Malcolm Cook

US needs stronger economic rebalance towards Asia

UNITED States President Barack Obama's four-country trip to East Asia was crafted to reassure regional allies, partners and competitors that the American pivot to Asia was real and progressing.

Likely more than the trip planners had hoped, Mr Obama's tour was a true mirror of the present state of the rebalancing policy and its likely future trajectory. In short, while diplomatic and security rebalancing through stronger security ties progressed, economic rebalancing through the Trans-Pacific Partnership (TPP) did not.

Given the fact that US presidents have traditionally prioritised visits to North-east Asia, the choice of two North-east Asian and two South-east Asian states underlined the way the rebalancing has led to a greater focus on South-east Asia.

This trip featured the first visit by a US president to Malaysia since before Asean was established. It was also the first visit, not stopover, to the Philippines this millennium. Mr Obama rarely referred to China during his trip, and denied that any of the agreements reached were due to China. He also chose not to go to the country.

The chosen states reflected well the present and hopeful future of the economic side of the rebalance. Japan and Malaysia are the two newest members to join the negotiations for the TPP, while South Korea and the Philippines are potential members.

Finally, the President's choice of nations reflected the security side of the rebalance. It featured America's three most important Asian allies, and Malaysia, a longstanding security partner exhibiting renewed vigour under Prime Minister Najib Razak.

The opening Japan leg and the closing Philippines leg of Mr Obama's trip were particularly important. In Japan, the contribution was one of US reassurance to allies and partners facing growing pressure from China and North Korea. President Obama publicly reiterated the longstanding US view that Japanese administration of (not sovereignty over) the Senkaku islands means that these disputed islands fall under the protection of the US-Japan alliance.

The joint statement released at the end of the Japan leg further reassured Japan by stating "our two countries oppose any attempt to assert territorial or maritime claims through the use of intimidation, coercion or force".

The inclusion of the term "coercion" is key as the latest Japanese defence documents fret that China is trying to undermine Japanese administration of the Senkaku islands through non-military "coercive" means.

The Philippines has voiced similar concerns about Chinese tactics and US responses in the West Philippine Sea.

The Enhanced Defence Cooperation Agreement with the Philippines will partially reverse the ejection of US forces from the Philippines in 1992. It will provide the US with greater access, with Philippine approval, to Philippine military facilities through troop rotations and the storage of US military equipment. This follows a similar US agreement with Australia announced in November 2011 that will see up to 2,500 marines rotate through Darwin at a time, and a 2012 agreement with Singapore regarding the deployment of US littoral combat ships.

But Mr Obama failed to make any progress at all on the TPP in any of his four destinations.

This unbalanced rebalance has three major problems for the US and Asia. First, it reinforces the conventional but faulty wisdom that the US is the major security actor in Asia but not a leading economic one.

Second, if the US-European Union Trans-Atlantic Trade and Investment Partnership shows more progress than the TPP, then the risk is that the US may rebalance away from Asia to Europe.

Finally, a stalled TPP could lead the Asian members to focus more on the Asean-based Regional Comprehensive Economic Partnership (RCEP) that excludes the US but includes China. If the RCEP progresses further and faster than the TPP, then East Asia could rebalance away from the US.

Economic diplomacy is the weakest part of the US rebalance to East Asia. This situation needs to be put right with more give and take on both sides of the Pacific. If not, the US may economically rebalance towards the Atlantic, while Asia turns inward to the exclusion of the world's largest market.

The writer is senior fellow at the Institute of Southeast Asian Studies.