For an interview with ASG Vice President and Southeast Asia practice lead Meredith Miller, please contact Mary Clare Rigali at mrigali@albrightstonebridge.com. 

Executive Summary

• On February 15-16, President Barack Obama held the first standalone Summit between the United States and the Association of Southeast Asian Nations (ASEAN) at the Sunnylands estate in California. The intimate meeting was emblematic of Obama’s effort to cement stronger relations with ASEAN as a central element of the administration’s rebalance to Asia.  

• The Summit took place against a backdrop of a difficult macroeconomic environment and domestic political challenges in many ASEAN capitols. Vietnam, Myanmar, and the Philippines are all undergoing leadership transitions this year; Thailand is facing protracted political uncertainty under military rule; and Malaysia’s Prime Minister Najib is beset by corruption allegations. Despite these distractions, there is strong consensus in Southeast Asia around the centrality of ASEAN, although divisions remain on how to respond to China’s growing assertiveness in the region.

• President Obama and the ASEAN leaders agreed on principles for addressing issues such as terrorism, climate change, and territorial disputes. Ahead of an expected March decision at The Hague on the Philippines’ petition against China’s claims in the South China Sea, the United States sought to shore up ASEAN’s support for using legal means to resolve the disputes. ASEAN leaders strongly affirmed their commitment to the rule of law, the rights of freedom of navigation and overflight, and opposition to further militarization of the disputes.  

• Economic cooperation was also a central focus. The administration announced “U.S.-ASEAN Connect”, a new effort to deepen economic relations that includes outreach to non-Trans-Pacific Partnership (TPP) members to build a foundation for future membership. On the margins of the Summit, ASEAN leaders, such as Singapore’s Prime Minister Lee Hsien Loong, Indonesian President Joko “Jokowi” Widodo, and Malaysian Prime Minister Najib Tun Razak, met with leaders of the U.S. technology community in Los Angeles and San Francisco to make the case for greater U.S. investment.  

Context for the Visit

On the margins of the December 2015 East Asia Summit (EAS) in Kuala Lumpur, President Obama invited the ten leaders of ASEAN to join him on February 15-16 at the Sunnylands estate. Throughout his presidency, Obama has taken steps to deepen relations with ASEAN as part of the administration’s rebalance to Asia, including joining the EAS and institutionalizing regular summits with ASEAN. Sunnylands was the first “standalone” summit and the first in the United States. Overall, this gesture was well-received in Southeast Asia, where leaders have complained of insufficient attention from the United States, particularly as compared with the strong engagement by Chinese leaders, and the extensive Chinese commitment of investment and other resources to ASEAN members. All but one of the ASEAN leaders (Myanmar President Thein Sein, who is leaving office shortly) participated.   

For ASEAN, the meeting met several objectives. First, ASEAN members share a desire for recognition and respect in the global arena. Undivided attention from the U.S. president at the estate where he hosted Chinese President Xi Jinping in 2013 was symbolically powerful and resonated across the region. Second, ASEAN members are acutely aware of China’s growing economic and strategic weight and seek to engage collectively with the United States to maximize their own diplomatic, commercial, and strategic leverage. As a result of their diverse interests and relationships with China, ASEAN members have struggled to reach consensus on a common strategy to engage Beijing on tough issues that impact ASEAN members differently, such as the South China Sea. Third, ASEAN members view the United States as an important partner for trade, foreign direct investment (FDI), and capacity building. The United States remains ASEAN’s single largest source of FDI. Finding new export markets and sources of capital has taken on a new urgency as China’s economic slowdown, low commodity prices, and the strengthening U.S. dollar have hit Southeast Asian economies hard. ASEAN is particularly focused on attracting greater FDI to fill the region’s estimated $60 billion per year infrastructure needs. The Summit followed the launch of the ASEAN Economic Community (AEC) in December 2015 and provided an opportunity for ASEAN to highlight progress toward developing an open and integrated trading bloc.

