America and ASEAN: Partners in Prosperity

Remarks
Ziad Haider
Special Representative for Commercial and Business Affairs, Bureau of Economic and Business Affairs
Lee Kuan Yew School of Public Policy
Singapore
November 8, 2016


Introduction

Good evening! Thank you, Associate Dean [Donald] Low, for that warm introduction.

As everyone knows, the National University of Singapore is the top University in Asia and in the highest echelon of universities worldwide.

Your reputation is well known worldwide, and the research you conduct and the future leaders you help shape make an invaluable contribution to the future of Asia.

And so, it is a pleasure to join you tonight and speak about a topic that is near and dear to my heart – “America and ASEAN: Partners in Prosperity”.

Rebalance to Asia / ASEAN

I’d like to begin by talking about a decision President Obama made early in his first term in office.

Despite the already deep and meaningful relationships our country enjoyed in the Asia Pacific, President Obama determined that we needed to do more.

He decided that “our diplomatic resources and energies must be recalibrated to reflect where our long-term interests lie – in the Asia-Pacific Region.”

And so in 2011 he announced the U.S. Rebalance to Asia.

There are five pillars of our Rebalance:

  1. Strengthening bilateral security alliances;
  2. Deepening our working relationships with emerging powers, including with China;
  3. Engaging with regional multilateral institutions;
  4. Expanding trade and investment;
  5. Advancing democracy and human rights.

And of course Southeast Asia is central to this rebalance.

Why?

As President Obama explained, it is because of ASEAN’s “youthful population, impressive economic growth and dynamism and its position at the world’s busiest shipping lanes.”

In addition, in contrast to other parts of the world, we see that ASEAN’s model of consensus and rules-based interaction, and founding tenets of ASEAN centrality, has promoted peace in Southeast Asia for decades; something that is remarkable in a region of such ethnic, religious, historical, and cultural diversity.

And so in our rebalance to the Asia Pacific, the ASEAN region became a key focus of President Obama’s and our nation’s global engagement.

To illustrate this point:

  • President Obama is the first U.S. president to meet with leaders of all 10 ASEAN countries;
  • He has made eight visits to the ASEAN region, the most of any U.S. president; and
  • This February, he convened in Sunnylands, California the first ever U.S.-ASEAN Summit hosted by the United States.
  • And during his presidency our increased engagement with ASEAN has led to a deepening of our ties in a variety of ways.
  • For example, in 2011, at ASEAN’s invitation, the United States joined the East Asia Summit, the region’s leading forum to address political and security challenges;
  • Under President Obama’s tenure, the United States became the first non-ASEAN country to establish a dedicated mission to ASEAN;
  • At the ASEAN Summit last year in Kuala Lumpur, we elevated our relationship with ASEAN to a Strategic Partnership; and
  • This year, at the U.S.-ASEAN Special Leaders’ Summit, we announced U.S.-ASEAN Connect, a unifying framework for U.S. economic engagement in ASEAN.

Why has this all been possible?

Clearly because both the United States and ASEAN believe we have significant shared interests, including on the economic front.

Shared Economic Prosperity

As we think about the U.S. rebalance to the Asia Pacific and to ASEAN, let me note that the fourth pillar of our Rebalance is focused on economic engagement and what we call our shared prosperity.

In a speech delivered by U.S. Secretary of State John Kerry here in Singapore in August of 2015, he spelled out the key elements of our shared economic prosperity agenda.

Allow me to highlight the four areas of focus within this shared prosperity agenda with ASEAN.

  • Trade,
  • Investment,
  • Climate/Development, and
  • Connectivity

Trade and ASEAN

First, with regard to trade, there is no question that the United States looks to the Pacific.

Today, U.S. trade in goods and services with the Asia-Pacific region is at an all-time high, reaching over $3 trillion in 2014.

That is due in no small part to the fact that of our top 10 trading partners around the globe, five are in Asia.

And our trade with ASEAN Member States has been a key component of our economic engagement in the region for decades and is growing in importance.

Today, ASEAN countries are collectively the United States’ fourth-largest goods trading partner.

