Asia, the Americas, and U.S. Strategy for a New Century
I’ve had the pleasure of speaking at many World Affairs Council events over the years, and am always glad to be invited back. Whenever I think of repeat performances, I’m reminded of a story involving George Bernard Shaw and Winston Churchill. It seems that Shaw sent Churchill two tickets to the opening night performance of a new play. He included a note that read, “Here are two tickets to my new play. Bring a friend, if you have one.” To which Churchill wrote back, with his usual diplomatic subtlety: “Sorry, but I can’t make it to the opening night performance. Please send me tickets to the second performance, if there is one.”
I’m certainly glad to be back for this repeat performance this morning. Today, instead of discussing the issues politicians have fought over for the last decade, I’d like to call attention to opportunities we are striving to seize in the decade ahead.
Twenty years after the Cold War, ten years after 9/11, as we remove the last U.S. troops from Iraq and prepare for transition in Afghanistan, America is focused on economic renewal and U.S. foreign policy is in the midst of a strategic pivot toward the Pacific.
President Obama has been clear: “the tide of war is receding.” We have spent much of the last decade -- by necessity -- focused on the places where we faced the most urgent threats. Responding to threats will always be central to our foreign policy. But, as Secretary Clinton likes to say, it cannot be our foreign policy. In the decade ahead, we have to direct our focus to the places where we have the greatest opportunities to shore up the sources of America’s strength.
So today, I’d like to focus on the broader Pacific region, stretching from India to the western coast of the Americas, and make the case that complementary strategic and economic relationships with vibrant partners in Asia and the Americas will be central to our future success.
The Asia-Pacific: America’s Strategic Pivot
In many respects, the broader Pacific will be the most dynamic and significant part of the world for American interests for many decades to come. It already includes more than half of the world’s population, many of its most important economies, key allies, and emerging powers. I recommend to all of you a recent article in Foreign Policy magazine in which Secretary Clinton spells out her vision for “America’s Pacific Century.”
The growing economic and political ties across the Pacific are part of a broader narrative of the politics of integration of the 21st century that stretches and challenges traditional geographic concepts and bureaucratic structures. In each of these regions, the United States is bolstering relationships with existing strategic partners, and enlisting emerging powers to address global problems and join us in crafting the 21st century rules of the road.
And, just as crucially, these are places with booming middle classes where U.S. businesses can tap new markets and reach new consumers to drive the U.S. economic recovery forward. It is not a coincidence that the three free trade agreements the President signed into law last month were with Pacific Rim partners. To harness the tremendous opportunities in the coming decades, we must adopt a new concept of our foreign policy and strategy that pays greater attention to the growing linkages across the Pacific -- and that leverages our core relationships on both sides.
Asia’s rise has been so dramatic that it is not just remaking Asia’s cities and economies -- it is redrawing the geostrategic map. To give one example, half the world’s merchant tonnage now passes through the South China Sea. As Asia undergoes profound changes, we need to develop the diplomatic, economic and security architecture that can keep pace. U.S. leadership in implementing such an architecture will pay us dividends this century and help the Pacific to reach its full potential, just as our investment in building a comprehensive and lasting network of institutions and relationships across the Atlantic has paid off many times over.
As we look to the future, we start from a position of strength. America is a resident diplomatic, military and economic power in the Pacific -- and, as Secretary Clinton says -- we are there to stay. The foundation of our policy remains our historical alliances with Japan, South Korea, Australia, the Philippines, and Thailand, which is our oldest treaty partner.
Japan, which I just visited last week, is the third largest economy in the world and a vital partner on everything from Afghanistan’s development to anti-piracy efforts off the coast of Africa. Our alliance remains the cornerstone of peace and stability in the region. South Korea is a go-to ally, an engine for global economic growth, and a major contributor to regional and global stability. Later this month, President Obama will arrive in Australia for an historic visit that underscores our modernizing alliance. With the Philippines, we are celebrating the 60th anniversary of our Mutual Defense Treaty and deepening our economic, defense, and security relationship.
We are also reaching out to build new partnerships across the region with countries like China, India, Indonesia, Singapore, New Zealand, Mongolia, Vietnam, and Brunei.
With China, which I also visited again last week, we start with the idea that good China policy is necessarily embedded in good Asia policy -- and then we work assiduously to deepen cooperation and trust between our nations. Year after year, our Strategic and Economic Dialogue with China features one of the largest diplomatic delegations ever assembled. And we are engaged in promising new civil-military dialogues to increase transparency and trust, and to decrease the odds of miscalculation on sensitive issues.
