Why Does the US-ASEAN Special Summit Lack Substantial Value?

Posted by Written by Ayman Falak Medina Reading Time: 6 minutes

During US-ASEAN Special Summit, the US pledged US$150 million to tackle several key topics ranging from maritime security to pandemic preparedness to clean energy. Despite hitting the right notes, the summit lacked the concrete trade and investment commitments that ASEAN members were seeking. Access to the prized US market for ASEAN will be vital if Washington wants to balance the bloc’s dependency on China.


On May 12-13, 2022, US President Joe Biden hosted the leaders of ASEAN in a special summit in Washington D.C., marking 45 years of US-ASEAN partnership.

This was the first meeting since 2016, as then-President Trump skipped attending the summit with his Southeast Asian counterparts for three consecutive years. The summit was further delayed and replaced with a virtual meeting due to COVID-19.

The summit covered several key topics, such as maritime security, pandemic preparedness, clean energy, and economic recovery. Biden described the partnership as critical and hailed a ‘new era’ in relations. Both sides reiterated their intentions to lift the current relations from a strategic partnership to a ‘comprehensive strategic partnership’ in November of this year. Such status was previously given to China and Australia, but it seems unlikely that ASEAN will immediately accede to the upgrade in status — talks with China lasted over two years and with Australia for over one year. The same process is likely to be the same in the United States.

The Biden administration wanted to demonstrate that ASEAN is vital to the US’ Indo-Pacific policies. However, ASEAN members are looking for more concrete commitments from the US, particularly surrounding trade and investment, which have thus far been lacking. Moreover, the poisonous partisanship in US politics in the mid-term election year casts further doubt on whether this strategic partnership could be secured.     

What was covered during the summit?

Joint statement

ASEAN members and the US issued a 28 point-joint vision statement that reiterated the importance of adhering to the shared values and key principles enshrined in the ASEAN Charter, Charter of the United Nations, the 1982 United Nations Convention on the Law of the Sea (UNCLOS), the Treaty of Amity and Cooperation in Southeast Asia (TAC), and the Treaty on the Southeast Asia Nuclear-Weapon-Free Zone (SEANWFZ).

The joint statement also referenced the Ukraine conflict where the two sides reaffirmed the ‘respect for sovereignty, political independence, and territorial integrity’. Russia was not mentioned by name in the statement (within ASEAN, only Singapore has imposed sanctions on Russia).

US financial support package

The US announced a US$150 million support package to expand areas on maritime security, digital trade and economy, infrastructure, decarbonization, and environmental protection. This comes seven months after the Biden administration promised US$102 million in investments to ASEAN members. The lion’s share of the support package, or US$60 million, has been dedicated to maritime security, spearheaded by the US Coast Guard in its capacity to support ASEAN’s Outlook on the Indo-Pacific (AOIP). The principles upon which the AOIP is based include openness, a region based on law, good governance, and respect for international law.

Further, utilizing the US Coast Guard as the lead agency will be perceived as less threatening than the US Navy, particularly involving activities in the South China Sea, an area where China is growing its assertiveness. It will also offer ASEAN member states some protection against China’s controversial Coast Guard Law, which gives its coast guard legal cover to fire on foreign vessels in waters claimed by Beijing.

Myanmar

Myanmar’s government was not invited to the summit and was represented by a symbolic empty chair. The US-ASEAN special summit sought to redouble efforts toward a peaceful resolution in Myanmar. The lack of progress on the Five-Point Consensus has been a pain point for ASEAN.

US commitments to ASEAN are still substantially vague

While the summit had the right symbolic overtones, the US approach to the region is still unimpressive.

The US$150 million in funding to counter China’s influence is underwhelming compared to the US$425 million pledged by the US in 2016 under the Southeast Asia Maritime Initiative (MSI). Further, the committed sum pales in comparison to the US$1.5 billion in development assistance pledged by China to ASEAN members in November 2021 to fight COVID-19 and help fuel economic recovery.

China continues to be ASEAN’s largest trade partner

China has been ASEAN’s largest trading partner since 2009 and total trade with the bloc reached an estimated US$800 billion in 2021. This can be compared with the US, which saw US$394 billion in total trade with ASEAN in 2021.

