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The U.S. Needs to Up Its Economic Game in Southeast Asia


WASHINGTON—This August 16, after President Joseph Biden walked away from the podium in the East Room of the White House, one could understand if leaders across Southeast Asia and elsewhere in the Indo-Pacific region shuddered.

There goes America again, they might have thought: Another U.S. president has written off an Asian nation now deemed no longer sufficiently “strategic” for U.S. engagement.

“Our only vital national interest in Afghanistan remains today what it has always been: preventing a terrorist attack on American homeland,” Biden said in an address to the nation. His remarks came after the rapid collapse of the U.S.-supported Afghan government on August 15 following Biden’s earlier decision to move forward with the withdrawal of U.S. military forces.[1]

Chaotic scenes from Afghanistan would ensue, including the deaths of 13 U.S. military service members and more than 160 Afghan civilians in an attack near the Kabul airport. A U.S. drone strike ordered after Biden vowed retaliation for the airport attack ended in a tragic mistake, killing 10 civilians, including an aid worker and seven children. Some two decades earlier, the U.S. had invaded Afghanistan post-9/11 to fight a “war on terror,” which would continue under presidents from both political parties.

As seen from Southeast Asia, the parallels in rhetoric and images with America’s departure from South Vietnam 40 years ago are obvious. In this case, 20 years of American involvement ended as it had begun, with a Taliban government in power.

Engagement Goes beyond “Military-Industrial” Ties

America’s leaders must recognize that vital national interests go beyond military- and defense-driven imperatives alone, whether in Afghanistan or in Southeast Asia. The tail, in essence, should not wag the dog.

Six decades ago, in January 1961, President Dwight Eisenhower warned about what he saw as a threat to democratic government. He termed it the “military-industrial complex,” describing a formidable union of defense contractors and the armed forces.[2]

“Together we must learn how to compose difference, not with arms, but with intellect and decent purpose,” Eisenhower said. The former Supreme Allied Commander in Europe also warned of the “prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money” as well as of the “danger that public policy could itself become the captive of a scientific-technological elite.” [3]

Fast forward to today, and Eisenhower’s words are well worth heeding. The need to focus on and strengthen commercial ties and other non-military engagement across Southeast Asia remains critical—even as necessary steps are taken to remain militarily ahead of an increasingly assertive, if not outright aggressive, China.

Important ongoing initiatives to ensure a free and open Indo-Pacific region include strengthening the Quad, officially the Quadrilateral Security Dialogue, composed of the United States, Australia, India and Japan. Maritime cooperation among the Quad began after the Indian Ocean tsunami of 2004. Today, the four nations—all boasting robust democracies and economies—have sought to expand cooperation on security, economic and health issues, including the financing and delivery of vaccines against COVID-19.[4]

Another important new initiative is the trilateral defense agreement announced in September 2021 by Australia, the United Kingdom, and the United States, informally known as AUKUS. Under the historic pact, nuclear-powered submarine technology will be provided to Australia.[5] The surprise announcement has raised concerns throughout Southeast Asia that the pact will increase tensions between the three countries and China—with the region being yet again the field on which future battles are fought.

The announcement echoes news during the administration of President Barack Obama that 2,500 U.S. Marines would be deployed to Darwin, Australia, as part of a longer-term U.S. military “pivot” to the Asian and Pacific region.[6] Following pushback from European allies worried about their place in the U.S. engagement, the U.S. “pivot to Asia” would later be rebranded as a “rebalance to Asia and the Pacific.”[7]

Reaction to the AUKUS deal in Southeast Asia has been mixed, reflecting the inability of the region to speak with a single voice, as well as the influence of economic and other ties with China. Malaysia and Indonesia expressed concern that the new security pact would lead to an arms race in the region. In contrast, Singapore and the Philippines welcomed the deal.[8]

This raises the question, to what degree have military considerations and initiatives dominated strategic calculations and engagement?

The U.S. Can Do Much More to Stay Relevant in Southeast Asia

“For an effective Asia strategy, for an effective Indo-Pacific approach, you must do more in Southeast Asia,” said Kurt Campbell, the White House Indo-Pacific Coordinator, at a recent Asia Society event. His remarks underscored that the United States is not doing enough, and for some has never done enough, to remain relevant in the region.

