Partnering with Thailand on Regional Economic Integration

Jose W. Fernandez
Assistant Secretary, Bureau of Economic and Business Affairs
Bangkok, Thailand
February 27, 2013


Thank you for the opportunity to speak here today. I am delighted to be in Bangkok. This stop comes near the end of my trip to Asia. I began in the Philippines last week, then Burma, and now Thailand. Tomorrow, I conclude my trip to the region with a day in Singapore. During my travels throughout the world, I make a point of meeting with AmChams. As you know, under the State Department’s Economic Statecraft initiative, economics serves as a cornerstone of our foreign policy. In formulating policy, I have found that local American business leaders provide some of the best insights into national economies as well as regional and global trends.

The United States and Thailand have a long history of trade relations dating back to a Treaty of Amity and Commerce in 1833. Today, both countries have an important role to play in fostering economic cooperation throughout the Asia Pacific region. Indeed, when you hear about the United States’ Asia pivot, or rebalance to Asia, as I am sure many of you in this room have, this is exactly what we are talking about: building prosperity together. This is particularly an important year as the United States and Thailand celebrate 180 years of friendship and partnership. I know that AmCham Thailand is actively involved in highlighting your commercial and CSR activities for this commemoration.

There are many aspects to building prosperity, but I will only touch on two today: 1) our regional initiatives in Southeast Asia, with an emphasis on regional integration and partnership; and 2) doing business in Burma.

Immediate Economic Goals in Southeast Asia

I don’t need to remind this audience that economic interests have long been at the core of U.S. engagement in the Asia-Pacific region. That’s why the rebalance towards the Asia Pacific that we are pursuing is driven by the realization that markets in this part of the world are increasingly critical to America’s long-term prosperity. And as we look at these markets, we look at the opportunities to approach them on a regional basis as well as bilaterally.

One of the key initiatives in our engagement policy is the Trans-Pacific Partnership. TPP offers exciting opportunities for the region. It brings together some of the largest and fastest growing economies stretching from Asia to the Western Hemisphere – developed and developing countries alike – and knits them into a single trading community that will cover 40 percent of the world's trade.

But our goal with the TPP is not just to create more economic growth. It’s also to foster better, more responsible, more stable, more sustainable growth by establishing strong protections for workers and the environment. That requires the crafting of a high-standard, high-trust trade agreement that addresses new and emerging trade issues and 21st-century realities. The agreement will serve as a platform for Asia-Pacific economic integration while at the same time taking into account U.S. priorities and values.

But lest anyone think that our focus on TPP comes at the expense of our long-standing multilateral and bilateral relationships, the United States and Thailand recently held meetings under the Trade and Investment Framework Agreement—or TIFA—in January. And there, in addition to broad discussions on expanding trade in goods and services, we also raised concerns affecting the commercial environment, including (importantly) intellectual property rights. The TIFA meetings were also an opportunity to outline our TPP goals to Thailand, to start creating the building blocks that Thailand can use to identify reforms required to meet the TPP’s high-standards.

We are also working with Thailand under the Expanded Economic Engagement Initiative (E3I) and U.S.-ASEAN Trade and Investment Framework Agreement to expand business between the United States and the countries of Southeast Asia. At the same time, the United States remains actively engaged in APEC as the premier institution for discussing trade and economic issues in the Asia-Pacific. We are working with Indonesia, the 2013 APEC host, to have successful outcomes for our Leaders who will meet in Bali in October. In addition to an ambitious trade and investment agenda in APEC, we see Indonesia’s focus on connectivity as an important area of attention for APEC this year. And Thailand is critical to connectivity.

Connectivity is not just an important topic in APEC. It’s a key issue for Southeast Asia. And when we speak of connectivity, we are often talking about infrastructure. Infrastructure is one of the core foundations of any economy, and conversely, poor infrastructure is a significant impediment to a country’s ability to trade effectively. During my tenure, I have spent significant time working on this important issue. Former Secretary Clinton created the Lower Mekong Initiative in 2009 to address acute and pervasive transnational challenges – such as emerging pandemic threats, the effects of hydropower infrastructure development, climate change, and environmental degradation, and the need for greater infrastructure connectivity – that threaten efforts toward greater regional integration in Southeast Asia. The initiative seeks to foster cooperation and capacity building among Cambodia, Laos, Thailand, Vietnam, and as of this past summer, also Burma.