For the Obama administration, the Summit cemented an important diplomatic legacy of deepening U.S. engagement with Southeast Asia. The administration believes strengthening ASEAN as an organization is important for U.S. long-term strategic interests in Asia. Concerns about China’s increasing assertiveness in the South China Sea and the need to strengthen ASEAN’s ability to respond effectively topped administration priorities. Four ASEAN members, Brunei, Malaysia, the Philippines, and Vietnam, have overlapping territorial claims with China. Relations between Manila and Beijing have been particularly acrimonious since the Philippines filed a petition against China’s claims in the South China Sea in The Hague. A verdict is expected as early as March, and the Obama administration is encouraging ASEAN to take a stance supporting the right of claimants to seek international arbitration and urging all parties to abide by the ruling.  

The Obama administration also views deepening economic ties as an important component of its rebalance to Asia. Although U.S.-ASEAN trade and investment has continued to grow, the U.S. share of ASEAN’s total trade has significantly declined while China’s has skyrocketed. ASEAN is the seventh largest trading partner of the United States, and has strong future growth potential. Even facing global economic headwinds, Southeast Asia remains an attractive investment destination, with 2016 GDP growth projected at 4.9 percent and favorable demographics. Additionally, Brunei, Malaysia, Singapore, and Vietnam are signatories of the TPP, the economic cornerstone of the Obama administration’s rebalance to Asia. Indonesia, the Philippines, and Thailand have also expressed interest in joining in the future, which would advance the United States’ long-term aim of positioning TPP as the core framework for regional economic integration in the Asia-Pacific.

Main Topics of Discussion

The discussions at Sunnylands addressed both security and economic cooperation. On the South China Sea, Obama told the press that the leaders discussed the need for a "halt to further reclamation, new construction, and militarization of disputed areas.” Malaysian Prime Minister Najib Razak said that ASEAN leaders expressed the need for self-restraint from both China and the United States.

Following a series of terrorist attacks around the world, including in San Bernardino and Jakarta, the leaders explored ways to deepen counter-terrorism cooperation. Indonesian President Jokowi led the discussion and emphasized the need to combine soft and hard power, urging the leaders to “work together through social media to spread peace and tolerance as a counter narrative.” Malaysian Prime Minister Najib highlighted his government’s plans to establish a regional center to counter ISIS propaganda.

Obama continued to emphasize the importance of measures to combat climate change, and called on the leaders to implement the Paris Climate Agreement and increase investment in clean energy. The joint statement affirms a shared commitment to addressing climate change and implementing Intended Nationally Determined Contributions (INDCs) under the Paris Climate Agreement.

The Summit was also leveraged to showcase U.S. strengths in innovation and entrepreneurship. Microsoft CEO Satya Nadella, IBM CEO Ginni Rometty, and CISCO CEO Chuck Robbins attended a session with leaders on February 15 on these issues and explored how to leapfrog traditional development paths using emerging technologies. Rometty highlighted the role of technology in advancing healthcare, while Microsoft CEO Satya Nadella focused on how ASEAN entrepreneurs and small- and medium-sized enterprises (SMEs) can utilize emerging technologies. 

Key Outcomes

U.S.-ASEAN Joint Statement

Following the Summit, President Obama and the ASEAN leaders issued a joint statement of principles for future cooperation. Of the seventeen paragraphs, over a third are focused on the importance of international law in providing the foundation for regional peace and prosperity. The statement does not explicitly mention China, the South China Sea, or the pending case in The Hague, but ASEAN leaders reaffirmed their commitment to the rule of law, the rights of freedom of navigation and overflight, and their opposition to further militarization of the disputes. The statement also includes commitments to deepen cooperation on counter-terrorism, climate change, cyber security, maritime issues, SMEs, people-to-people exchanges, and sustainable economic development. The final pledge is to continue to meet regularly at the head of state level.