“We recognize fully that to be effective in Asia, you have to be effective in Southeast Asia,” said Campbell, who had served in the Obama Administration as Assistant Secretary of State for East Asia and the Pacific.[9]

For the United States to be successful, U.S. rhetoric must match the reality of U.S. engagement. This is as true today across the Indo-Pacific, from Afghanistan to the South China Sea, as it was when America’s friends and rivals in Asia saw a disconnect between U.S. rhetoric and the U.S. response over a “red line” drawn in regard to Syria’s use of chemical weapons.

As Ashley Townshend, Director of Foreign Policy and Defense of the United States Studies Centre, and his colleagues have written, the Biden Administration’s approach to the Indo-Pacific has so far lacked focus and urgency. “Despite its deep regional expertise and the region’s high expectations, it has failed to articulate a comprehensive regional strategy or treat the Indo-Pacific as its decisive priority,” says Townshend and his co-authors in calling for a “course correction.” [10]

But what does doing “more” look like?

“More” cannot be a repeat of past missteps. Failure to send high-level representation to critical regional and multilateral meetings including the U.S.-ASEAN Summit [11], and not consistently and adequately funding initiatives such as the Lower Mekong Initiative [12], are just two examples that cut across Democratic and Republican Administrations when it comes to less-than-optimal engagement with Southeast Asia.

“More” cannot be simply a “pivot to Asia 2.0,” which is seen as overly militaristic in nature and deemed more rhetoric than reality when it comes to business, trade, development, climate and health engagement that would be of long-term benefit for both the United States and Southeast Asia.

“More” must encompass an “all of government” U.S. approach—moving well beyond our U.S. Departments of State and Defense—and engagement in a sustained way with the region. The United States must better partner with Southeast Asian nations large and small, helping drive economic prosperity to our mutual benefit, just as we collaborate on strengthening regional security.

As unpopular as it may be, doing more means also talking about trade deals with the region and with our own fellow citizens. Business and government leaders must better understand and then address very real concerns about the unequal benefits and consequences of trade in America.

We Need to Value and Play the Economic Card

Trade has gotten a bad rap in the last few years, and that is understandable when unfair business practices by China, enduring trade deficits and heart-breaking job losses, as well as partisan politics, dominate the conversation.

Free and fair trade has been more aspirational than reality. More attention must be paid to the negative consequences of trade, specifically, the very real impact, both positive and negative, on real people—on jobs, livelihoods and people’s outlook on whether their kids will grow up to live better lives than their own. Promises of “job retraining” and one-off payments are an inadequate response by business and government to a loss of livelihoods.

It has been said that, for businesses, the biggest advantage of trade is that it allows companies to grow beyond their home borders and expand into new markets, creating new and different jobs back home and expanding consumer choices. We cannot ignore that 96% percent of the world’s consumers reside outside the United States, according to the U.S. Small Business Administration.[13]

There remains a robust demand outside America’s borders for U.S. products, brands and services—whether for U.S.-designed iPhones assembled abroad, American-made Boeing jetliners from the state of Washington and agricultural products grown in the U.S. Midwest as well as in Florida, Texas, California and elsewhere.

Here too is reason enough for an all-in American approach to Southeast Asia. There is much more to the Indo-Pacific region than China, Japan and India.

The 10 member states of the Association of Southeast Asian Nations (ASEAN) —Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam—together constitute a market with a population exceeding 660 million people. ASEAN countries combined also have the third-largest population in the world and a GDP of $3.2 trillion, making the region the third-largest economy in the Indo-Pacific and the fifth-largest in the world.

With growth projected to exceed 5.5% per year, the region’s economy will pass those of India and Japan to become the world’s fourth-largest by 2030, according to the U.S.-ASEAN Business Council, the leading advocacy organization for U.S. corporations operating within the dynamic ASEAN region.[14]

U.S. companies are already taking advantage of the business opportunities in this region, with U.S. exports recently exceeding more than $122 billion in goods and services to the ASEAN region.

At the state level, Texas has the largest share of exports to the region, with $20 billion worth of exports headed to ASEAN nations, supporting more than 84,000 jobs, according to “ASEAN Matters for America/America Matters for ASEAN,” a data resource created in partnership by the East-West Center in Washington, the U.S.-ASEAN Business Council and the ISEAS-Yushof Ishak Institute.

The economic cards that the U.S. holds are significant and well worth showing in America as part of non-partisan efforts to build support for greater, sustained U.S.-ASEAN engagement by all sectors.

