As world leaders prepare to gather for the annual Asia-Pacific Economic Cooperation (APEC) Summit this month, one member economy will noticeably stand out.
The Biden-Harris administration has signaled its intent to restore American leadership in the Indo-Pacific. Several cabinet members have already visited the region in the administration’s first year, and in September, President Biden hosted the first-ever Quad Summit at the White House. Just before the Quad Summit, the United States concluded AUKUS, which provides Australia with nuclear submarines in a bid to buttress maritime security in the region.
However, in Asia, strategy is more than just planes, ships, and submarines — it’s trade. China’s submission of its formal application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) the day after the announcement of AUKUS accentuated the absence of U.S. economic leadership in the region since President Trump withdrew from the Trans-Pacific Partnership (TPP) in 2017. Since then, the United States has stood on the sidelines as Asia’s economies continue to write the region’s economic rules of the road.
The United States is serious about its offer to host APEC in 2023 as Vice President Harris announced during her visit to Singapore this past August. The administration now needs to start developing and publicizing an economic strategy for the Indo-Pacific with a proactive trade agenda at its core. We sincerely hope the “new, comprehensive Indo-Pacific Strategy” that Secretary of State Antony Blinken teased at his recent meeting with the ASEAN foreign ministers on the sidelines of the United Nations General Assembly emphasizes the importance of U.S. leadership on trade in the region.
We understand that domestic concerns currently make rejoining a large multilateral trade bloc, such as TPP or CPTPP, very difficult. However, China and other countries’ interest in joining CPTPP also should be a call to action for the Biden-Harris administration: President Biden should build upon the hard work of the Obama-Biden administration by joining the CPTPP in some form. In the meantime, technology agreements can serve as a good first step by sending a strong signal to U.S. partners and competitors that America is back. Time is of the essence because a number of existing digital agreements and frameworks are already in place in the Indo-Pacific through existing multilateral arrangements. An alternative route involves bilateral or “minilateral” sector-specific agreements, such as Singapore’s digital economy agreements, which harmonize technological standards and systems with like-minded economies. Its Digital Economy Partnership Agreement with Chile and New Zealand, for instance, provides a framework to facilitate cross-border digital trade and is open to new membership.
U.S. participation in rules-setting for the digital economy can also bolster economic opportunities for the global middle class. The digital economy is an incredible democratizing force. Not only is it accessible to any individual or business with an internet connection, but also presents low barriers to entry for businesses selling online relative to a traditional brick-and-mortar store. More importantly, the digital economy offers human capital development opportunities regardless of geographical location that can translate into high-paying jobs. Members of the U.S. Congress understand the value of digital agreements with Asian markets not only for American leadership abroad but also for their constituents at home.
Within the Indo-Pacific, ASEAN sits at the heart of this digital opportunity. Multi-billion-dollar Southeast Asian tech unicorns, such as Gojek, Grab, Sea, and Tokopedia, were incubated by the world’s fastest-growing digital economy, which is projected to nearly triple in size to $300 billion by 2025. ASEAN has 915 million active mobile connections — a number one and a half times larger than its population. Foreign investors recognize the broader potential of Asia’s fifth-largest economy. ASEAN has received $338 billion in U.S. Foreign Direct Investment. That’s more than the United States has invested in China, India, Japan and South Korea combined.
A forward-leaning economic strategy that builds on existing bilateral agreements with Japan, Korea and Singapore and the digital trade chapter of the United States-Mexico-Canada Agreement is essential for the United States to reinvigorate its relationships with friends and partners in the Indo-Pacific.
Canada, the European Union and the United Kingdom have already underscored boosting economic engagement with growing economies in Asia as a key component of their broader trade strategies. To prove that the Biden-Harris administration is serious about the Indo-Pacific, America must return to the negotiating table before it’s too late.
Ambassador (ret.) Ted Osius is president & CEO of the US-ASEAN Business Council. Monica Hardy Whaley is president of the National Center for APEC.