Building Stronger Commercial Ties with ASEAN

March 2, 2016
Arun Kumar is ITA’s Assistant Secretary for Global Markets and the Director General of the U.S. and Foreign Commercial Service.

A few weeks ago, President Obama hosted Southeast Asia’s leaders just outside of Los Angeles, California. This summit with the Association of Southeast Asian Nations (ASEAN) preceded a Bay Area “roadshow” allowing the countries’ economic ministers to witness innovation and entrepreneurship in action. The historic week helped highlight the launch of the ASEAN Economic Community (AEC), which will combine the 10 regional economies into a single market.

For the first time, an American president hosted all 10 ASEAN leaders for a stand-alone summit on U.S. soil. President Obama sought to demonstrate our long-term commitment to Southeast Asia, one of the world’s fastest growing and strategically important regions. U.S.-ASEAN relations are stronger than ever, as reflected in the joint decision to establish a Strategic Partnership in November. U.S. Commerce Secretary Pritzker, U.S. Trade Representative Michael Froman, and the CEOs from Cisco, IBM, and Microsoft were all on hand with the President to greet ASEAN’s leaders.

The two-day ASEAN economic ministers roadshow kicked off with an outstanding conference in San Francisco organized by the U.S.-ASEAN Business Council with senior officials from government, business, and academia. The conference included several memorable speakers including an opening keynote by Indonesian President Joko Widodo and closing remarks by Tony Fernandes, CEO of Air Asia.

The gathering highlighted the realities and possibilities of the U.S.-ASEAN relationship following the launch of the AEC on December 31, 2015. Why does this economic integration initiative matter for the United States?

The ASEAN region represents 632 million consumers and a collective economy of more than $2.4 trillion. Taken together, it constitutes the world’s seventh largest economy. ASEAN is already our fourth largest trading partner with two-way goods and services trade reaching $254 billion in 2014. That reflects a 55 percent increase since 2009, and most importantly, supports more than 500,000 U.S. jobs.

This young and vibrant market will only continue to grow, as almost 60 percent of the region’s citizens are under 35, and its middle class is likely to double to almost 400 million by 2020. The conference participants acknowledged there is work to do to achieve the AEC’s full potential and even discussed plans to secure further gains over the next 10 years. From the ASEAN region’s perspective, the United States is important because of our vast and comparatively wealthy consumer class, strong rule of law, deep and liquid capital markets, and our robust protection of intellectual property.

At a meeting to assess progress under the U.S. Trade and Investment Framework Arrangement with ASEAN countries, we discussed efforts to further enhance trade and investment ties and promote regional integration. We also discussed the recent announcement of U.S.-ASEAN Connect, a new unified strategic vision for U.S. economic engagement with ASEAN, which will facilitate better access to U.S. information, resources, and insights, and augments the existing, on-the-ground U.S. presence through “Connect Centers” in Jakarta, Singapore, and Bangkok.

The ASEAN’s economic ministers and senior U.S. government officials also met with some of the Bay Area’s leading companies and the San Francisco government to exchange views on how to pursue environmentally sustainable growth and digital innovation – two key areas of U.S.-ASEAN cooperation.

We received technology demonstrations by cutting-edge U.S. innovators such as Autodesk, Silver Spring Networks, and Google, and met with Prospect Silicon Valley, a nonprofit technology incubator in San Jose. Autodesk demonstrated the potential of “generative design” that uses software to enable the creation of optimized designs, which are efficient in energy and material usage. Silver Spring Networks, which sells complex solutions for smart cities and power environments, presented examples of how the Internet of Things is conserving energy and resources. At Google, we saw the game-changing potential of their balloons (“loons”) to extend the Internet to remote areas. They are working to pilot loons in India, Indonesia, and Sri Lanka. These visits provided glimpses of how profoundly “software is eating the world,” to quote Marc Andreessen, co-founder of the leading venture capital firm Andreesen Horowitz.

Overall, it was a great couple of days and really fun to be back in Silicon Valley. The visits provided some powerful examples of American leadership in clean energy, digital infrastructure, and smart cities development, and illuminated the possibilities for greater commercial cooperation between the United States and the critically important ASEAN region.