Remarks at the East-West Center on "Next Steps in the U.S. - Southeast Asia Economic Partnership"
Special Representative for Commercial and Business Affairs, Bureau of Economic and Business Affairs
Thank you, Dr. Limaye, for that kind introduction.
As everyone here knows, the East-West Center plays a central role in our public discourse on a host of issues.
The project they launched in 2014 in collaboration with the U.S. ASEAN Business Council, entitled “ASEAN Matters for America / America Matters for ASEAN”, is just one such example.
As noted in that report:
- ASEAN countries combined have an economy of $2.4 billion and a population of 626 million people;
- ASEAN is the number one destination for U.S. investment in Asia;
- 21 U.S. states send at least $1 billion in goods exports to ASEAN each year, and 7% of U.S. jobs from exports are supported by exports to ASEAN;
- Over 3 million Americans visit ASEAN annually and visitors from ASEAN countries spend over $4 billion in the United States; and
- More than half of total shipped tonnage, transit through ASEAN's sea lanes each year.
Dr. Limaye, thank you for your contributions to our discourse and for today’s discussion - a continuation of your efforts to keep the importance of U.S.-ASEAN relations in the forefront of our minds.
Before launching into today’s topic - “Next Steps in the U.S. – Southeast Asia Economic Partnership” - I’d like to briefly touch on the broader importance of the Asia Pacific to the United States.
As President Obama has said “few regions present more opportunity to the 21st century than the Asia Pacific.”
That’s why, early in his presidency, he decided that the United States would rebalance its foreign policy and play a larger and long-term role in the Asia Pacific.
ASEAN has been the focus of much of that rebalance.
President Obama is the first U.S. president to meet with leaders of all 10 ASEAN countries. And he has done so seven times now.
The President has also made seven visits to the ASEAN region, the most of any U.S. president.
Under his tenure, we acceded to the Treaty of Amity and Cooperation in Southeast Asia.
We established the first mission and first U.S. Ambassador to ASEAN.
At ASEAN’s invitation, the United States joined the East Asia Summit, the region’s leading forum to address political and security challenges.
At the ASEAN Summit in Kuala Lumpur last year, we elevated our relationship with ASEAN to a Strategic Partnership.
And this February, in Sunnylands, CA, the President held the first ever U.S.-ASEAN Summit hosted by the United States.
In September, President Obama will meet his counterparts again at the ASEAN-U.S. Summit, and he will show how our efforts in the region are changing the way we do business in ASEAN.With such a list of achievements, there should be no question that “ASEAN Matters for America.”
And I believe equally so that “America Matters for ASEAN.”
ASEAN matters to the U.S. in many ways, not the least of which is economically.
As Secretary Kerry explained in a speech he delivered in Singapore last year, economics is one of the pillars of our Asia rebalance. It is part of our “shared prosperity” agenda.
Within that economic pillar we have four areas of focus:
- Development, and
I’d like to touch briefly on each of these focus areas in relation to our engagement in Southeast Asia.
On the trade front, since President Obama took office, we have boosted trade between the United States and ASEAN by 55 percent.
In fact, the region is now our fourth largest goods trading partner. And U.S. exports to Southeast Asia support more than half a million American jobs.
As our trade with ASEAN grows, so grows the importance of our relationship in the region.
We are pursuing a high quality trade agreement in the Asia-Pacific region – the Trans-Pacific Partnership, or TPP agreement.
TPP will cut more than 18,000 taxes member countries put on Made-in-America goods, which will enable trade growth between our nations.
TPP is more than that though.
While four ASEAN nations are TPP partners, we believe TPP will benefit all of ASEAN as it will inspire a race to the top, a virtuous cycle moving upward and onward to build the ASEAN Economic Community.
And as Prime Minister Lee of Singapore recently argued, “Getting the TPP done will deepen links on both sides of the Pacific. [But] failing to get the TPP done will hurt the credibility and [seriousness] of the U.S. not just in Asia, but worldwide.”
Needless to say, passage of TPP is critical.
However, there are many other ways we promote trade in the region. Barbara Weisel will talk more about another key tool, the Trade and Investment Framework Arrangement (TIFA), which we are pursuing with ASEAN.
