trade in goods and services with ASEAN more than doubled between 1996 and 2015, exceeding $260 billion per year to make ASEAN the fourth-largest trading partner of the United States. U.S. firms are also the top aggregate investors in this region, with a stock of foreign direct investment (FDI) in Southeast Asia at nearly $230 billion in 2014. Data from that year show that the U.S. and Japanese FDI outflows to ASEAN each separately continue to outpace those by any other nation outside of ASEAN, even China. Part of what is driving this investment is the fact that the ASEAN region is demographically younger and more economically dynamic than the United States or Northeast Asia.

Of course, the growth in U.S. activity in Southeast Asia pales in comparison overall to what China has accomplished during its phenomenal economic rise since the 1990s. Just before the 1997 Asian financial crisis, the United States and Japan were ASEAN’s largest trading partners, together accounting for over 30 percent of the region’s imports and exports, while China’s share was less than 5 percent. By 2015, however, China’s weight had grown and represented about 15 percent of ASEAN’s total trade, with a value of trade more than 20 times what it was in 1996. China’s leadership in the newly created Asian Infrastructure Investment Bank and related Southeast Asian initiatives will boost its role further.

Yet China’s influence in the region goes beyond mere economics, as it is leveraging years of increased defense and paramilitary spending to assert its preeminence in the South China Sea and claim most of the sea’s resources for itself. This makes many ASEAN members nervous. China’s political and diplomatic strength has risen as well, as shown in 2012 when behind-the-scenes pressure by Beijing on Cambodia, the host of the ASEAN Ministerial Meeting, succeeded in scuttling the association’s issuance of its usual joint communiqué that would have expressed concerns about China’s maritime activities. ASEAN’s efforts to promote economic integration and foster its own regional identity are part of a strategy to maximize control over its own affairs in the face of rising Chinese influence. Deepening partnerships with the United States and Japan are another part of this balancing approach, and the two allies are eager to reciprocate.

Read more: U.S.-ASEAN Relations: Hiding in Plain Sight - Carnegie Endowment for International Peace

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