Through the LMI, we have leveraged U.S. expertise in fostering entrepreneurship and trade, cultivated technical expertise to promote infrastructure connectivity, and expanded educational access to support development of sustainable infrastructure systems and technical capacity in the sub-region. We call this “Connect Mekong,” and we hope that it will increase investment opportunity in the region by providing avenues for public-private cooperation. Connectivity is also a priority objective of the “U.S.-Asia Pacific Comprehensive Partnership for a Sustainable Energy Future” announced by President Obama in Cambodia last November. Through this partnership, we are working with our export and investment finance agencies to increase U.S. private sector involvement in the energy sector in the region while promoting rural electrification and increased use of renewable energy resources.

Improved infrastructure can also help to tackle the global problem of food security. The world’s population is expected to reach nine billion people by the year 2050. The Food and Agriculture Organization, or FAO, estimates global demand for food will increase by 60 percent.

One of the surest – and arguably most affordable – ways to feed more people sustainably is to ensure that the food already produced is not lost or wasted between the farm and table. According to the FAO, roughly one-third of the food produced in the world goes to waste – that’s a staggering 1.3 billion tons every year. Some reports have suggested this number may run even higher.

There are many causes of postharvest loss including lack of roads or cold storage facilities. But there are ways to reduce post-harvest losses by improving management of stored foods through better technology and processing techniques, supporting basic market infrastructure, and introducing risk management tools such as crop insurance. In the private sector arena, innovators and entrepreneurs throughout the world are developing new technologies to reduce postharvest loss. We are looking for more ways to support them.

Some of the most important foundations of our economic approach to Southeast Asia include TPP, the Expanded Economic Engagement Initiative, the U.S. – ASEAN Trade and Investment Framework Agreement, and the Lower Mekong Initiative. All of them are designed to take advantage of the economic opportunities in this region. But the most important vehicle for our business and economic policy is you, our companies. And this brings me to our second topic, Burma.


As I mentioned earlier, I was in Burma the past few days and met with members of a U.S. Chamber of Commerce organized delegation. The delegation included government officials and representatives from the private sector and international financial institutions. It focused on the opportunities and challenges to doing business in Burma, including promoting goodwill and not going back to how things were previously. There is great interest from American companies in entering the Burmese market, especially in the new foreign investment law there and in the electricity, transportation infrastructure, and telecoms sectors, but I know there is concern regarding the status of sanctions. And I also know that this Chamber has been very interested. So let me tell you what I told them.

President Obama’s administration has implemented an approach that eases many sanctions and provides incentives for further political and economic reform as the result of recent positive developments. It’s what we call a “calibrated approach.” We are encouraged that the Burmese parliament has taken several steps towards reform, including passing new legislation to protect the freedom of assembly and the rights of workers to form labor unions. The government has also agreed to the U.S.-Myanmar Joint Plan on Countering Trafficking in Persons, and is taking steps to bring increased transparency to the national budget. President Obama’s trip in November highlighted the continued progress Burma is making on key reforms. In recognition of this progress, we have responded with positive steps in many areas, including on the sanctions front, as we had promised to do.

So we have eased our sanctions, but in a carefully calibrated manner. We remain vigilant about the corruption, lack of transparency, and the role of the military in the country’s economy. Our approach aims to support respect for human rights and democratic reform while aiding in the development of an economic and business environment that provides benefits to all people. Just last Friday we provided a general license for four financial institutions to give U.S. companies and NGOs greater access to Burma’s banking system, thereby encouraging additional economic involvement in Burma. Government officials now agree that there is no impediment to permitted economic activities in Burma.

As we shift from the sanctions era to more normalized trade relations, I encourage American businesses to let the U.S. government know if your companies are encountering impediments, sanctions-related or otherwise, to investing or doing business in Burma.