In a complex relationship like this one, neither conflict nor cooperation is preordained. As China’s role in world affairs grows, keeping this relationship on a productive track will be a defining challenge -- for both sides -- for many years to come. For all our differences, we have a lot more to gain by working together than by working apart. And no bilateral relationship is likely to matter more to the interests of each of our countries, or to the future of international order, in the new century unfolding before us.
Beyond these key relationships, we are making an unprecedented commitment to supporting Asia’s promising regional institutions, including the ASEAN Regional Forum, and the East Asia Summit, where President Obama will inaugurate America’s participation two weeks from now. We will help these institutions realize their potential to play a critical role in developing common rules of the road and systems that can help address increasingly complex and transnational challenges, like non-proliferation, maritime security, and humanitarian and natural disasters.
Through all of these deepening ties, we are attempting to build networks of cooperation that will create a peaceful and prosperous Asia-Pacific for many years to come. But, to be successful, our outreach in shaping Asia’s future must not end at the conventional borders of the region. We are enlisting India and the Americas -- East Asia’s neighbors to the west and to the east -- to help us anchor and shape a fast-growing Asia-Pacific.
India: A Defining Partnership
Let me start with India. Soon to be the world’s most populous country, and already the world’s biggest democracy, with an economy likely to be the world’s third largest within two decades, India’s rise will reshape the international system. The President has said that India will be “one of the defining partnerships of the 21st century.” We also want it to be one of the defining partnerships in the Asia-Pacific.
India is already a powerful economic and cultural presence in East Asia, and has built a vast network of economic agreements and security arrangements with partners like Japan, South Korea, Australia, Singapore, Indonesia, and Vietnam. India’s outreach is growing toward a comprehensive vision for the East Asia region -- a “Look East” policy that is becoming an “Act East” policy.
That’s why, last year, our two countries launched a strategic dialogue on the Asia-Pacific to ensure that the world’s two largest democracies pursue strategies that reinforce one another. And we are launching a new U.S.-India-Japan trilateral consultation on regional issues.
We hope that India will join us in working to strengthen Asia’s many regional institutions -- from the East Asia Summit to ASEAN, where India already trades nearly as much in goods as it does with the United States. An architecture of free trade and investment that connects India to Southeast and East Asia will have a profound impact on global trade and economic growth.
And let me explicitly state that the 21st century Asia-Pacific we seek is one in which India, the United States, and China all enjoy good relations. Whatever our differences, we know that, as this century advances, fewer and fewer global problems will be solvable without constructive cooperation amongst our three great countries. To paraphrase India’s National Security Advisor, I have no doubt that Asia and the world are big enough for the three of us -- if we want them to be.
The Americas: A Complementary Strategy
For many of the same reasons, not least the democratic values that we share, we are also looking to our partners in the Americas as a natural complement to our strategy in the 21st century Pacific. Nearly all nations of the Americas are growing markets. From Canada to Chile, many are already resident Pacific powers. Brazil and others without a Pacific coast are building important ties with Asia and India.
Our partnerships in the Western Hemisphere are vital to the United States in their own right. They are vital to our economic recovery and competitiveness; vital to our ability to solve the transnational challenges that no country can solve on its own; and vital to our efforts to promote and consolidate democracy and human rights globally. Just as we start from a position of strength in the new Asia, our multifaceted ties with our friends closer to home give us an edge in encouraging and benefiting from a growing and increasingly integrated Americas. But we cannot be passive. We need to continue to actively strengthen our hemispheric ties with mutual respect and as partners -- not junior partners or senior partners, but equal partners.
Everyone knows about Asia’s economic success. Latin America’s success story is less known but no less important to us. Over the last 15 years, 56 million Latin American households have joined the ranks of the middle class, buying cars and iPhones and opening bank accounts. Roughly 275 million people in Latin America and the Caribbean are now in the middle class. That is almost half of the population, and it is projected to reach a whopping 72 percent by 2030. Over the next five years, the economies of Latin America and the Caribbean could grow by one-third. Brazil is already one of the world’s largest economies, and many of its neighbors are growing at rates typically associated with Asia. Latin America is a major source of energy, food, and other resources, fueling the world economy, and will continue to develop as a supplier and consumer of manufactured products, technology and services.
