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                                                                                                                           Asean Affairs August 22, 2013  


Critical Questions: The 2013 ASEAN Economic Ministers Meeting & Its Implications for the United States

Ernest Z. Bower and Noelan Arbis, Sumitro Chair for Southeast Asia Studies, CSIS

The 45th ASEAN Economic Ministers (AEM) Meeting and related meetings will be held in Brunei from August 20 to 24. The AEM provides a platform for economic and trade ministers from the 10 ASEAN member states and their counterparts from important partners, including Australia, Canada, China, India, Japan, New Zealand, Russia, South Korea, and the United States, to engage in high-level discussions on economic cooperation. The AEM is becoming the unofficial economic and trade ministerial track informing the East Asia Summit (EAS), which includes the same countries named above expect Canada.

The AEM is important for the United States because it represents a significant opportunity to advance discussions directly with ASEAN as well as to participate in the caucus of the EAS ministers that will be held as part of the AEM agenda. Therefore, it is significant that United States Trade Representative (USTR) Michael Froman will attend the meetings in Brunei following a one-day stop in Tokyo to discuss the Trans-Pacific Partnership (TPP) with his Japanese counterparts.

From Washington’s perspective, Froman’s participation is vital. Past USTRs have not always attended the AEM, which generally occurs during the traditional late August vacation time in Washington. But U.S. engagement in ASEAN at the economic level is vital to implementing a U.S. strategy that supports the development of ASEAN-centric regional frameworks for both economics and security, recognizing that the two are linked. For this reason, U.S. cabinet-level engagement at the AEM is now as important as the U.S. secretary of state attending the ASEAN Regional Forum each year. It has become a command performance, and Froman is leading the charge to put economic engagement back on track, joining security and people-to-people ties as vital planks in the U.S. strategy for the Indo-Pacific region.

It is notable that later in the same week, U.S. secretary of defense Chuck Hagel will visit Southeast Asia and participate in the second ASEAN Defense Ministers Meeting-Plus (ADMM+) in Brunei on August 29. The ADMM+ is becoming the military and security ministerial input to the EAS. President Obama will participate in his third EAS in Brunei on October 9-10.

Q1: What is on the agenda at this year’s AEM and related meetings?

A1: Achieving regional economic integration within ASEAN through the ASEAN Economic Community (AEC) will likely headline the discussions. The AEC hopes to integrate ASEAN into the global economy as a single market and production base, making it more competitive and equitable for economic development. According to a press statement issued on April 10 after the ninth AEC Council Meeting, 77.5 percent of the regulatory and economic measures under the AEC blueprint had already been implemented, but some analysts have expressed doubts about whether full implementation by the December 2015 deadline is viable. Many ASEAN leaders have spoken to the need for each country to work hard to achieve their goals in light of the upcoming deadline.

The successful implementation of the Regional Comprehensive Economic Partnership (RCEP) by the AEC’s instatement in 2015 will also be discussed. The RCEP is a proposed free-trade agreement between ASEAN and six trading partners—Australia, China, India, Japan, New Zealand, and South Korea. It will be the world’s largest free-trade agreement, if completed, encompassing more than 50 percent of the global population and 27 percent of the world’s gross domestic product. Whether or not to include the United States and Russia in the RCEP will also likely come up in the discussions. The United States needs to find a seat at the RCEP table to complement its focused efforts to negotiate and approve the TPP agreement.

RCEP is currently open to countries engaged in a free trade agreement with ASEAN. This seemingly excludes the United States, though the RCEP criteria do allow exceptions for important trade partners that have not reached a trade agreement with ASEAN. Meanwhile, the criterion for inclusion in TPP is that a country must be a member of the Asia Pacific Economic Cooperation (APEC) group, which excludes India and three ASEAN countries: Cambodia, Laos, and Myanmar. The United States needs to be engaged in the economic and trade integration discussions within the EAS as a whole in order to ensure that its economic and trade strategy is consistent with and supportive of its broader geostrategic objectives in the Indo-Pacific.

Negotiations on the TPP will also take place, as a lead-up to the 19th round of talks in Brunei from August 23 to 30. Four ASEAN countries are already a part of the TPP negotiations—Brunei, Malaysia, Singapore, and Vietnam—while others such as the Philippines and Thailand have expressed interest in joining. Japan formally took part in the negotiations on July 24-25, making it more attractive for Southeast Asian countries with close economic relations with Japan to join as well.