And we can work with you to devise appropriate solutions. For example, the embassy in Rangoon recently made my staff aware that a particular Internet company had cut off services to customers in Burma out of a misplaced concern about sanctions. My staff called the company’s lawyers, explained why there was no sanctions impediment, and the company restored its service.

An integral part of U.S. corporate culture is that American businesses act as responsible partners in the countries where they invest. The U.S. government is dedicated to doing everything in its power to encourage and support this proud tradition. We want U.S. companies to invest in Burma and to do so in a socially and environmentally responsible manner that can serve as a model for others and benefit everyone. As a result, we have paired our sanctions easing on new investment with reporting requirements for U.S. companies that encourages responsible investing, including with regard to promoting transparency and respect for human and labor rights, as well as supporting sound environmental practices, and land use. In addition, companies working with the Myanma Oil and Gas Enterprise, or MOGE (pronounced M-O-G-E) must report their investment within 60 days. The purpose of the public reporting is to promote greater transparency and encourage civil society to partner with our companies for fostering sustainable development through responsible investment. It is also encouraging to see that the government has decided to implement the Extractive Industries Transparency Initiative, which helps countries benefit in a transparent manner from the development of petroleum and mineral resources.

We are aware of the need for clearer guidance to companies on various aspects of this reporting requirement and have been working diligently with U.S. government experts on responses to comments from companies, civil society, and other stakeholders during the public review periods over the past few months. Our goal has been, and remains, to come up with a balanced reporting requirement that is not too onerous for companies, but that still provides useful parameters for responsible investing in Burma.

Companies present will be happy to hear that we are pushing back the deadline for submission of reports in recognition that it has taken the U.S. government longer than anticipated to respond to the public comments.

As U.S. companies expand activities in Burma, sanctions-related situations and other impediments to business will arise that we in Washington never dreamed of. I urge you to alert us as soon as you run into problems so that we can work together to find solutions. The dialogues we have maintained with government officials in Burma, the private sector, civil society, and other stakeholders throughout the sanctions-easing process have been vibrant and productive, and we hope to continue in this vein. Normalizing our trade and investment relationship is something we aspire to in all of our sanctions programs. I am pleased to report that we continue to move in the right direction with your next door neighbor.

We strongly encourage American companies to take full advantage of opportunities in Southeast Asia. U.S. companies can be some of the best ambassadors for American ideas and values, especially in the areas of transparency and model corporate governance.

We have to sell the “American Brand.” And the American Brand can’t just be that we make the best cars, have the most innovative software, or make the tastiest hamburgers. It’s got to be that we also make the best employers, the best neighbors, the best partners; that we don’t bribe and we leave the environment better than we found it. Our companies will help deliver lifesaving medicines to remote areas, respect workers’ rights, and create jobs that help more people make enough money to raise a family. And if we can do that, if we can walk the talk and sell the American Brand, there is no question in my mind that responsible corporate citizenship not only benefits the communities where companies operate, but is good for the companies’ bottom line. And again, I know I’m preaching to the choir: It is heartening to see that many companies here today already have corporate social responsibility programs in place.


So let me leave you with a story, a story that has nothing to do with economics, nothing to do with business, but everything to do with what we are trying to convey throughout the world about the American brand. A few days ago I was at the National Museum in Rangoon, taking advantage of a day off to learn about Burma’s history. While there I happened to witness the historic return of an important Bagan-era Buddha that was stolen many years ago. An earthquake in the 1930s broke the statue in two. The upper half traveled the world before finally ending up at Northern Illinois University where a professor there recognized it for what it was. The professor was also able to identify the lower half, which still resided in a temple niche in Bagan. She and other experts were dedicated to seeing the pieces reunited and returned to their rightful home. They toiled for years, but thanks to their dedication, this statue has finally come home. When I asked the professor why she did it, she said simply, “Because it was the right thing to do.” This is exactly the type of people-to-people ties that we want to see between our countries. And this is the American brand.

Thank you.