The new US-ASEAN Connect initiative was announced at the US-ASEAN Leaders Summit at Sunnylands in February, 2016, attended by President Obama and the leaders of the ten ASEAN nations. Image: PBS News Hour via YouTube.

US-ASEAN Connect: Empowering US-ASEAN Relations

ASEAN

The US and ASEAN have enjoyed close relations for nearly forty years since the former became a Dialogue Partner in 1977. During this time, trade and investment relations between the US and ASEAN have flourished. The US is ASEAN’s third largest trading and investment partner. Conversely, ASEAN is the US’s fourth largest export destination, after Canada, Mexico, and China.

ASEAN has also grown over time to become the seventh largest economy in the world and the third largest in Asia. Growing economic prosperity is transforming the ASEAN region from a mere production base to an important market for US goods. Central to ASEAN’s attractiveness to the US as an export market is its fast growing 635 million population. A burgeoning young population and an expanding middle class in Indonesia and Vietnam also highlight ASEAN’s growing consumption power in the years ahead.

The US-ASEAN relation is poised to take off to greater heights with the announcement of the US-ASEAN Connect initiative in February by President Barack Obama at the US-ASEAN Summit in Sunnylands, CA. The initiative aims to further strengthen the US’s economic engagement in the region through four strategic thrusts or pillars, namely Business Connect, Energy Connect, Innovation Connect, and Policy Connect.

The first pillar seeks to increase commercial engagement between US and ASEAN in selected sectors such as ICT and infrastructure. It will also help to facilitate the ongoing efforts to deepen economic integration within ASEAN by assisting in the implementation the ASEAN Economic Community (AEC). The connectivity, clean energy and energy security goals of ASEAN are supported in the second pillar through assistance for the development of power sectors in ASEAN. The third Connect uses policy support and direct engagement with entrepreneurs to assist in the development of Southeast Asia’s entrepreneurial ecosystem. Finally, the fourth pillar focusses on helping ASEAN countries to create a policy environment that is conducive to trade and investment, digitally enabled innovation and sustainable and equitable economic growth. This includes the provision of capacity building and technical support to ASEAN member states.

Despite the strong commercial interests in the new initiative, there are also geopolitical imperatives underlying the US’s strategic shift for deeper engagement with ASEAN. The rise of China and its increasingly close economic linkages with Southeast Asia is an obvious contributory factor. China is ASEAN’s largest trading partner and is currently negotiating to upgrade its trade agreement with ASEAN. It is also party to the on-going Regional Comprehensive Economic Partnership (RCEP) negotiations, which aims to link the ten member states of ASEAN with its six Free Trade Agreement (FTA) partners – Australia, China, India, Japan, South Korea, and New Zealand.

The Trans-Pacific Partnership (TPP), in comparison, counts only four ASEAN member states – Brunei, Malaysia, Singapore and Vietnam – as parties to the agreement. The US-ASEAN Connect could potentially be a useful mechanism to promote the TPP and facilitate the US’s expanding economic footprint in the region by supporting structural and policy reforms in potential members such as Indonesia, the Philippines, and Thailand.

The initiative will reap substantive diplomatic payoffs for the US in helping Washington to regain its standing on the economic front. China’s ascendance as ASEAN’s largest trade partner had bolstered Beijing political influence in the region, which gave rise to the misperception of US decline. The hubris surrounding China’s economic growing influence belies the fact that the US holds the largest quantum of foreign direct investment stock in the region. The US-ASEAN Connect effectively puts a public face to mark the US’s longstanding and deep trade and investment links in the region.

The initiative offering new trade and investment ties should therefore be viewed as opportune to help ASEAN achieve its economic integration goals. This in turn will help to foster the region’s economic growth, which will benefit the US’s commercial interests in the region. It is therefore a win-win situation for both to work together to translate the general principles of the US-ASEAN Connect initiative into an economically meaningful action plan. While the new initiative provides a positive signal for deepening US-ASEAN relations, it is the realization of the initiative that will truly lift US-ASEAN relations to newer heights.

Dr. Tham Siew Yean is Senior Fellow at ISEAS-Yusof Ishak Institute, Singapore.