By James Wallar —
At the ASEAN Summit and East Asia Summit meetings in Laos from September 6-8 President Obama would be wise to lay out a vision of how other ASEAN member states can join the Trans-Pacific Partnership (TPP) and why it would not only be in their interests, but also the interest of ASEAN as a grouping to do so. He should do this even though it is not clear when Congress will ratify the agreement that has become a political football during the presidential election campaign.
Before proceeding, a true confession: Previously I have regarded the TPP and the vision of a Free Trade Area of the Asia Pacific as potentially fracturing ASEAN. As the United States has emphasized the central role of ASEAN to promote prosperity and peace in the region, undermining the institution, in my opinion, could be troublesome.
Times have moved on, as have my assumptions. I now consider the TPP in ASEAN’s interest, holding the potential to transform its economic agenda in a positive way. Why the change in heart? Let me count the ways.
First, now that the TPP package has been agreed, the four ASEAN member states participating in the negotiations – Singapore, Brunei, Malaysia, and Vietnam — have demonstrated the political courage to make the domestic case for more open, disciplined trading regimes. Rest assured, there are plenty of vested interests in those countries that enjoy economic rents associated with less than robust competition.
Second, other ASEAN member states – the Philippines, Thailand, and Indonesia – have expressed an interest in joining – suggesting that they, too, are willing to step up to more open, market-oriented rules. This would be a game changer for these countries that have long harbored strong domestic constituents opposing competition, leaving consumers and businesses burdened with higher costs and fewer choices.
Third, the ambitious ASEAN Economic Community (AEC) to integrate ASEAN member states’ economies would benefit from a positive jolt. The AEC and ASEAN’s agenda is as broad as the TPP’s, yielding a broad alignment of interests. ASEAN’s pace in creating the AEC, however, is at best, leisurely. Formation of the AEC would be accelerated enormously by the TPP’s rules and peer reviews on customs facilitation, investment, and services, as well as on competition, labor rights, environment, government procurement, electronic commerce and telecommunications, and transparency and tackling corruption.
Moreover, ASEAN is committed to being an open, rules-based trade and investment regime and an integral part of the international economic community. Behind these fine-sounding words is the economic reality that ASEAN trades more with the outside world than among member countries. Adherence to the latest trading rules is a commercial imperative.
Fourth, ASEAN has recognized that to move more quickly decisions may need to be made on an “ASEAN minus” basis, in which a coalition of the willing would move ahead if all 10 countries could not agree. Those ASEAN members opting to proceed more slowly would benefit from special programs to help close the gap. That said, the power of peer pressure and competition are great in the region and may spur all countries to greater achievements.
TPP rules operating in at least 7 of ASEAN’s 10 members would contribute to increased trade and investment for the region and U.S. firms. A stronger AEC also would contribute to ASEAN’s credibility as the only viable regional institution in the constellation of Asian architecture that brings together all major regional actors – including China – in groupings such as the ASEAN Regional Forum, the East Asia Summit, and the ASEAN Defense Ministers Meeting Plus.
In 2005 President George W. Bush inaugurated the U.S.-ASEAN Enhanced Partnership reasoning that a prosperous, stable ASEAN is in the interest of the United States. In retrospect, this was a visionary move to re-establish U.S. interests in an area of the world that accounts for over half global economic growth and, later this century, will generate over half of all economic activity in the world.
President Obama’s more pronounced, “pivot” has further extended U.S. interests – commercial, political, military, and civil. The region unquestionably welcomes U.S. leadership. A TPP that advances ASEAN and U.S. interests is the finest and latest example. The question is whether the United States has the political courage to deliver as it has before. Failure to do so would be more than a lost opportunity. It would be a loss of leadership in a region too important to be without the United States.
Mr. James Wallar has worked for the U.S. Treasury Department as a director of the International Trade Office and as a trade negotiator in Geneva. He has served as a senior vice president for Nathan Associates and on a project in the ASEAN Secretariat based in Jakarta.