As examples, ASEAN accounts for at least 20% of export-dependent jobs to the Indo-Pacific, not only in Texas, but also in the states of Arizona, Georgia, Kansas, Mississippi, Montana, North Dakota, Tennessee, Virginia, Wyoming, Oregon, Idaho and Maine.

The United States exports nearly $14 billion in agricultural and food products to ASEAN, with soybeans ($2 billion) and cotton ($1.6 billion) making up a large share of trade activity. This trade involves all U.S. states, from California ($2 billion) to Rhode Island ($1 million).

ASEAN is also the top destination for U.S. investment in the Indo-Pacific, with U.S. companies having invested nearly $338 billion in the region. That is more than the United States has invested in the much-discussed BRIC nations of Brazil, Russia, India and China combined.

Yet, amid all this success, the reality is that in 2020, Southeast Asia became China’s largest trade partner as the U.S.-China trade war forced Beijing to recalibrate its global supply chain. The European Union had previously been China’s largest trade partner. At the start of 2021, China’s top five trading partners are ASEAN, the EU, the United States, Japan and South Korea.

China and ASEAN also enacted an updated free-trade agreement in October 2020. In addition, “in an attempt to counter U.S. clout, the Chinese government has promoted trade with ASEAN and other participants in its Belt and Road infrastructure initiative,” according to Nikkei Asia.[15]

For U.S. companies and business people to better build on past successes in Southeast Asia amid China’s rise, the federal government in Washington, D.C., also has a role to play. For the Biden Administration and the U.S. Congress, that includes, at times, getting out of the way by doing away with burdensome regulatory and tax policies that unintentionally hinder U.S. competitiveness and U.S. business people abroad.

One enduring example of well-intended legislation with unintended negative consequences on Americans abroad that Washington should fully address is FATCA (the Foreign Account Tax Compliance Act). Due to the added reporting burden that FATCA requires of financial institutions outside the United States, numerous Americans in Southeast Asia and elsewhere have come up against foreign banks who have decided not to serve Americans. The result is added challenges for Americans overseas at a time when Washington should be making it easier for U.S. students, business people and entrepreneurs abroad to succeed.[16]

Government and business also must invest in personnel with an understanding of the Indo-Pacific’s diversity of cultures, challenges and opportunities. Post-pandemic opportunities should be explored with educational, cultural, tourism and other institutions to step up people-to-people engagement here and abroad between the United States and each of the 10 ASEAN nations.

At the same time, U.S. businesses that manufacture products in Southeast Asia for sale in Southeast Asia should not be unfairly maligned as they take steps to remain cost-competitive.

The Biden Administration and the U.S. Congress could also do much more to ensure that Americans abroad in Southeast Asia and elsewhere have access to COVID-19 vaccines as part of a U.S. commitment to assist nations in need, as well as assisting Americans abroad. While getting its house in order at home, the United States must also better engage with and support its own citizens living and working outside its borders.[17] Americans abroad are on the front lines of everyday engagement and interactions overseas.

We Need to Get Back into the Game (of Making Trade Deals)

President Donald Trump promptly withdrew the United States from the Trans-Pacific Partnership (TPP) trade agreement in his first few days in office, fulfilling one of his most popular campaign promises. The 2016 election year also saw the most prominent Democratic presidential candidates, including former Secretary of State Hillary Clinton, express their own opposition to the Obama-era trade deal. TPP had never been submitted to the U.S. Congress for ratification due to its likely failure to win approval, and trade deals, unfortunately, seem to have become increasingly toxic.

The TPP, designed to lower trade barriers among its participants, included four ASEAN countries (Brunei, Malaysia, Singapore and Vietnam), along with Australia, Canada, Chile, Japan, Mexico, New Zealand and Peru, as signatories. It is a trade agreement that Obama had once said would write the “rules of the global economy” and open markets to “American products while setting high standards for protecting workers and preserving our environment.”[18]

Obama’s inability to win support for the TPP and then Trump’s withdrawal of the United States from and failure to replace the TPP have undercut steps to counterbalance the rising influence of China in Southeast Asia and throughout the Indo-Pacific.

With support by Japan, the TPP has since morphed into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that does not include the United States. The CPTPP now represents 13.4% of global GDP, with China hoping to join the agreement.