Two-way trade in goods and services has tripled since the 1990s and now supports hundreds of thousands of jobs in the United States and ASEAN.

And the United States and Singapore are key partners in this effort. The latest statistics show annual U.S. goods and private services trade between the United States and Singapore stand at $68 billion.

And we are actively pursuing ways to expand our trade in the region.

Trans-Pacific Partnership

A key initiative here that you all are aware of is the Trans-Pacific Partnership or TPP agreement.

TPP is critical for three reasons. It is crucial for:

  1. Economic reasons;
  2. Geo-Economic reasons; and
  3. Strategic reasons.

From the Economic perspective, TPP will reduce and eliminate trade barriers across 12 Asia Pacific markets, comprising nearly 40 percent of global GDP, and will immediately encompass 800 million people, and is squarely in the middle of a region projected to reach 3.2 billion middle class consumers by 2030.

From the Geo-Economic perspective, it is the epitome of our work to promote a stable, rules-based order for the Asia Pacific, and puts in place historic high-quality labor and environmental standards.

And from the Strategic perspective let me simply share a quote by Singapore Prime Minister and U.S. Secretary of State John Kerry.

Singapore Prime Minister Lee stated awhile back that “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.”

And Secretary Kerry a few short weeks ago said, “Make no mistake; if we’re going to live up to our responsibilities in Asia, if we’re going to treat our partners with the respect that they deserve while earning their respect at the same time, and if we’re going to do what is necessary to protect our interests, we have to maintain a steady and a reliable presence in that region. And I’ll just share with you our involvement can’t be in one sector and not in others. We can’t focus on one country and not be inclusive. We can’t focus on security at one moment and then ignore the economic dimension. You can’t turn it on and off like a faucet.”

In short, TPP is the right thing to do for many reasons.

And so we presently are making the case on TPP to the Congress and the American people, and hope it will see a smooth passage in the U.S. Congress soon.

And while Singapore and three other ASEAN countries are currently TPP partners, we believe TPP will benefit all of ASEAN by inspiring a race to the top, a virtuous cycle moving upward and onward to build the ASEAN Economic Community, and do so with increasingly higher standards in areas such as labor rights and environmental protection.

Investment in the Asia Pacific

Second, investment is equally important to our shared prosperity agenda in Southeast Asia, and here the United States also leads the way.

U.S. businesses have more than doubled their foreign direct investment or FDI in ASEAN in recent years, and the United States is the largest cumulative source of FDI in the region.

In fact, U.S. FDI stock among ASEAN members is roughly $226 billion, exceeding all other destinations in Asia.

At present approximately 3,600 U.S. companies are resident in Singapore, and so it is not surprising that Singapore accounts for approximately $180 billion of this U.S. FDI stock.

And this investment not only supports jobs and economic growth – it transfers cutting-edge technology, builds local communities, and strengthens the skill sets of local workers.

In addition, many U.S. companies invest for the long-term, by developing long-term business relationships, training and developing local employees, and otherwise investing in local communities.

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 and Singapore accounts for most of this investment.

Not only are we leaders in the quantity of investment in the ASEAN region, we are leaders in the quality of our investments as well.

Since 1999 the State Department, where I work, 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.

The excellent work U.S. companies are doing in Southeast Asia, is evidenced by the fact that two of the three recent ACE Award winners 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 created 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 ages 3 months to 5 years old.

The second ACE winner in Southeast Asia, 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.

And ASEAN countries are now returning the favor. 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 an East-West Center study ASEAN investment into the U.S. has risen to over $27 billion.

And Singapore accounts for much/most [in 2012 Singapore FDI in the U.S. was $26.2 billion] of this investment.

Climate/Development in the Asia Pacific

The third element of our shared prosperity agenda is on the climate and development front. In this area 2015 was a milestone year.

We signed several important international accords, starting with the Addis Ababa Action Agenda on Financing for Development, followed by the 2030 Agenda for Sustainable Development, and culminating in the agreement at the COP21UN Framework Convention on Climate Change in Paris in December.