The U.S.-ASEAN Connect Initiative

President Obama announced “U.S.-ASEAN Connect”, a new initiative that will provide strategic focus to U.S. support for ASEAN economic integration. The United States will establish three “Connect Centers” in Jakarta, Singapore, and Bangkok to coordinate U.S. government resources dedicated to growing economic engagement in the region. The Jakarta Center will lead engagement with the ASEAN Secretariat, ASEAN sectoral bodies, and Missions to ASEAN to strengthen ASEAN as an organization. U.S.-ASEAN Connect will feature a new series of trade workshops to build understanding of the key elements of TPP and the reforms necessary for joining. The initiative is organized under four pillars:

• Business Connect aims to support U.S. businesses in the region and facilitate connections between U.S. and ASEAN businesses to capitalize on opportunities presented by the AEC. Under Business Connect, the United States will continue to implement the U.S.-ASEAN Air Transport Working Group Work Plan and U.S. Trade and Development Agency (USTDA) programs.

• Under Energy Connect, the U.S. will continue to support and implement the U.S.-ASEAN Energy Cooperation Work Plan, the U.S.-Asia Pacific Comprehensive Energy Partnership, the Asia Pacific Clean Energy Program, and USTDA clean energy and grid modernization/connectivity programs.

• Under Innovation Connect, the United States will continue to provide technical assistance for the Young Southeast Asian Leaders Initiative (YSEALI) Innovation Challenges and economic programs, the Global Entrepreneurship Program, and Innovation Roadshows, and support for the ASEAN Science Prize for Women.

• In addition to the new U.S.-ASEAN Trade Workshops, under Policy Connect, the United States will continue to support U.S.-ASEAN Trade and Investment Framework Agreement work plan initiatives such as ASEAN Connectivity through Trade and Investment (ACTI) SME initiatives, ASEAN Single Window assistance, and standards cooperation; the U.S.-ASEAN ICT Workplan; and discussions on aviation issues.  

What’s Next?

President Obama has two trips to Southeast Asia planned for his remaining months in office: a stop in Vietnam on his way to the Group of Seven (G7) Summit in May and a visit to Laos to participate in the EAS meeting in early September. 

During the ASEAN-U.S. Summit, Vietnam Prime Minister Nguyen Tan Dung and Obama met privately to discuss Obama’s visit to Vietnam. Dung reportedly urged Obama to take more “pragmatic” actions against China in the South China Sea (East Sea in Vietnam), grant Vietnam market economy status, secure congressional ratification of TPP, and lift the U.S. ban on the sale of lethal weapons to Vietnam. Vietnam has looked to the United States for support in resolving its territorial disputes with China and in reducing its economic dependence on China, as its trade deficit with China continues to climb, reaching $32.3 billion in 2015, up 12.5 percent from the previous year. Vietnam stands to benefit greatly from TPP, with the World Bank projecting a ten percent gain in GDP by 2030. The agreement will require Vietnam to make significant economic and political reforms, including amending its constitution to allow for independent unions with collective bargaining rights.

Overall, the Obama administration’s efforts have led to an improvement in relations with ASEAN and countries such as Myanmar, Indonesia, and Vietnam, but many in Asia question if this effort will be sustained under the next U.S. president, given the foreign policy demands the United States faces around the world.  

Malaysian Prime Minister Najib told reporters that ASEAN leaders hope Obama's attention to ASEAN will continue and be sustained by future U.S. presidents, stressing that members view ASEAN’s relationship with the United States as equally important as its relationship with China. Singapore Prime Minister Lee also urged the United States to stay the course in Asia, saying he hopes that whoever succeeds Obama will build on the progress made over the past eight years. "What's most important is that the direction be sustained and enhanced, and there is predictability and conviction by all players that this is the direction which America has committed to taking," Lee said at a working dinner at Sunnylands. Lee also shared the view that ASEAN’s development as an organization is one of the three critical trends shaping Asia’s future, in addition to the rise of China and India. This year will be a litmus test of the grouping’s future direction as ASEAN must accelerate efforts to implement commitments under the AEC and confront what is likely to be a strong reaction from China to The Hague’s ruling, which is unlikely to support Beijing’s expansive territorial claims in the South China Sea.