Comments on the U.S. Government’s Indo-Pacific Strategy Paper: Non-security Aspects

The Biden administration’s Indo-Pacific Strategy of the United States released February 11 is a creative and potentially useful approach compared to previous U.S. government initiatives. The real question is whether the administration has the senior official staying power suggested by its labor-intensive approach. Failure to fill the position of U.S. ambassador to the Association of Southeast Asian Nations (ASEAN) in Jakarta suggests that, for the moment, rhetoric is running ahead of action.

Consolidate and Go Regional

Non-security topics are woven throughout the strategy: health, climate, clean energy, infrastructure, transportation, trade. Some are clustered under different groups of countries in the “Build Connections” section: the Quad (Japan, Australia, India, and the United States) or “flexible groupings” of the Quad, ASEAN, and South Asia. A few topics overlap with different groups. This is unduly complicated, difficult to staff, and a headache to track and record any progress.

Another approach would be to base initial efforts on work underway in ASEAN, permitting a quick start and reinforcing its objectives. ASEAN’s economic and sociocultural umbrellas encompass all the strategy’s topics. Committees meeting on a regular basis staffed by the ASEAN secretariat are implementing activities in pursuit of medium-term plans and objectives. Quad members are already engaged with ASEAN as “dialogue partners,” in “ASEAN-Plus One” formats. This format could be converted to an ASEAN-Plus Four (or six including New Zealand and South Korea, or eight including the European Union and United Kingdom) similar to the long-established ASEAN- Plus Three (Japan, Korea, and China) dialogue. ASEAN could lend its experience to the South Asian Association for Regional Cooperation (SAARC) and smaller regional groupings by inviting them as observers to ASEAN technical meetings or sending ASEAN experts to their meetings.

The excellent Japanese-backed Economic Research Institute of ASEAN and East Asia (ERIA) could provide important analytical support, as it is doing for the upcoming Indonesian and Indian G20 presidencies. The U.S. government should become a member of ERIA and participate in its governing board with other Quad members. A small Indo-Pacific secretariat could be set up in ERIA’s Jakarta offices to track and coordinate activities.

Economic Framework: Build on New Digital Agreements and Add Competition

The proposed and sparsely outlined Indo-Pacific Economic Framework (IPEF) mentions some topics already covered in the “Build Connections” section and lists the digital economy, an approach to trade that includes high labor and environment standards, and supply chains. Again, implementation of the strategy could build on the ongoing work of ASEAN as well as the Asia-Pacific Economic Forum (APEC) and the new, innovative digital economic agreements pioneered by Singapore with Australia and South Korea.

An important topic missing from the framework is competition policy and law. Contrary to the strategy’s assertion, “the principles of openness, transparency, and inclusivity” have not “fueled the region’s success.” Instead, the evolution of regional production chains and the openness of export markets have been major factors propelling the region’s economic growth. 

That dynamic is changing as the region’s middle-class consumers are on the rise. This makes the nurturing of open, contestable markets more important. Effective competition policy and enforcement could have a transformative effect, changing the business environment to favor efficient, market-driven enterprises. Robust competition enforcement would complement the new U.S. Strategy on Countering Corruption and reduce market distortions, including those caused by corrupt government officials.

The U.S. Federal Trade Commission planted the competition policy seed in ASEAN, which has been nurtured by Germany, Australia, and New Zealand. ASEAN’s guidelines on competition policy and law have informed the nine of the ten member countries that now have competition policy laws. Australia and Japan have active competition law enforcement, and India’s relatively new Competition Commission is beginning to develop a track record. The Biden administration’s new, energetic approach to competition would underscore the issue’s importance and help invigorate the nascent dynamic in the region.

Principles Can Produce Progress

The “framework” approach suggests participants would operate based on agreed principles or guidelines rather than legally binding obligations. This could be appealing to Indo-Pacific countries, particularly given their income and capacity disparities. Having more participants would help build the connectivity and relationships envisioned by strategy. Recall that in November 2019, India stepped out of negotiations on the relatively modest rules and obligations of the Regional Comprehensive Economic Partnership (RCEP), which took effect in January of this year.

Skeptics question whether such an approach can produce meaningful results. But this labor-intensive, sustained approach could offer deeper professional relationships in the region. APEC and ASEAN have demonstrated that measurable progress can be achieved by setting targets, adopting medium-term action plans, laying out milestones to track progress, providing peer review and advice, taking advantage of technical assistance, and having annual leaders’ meeting stocktaking. As the strategy paper recognizes, the region’s transformation into a budding economic powerhouse is testimony to the power of trade and investment principles.

Telecommunications advances during the pandemic, even for senior officials’ meetings, could facilitate engagement and bridge the geographic distance from the United States to the region. Make no mistake, the moment attendance by U.S. senior officials languishes, whether in person or virtually, the effort will begin to flounder.

Practical Engagement, Not Vilification to Counter China

The administration’s strategy paper portrays China as a regional bully. Certainly, that case can be made, but not all in the region share this view. Strong ethnic, historical, and commercial ties mean that relationships with China will always be important. Political officials do not want to be in a position of choosing between China and the United States.

U.S. engagement at the policy and technical levels is a necessary counterbalance to China’s influence. Granted, Chinese assistance comes without the value-laden strings attached—respect for human rights and the importance of democratic, accountable governments—typical of U.S. aid. Nonetheless, generally speaking, countries in the region welcome U.S. involvement because advice provided by U.S. technical experts is targeted to mechanisms and policies to make markets work better and is not self-serving. This approach is the U.S. government’s comparative advantage and can influence the region’s commercial environment.

Bilateral Assistance to Support the Indo-Pacific Strategy

The U.S. government’s increase of assistance to ASEAN will be welcomed and could be put to good use in the areas articulated in the strategy. Bilateral assistance, such as that provided by the U.S. Agency for International Development (USAID), should be channeled to national implementation of regional initiatives supported by the U.S. government. Understandably, bilateral missions want to use funds for their national strategies. Too often, this is a missed opportunity to get a bigger bang for a bilateral buck. The European Union has begun to coordinate its bilateral programs with its regional ones.

ASEAN minus One

As a member of ASEAN, Myanmar presents a tricky issue. However, ASEAN member countries were disappointed that the current regime did not take up their Five-Point Consensus hammered out in April 2021. As a result, the October 2021 ASEAN leaders’ meeting was without an official Myanmar government representative. An “ASEAN minus one” format would be a way to proceed for any high-level meetings with the U.S. government.

The amount of effort by many U.S. government agencies to convert the strategy into meaningful results cannot be underestimated. But neither can the costs of not being engaged in the Indo-Pacific region.

James Wallar is a senior associate (non-resident) with the Economics Program at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2022 by the Center for Strategic and International Studies. All rights reserved.

James Wallar
Senior Associate (Non-resident), Economics Program