With their growing domestic demand, growing investments in our country, and increasingly integrated supply chains and intra-company trading with the United States, our neighbors in the Americas are supporting jobs here at home. Every dollar of growth in our own hemisphere does more to help us than growth farther afield. Forty-three percent of our exports stay in our hemisphere. We export over three times as much to Latin America as we do to China. We sell more to Colombia than to Russia. The increase in trade between Canada and the U.S. last year was double our entire bilateral trade with India.
With the addition of Colombia and Panama, we now have Free Trade Agreements that stretch, uninterrupted, from the Arctic to the Straits of Magellan, including almost the entire Pacific coast. The FTAs cement important strategic partnerships and open the doors to U.S. products and services -- 87 percent of our exports within the region go to our FTA partners. That is the power of proximity at work. And we need to harness it to help in our recovery.
In addition to commerce, stable energy supplies from our own hemisphere will be increasingly crucial to our security and to fueling our economic recovery. Our hemisphere supplies one-fourth of the world’s crude oil, one-third of the world’s natural gas, nearly one-fourth of its coal, over a third of global electricity, and is a leader in renewable energy. We have over 40 innovative initiatives underway under our Energy and Climate Partnership of the Americas.
Last year, the United States imported nearly half of the oil and petroleum products we used. Forty-nine percent of those imports came from right here in our hemisphere and only 18% from the Persian Gulf. Canada and Mexico are already our top two foreign sources of oil, and big deposits in Brazil are becoming accessible. As energy expert Daniel Yergin wrote recently, the world’s new oil map is no longer centered on the Middle East, but on the Western Hemisphere. He predicts that by 2020, our hemisphere will import only half as much oil from outside the hemisphere as we do now.
Given the economic dynamism on both sides of the Pacific, it is no surprise that Asia and Latin America have also recognized each others’ potential. China has become the top recipient of commodities exports from several South American countries. Many of our hemispheric colleagues are concluding trade or investment agreements with partners in Asia. The IDB reports that Japan leads Asian investment in Latin America and the Caribbean, with over $26 billion over the past seven years, followed by over $5 billion from South Korea and $1.8 billion from China. We should not fear Asia’s economic interest in our hemisphere, provided the relationships are transparent and the rules are respected. And by the way, U.S. investment in the region over the same period was $147 billion.
Beyond economics, our hemisphere is full of proven and potential partners that are increasingly contributing outside their immediate borders. We collaborate with Canada on nearly everything, including on taking the fight to the Taliban and NATO’s Libya operation. Mexico is a leader at global climate talks and an ally against all forms of illegal trafficking. Brazil has ambitious development projects in Africa, and works closely with us to fight AIDS and malaria. Colombia shares its counternarcotics and counterterrorism expertise, and Uruguay generously contributes UN peacekeepers. We are connecting electrical grids from North to South America. And after the Haitian earthquake, virtually every country in the Americas worked side by side on the largest relief operation in the history of the world.
Even more important than the region’s economic success is its democratic transformation. While military dictatorships dotted the landscape just decades ago, there are now very few exceptions to democratic governance in our hemisphere. The Organization of American States can bind our democracies together, and our unique Inter-American Democratic Charter enshrines the duties of our governments to protect and promote our citizens’ right to democracy.
The economic, political, and social development of the Americas has been accompanied by unprecedented regional integration. In addition to the OAS, there are summits, NAFTA, UNASUR, SICA, CARICOM, and many other initiatives to enhance economic integration and political cooperation. These efforts have fostered dialogue, peaceful resolution of disputes, and democratic solidarity. They have also built a political consensus around integration that has made globalization less scary and allowed countries to beat back protectionist instincts during tough economic times.
So as you can see, we are strategically engaged in both the Asia-Pacific and in the Americas. The challenge I present to you today is to think of those increasingly interconnected regions as an integrated whole -- a broader Pacific with commonalities beyond geographic proximity. Our strategies in each region must be mutually reinforcing, and should identify complementarities and build upon them. We can leverage our partners on one end of the ocean to advance our goals on the other end. We must exert our leadership in each region to build the Pacific Century we seek.
For example, if we can deepen and consolidate a consensus in our hemisphere behind open, free, transparent, and fair economic competition, coupled with a commitment to social inclusion -- then that will not only benefit our citizens here at home, but also strengthen our collective position as together we promote our common values in the Asia-Pacific and around the world.
