Donald Trump Should Capitalize on Trade Opportunities in Asia
Questions surround the administration’s economic approach to Southeast Asia—primarily, does it have one?
Multilateral Efforts
The Trump administration has expressed wariness towards international organizations, foreign aid, and even its own State Department, which the president apparently views as too large and in need of downsizing. As such, he may be less amenable to the following recommendations, which could be costly and for which there may not be short-term payoff, at least in terms of American jobs and American exports. Even so, if the United States wants to shore up its staying power in Southeast Asia, compete with China’s growing influence, and ensure that American businesses can take advantage of opportunities in the region, the following suggestions may prove themselves attractive.
At the Sunnylands Summit with ASEAN leaders in February 2016, President Obama announced a new initiative: U.S.-ASEAN Connect. The U.S.-ASEAN Connect website describes the initiative as “a new strategic, unifying framework to deepen the United States’ growing economic cooperation with ASEAN.” Built around four pillars—Business Connect, Energy Connect, Innovation Connect and Policy Connect—the program seeks to “support regional integration efforts of the new ASEAN Economic Community and build upon the positive economic ties between the U.S. and ASEAN.”
President Trump should announce an expansion of this program during the trip. The second pillar, Energy Connect, is an obvious place to start. As currently defined, Energy Connect “helps develop ASEAN’s power sector using sustainable, efficient, and innovative technologies.” The initiative’s kick-off project is USAID Clean Power Asia, which seeks to “increase the supply of grid-connected renewable energy.” This is a laudable effort, but this pillar should not be solely focused on sustainable energy.
The International Energy Agency (IEA) reported in 2015 that the region needs an “annual average of almost $100 billion” of infrastructure investment out to 2040 if Southeast Asia is to meet its energy needs. Over this timeframe, Southeast Asia will flip from a net-gas exporter (fifty-four billion cubic meters in 2013) to a net importer (ten billion cubic meters by 2040). These trends mark opportunities for American businesses.
As energy priorities in Southeast Asia, the United States should support efforts to better integrate the region’s power networks and should seek an expansion of reliable and affordable energy to the 120 million Southeast Asians that still live without electricity and the 276 million that continue to rely on solid fuels for cooking. Pursuing these goals would earn good will for the United States in the region, while also contributing to the development of future markets for American goods and services.
Through U.S.-ASEAN Connect, the United States can educate local policymakers on the regulatory environment that would be most conducive to U.S. private sector investment in infrastructure projects while facilitating exchanges between U.S. gas exporters and regional energy companies. In announcing an expansion of U.S.-ASEAN Connect, President Trump should commit to making reforms at home as well by easing the export of American gas and avowing an intent to provide export licenses as a matter of course. Denials of such licenses should be rare exceptions.
Finally, and most unlikely for this administration, President Trump should, after consulting with Prime Minister Abe, announce that the United States intends to join the Asian Infrastructure Investment Bank. Across Southeast Asia, Washington’s actions regarding the AIIB—not only its decision to stay out, but its efforts to prevent partners from joining—is viewed as a major and confounding misstep. Not only does the AIIB provide infrastructure investment, of which Southeast Asia is in desperate need, but it would have also provided an opportunity for the United States and China to work together constructively in a region in which they are increasingly at odds. Instead, the United States needlessly ceded leadership to China on the issue of infrastructure investment, while failing to keep any of its allies (apart from Japan, which was uninterested in any case) from signing up—the American effort screamed of ineptitude and strategic impotence.
American concerns about governance and best practices surely could have been addressed at the outset and still can be. Joining the AIIB would allow the United States and China to tamp down, at least at the margins, great power competition in Southeast Asia, while winning for the United States more good will in the region and positioning Washington to deny China an entirely free hand in shaping the region’s infrastructure in ways that do not accord with American strategic and economic interests.
President Trump, when he dispatched the National Security Council’s Matt Pottinger to the “One Belt, One Road” summit in May, already indicated that he does not, as a matter of course, oppose China’s broader plans to invest in greater connectivity across Eurasia. Addressing the meeting attendees, Pottinger noted, “American companies have much to offer here. U.S. firms can offer the best-value goods and services required over the lift of a project. U.S. firms have a long and successful track record in global infrastructure development, and are ready to participate in ‘Belt and Road’ projects.” The AIIB, of course, will be funding many of those projects. If American companies hope to participate, they will benefit from open, fair, and transparent bidding processes. Without a seat at the AIIB table, Washington will find it difficult to ensure such processes are in place. Ideally, over the longer term AIIB projects should help open new markets for American companies, but that’s far less likely to occur with the United States sitting on the outside.
President Obama whiffed badly in keeping the United States out of the AIIB and in futilely imploring U.S. allies to keep their distance as well. In negotiating American entry now, President Trump can correct that mistake and show off his dealmaking prowess.
The United States should time its entry into the AIIB to coincide with an increased contribution to the Asian Development Bank (ADB), in order to avoid undercutting Japanese leadership in the Asian development space and to ensure that countries in the region have multiple routes to secure the investment that they need.
Conclusion
To date, the Trump administration has sent mixed signals about its approach to Southeast Asia. Although there has been sustained engagement with regional leaders since last spring, questions surround the administration’s economic approach to Southeast Asia—primarily, does it have one?
With his visit to the region, his attendance at APEC and, his participation in the U.S.-ASEAN Summit, President Trump will convey his interest in Southeast Asia and his recognition of the importance of economic issues. During his visits to Vietnam and the Philippines, he can make clear that the United States has a strategy aimed at expanding U.S. trade with the region and ensuring that Southeast Asia grows more prosperous.
In laying out a new free trade initiative for Asia centered on Japan, in doubling down on the promise of U.S.-ASEAN Connect, and in announcing his intention to join the AIIB, President Trump can serve American and Southeast Asian economic interests and, to the great relief of regional partners, deepen engagement with local multilateral institutions that likewise serve those ends.
Michael Mazza is a research fellow in foreign and defense policy studies at the American Enterprise Institute, where he analyzes U.S. defense policy in the Asia-Pacific region, Chinese military modernization, cross–Taiwan Strait relations and Korean Peninsula security.
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