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What ASEAN takes to Washington
The challenges facing the global system and the global economy continue to multiply. The recovery from the COVID-19 pandemic is still sputtering, with global inflationary pressure as well as supply chain issues stemming from lockdowns in China throwing a wrench into the works.
Author: Editorial Board, ANU
The situation in Ukraine continues to deteriorate. Tensions between the two major powers, the United States and China, continue to metastasize across all dimensions of the bilateral relationship. The strategic direction of the United States, and of Asia, are at a major crossroad.
Long overdue US-ASEAN summit
President Joe Biden’s long-promised US-ASEAN summit, which nearly didn’t get off the ground, will take place on 12 and 13 May at the White House. The summit is officially being convened to celebrate 45 years of diplomatic engagement between the United States and the Southeast Asian regional bloc. It comes after the Biden administration released its rhetorically ambitious but substantively vague Indo-Pacific Strategy, with its crucial economic element — the Indo-Pacific Economic Framework (IPEF) — yet to be defined.
Biden has made a point of stressing ASEAN centrality, and for the attending ASEAN leaders this is a chance to set out regional priorities to a superpower whose influence, if receding, is still substantial.
Editorial Board, ANU
What is the the Indo-Pacific Economic Framework (IPEF) ?
Washington is making a habit of offering economic frameworks for Asia: Obama had his ‘pivot’; Trump his ‘Free and Open Indo-Pacific’. The IPEF is the latest, and it shares several of the defects common to the genre. It is framed around issues that matter to the United States and not questions of urgency for Asian economies; it reads like a strategy to counter the rise of China; and it is unlikely to outlive the current administration.
Like its predecessors, the IPEF is driven by a fear of conceding influence in the region to China, which the United States has ostentatiously excluded from the IPEF discussions. Washington is contriving its economic strategy in the region as a means to achieving its security objectives. Although ASEAN countries are by no means sanguine about China’s behavior, none share Washington’s desire to exorcise its economy.
The massive Chinese market is the engine of the broader Asian economy and no East Asian economy could continue to grow for long without trade and investment ties with China. Moreover, Southeast Asian economies are unlikely to sign on to stringent rules on labour standards or the environment if China is not also bound by them, since to do so would be to cede a competitive advantage to Chinese firms.
Like it or not, an American strategy for Asia that seeks to isolate China economically is doomed to failure.
Editorial Board, ANU
What goes unsaid is that Asia already has an economic security framework, one that has proved its strength for over half a century: the post-war multilateral order. Without it, the economic ascent of Southeast Asia would have been unthinkable. In addition to being the lynchpin of economic growth, the multilateral order has been vital in underpinning the national security of ASEAN member states, by taking the geopolitics out of international economic engagement, and building trade and investment relationships that raise the cost of aggression.
ASEAN is one of the most enduring and successful regional organisations precisely because it is designed to complement and not compete with the multilateral order. Its success, indeed, depends on that order.
Simply returning to the pre-Trump status quo would, however, not be enough. The multilateral order was fraying before 2016, and the institutions that superintend it need to be rethought for the 21st century. New rules are needed to cover the areas of the global economy left untouched by the Bretton Woods institutions.
Can ASEAN take the lead ?
This is where ASEAN can take a leading role, particularly given Indonesia’s convening power through the G20 this year, and drawing on ASEAN’s recent experience in institutional innovation through the conclusion of the Regional Comprehensive Economic Partnership, an arrangement that incorporates a substantial element of economic cooperation.
The opportunity for ASEAN to make a start on this agenda through the G20 is real, but complicated – particularly given the politics of the Russia-Ukraine crisis, which threatens to overshadow Indonesia’s G20 year.
As Yose Rizal Damuri and Peter Drysdale argue in our lead article this week, ‘Indonesia’s role both in the G20, its standing in the developing world and its weight within ASEAN make it vital to the United States and China both. Indonesia’s diplomatic instinct is to build bridges between the developed and developing world, an asset in the G20 which brings together all. Indonesia’s size, legitimacy and its tradition of non-alignment mean it is one of the few that can lead the G20 in difficult times like these. The United States also needs Indonesia more than it realises for its own purposes: the Biden administration’s Indo-Pacific Framework and indeed anything the United States does in Asia will need Indonesian buy-in in order to succeed’.
Indonesia under pressure
Pressure on Indonesia is immense. As G20 chair, it will have to find some way to thread a number of needles: including finding a solution to the question of Russian participation around the Ukraine question. Indonesia cannot let the urgent issues crowd out the systemic. The comparative advantage of the G20 lies in its ability to bring together all major stakeholders in the world economy, not just the G7 advanced economy group, to discuss the global system. The Indonesian presidency comes after several years in which the body, hosted by rich nations, has focused on worthy but second-order issues for emerging economies.
The times call for moderation with boldness. What’s required of Indonesia and its ASEAN partners on their mission to Washington is quiet clarity about their multilateral interests and priorities and what is at stake for all in the G20 and global process.
The opportunity to steer discussion back to the renovation of the multilateral order has come. The time when the United States could unilaterally impose the rules of international economic intercourse has long passed, even if Washington still possessed the will. What Washington can do is promise to support — institutionally and materially — an effort of collective Asian will to refashion the global order.
The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.
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