With our partners in the Americas, we can present the unique approach to democratic development that is leading to tremendous success in our hemisphere as a powerful example to countries in Asia undertaking their own processes of political opening and democratization.
The Americas’ rich history of multilateralism will allow us to reach across the Pacific in a coherent and productive fashion, and help build a mature and effective regional architecture based on the expanding groupings and arrangements in the Asia-Pacific.
Many of our partners in the broader Pacific share our goal of building a regional economic architecture for long-term, inclusive growth that is open, free, transparent, and fair. And many share our concerns about workers’ rights, non-transparent investments, relationships that simply center on extracting resources, and misaligned currencies that throw trade relations out of balance and cost jobs. These are but a few of the trans-Pacific issues needing trans-Pacific dialogue to find solutions.
The Asia Pacific Economic Cooperation forum is a key vehicle for promoting a rules-based economic framework to trade and investment across the Pacific, since it includes 21 of the 21st century’s most dynamic economies, 5 of them from the Americas. APEC is also important to American wallets, as its members account for over half of global economic output and 40% of the world’s population. Increasing our exports to APEC members by just 5% would increase export-related jobs in the U.S. by hundreds of thousands. President Obama and Secretary Clinton will welcome their counterparts to Hawaii next week to further the progress we have made together in designing the Asia-Pacific architecture.
APEC will be immediately followed by the sixth North America Leaders Summit, where our leaders will be able to reflect on the results of APEC and our hemisphere’s engagement with Asia, as well as on ideas for additional pragmatic partnerships that we can bring to the Summit of the Americas in April.
And with our free trade agreements with Korea, Colombia and Panama complete, our attention is focused on concluding the Trans-Pacific Partnership, or TPP. The goal of the cutting-edge TPP is to unite Peru, Chile, and the United States with New Zealand, Australia, Malaysia, Vietnam, Singapore, Brunei, and eventually future members, in a single trading community, using the highest standards. In so doing, we and our partners hope to foster not just more growth, but better growth on both sides of the Pacific. We hope that, once the TPP is in force, the promise of access to its markets will encourage other nations to raise their standards as well. Eventually, we would like to see a high-quality TPP become the foundation for a Free Trade Area of the Asia-Pacific.
Our parallel and overlapping work at APEC, the TPP, the ASEAN Regional Forum, the Summit of the Americas, and other groupings paint a clear picture: the economic goals of the Americas and the Asia-Pacific are highly complementary. It makes sense that two regions that are tied so closely together and with similar economic aspirations could learn from each other and work closely together.
Another way we are building bridges is through bilateral dialogues on Western Hemisphere issues that we conduct with key Asian partners, including Japan, Korea, China, and soon, India. We are similarly deepening our discussions with Western Hemisphere partners on issues related to Asia.
Both Asia and Latin America are notably receptive to collaboration with the United States. In Asia, countries are eager to work with us to shape a changing regional dynamic. In Latin America, the old ideological roadblocks are less salient than ever. There are real opportunities out there -- if we commit ourselves to seize them. These new configurations may seem abstract -- but our economic cooperation can create jobs here in America, and our diplomatic work together can help us promote democracy and security around the world.
And let me add that, as we consider cuts to the 1% of our budget devoted to diplomacy and development, these are the questions we should be asking. Will America devote the resources necessary to knock down economic barriers and help our businesses compete in the global economy? Will we invest in a strong presence in order to lead in the most important regions of the 21st century? Will we take on transnational threats and the drivers of instability, from climate change to famine to violent extremism? Or will we cut corners now and pay the cost later with a weaker position in a more dangerous world?
These are the stakes of our budget debate. We need only look at our successes over the past few months and the transformations underway globally to see that U.S. taxpayers are getting a great bang for the buck they invest in diplomacy and development. Any attempt to cut that small investment will not make a dent in our deficit, but will certainly make a dent in our leadership. And that is what we cannot afford.
To sum up, in order to lead in the 21st century, America must think strategically as the world’s economic and strategic center of gravity shifts inexorably toward the Pacific. Our challenge is not to pull it back, but to make sure that a rising tide of economic prosperity lifts all boats and economic renewal at home creates new opportunities for the American people. Our challenge is not to contain rising powers in East Asia, South Asia, or Latin America, but to lead in creating global networks of cooperation that benefit everyone.
And if we do, we won’t just help our own economy and build a more peaceful, prosperous world. We will ensure that the Pacific century that is unfolding before us will also be an American century.