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U.S. Department of State

Diplomacy in Action

The U.S. Economic and Trade Relationship with the Association of Southeast Asian Nations

Anthony Nelson, Director for Multilateral Affairs and Mainland Southeast Asia, U.S.-ASEAN Business Council
Washington, DC
February 10, 2016




3:30 P.M. EST

THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.

MODERATOR: Okay. Well, a warm welcome back to the Foreign Press Center as we gear up for the ASEAN Summit in Sunnylands. We’re very pleased to have a briefing today with Anthony Nelson, who is Director of ASEAN Multilateral Affairs and Mainland Southeast Asia. We will begin with Mr. Nelson giving a brief statement. Afterwards we’ll take questions. And of course, we warmly welcome our guests who are at the New York Foreign Press Center. Please come to the podium when you are ready.

Without further ado, Mr. Nelson. Thank you and welcome.

MR NELSON: Thank you very much. Just to set the scene a little bit, the US-ASEAN Business Council represents 160 of the largest U.S. companies that do business in Southeast Asia. We’ve been around for a little over 30 years. We are headquartered here in Washington, D.C., but we have six offices throughout Southeast Asia. We participate annually in the meetings of the ASEAN economic ministers, finance ministers, energy ministers, food and agriculture ministers, and customs directors-general, as the voice of the private sector.

We are holding a major conference immediately after the U.S.-ASEAN Leaders Summit in Sunnylands. That’ll be held February 17th in San Francisco. It’s entitled, “Asia’s Best Kept Secret: the ASEAN Economic Community,” and it’s aimed at raising the profile of the AEC among U.S. businesses and giving an opportunity for ASEAN policymakers to make the case for why the AEC matters and what the future of ASEAN economic integration will look like. That conference will feature a keynote address by President Joko Widodo of Indonesia, as well as USTR Michael Froman, all 10 ASEAN economic ministers or their direct representatives, and the secretary general of ASEAN, among others.

Just to speak briefly about why ASEAN is so important to U.S. business, as you may know, at the end of last year ASEAN came together into the ASEAN Economic Community, a single market and production base that focuses on the free movement of goods, services, capital, and skilled professionals. Taken together, those 10 countries represent the seventh largest economy in the world. They’re the fourth largest trading partner for the United States and the fourth largest export market, and they are by far the largest destination in Asia for U.S. foreign direct investment, at $226 billion worth of collective U.S. investment in the region, which is more than U.S. companies have invested in China, India and Japan combined.

As you know, the TPP includes four ASEAN countries – Brunei, Malaysia, Singapore and Vietnam – and there is interest in joining from the remaining three countries which are eligible to join the TPP. The ASEAN nations in the TPP right now include about 60 percent of U.S. exports to ASEAN, but ASEAN itself is also negotiating the Regional Comprehensive Economic Partnership, or RCEP, which will knit together ASEAN’s FTAs with all six of its partner countries: Australia, China, India, Japan, South Korea, and New Zealand. So when taken collectively, the RCEP will cover 50 percent of the world’s population. It’s an incredibly diverse region that offers opportunities in a wide variety of sectors to our companies, and that’s why we’ve seen so much corporate interest across the board in every different sector.

So with that, I’m happy to take any questions about the event we’re holding in San Francisco or what U.S. business is looking for in the region.

MODERATOR: Thank you very much, Mr. Nelson. May I open for questions? Yes, sir.

QUESTION: Thanks, Anthony, for the briefing. Just two quick questions. So first, I was wondering if you could describe a little bit or elaborate a little bit on the significance of Jokowi delivering the keynote address given concerns about Indonesia and some of its trade issues and Jokowi personally.

And then secondly, I was wondering if you could – considering the fact that this is being held immediately after the U.S.-ASEAN Summit meeting in Sunnylands, I was wondering if you could talk about the relationship between some of the issues that are going to be discussed in Sunnylands, particularly the economic piece, and the conference that you are holding. Thanks.

MR NELSON: Sure. Well, firstly, President Joko Widodo is the key leader on economic issues in ASEAN by virtue of representing the fourth largest country in the world. It’s the most essential country to the success of the AEC. And we’ve seen in his interactions with the business community that he’s been responsive, that he’s – works to make sure his administration is able to address business communities’ concerns, and change policies or introduce new personnel that are able to improve the investment environment. So it’s an important opportunity for us to hear from him about where his priorities lie. The last time that the council was able to host him here in D.C., he announced that Indonesia would look to join the TPP. I don’t know if he’ll say anything that exciting this time, but he is someone who understands the concerns of business and is willing to go ahead and address some of our issues. So we’re looking forward to that.