Total ASEAN Trade with US and China in 2021

 

Country

Total trade with the US

Total trade with China

Brunei

US$117 million

US$2.7 billion

Cambodia

US$9.1 billion

US$11.1 billion

Indonesia

US$36.4 billion

US$109 billion

Laos

US$251 million

US$2.9 billion

Malaysia

US$71 billion

US$101 billion

Myanmar

N/A

US$11 billion (2020)

Philippines

US$14.2 billion

US$39.7 billion

Singapore

US$65.1 billion

US$122 billion

Thailand

US$59.9 billion

US$103 billion

Vietnam

US$112 billion

US$133 billion

Source: census.gov, trademap.org

The Indo-Pacific Economic Framework

The joint statement was absent any mention of the Indo-Pacific Economic Framework (IPEF). The IPEF, which was first announced in August 2021 by the Biden administration, aims to counter China, and the framework covers common rules on labor standards, the digital economy, and mechanisms to stop leaks of critical technology, among others. However, the White House has not revealed any substantial details regarding the IPEF.

What ASEAN countries are seeking is a framework for a robust economic plan that offers growth prospects to the region and increased access to the prized US domestic market; this is vital for the US to counter ASEAN’s trade dependency on China. Yet, the Biden administration mentioned that the IPEF is not designed in a way that requires congressional approval, and thus increased access to the US market is effectively off the table. Further, some ASEAN members will not meet the stringent labor, tax, anti-corruption, and data privacy standards set out in the framework.

The problem with the IPEF is that it’s framed around issues that matter most to the United States and does not answer the questions of the urgency of ASEAN states. Driven by a fear of conceding regional influence on China, the IPEF is an unimpressive attempt by Washington to make up for its unwillingness to negotiate the type of open market access trade deals ASEAN countries are seeking.

The IPEF is demonstrative of a wider ‘America first’ policy that has been continued by the Biden administration. After the US spent the last five years withdrawing from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the 10 ASEAN members, South Korea, New Zealand, Japan, and China signed the Regional Comprehensive Economic Partnership (RCEP), which is officially the world’s largest trading bloc, accounting for 30 percent of global GDP.

Importantly, the RCEP – which came into effect on January 1, 2022 – will deepen China’s integration with ASEAN, as well as North Asia, Australia, and New Zealand, and further strengthen Beijing’s influence in the Asia-Pacific region.

The full details of the IPEF are expected to be revealed at the Quadrilateral Security Dialogue (Quad) meeting in Tokyo, on May 24, 2022.

US engagement with ASEAN needs more attention

The US is underestimating how fast it is losing competition and influence in ASEAN, a region that is already the fifth largest economy in the world and well on track to become the fourth by 2030. In addition to a lack of progress in trade, President Biden has not established rapport with many ASEAN leaders. He has only held bilateral meetings with Indonesia and Singapore since taking office, whereas President Obama had already visited five ASEAN countries by his second term.

Achieving ASEAN centrality

As ASEAN finds itself at the center of great power competition, achieving ‘ASEAN centrality’ is vital for the bloc to play a leading role in shaping its own security agenda.

The idea or notion of ASEAN centrality is engraved in the ASEAN Charter and is defined as ASEAN being the driving force in shaping regional architecture that is inclusive and transparent. However, China’s behavior in the South China Sea in which it has territorial disputes with several ASEAN members has exposed ASEAN unity and raised questions about its centrality.

Increasing intra-ASEAN trade can help to achieve ASEAN centrality, particularly since the bloc already accounts for 7.8 percent of global trade. Further, the 10 member states have among the world’s highest trade intensity.

However, over the last decade, intra-ASEAN trade fell by three percent from US$582 billion in 2011 to US$567 billion in 2020, and relative to overall trade, it shrank from 24 percent to 21 percent, respectively. As a result, intra-ASEAN trade was only marginally larger than the bloc’s trade with China in 2020.

To break the dependency on Chinese trade requires a higher degree of intra-ASEAN connectivity. Achieving this would position ASEAN to become a fulcrum of regional policy-making and cooperation in the Asia-Pacific, without being forced to choose sides between the US or China.

Further Reading


About Us

ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City, and Da Nang in Vietnam, Munich, and Essen in Germany, Boston, and Salt Lake City in the United States, Milan, Conegliano, and Udine in Italy, in addition to Jakarta, and Batam in Indonesia. We also have partner firms in Malaysia, Bangladesh, the Philippines, and Thailand as well as our practices in China and India. Please contact us at asia@dezshira.com or visit our website at www.dezshira.com.

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