Q2: What is the significance of Michael Froman’s participation at this year’s AEM?

A2: Michael Froman’s participation at this year’s AEM signals the United States’ continued commitment to engaging ASEAN and the Indo-Pacific region economically. Froman’s schedule in Brunei will include high-level meetings with ASEAN ministers on the ASEAN-U.S. Trade and Investment Framework Agreement, U.S.-ASEAN Expanded Economic Engagement initiative, and the U.S-ASEAN Business Summit, which provides business representatives from both sides of the Pacific an opportunity to engage in direct dialog with ASEAN ministers.

Froman’s participation also indicates the United States’ commitment to finalize TPP negotiations by the end of 2013, which Froman has admitted will be difficult but will greatly expand U.S. trade and investment opportunities in Asia.

In the future, Froman should consider inviting his Department of Commerce counterpart Secretary Penny Pritzker to join him for the AEM. Pritzker could encourage U.S. business participation at the CEO level and help round out discussions about trade negotiations, which are Froman’s forte, with trade and investment promotion and enforcement. These are key themes at the AEM that would advance U.S. interests in the region and help demonstrate a united private-public partnership approach to U.S. partners in the region.

Q3: What is the significance of this year’s AEM for U.S.-ASEAN relations?

A3: The center of gravity of U.S. foreign policy and engagement in ASEAN has apparently shifted from the State Department to a White House-driven agenda with Froman at the head of more focused economic engagement in the region. This could be a healthy development if the United States can succeed in broadening its economic engagement to include making India and all the ASEAN countries eligible to join TPP. This would mean leading efforts to either have them join APEC or adjust the TPP criteria to allow EAS as well as APEC members to join.

Participation in the AEM is fundamental not only strategically, but in a very practical way. It gives the United States and the U.S. private sector a seat at the table as the important issues in the fast developing economic integration of the Indo-Pacific move forward.

A logical and necessary next step will be for all relevant U.S. cabinet members to heed the direction given them by President Obama to make at least one visit to Asia each year in the context of the U.S. rebalancing toward the region. An ideal anchor for secretaries of energy, health, agriculture, and others would be to attend the ASEAN ministerial meeting for their portfolio to leverage developing regional architecture, maximize the investment of time and resources by meeting a large number of their counterparts in one venue, and sending a clear signal to regional partners that the United States is institutionally engaged at both the bilateral and regional levels. These visits would also allow Obama’s cabinet members to make specific and substantive recommendations for what he should prioritize when he participates in the EAS each year.

This year’s AEM follows on the heels of the ASEAN Economic Ministers Roadshow to the United States in June, which was an effort by both the United States and ASEAN to promote trade and investment between the two regions. After the roadshow, Deputy USTR Miriam Sapiro remarked that, “further deepening our ties to ASEAN is a priority for the United States.” This year’s AEM will provide the United States and ASEAN an opportunity to follow-up on this year’s roadshow and take steps to deepen their economic ties.

The AEM is also significant to U.S.-ASEAN relations as their economies become more interlinked, especially with the TPP and the completion of the AEC in 2015. U.S. trade with the 10 ASEAN countries reached $198 billion in 2012, making ASEAN the United States’ fifth largest overall trading partner. A study by the U.S. Chamber of Commerce also showed that creating an AEC is important for U.S. businesses that expect to significantly increase their trade and investment in Southeast Asia in the next five years.

Q4: What are some expectations for and possible outcomes from this year’s AEM?

A4: Just as last year, we can expect the participating ministers to welcome ASEAN’s continued economic growth and resilience. The International Monetary Fund projects ASEAN to grow at 5.9 percent in 2013, despite downsides in the emerging-market economies and a deeper recession in Europe. ASEAN nations will also try to attract more foreign direct investment from the United States and other partners, as ASEAN economies have become more attractive due in part to red tape in India and rising production costs in China.

We can expect the United States to call for other ASEAN nations to join the TPP and push for completing the negotiations by the end of 2013. The ASEAN ministers are also likely call for faster implementation of the AEC guidelines to ensure that the community will be realized by the 2015 deadline, along with RCEP.

Ernest Z. Bower is a senior adviser and holds the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Noelan Arbis is a researcher with the Sumitro Chair at CSIS.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

2013 by the Center for Strategic and International Studies. All rights reserved.

Courtesy: This post originally appeared on the Center for Strategic and International Studies, Washington D.C. cogitASIA blog

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