As far as how it will flow out of some of the discussion in Sunnylands, I think the leaders-level discussions in Sunnylands will obviously take on more of a kind of big-picture quality. So it’ll be interesting for us to have some of the discussions that we have in an ongoing dialogue with the ASEAN economic ministers and others, and see how those kind of issues have been informed by the progress that’s been made at the leader level.

For us this isn’t a one-off event. It’s part of a years-long dialogue that’s resulted in some incredible progress across the board on issues that are important to U.S. business. The dialogue has brought about a number of different issues, including the Business Council’s SME training program that’s across all 10 ASEAN countries that’s trained 4,000 different ASEAN entrepreneurs. So we’re hoping that it’ll be the perfect opportunity to follow up on some of the high-level discussions that happened there.

MODERATOR: Great. I see we have a question from New York. Welcome back.

QUESTION: Hi. Manik Mehta from Bernama. I know Mr. Nelson through our former contacts. How are you, Anthony?

MR NELSON: I’m doing all right. Good to see you on the screen over there.

QUESTION: Yeah, okay. I’ll get back to the question right away. Now, as you know, the AEC was formed in 2015 and it was received with great euphoria both in the U.S. as well as in ASEAN itself. However, do you see any areas which are less attractive and which offer room for improvement from the business perspective?

MR NELSON: Absolutely. I think a realistic view of the excitement of the AEC recognizes that the fundamental differences on the ground didn’t change all that much between December 31st, 2015 and January 1st, 2016. Where the AEC has made a difference is in the long arc of progress. And even in areas where ASEAN has fallen short of some very ambitious goals, simply having those goals has led to progress across the board.

That being said, some of the real game-changer elements of the AEC are things that are still out there. In particular, if you look at the customs single window, that’s something that – in order for ASEAN to really, truly be a single market and a single production base, that’s something that’s going to have to be in place. So we’re looking forward to this year the limited trial from five countries, but that’s definitely one of the areas that’s going to be important to us to make sure continues to make progress and that the ASEAN countries that are still working on their own national single windows have the resources they need to completely succeed in that.

Another area, as you know, is skilled professionals. Some of ASEAN’s skilled professionals, the agreements have gone through to be able to transfer credentials across countries, but that’s an area we think is important for firms to be able to truly take advantage of their labor force.

There’s a number of other issues. I think ASEAN is now at about 80 percent successful completed – successfully completed integration. So we – one of the things that we’re going to be interested in hearing about in this conference is what are the priority areas for 2016, what’s Laos’ vision for completing the work that’s already been done before ASEAN moves on to Vision 2025.

MODERATOR: Okay, thank you. Yes, sir.

QUESTION: Thank you very much. My name is Tatsuya Mizumoto from Jiji Press, Japanese wire service. So regarding the TPP, some nations joined TPP – I mean ASEAN 10 – and then some are not. So are you aware of any division among ASEAN 10 regarding the business or economic developing? At the same time they build ASEAN Economic Community, so that is – looks like counter-TPP. So what is your perspective?

MR NELSON: Well, I don’t think that the RCEP is an alternative to TPP or something that’s counter to TPP. I think it’s more helpful to think of them as existing in parallel. And the TPP was always meant to be a high-standards, aspirational agreement that countries would move towards participating in when they were ready to meet the high standards that are expected of it. RCEP, by the nature of it, is pitched at a level that some of the ASEAN countries that are newer to international trade can meet and have success with. We would hope that those ASEAN countries that are participating in both would maintain as many of their high standards as they can, but we certainly wouldn’t view them as oppositional, but rather parallel tracks.

And we hope one of the things that the U.S. Government will articulate in Sunnylands is talking about for those ASEAN countries that are not yet in the position to join TPP – and three are not yet eligible – what’s the roadmap for them to begin the process to ramp up that kind of engagement. The council has always supported a U.S.-ASEAN FTA, but we recognize that that’s something that’s quite a ways off. And so it’s more realistic at this point to talk about what’s the roadmap, what are the steps that will eventually lead to a U.S.-ASEAN FTA.

QUESTION: Are you negotiating a U.S.ASEAN FTA?

MODERATOR: Wait for the microphone, please.

MR NELSON: No, no, no.

QUESTION: Not yet?

MR NELSON: No. It’s just an idea.

QUESTION: Oh, okay.

MODERATOR: Okay. Yes, sir. Thank you. We have another microphone.

QUESTION: Hi. Len Bracken, Bloomberg BNA. Would you identify the three countries for the record that you believe would – have expressed interest in joining the TPP, and could you handicap their chances?