More specific to ASEAN, we understand that the ASEAN Coordinating Center for Humanitarian Assistance on Disaster Management (AHA Center), the ASEAN Committee for Disaster Management (ACDM), and the ASEAN Secretariat are ready to take the ‘One ASEAN, One Response’ concept forward.

USAID and our Department of Defense stand ready to cooperate. We have already begun working with them to provide input to the ASEAN Joint Disaster Response Plan, which is a great start to the next phase of ASEAN HA/DR efforts.

Another area where the United States has been a valuable development partner is in the area of Illegal, Unreported, and Unregulated or IUU fishing. IUU fishing is one of the major global threats to the sustainable management of the world’s fisheries, affecting the 2.5 billion people who depend on fish for food and nutrition. Global losses from IUU fishing are estimated to be between $10 and $23 billion annually.

To help address this challenge the United States has co-sponsored and funded two ASEAN Regional Forum or ARF workshops on improving fisheries management and IUU fishing with Indonesia and Timor-Leste. More than 100 participants from 14 different countries took part and urged the ARF to take more action against IUU fishing.

Connectivity in the Asia Pacific

The fourth aspect of our shared prosperity agenda is connectivity, and when we talk about connectivity, we talk in terms of facilitating U.S. linkages 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 allow for the flow of people, products, and ideas from one country to another.

Over the years the U.S. public and private sectors have done much to strengthen their connections in Southeast Asia.

However, we knew we could do more to enhance our collaboration with ASEAN, so at the U.S.-ASEAN Leaders’ Summit in Sunnylands, California in February, President Obama announced the establishment of U.S.-ASEAN Connect, a new, unifying framework for U.S.-ASEAN economic engagement.

Connect combines the expertise and resources of the U.S. government and private sector to further improve U.S.-ASEAN economic relations and assist ASEAN and its Member States in achieving the economic integration goals of the ASEAN Economic Community.

Connect is organized around four pillars:

  • Business Connect;
  • Energy Connect;
  • Innovation Connect; and
  • Policy Connect.

Through Connect we are working to strengthen our partnership with ASEAN, and support ASEAN’s goal of building a dynamic, innovative, sustainable, resilient and rules-based economic community that benefits citizens in all of our countries.

During the ASEAN Economic Ministers’ meetings in Laos in early August I was able to preview our efforts to date under the Connect initiative. I am pleased to say that it was well received by our ASEAN counterparts.

Allow me to highlight for you a few of our efforts under this initiative.

Business Connect

Through Business Connect we are establishing an agribusiness credit enhancement program to increase access to finance and improve business processes and technologies for small and medium-sized agribusinesses and entrepreneurs in the region.

In addition, through a new Memorandum of Understanding between the U.S. Department of Commerce and the Singapore Ministry of Trade, U.S. and Singaporean firms are working to deliver e-commerce, financial technology, infrastructure, and smart city solutions throughout ASEAN.

To assist SMEs in the ASEAN region, the U.S. Agency for International Development and the U.S.-ASEAN Business Council have launched the ASEAN SME Online Academy, which serves as one-stop resource links for small and medium-sized enterprises (SMEs) to regional and global supply chains and allows users to take courses on topics ranging from finance to technology. A resources section links users to more than 300 business associations, corporate initiatives, financial services and government services.

Energy Connect

The goal of Energy Connect is to utilize innovation and entrepreneurship to drive economic growth through the promotion of sustainable power for the region.

With the increasing competitiveness of renewable energy technologies and growing applications of energy efficiency, charting a more sustainable development pathway no longer has to come at the cost of economic competitiveness.

To help promote grid-connected clean energy technologies and sustainable development, we are establishing a new multi-million dollar, multi-year effort in ASEAN member states through our Clean Power Asia program.

Just last month, we held our first Energy Connect event that convened regional leaders here in Singapore to examine how Connect can be used as a platform to access to electricity for those that lack it throughout the region.

We recognize that access to quality, affordable, and reliable electricity underpins economic growth and is a pre-requisite for unleashing innovation, which is why we’re pleased to partner with others in the region to expand access and eliminate energy poverty.

We also understand that the availability of financing will be vital to the regional energy infrastructure development. As a result, we’re utilizing our Connect Center in Bangkok to promote sustainable technologies through the Asia Pacific Clean Energy Program.

