What I Hope President Obama Brings to ASEAN This Month

Fresh off his election victory, US President Barack Obama announced that he would visit Myanmar, Thailand and Cambodia later this month, en route to the East Asian Summit that takes place later in Cambodia.    This represents a major commitment of time and prestige for President Obama, and it is a positive start to the annual “American” season here in Southeast Asia, which will end around the time of the US Thanksgiving holiday on November 22.

I agree that this is a major positive development for US-ASEAN relations, but I hope that the visit is accompanied by substantive steps in economic policy as well. I have a few items on my personal wish list, with varying likelihoods of coming into fruition:

1. Reduce Burma sanctions to the minimum level necessary.  US Secretary of State Clinton has already announced that the Obama administration wants to do this, but it will require new legislation and/or approval from the US Congress.  Under existing US Burma sanctions legislation, President Obama could end the import ban and asset freeze “upon request of a democratically elected government in Burma” and when conditions in the 2003 Burma Freedom and Democracy Act regarding progress on human rights, release of all political prisoners, freedom of speech and the press, freedom of association, peaceful exercise of religion, democratic governance, country not designated as “a country of interest” for narcotics trafficking—have been met.   I don’t think the Obama administration is prepared to do that.  But given the weakened condition of the Republican opposition, this might be the opportunity to propose new legislation that would end the import ban but establish clear tripwires that would result in the resumption of the ban and other sanctions.  This would align US sanctions with those of the EU, which has much greater administrative flexibility with its Burma sanctions.  Coupled with a revision to the US sanctions blacklist to narcotics-related persons only, this would allow US investors to help the Burmese people recover from their years of isolation.
2. Request trade promotion authority (TPA).  President Obama has negotiated FTAs such as the Trans Pacific Partnership without TPA, which allows him to negotiate with delegated authority from the US Congress. All successfully concluded FTAs have been done with TPA. This is necessary in the US because the Congress has primary authority over trade legislation. Without TPA, the Congress could rewrite any trade agreements in the US implementing legislation.  TPA would reassure US trading partners in the TPP talks that this would not happen, and it would help alleviate continuing congressional complaints about the negotiating process (by effectively co-opting them).
3.  Implement the APEC Travel Card.  The card allows businesspeople to travel within the APEC region on an expedited basis. Other APEC members currently use this process, but US citizens have been unable to participate fully in this program, nor have other APEC members’ citizens been able to use the card for travel to the US.  The legislation has been passed, but implementing regulations have been indefinitely stalled within the US Department of Homeland Security (DHS).  President Obama should announce that he will direct DHS to implement the APEC travel card within the next few months
4.  Start double taxation agreement (DTA) talks with Singapore.  I have been hearing about the need for a DTA since I first moved to Singapore 15 years ago, and not much has happened. A DTA would ensure that US companies’ investments in Singapore will not be devalued by changes in Singaporean tax policy.  Singapore, having signed off on tax cooperation agreements with the EU, will be willing to do this now with the US, which was a sticking point in the past.   The DTA would square the circle in US-Singapore economic relations formed by the US-Singapore FTA.

By taking these and similar steps, President Obama could demonstrate that the US “pivot” to Asia is broader than security, and encompasses economic and social ties as well.  President Obama now has an additional four years to lock in his legacy in Asia and ensure that the US will continue to support regional peace and security in the region.

EU-Singapore FTA Finally Arrives

Last week the EU announced that it was on the verge of concluding its free trade agreement with Singapore. I’ll have some comments on the EU-Singapore FTA when the final text comes out.

This agreement is important because it will be the first FTA concluded by the EU with an ASEAN country, following up on the EU’s process of negotiating FTAs on a country by country basis rather than with ASEAN as a whole.  The EU’s attempt to negotiate an EU-ASEAN FTA stalled several years ago due to the political difficulties of negotiating an FTA that included Myanmar, and with institutional issues in ASEAN (the EU thought that it could negotiate directly with ASEAN, but the ASEAN FTAs are actually a collection of 10 bilateral FTAs with the trading partner, with the 10 ASEAN members negotiating on a collective basis).

The EU-Singapore FTA had been anticipated for conclusion in October 2011, but has been delayed to the point that Malaysia anticipated concluding its FTA talks with the EU before Singapore.  Informed sources told me that the EU-Singapore FTA had been largely completed last year. So why the delay?

