Aug 18, 2021 - 9:45am

VP’s Visit to Southeast Asia Affirms Need to Enhance U.S. Trade Ties


Executive Director, Southeast Asia

Vice President Kamala Harris is heading to Singapore and Vietnam this weekend for a timely visit to an increasingly important part of the world.  Member countries of the Association of Southeast Asian Nations (ASEAN) have called for greater U.S. engagement in the region, and recent visits to the region — in person and virtually — by Defense Secretary Lloyd Austin and Secretary of State Antony Blinken show the Administration is responding to the call. 

The U.S. business community applauds this uptick in engagement. The 10 ASEAN nations together represent a growing market of 660 million consumers, and U.S. trade with the region is booming. Southeast Asia is the fourth largest destination worldwide for U.S. exports, behind only China in the Indo-Pacific. U.S. direct investment in the region roughly equals that in China, Japan, and Korea combined. The region supplies U.S. consumers and businesses with everything from footwear and clothing to cell phones and electronic components, and as U.S. companies and suppliers have sought to diversify away from China, the region is set to become an even more indispensable economic partner. 

Indeed, U.S. security relationships in the region are well developed and are expanding, but the economic analogue in the relationship has been lacking since the U.S. withdrawal from the Trans-Pacific Partnership in early 2017.  Our Asian partners have been signaling for years that an Indo-Pacific strategy not backed by an inclusive, expansive economic platform is dead in the water. Particularly given recent events in Afghanistan, the region is looking to the Administration to complement U.S. security relationships with a strong signal and demonstration of U.S. economic and commercial commitment to the region. 

However, countries in the region belong to a web of trade agreements that provide preferential market access to their members, which include our European and Chinese competitors, and which do not involve the United States.  These put U.S. companies and the U.S. workers that support them at a disadvantage.  There is no better way to better establish the United States as a trusted regional partner than by enhancing our economic engagement in the region. 

A starting point would be to begin talks on digital economy standards.  Southeast Asia’s digital economy is expected to reach $300 billion by 2025, fueled by an increasingly innovative online marketplace.  The United States has taken the lead in establishing digital economy standards in the USMCA and the U.S.-Japan Digital Economy Agreement and should seek to extend the reach of those standards in Southeast Asia. Doing so will help us push back against the digital protectionism and fragmentation that reflects the influence of our competitors in the region. Simply put, engagement on digital economic issues is critical to maintaining U.S. economic leadership in the region. The Vice President will start her visit in Singapore, which happens to be an excellent place to begin the discussion.  Her interlocutors are in listening mode and will be receptive.

Southeast Asia’s battle with COVID-19 and the Delta Variant demands U.S. attention, and is an opportunity to strengthen partnerships in the region.  The ASEAN countries have the fourth highest number of cumulative COVID-19 cases globally, behind only the United States, India, and Brazil, and the numbers are unfortunately growing rapidly.  U.S. companies are working with the U.S. government and governments in the region to provide support through the Chamber-led Global Task Force on Pandemic Response, a unified platform for businesses to mobilize and deliver resources to assist COVID-19 efforts in areas of the highest need around the world.  The Chamber has urged the Administration to ramp up its support for Southeast Asia, including in vaccine distribution, oxygen supplies and other equipment, and therapeutic medicines.  The private sector is an eager partner in this effort. 

While in-person participation in ASEAN Summit meetings is constrained by COVID, we urge the Administration to participate vigorously, and at the highest levels, in the ASEAN Leaders Meetings and other senior-level meetings that are to take place virtually between now and the end of the year.  This participation is vital to demonstrating U.S. commitment to the region.  

Following her visit to Singapore, the Vice President will head to Vietnam, where additional action is needed to shore up the economic relationship.  The U.S. Chamber applauded the Administration’s recent decision not to impose tariffs on goods from Vietnam in the context of the Section 301 currency investigation; a strong follow-up step would be to enhance the existing trade and investment framework (TIFA) agreement with Vietnam, as the U.S. Chamber initially proposed in 2019 and which USTR supported.  An upgraded TIFA will provide a way to address the myriad regulatory and market access issues that are increasingly large irritants in the commercial relationship. 

Finally, the Administration could announce its intention to host APEC in 2023, as the Chamber called for in June. APEC has been supported by Democratic and Republican Administrations alike and has been a useful forum for countries to address economic challenges and work together on a range of global priorities. As chair, the United States would be in a strong position to set the APEC agenda and advance digital standards and other priorities in the region.  As Myron Brilliant, Executive Vice President and Head of International of the Chamber explained, “The United States has a golden opportunity to cement re-engagement and enhance U.S. economic leadership in the Indo-Pacific by committing to host APEC in 2023.” 

U.S. security and strategic engagement in Southeast Asia and the broader Indo-Pacific region cannot happen without a strong economic foundation - a foundation that’s been weakened in recent years.  The Vice President’s trip is a rare opportunity for the United States to strengthen ties and reassert its economic and commercial leadership in the region. 

 

About the Author

About the Author

Executive Director, Southeast Asia