This program leverages U.S. government resources to catalyze private U.S. investment in clean energy in the Asia-Pacific region by offering a range of tools, such as financing, insurance, and project preparation, while enhancing U.S.-Asia business partnerships.

Innovation Connect

Under the Innovation Connect pillar we have organized American Innovation Roadshow visits to Indonesia, Myanmar, the Philippines, and Vietnam where our delegation which included representatives from some of the most innovative U.S. companies engaged with public and private sector officials in those countries to promote innovative and entrepreneurship in the partner countries, and deepen economic cooperation that will lead to increased trade and investment.

Under the innovation pillar we are also supporting the Women’s Livelihood Bond, which will leverage just over $15 million in private capital for microfinance institutions that lend to women and social enterprises to create sustainable livelihoods for women.

We are also launching a new Digital Economy Series to help ASEAN Member States build a successful and vibrant regional digital economy, through public-private policy dialogues, capacity-building activities, and people-to-people exchanges on e-commerce, digital entrepreneurship, mobile payments, and broadband connectivity, among other topics.

And in fact, the first Digital Economy Series event is being held next week (Nov 17) on the margins of a Financial Technology conference right here in Singapore.

ASEAN was well represented at the Global Entrepreneurship Summit held in Silicon Valley in June of this year as well. 54 ASEAN representatives participated and we organized a special session to highlight investment opportunities in Southeast Asia.

In addition, yesterday I had the pleasure of visiting with local entrepreneurs at MetLife’s LumenLab, a Singapore-based incubator and accelerator that is a joint project between U.S. company MetLife and the Government of Singapore.

And today I met with National Research Foundation in the Singapore Prime Minister’s Office to learn how the Singapore government is promoting innovation in Singapore and to explore ways the United States and Singapore can collaborate on innovation."

Policy Connect

And through the Policy Connect pillar we are helping ASEAN Member State officials familiarize themselves with the elements that go into high-standard trade agreements, helping to improve the environment for trade and investment.

In addition, this week we are hosting a week-long ASEAN IPR workshop in conjunction with Singapore via the Third Country Training Program, or TCTP.

My office helped organize and I helped open the training, which is designed to give ASEAN Member States’ IP officials insights to improve IP enforcement by focusing on topics of criminal, civil, customs and border enforcement, and improving the management of patents, trademarks, copyrights, and other forms of IP.

With the completion of this workshop, we will have organized twenty-nine TCTP courses on a variety of topics and trained close to 1000 ASEAN officials. We look forward to organizing additional trainings and sharing more expertise throughout the rest of the year.

Singapore is a key partner in each aspect of our shared prosperity agenda in ASEAN. On trade, Singapore was one of the original countries pursuing the Trans-Pacific Partnership and is our top trading partner in ASEAN. On investment, Singapore accounts for $180 billion of the $226 billion in U.S. FDI stock in ASEAN, and it is returning the favor as the top ASEAN investor in the United States. On development, Singapore is a valuable partner in supporting development and capacity building in ASEAN as our partner in the joint Third Country Training Program in ASEAN. And on innovation, like the United States, Singapore is setting the example for the region in promoting innovation.

Closing

Each of these efforts reinforce the message of the U.S.-ASEAN Special Leaders’ Summit in Sunnylands, California held earlier this year, that we have a vested interest in the success of the ASEAN Economic Community.

In short, as important economic and trade partners, it is in our shared interest to collaborate in the promotion of our shared economic prosperity.

Our economic success is tied to the economic success of our trading partners in Singapore, ASEAN, and throughout the Asia Pacific.

And so we are keen to support ASEAN’s efforts in terms of its economic integration goals; in terms of high standards in customs, regulations, and trade facilitation; and in terms of creating sustainable, inclusive growth built on innovation and entrepreneurship.

As partners we can build on the progress we made at Sunnylands and foster the type of innovation-focused ecosystems that have developed in the United States in all of the ASEAN countries. With the right mixture of policies, ASEAN can unleash its dynamic youth to be the innovators, entrepreneurs, and business leaders of tomorrow.

Thank you.