There are several reasons often cited for this delay, but the one most cited was the lack of an EU-Singapore tax cooperation agreement.   Several EU members have long been concerned about its citizens using Singapore as a tax haven.  Last month’s financial information cooperation agreement between Germany and Singapore thus eliminated this major hurdle, clearing the way for formal acceptance of the EU-Singapore FTA later this year.

The EU is now in FTA talks or preparatory FTA talks with several ASEAN members including Malaysia, Indonesia and Vietnam.  The EU-Singapore FTA will thus provide a basic template for those EU FTAs, although perhaps not an exact duplicate, due to agriculture being a less sensitive issue for trade between the EU and Singapore. For the talks involving the other ASEAN members, raw agricultural products exported from ASEAN will be an issue for the EU, and processed agricultural products exported from the EU to ASEAN (e.g., those subsidized by the EU’s Common Agricultural Program will be an issue for ASEAN).  Nevertheless, the major points of the EU-Singapore FTA, particularly with regard to services and investment, will be closely studied by the other ASEAN members.

For ASEAN’s other trading partners, the EU-Singapore FTA is a reminder that ASEAN has a broad scope in its trade policy, looking beyond its immediate region.  Although the US has had an FTA with Singapore for more than ten years now, it does not have an FTA with any other ASEAN members. If and when the EU concludes its FTA talks with Malaysia or other ASEAN members, it will represent a competitive advantage for the EU vis-à-vis the US (one which it already has in Myanmar, as the US maintains many of its Burma sanctions).  That, combined with the impending start of ASEAN’s Regional Economic Cooperation talks with its trading partners, indicates that perhaps the United States needs to augment its trade policy in the region beyond the Trans Pacific Partnership talks.

Why ASEAN Is More Deserving of the Nobel Peace Prize

Today the Nobel committee announced that it had awarded the Nobel Peace Prize to the European Union. According to the Washington Post,

“The EU is currently undergoing grave economic difficulties and considerable social unrest,” Nobel Committee president Thorbjoern Jagland said in Oslo. “The Norwegian Nobel Committee wishes to focus on what it sees as the EU's most important result, the successful struggle for peace and reconciliation and for democracy and human rights. The stabilizing part played by the EU has helped to transform most of Europe from a continent of war to a continent of peace.”

Personally, I think the choice of the EU is inspired but perhaps misses the mark a little. The EU was founded as an economic bloc that took on political characteristics.  Although the EU does fund worthwhile aid and development projects, and has engaged in fruitful diplomatic efforts around the world, it is still relatively young and undeveloped as a political actor.  Only recently did the EU create an EU diplomatic corps headed by Baroness Ashton.  NATO and the Organization for Security and Cooperation (OSCE) are European entities that actually contributed more to peace through their own efforts, one could say.   Both entities contributed to the fall of the Berlin Wall and the end of Soviet Communism as a threat to world peace.

The main contribution of the EU to peace was not in anything that it did politically, but merely through its sheer existence.  The creation of the European common market wedded postwar Germany to the rest of Europe and quashed the nationalistic urges which had led to two World Wars in Europe.  Eastern European countries modernized and set aside conflicts to meet EU membership criteria.  In other words, the process of applying and joining the EU served the purposes of peace; in that regard, perhaps the appropriate EU representative at the Oslo ceremonies should be the EU enlargement commissioner.  Yet ironically, the EU membership process seems to have stalled out after the impending membership of Croatia, with Turkey and many others waiting for consideration.  The main tool of the EU for promoting peace is not actually being used at the moment.

In any event, if the EU qualifies for the Nobel Peace Prize, then let me be the first to nominate ASEAN for the Nobel Peace Prize.  Unlike the EU, ASEAN was specifically designed as a political entity first, and an economic entity later.  Since its founding, ASEAN has by and large promoted peace throughout Southeast Asia, with no two ASEAN members having gone beyond border skirmishes.  In fact, the ability of ASEAN to tamp down regional disputes, such as in last year’s Preah Vihear dispute, demonstrates why it has contributed more to peace (as an active participant) than the EU has.   ASEAN also was instrumental in bringing about reforms in Myanmar, both through Myanmar’s participation in ASEAN and through the increased engagement of ASEAN institutions in Myanmar.

However, the Nobel Peace Prize would be even more deserved if ASEAN could solve some of the intractable regional issues such as the South China Sea island disputes and transboundary haze. The ASEAN Secretariat could certainly use the prize money of 10 million Swedish kronors, which is the equivalent to 10% of its annual budget. Let’s hope that ASEAN can continue to develop itself as a regional institution and win that Nobel Peace Prize one day.