As Joe Biden prepares to assume the presidency, foreign policy will be high on his agenda, including US relations with Asia. In this context, boosting economic relations with the Association of Southeast Asian Nations (ASEAN) must be a priority.
ASEAN comprises a diverse mix of ten Southeast Asian countries, including: the sprawling archipelagic nation of Indonesia; land-locked, mountainous Laos, and the high-tech financial center that is Singapore. Brunei, Cambodia, Malaysia, the Philippines, Thailand, and Vietnam round out the membership. ASEAN countries boast a population of 670 million — more than the European Union, the United Kingdom and Canada combined.
ASEAN’s demographic profile is comparatively young; nearly three-fifths of the population is under 35. Its five largest developing country economies grew at an incredible annual average of more than 5 percent between 2010 and 2019. ASEAN as a whole is on track to become the world’s fourth largest economy by 2030, behind only the US, China and India.
ASEAN is already one of America’s top dozen trading partners, importing large quantities of electrical machinery, aircraft, mineral fuels and optical and medical instruments annually in a goods and services trading relationship valued at more than $350 billion last year. US exports to ASEAN support hundreds of thousands of American jobs. A large and growing middle class in Southeast Asia ensures that exports will only grow.
US foreign direct investment (FDI) stock in ASEAN, and ASEAN FDI stock in the US, exceed $360 billion. US investment in ASEAN will grow as more American firms shift investment from China to Southeast Asia in an effort to mitigate risks to their supply chains posed by tensions in the US-China relationship.
Despite the growing economic might of ASEAN, it often receives second billing in the US government’s Asia portfolio, which places strong emphasis on security and geopolitical concerns. Yet a substantially strengthened economic engagement with ASEAN would helpfully complement policies and measures addressing such concerns. This argument is not lost on seasoned hands at the State Department, but the times demand a bolder, more ambitious approach led from the top.
What should incoming President Biden do? He could start by scheduling a meeting with Indonesia’s President, Joko Widodo. Indonesia is the world’s largest democracy in a mostly Muslim country, the fourth most populous country on Earth, and the only ASEAN member that is also a member of the G20. The new US administration should also reach out to leaders in other ASEAN member capitals.
The clear message to these leaders should be that Southeast Asia matters to the US, and that closer economic ties are a key priority. The new American president — or his Asian-American vice president — should participate in every annual ASEAN Summit and East Asian Summit. Doing so will send an important signal about US intentions to remain actively engaged in the region.
In boosting the importance of US economic relations with ASEAN, the Biden administration would have natural domestic allies, including the US-ASEAN Business Council, the bipartisan Congressional Caucus on ASEAN, and the millions of Americans whose family ties trace back to ASEAN countries.
The US also needs to revisit participation in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The US initiated the idea for this multilateral accord and then unwisely walked away. Joining CPTPP has become even more important given recent approval of the Regional Comprehensive Economic Partnership, the latest significant Asia-centered trade pact negotiated without US membership.
Gaining entry into the CPTPP, which includes four ASEAN members, can form a meaningful part of a broad strategy to promote US economic recovery through enhanced international trade.
In addition, President Biden should use tools at his disposal to boost US trade and investment with ASEAN, including resources of the US Commercial Service, Development Finance Corporation, EXIM Bank, and Trade and Development Agency. Southeast Asia has a massive infrastructure finance deficit, and experienced US firms should play a bigger role in filling it through projects adhering to high environmental, governance and social standards.
The weight of the world continues to tilt toward Asia. The Biden administration needs to embrace ASEAN in an expanded economic relationship that serves as a pillar of the US foreign policy approach to the world’s most populous and dynamic region.
This commentary was first published in The Hill on 12 December 2020.