China also has forged ahead with the rival Regional Comprehensive Economic Partnership (RCEP) trade pact, which includes all 10 ASEAN countries plus Australia, Japan, South Korea and New Zealand. China had begun gathering support for the pact in 2012, in what, according to Reuters, was seen as “a bid to counter growing U.S. influence in the Asia-Pacific region.” Covering nearly a third of the world’s population, the RCEP economies now represent some 30% of global GDP, making it the biggest free-trade bloc on the planet.[19]

The Biden Administration and the U.S. Congress now have a choice to make: will the United States stay on the outside looking in on trade agreements, or will the nation become part of a process where it has traditionally taken a leading role?

The lack of a strong U.S. voice in advancing bilateral and multilateral trade agreements potentially puts U.S. companies at a disadvantage. The United States should help shape the rules, especially when it comes to competing in new markets and in critical fields, such as fintech and artificial intelligence, that will anchor the digital economy.

With its large number of young, tech-savvy consumers, Southeast Asia is primed for these new industries, and China is looking to take the lead there in digital trade.[20]

The China challenge is just one important reason why it is urgent that the United States re-engage ASEAN in trade talks. Movement toward a digital trade agreement, much like the one Trump signed with Japan, can help U.S. tech companies stay competitive. Southeast Asia is now the world’s fastest-growing internet market, expected to grow to $300 billion by 2025.

The Biden Administration must elevate its own engagement and support U.S.

business engagement in southeast Asia. If the Biden team is distracted away from the ASEAN opportunity, U.S. businesses, especially small- and medium-sized enterprises, could well be subject to data protectionism measures that will lock them out of what will be the world’s fourth-largest economic bloc.

If “We’re Back,” Then We Need to Be “All In” in Southeast Asia

“We’re back!” is the catchphrase Biden and his foreign policy team have used to announce to the world that he is moving beyond Trump’s non-traditional, if not outright disruptive, approach to international diplomacy and instead returning to “business as usual.”

But a return to business as normal is insufficient for the United States to remain competitive in Southeast Asia. A focus on new military agreements and on new military weapons sales and the sharing of military know-how and technology might well lead to a revitalized “pivot to Asia 2.0” being viewed as an approach that sees every challenge as a nail that needs to be hammered in.

Likewise, drop-in visits by senior Biden Administration officials, including Vice President Kamala Harris’s this August to lecture Southeast Asian leaders about the dangers of a rising China, are not enough to keep the United States a key player in the ASEAN region. Asian nations with China next door understand better than the United States does the dangers of a bullying nation in their midst, whether in the South China Sea, the East China Sea or on their northern borders.

Although Southeast Asia is often overlooked in U.S. policy circles and in too many U.S. corporate board rooms, the region’s rising political and economic importance to our country cannot be ignored. The United States must use every tool and lever we have to maintain and build on our engagement in the region. Innovations also must be embraced.

The newly established Development Finance Corporation—the U.S. government’s development finance institution—offers an opportunity to provide a more transparent alternative to some of China’s economic outreach and infrastructure project financing in the region. Ongoing U.S. “vaccine diplomacy” should be expanded. And U.S. involvement in multilateral institutions such as the Asian Development Bank must be strategic and sustained.

Traditional diplomacy and military engagement will always be critical parts of any approach, but so too should be public and cultural diplomacy, people-to-people engagement, and business, trade and economic initiatives.

Most important, the United States must have an overarching strategy of engagement for the region, both with ASEAN at the regional, institutional level and at bilateral levels. While some Southeast Asian nations will be more important to the United States due to history if not relations as treaty allies or security partners—Thailand, the Philippines and Singapore, for example—every nation offers worthy opportunities for engagement.

The United States has long championed freedom of navigation and the peaceful resolution of disputes in the South China Sea. Yet China knows well that its focus on smaller nations in ASEAN such as Cambodia and Laos pays off in their support for China’s positions in regional and international forums on issues ranging from Taiwan to territorial disputes and human rights issues.[21] While not (yet) members of ASEAN, the Southeast Asian nations of Timor-Leste and Papua New Guinea also deserve more U.S. attention now, lest America once again be seen as playing catch-up to China in these nations, too.

“Go West, young man” is a phrase often associated with the American author and newspaper editor Horace Greeley in the mid-1800s, as a young American nation looked to expand westward to the Pacific Coast.

More than a century and a half later, the United States is an established Asia-Pacific power. As new challenges rise, including those from China, our government and business leaders must also now appreciate the diversity of opportunity that the Indo-Pacific region overall and the Southeast Asia region specifically offer. U.S. commitment and staying power are needed to make those opportunities real.