MR NELSON: (Laughter.) Well, Indonesia, Thailand, and Philippines have expressed interest at different points in joining the TPP. It would be hard for me to handicap their chances since we’re not quite – we’ve still got to handicap our own chances of finishing the agreement. But I think the interest is real, particularly, as we heard, from Indonesia. And as long as progress continues to be made for the U.S. and the other participants to ratify the agreement, I think they’ll start moving towards it, looking at it themselves.

MODERATOR: We have a follow-up.

QUESTION: And if you could just maybe briefly talk about the eligibility issues.

MR NELSON: Well, sure. From what I understand, the TPP is open to APEC economies, and Cambodia, Laos, and Myanmar are not part of APEC.

QUESTION: Thank you.

MODERATOR: All right, thank you. I think we have a follow-up from New York. Is that right?

QUESTION: Yes, that’s right. Thank you. I would like to address questions relating to transfer of technology. Many American companies, while they show an interest in making financial investments, they tend to be hesitant in transferring the latest technology. Why is that so, particularly in countries like Malaysia, Singapore, and to a certain extent Thailand, which have also very good patent laws that protect technology? Could you explain that?

MR NELSON: Well, I don't know that I can explain that completely other than to say, obviously, companies are concerned about their intellectual property and being able to make sure data is protected. Strong intellectual property laws help with that, and certainly, the TPP, I hope, will provide some more security around that.

MODERATOR: Thank you. Yes, sir.

QUESTION: Connor Cislo with the Asahi Shimbun. I had another question on the TPP, and I wonder if you could just assess the – like you mentioned handicapping the chances of getting it done, I wonder if you can talk about any difficulties you might foresee in the ASEAN countries of implementing TPP.

MR NELSON: Well, they – each ASEAN country is quite different in terms of how they’re going to take a look at it. I don't know that I would be comfortable going into handicapping each individual country’s particular concerns. Obviously, a thing to watch will be leadership transitions and how the new leadership in Vietnam and other places takes a look at it.

MODERATOR: Okay. Do we have additional questions? Yes, sir.

QUESTION: So regarding rebalance to Asia, the policy – so what is the effectiveness of that policy on, I think – what is the big difference between – before – I mean, before 2009 --

MR NELSON: Sure.

QUESTION: -- now, so – from your perspective?

MR NELSON: Well, I think you can look – just from a personal perspective, I joined the council in 2009 and I can see the weight of resources that the U.S. Government applies to ASEAN has multiplied incredibly just over the time that I’ve been working on it.

The U.S. acceded to the Treaty of Amity and Cooperation with ASEAN in 2009. We became the first non-ASEAN country to have a resident ambassador to ASEAN in 2010. We established the U.S.-ASEAN Leaders Meetings in 2010, joined the East Asia Summit in 2011, and last year elevated the relationship to a strategic partnership. And now, all the U.S. Government agencies are more likely to have a specific staff dedicated to working on ASEAN specifically. We’ve seen our secretaries of state participate in the ARF every year. And President Obama has made a real personal commitment to making sure that he holds these U.S.-ASEAN Leaders Meetings. I think the – just the sheer weight of personal investment across the region has made an enormous difference.

QUESTION: But what is – so what is the concrete benefit for you?

MR NELSON: What’s the concrete benefit for us?

QUESTION: Yeah, by those political activity, so --

MR NELSON: Sure. Well, for companies, it makes a big difference in terms of having the support of the U.S. Government to engage multilaterally. We really value the ability to work with ASEAN in multilateral settings. I mentioned earlier the ASEAN economic ministers meeting, the finance ministers meeting. We find that those are tremendously productive areas of engagement to get things done because we can address top-level concerns that are important across ASEAN for U.S. companies. We can make sure that our views are heard when ASEAN is looking at the rules and plans for integration. We can provide feedback when policies maybe aren’t working the way that they were originally anticipated to. And having the U.S. Government there to amplify our concerns and make sure that we know every venue that we should be speaking to makes a tremendous difference.

MODERATOR: Okay. We have a follow-up. Yes.

QUESTION: Sorry, one more. So is ASEAN the alternative – I mean, economic – alternative of economic opportunity of China?

MR NELSON: Well, I think any significantly large company is going to want to work in both ASEAN and China, but I think you are seeing increasingly companies that want to make sure that they’re balanced in their investments, that they aren’t overwhelmingly dependent on one partner country. And ASEAN increasingly offers opportunities beyond just those that are there in each particular ASEAN country, which can be substantial, but the more you’re able to integrate your operations across ASEAN, the more valuable that is.

MODERATOR: Thank you. We have additional questions either here or in New York? (No response.)

Okay. Well, with that, I’d like to thank you very much, Mr. Nelson, and to all of you for joining us today. That concludes our briefing and I wish you a good evening and a warm week.

MR NELSON: Thanks.

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