Economics and the U.S. Rebalance toward Asia

By Ambassador Ashok Mirpuri

President Obama meets with leaders of the Trans-Pacific Partnership countries. Source: NZNationalParty's flickr photostream, used under a creative commons license.

This blog post is adapted from comments Amb. Mirpuri delivered at a forum called “The Pivot: U.S. Rebalancing, Asian Responses” at the Indonesian Embassy in Washington, D.C. on February 14, 2013.

The United States is seen in the region as a resident power with legitimate interests in the Asia-Pacific, where it has played an indispensable and stabilizing role. U.S. engagement with Asia predates the Obama administration and enjoys broad bipartisan support, which is important for the sustainability and continuity of this engagement.

For various reasons, U.S. engagement with the region over the past few years has emphasized the political and security dimensions, with the economic dimension seen as a few steps back. This is unbalanced, and it is important to move the economic dimension of U.S. policy to center-stage.

This is particularly so as the rise of Asia over the past five decades has been an economic emergence, which in turn has served to underpin the region’s growing political significance. As the global economic and political poles shift to Asia, the imperatives for sustained U.S. engagement will only strengthen. As former secretary of state Hillary Clinton said in Singapore last year, the history of the 21st century is being written in Asia.

With the U.S. emphasis on domestic economic growth, engaging Asia makes economic sense for the United States in terms of trade, jobs, and manufacturing strength. U.S. companies stand to benefit enormously from the opportunities and markets available in Asia.

Some observers have questioned the sustainability of U.S. economic engagement with Asia, particularly given the economic circumstances in Washington, including budget limitations and debt issues. From Singapore’s perspective, the United States can and should dispel these doubts. The United States continues to have tremendous economic potential and maintains a leading edge in technology and innovation that is unlikely to be surpassed in the near future.

Looking at U.S.-Southeast Asia economic engagement, there is considerable depth and potential. ASEAN is the fourth largest export market for the United States. The United States has more than $150 billion in foreign direct investment (FDI) in ASEAN, with over $100 billion in Singapore.

ASEAN has a growing middle class with the resources and demand for the goods and services the United States can offer. ASEAN consumers appreciate high-tech innovation and design, top quality education, and the latest consumer goods.

However, as a trading partner with ASEAN, the United States has dropped to fourth place, after China, the EU, and Japan.

The way forward is to capitalize on U.S. strengths, and build on the ideas that President Barack Obama presented to the region in his meetings at the Asia Pacific Economic Cooperation (APEC) Summit and the East Asia Summit last November:

First, maintain the momentum for forward-looking economic initiatives like the 11-nation Trans-Pacific Partnership (TPP). This is a strategic agreement and the United States must lead the way to ensure its conclusion by October 2013 as announced by the leaders last year. The TPP keeps the United States engaged in shaping the regional economic architecture.

Second, re-double efforts on the Expanded Economic Engagement (E3), which is intended to lay the groundwork for all ASEAN countries to pursue high standard trade agreements. The E3 aims to achieve common principles on trade facilitation, investment standards, and e-commerce.

Third, the Comprehensive Energy Partnership for a Shared Future can shape and define new ideas for regional cooperation on energy issues. The United States should look at energy cooperation as reinforcing ASEAN connectivity through public-private partnerships.

Fourth, Singapore developed with the United States a Third Country Training Program, which can use our complementary strengths to help close the development gaps in the region, and share ideas for sustainable development and growth.

The challenge is to find new areas of cooperation that build on U.S. economic strengths — innovation and entrepreneurship — and combine this with ASEAN’s natural energy and drive to build a stable foundation for U.S. engagement in Asia. This is mutually beneficial, and the corporate sector already leads the way.

His Excellency Ashok Mirpuri is Singapore’s Ambassador to the United States of America.

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