In a more granular way we are helping ASEAN as well. We are assisting four ASEAN Member States launch their National Single Windows (NSW) for customs documentation, the largest step to date for the ASEAN Single Window (ASW).
This too will make the ASEAN region a more attractive place to do business.
Investment is also key to our shared prosperity agenda in Southeast Asia, and here the United States clearly leads the way.
U.S. foreign direct investment in ASEAN is almost $190 billion, exceeding all other destinations in Asia.
Indonesia and many others are important recipients of this investment. During Indonesia President Jokowi’s visit to the United States last year he witnessed the signing of investments worth over $20 billion between Indonesian and U.S companies for the development of wind and natural gas plants, refinery construction and development, an expansion of beverage production facilities, and the development of a machinery remanufacturing facility.
The U.S. government supports these efforts wherever we can. For example, in the Philippines, U.S. Ambassador Goldberg and U.S. Secretary of Commerce Pritzker helped secure a deal for Selex - a U.S. firm headquartered in Overland Park, Kansas - to provide airport navigational aids valued at $4.6 million for the Clark International Airport in the Philippines.
In short, U.S investment in ASEAN is one of the many reasons that the region’s GDP has grown in recent years, helping people move from poverty into the middle class.
Not only do we lead in the quantity of investment in the ASEAN region, we lead in the quality of investments as well.
In Burma, for example, American companies have been at the forefront of accountability. Since 2013 the Reporting Requirements on Responsible Investment have required U.S. companies to report on due diligence measures taken to mitigate risk and prevent adverse impacts.
Since 1999 the State Department has recognized the role U.S. companies play abroad as good corporate citizens.
Annually the Secretary’s Award for Corporate Excellence, or ACE Award, recognizes the contributions businesses make to improving lives both at home and abroad.
Evidence of the excellent work U.S. companies are doing in Southeast Asia, two of the three ACE Award winners in 2016 were from the region – East Bali Cashews and Cargill Vietnam.
The U.S. owner of East Bali Cashews initially garnered the support of four local investors in Indonesia, and in the first year of operations produced 180 tons of cashews and 130 new jobs, employing a 90% female workforce.
This success allowed the company to raise $900,000 in additional funding from three private investors, including Red River Foods, a major importer of tree nuts, dried fruit, seeds, and specialty snacks.
Today the company employs 230 people, primarily women, and provides a day care for their children 3 months to 5 years old.
The second ACE winner in Southeast Asia this year, Cargill Vietnam, has invested heavily in Vietnam over the last 20 years, training more than 12,000 cocoa farmers in sustainable agriculture practices and more than one million farmers on animal husbandry.
Through Cargill’s partnerships, they have also built and improved 76 schools across rural communities in Vietnam, which today benefit more than 13,000 children.
The U.S. private sector is doing much to support responsible economic growth and to improve the lives of the people in Southeast Asia.
Investment, however, is not one way. Between 2001 and 2012, the growth in ASEAN investments in the United States exceeded that from all other regions of the world.
In fact, according to the East-West Center study ASEAN investment into the U.S. has risen to over $27 billion.
Two-way investment between the United States and Southeast Asia is another important example of the strong U.S.-Southeast Asia economic partnership.
Now we can’t talk about investment in Southeast Asia without mentioned our efforts to support ASEAN’s development needs and aspirations, as development, investment, and the economy are so intertwined.
As an example, Illegal, Unreported, and Unregulated, or IUU fishing, is a major global threat to the sustainability of the world’s fisheries, affecting the 4.3 billion people who depend on fish for food and nutrition. Global losses from IUU fishing are estimated to be in the billions annually.
To address this serious challenge, USAID launched the Oceans and Fisheries Partnership last year, which works with the Southeast Asian Fisheries Development Center to combat IUU fishing and protect fisheries and marine diversity, and we co-sponsored and funded two ASEAN Regional Forum workshops on improving fisheries management and IUU fishing with Indonesia and Timor-Leste.