Just ten months into a new U.S. presidential administration, questions grow over U.S. foreign policy, given the “strategic disaster” that has been the execution of America’s withdrawal from Afghanistan.

In contentious U.S. congressional hearings this September following the U.S. withdrawal from Afghanistan, General Mark Milley, the chairman of the Joint Chiefs of Staff, called the evacuation of Americans, Afghans and allies out of Kabul in the final weeks of the nation’s longest war as a “logistical success but a strategic failure.”[22] “Strategically, the war was lost. The enemy is in Kabul,” said Milley.

It is important that disengagement from Afghanistan does not now foreshadow a lack of commitment to any nation in the Indo-Pacific that might be deemed by the U.S. President as not being of “vital national interest” to the U.S. With a focus on economic and trade engagement, China may well view nations differently than if it had a mindset shaped purely by military interests.

Southeast Asia is at the dynamic heart of the Indo-Pacific. To America, we say, “Go Southeast, my friends.” The United States needs to up economic involvement in the region to make a sustainable and lasting presence in Southeast Asia. Then, President Biden and our U.S. Congress can say “we’re back” and “here to stay” with an all-in approach to Southeast Asia.


AMBASSADOR CURTIS S. CHIN, a former U.S. Ambassador to the Asian Development Bank, is Managing Director of advisory firm RiverPeak Group, LLC. JOSE B. COLLAZO is a Southeast Asia analyst and Project Consultant at RiverPeak Group.

[1] Biden, Joseph. "Remarks by President Biden on Afghanistan".

[2] “Ike's Warning of Military Expansion, 50 Years Later.” NPR, January 17, 2011.

[3] Eisenhower, Dwight D. "Farewell Address".

[4] Smith, Sheila A. “The Quad in the Indo-Pacific: What to Know.” Council on Foreign Relations, May 27, 2021.

[5] “Aukus: UK, US and Australia Launch Pact to Counter China.” BBC News. BBC, September 16, 2021.

[6] Purtill, James, and Steven Schubert. “US Marines Begin Arriving in Darwin in Fourth Rotation as Part of US 'Pivot' to the Asia-Pacific.” ABC News, May 18, 2015.

[7] “FACT SHEET: Advancing the Rebalance to Asia and the Pacific.” The White House | President Barack Obama, November 16, 2016. The White House.

[8] Southgate, Laura. “AUKUS: The View from ASEAN.” The Diplomat, September 23, 2021.

[9] Campbell, Kurt. “U.S. and China Can Co-Exist Peacefully.” Asia Society. Asia Society Policy Institute, July 6, 2021.

[10] Townshend, Ashley, Susannah Patton, Toby Warden, and Tom Corben. “Correcting the Course: How the Biden Administration Should Compete for Influence in the Indo-Pacific .” United States Studies Centre, August 27, 2021.

[11] Strangio, Sebastian. “As Summits Loom, Biden Administration Bolsters Engagement with Southeast Asia.” The Diplomat, August 2, 2021.

[12] “Lower Mekong Initiative (LMI).” U.S. Agency for International Development, July 12, 2021.

[13] “A World of Opportunity .” U.S. Small Business Association, n.d.

[14] “ASEAN Matters for America / America Matters for ASEAN.” Asia Matters for America, n.d.

[15] Harada, Issaku. “ASEAN Becomes China's Top Trade Partner as Supply Chain Evolves.” Nikkei Asia, July 14, 2020.

[16] “What Is FATCA? Everything Expats Need to Know.” Bright!Tax Expat Tax Services, October 1, 2021.

[17] Chin, Curtis S. “Biden's Global Vaccination Push Must Not Ignore Americans Abroad.” The Hill, June 8, 2021.

[18] “Statement by the President on the Trans-Pacific Partnership.” The White House | President Barack Obama, October 5, 2015. The White House.

[19] “China Says Members of RCEP Pact Aim for Deal to Take Effect from 2022.” Reuters, March 25, 2021.

[20] Tong, Linh. “Digital Trade Must Be Central to Biden's 'Pivot to Asia'.” The Diplomat, August 12, 2021.

[21] “ASEAN Nations Fail to Reach Agreement on South China Sea.” BBC News. BBC, July 13, 2012.

[22] Lubold, Gordon, and Nancy A. Youssef. “Gen. Milley Calls Afghan Withdrawal 'Strategic Failure' in Heated Senate Hearing.” The Wall Street Journal. Dow Jones & Company, September 28, 2021.


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