The Lower Mekong Initiative, or LMI, is another mechanism for U.S. development assistance. Through LMI we are helping the five mainland Southeast Asian partner countries build capacity to address transnational development and policy challenges and to narrow the development gap within ASEAN.
One way we are doing this is by organizing angel investment workshops throughout the region. In addition, we have established a WECREATE women’s entrepreneurship center in Cambodia, with another to open in Vietnam later this year.
Finally, Connectivity. When we talk about connectivity, we talk in terms of U.S. linkages with the region and within the region.
ASEAN and its Member States use the term “Connectivity” often, in reference to person-to-person exchanges; cross-border issues; or the physical infrastructure - the roads, rails, and communication lines - that allows for the flow of people, products, and ideas from one country to another.
Many U.S. agencies promote shared prosperity in Southeast Asia. Barbara Weisel and I represent two of them.
All of us are working to expand U.S. economic connections and linkages in Southeast Asia.
However, we believed we could be more effective in our efforts, so at the U.S.-ASEAN Leaders’ Summit in Sunnylands, California, President Obama announced the establishment of U.S.-ASEAN Connect.
Connect is a new, unifying framework for the whole of U.S. government economic engagement with ASEAN.
It streamlines all our work into four priority pillars:
- Business Connect,
- Energy Connect,
- Innovation Connect, and
- Policy Connect.
Business Connect supports increased commercial engagement between the U.S. private sector and ASEAN businesses and Member State governments.
Our commercial engagement through Business Connect will focus on regionally important sectors like ICT, healthcare, and infrastructure.
Energy Connect will help ASEAN develop power sectors built using sustainable, efficient, and innovative technologies.
Innovation Connect supports Southeast Asia’s emerging entrepreneurial ecosystem through policy support and direct engagement with entrepreneurs.
Innovation Connect is made up of programs like the American Innovation Roadshow, which promotes entrepreneurship and innovation in the region.
In March, Senior Advisor to the Secretary, Ambassador David Thorne organized the first innovation roadshow, taking representatives of more than a dozen U.S. companies to Indonesia, Vietnam, and the Philippines. We envision leading more innovation roadshows to Southeast Asia in the coming months.
The Global Entrepreneurship Summit, which will be held in the United States this summer, will provide us additional opportunities for engagement with nearly 50 innovators and entrepreneurs from Southeast Asia who have registered for the summit.
And finally, Policy Connect is about working with ASEAN countries to create a policy environment that promotes trade and investment, sustainable and equitable economic growth, and digitally-enabled innovation.
This includes providing capacity building and technical support to member states. The U.S.-ASEAN ICT Dialogue will also fall under this pillar.
Our engagement through U.S.-ASEAN Connect will build upon existing efforts.
It will reinforce the message of Sunnylands – that we all have a vested interest in ensuring that the ASEAN Economic Community is a success in terms of the tangible integration that ASEAN has set its sights on, in terms of high standards in customs, regulations, and trade facilitation, and in terms of creating sustainable, inclusive growth built on innovation and entrepreneurship.
To help implement Connect, we are establishing a network of three Connect Centers in Jakarta, Singapore, and Bangkok that will support our efforts in the region. All three centers will be operational by the end of 2016.
This initiative is meant to combine the expertise and resources of the U.S. government and private sector. It is in the development stage, and so we very much welcome the bold and innovative ideas our business community and civil society can offer.
In closing, 60 percent of global growth in the next two years is projected to take place in Asia; with a significant portion coming from the ASEAN region and its growing middle-class. ASEAN economies are expected to grow by 4.5 percent and 4.8 percent, in 2016 and 2017 respectively.
Given the already strong trade, investment, and development ties we enjoy in Southeast Asia, and ASEAN’s model of consensus and rules-based interaction, the United States has a strong interest in continuing to support ASEAN as the stable center of the region, and to expand our ties there.
We hope our efforts on the Trans-Pacific Partnership, the TIFA talks, U.S.-ASEAN Connect, and many other initiatives will allow us to support the goals of the ASEAN Economic Community, and greatly expand our shared prosperity in the areas of trade, investment, development, and connectivity.
We welcome your support in achieving these goals.