America's Future Is Tied to Asia's

Posted January 21, 2009

It’s no surprise that U.S. President Barack Obama has said little about Asia since being elected last November. Compared to America’s economic disaster and the ongoing Middle East crises, Asia may seem a veritable sea of tranquility. Yet turbulent currents are running under the surface, and the costs of either economic or political disruption in Asia could well dwarf anything else America faces. For this reason alone, the new president and his team need a bold engagement with Asia in his first days in office.

Even in this economic collapse, Asia continues to produce nearly two-thirds of global output, the majority of which is exported to the West. Yet Japan, China, and other major producers are facing a severe downturn in exports, and Japan, where manufacturing output dropped by nearly 8% in November, has already slipped into an official recession. Chinese consumer goods factories are laying off workers or shutting down, and numerous experts warn of potential social unrest if economic conditions worsen in China’s less prosperous interior regions. Even recent mini-tigers, like Vietnam, are revising their growth predictions downward.

The danger in the coming years is that fragile Asian economies might look to exclusive trading arrangements or move to protect domestic markets, partly as a result of citizen demands. This would turn back decades of growth that have pulled millions in Asia out of poverty and have benefited Western business and consumers, as well. President Obama should therefore throw his support behind ratification of the Korea-U.S. Free Trade Agreement and use its passage as a stepping stone to a renewed round of free trade negotiations with the Association of Southeast Asian Nations (Asean) and Japan. Having the U.S. play a major role early on will make more likely the prospect of region-wide free-trade talks, and increase the chance that Japan and China will have confidence to work together, and not in competition, in a multilateral setting.

Similarly, the Obama administration should consider high-level, public discussions between the U.S. and Asian nations on paths forward in the economic crisis. Pulling together Japan, Korea, China, India, Indonesia, and others for a “lessons learned” summit from the 1997 Asian financial crisis and the 1990s failed pump-priming policies of the Japanese may result in a series of initiatives that have more common agreement behind them than the irrelevant G-20 summit convened by former U.S. President George W. Bush in November.

Economics are not the only landmine facing President Obama’s Asian policy. Security and political issues in Asia present a mixed bag that will require a nuanced U.S. approach. The failure of the Six Party Talks means that Secretary of State Hilary Clinton will have to work from a de facto U.S. acceptance of a nuclear North Korea that appears interested only in an endless diplomatic rondeau. President Obama and Secretary Clinton must determine if there is any utility in sending U.S. officials back for another round of talks when other parties to the talks appear satisfied with the status quo.

Beyond Korea, both Washington and Beijing have an enormous stake in good Sino-American ties. However, outstanding differences over policy toward Burma and Tibet, along with the continued Chinese military buildup, may make managing relations more difficult, especially if the economic slowdown leads to nervousness among China’s leaders. One way to ensure the continued development of positive relations with Beijing is for the U.S. to work as closely as possible with its allies and other friendly nations in Asia to craft common agendas for security issues, trade relations, environmental problems, and the like, thus encouraging China to play a supportive role in such innovative regional initiatives. This should be accompanied by continued high-level Sino-American discussions, but the Obama Administration should resist the temptation to place U.S.-China relations above those of our allies or Asia as a whole.

There is also the specter of democratic instability throughout Asia, from Thailand to Japan. No president wants to see democracy wobble on his watch, and a key part of Obama’s Asia policy should be to support democratic governance among our allies and friends, through grass-roots and official dialogues. Finally, no U.S. role in Asia will be credible without a continued commitment to maintaining the U.S. military capability that has ensured regional stability for decades; any hint that the U.S. is wavering in its promise to defend Asia’s commons or its friends could lead to unforeseen results.

President Obama faces challenges unlike any other U.S. president in recent history. It will be tempting to let U.S. policy in Asia slide, or to hope that things there stay peaceful. Regardless of the effort involved, President Obama and his team must recognize that America's future is tied to Asia’s, and that their success will in part will be viewed through an Asian prism.

Michael Auslin is a resident scholar at the American Enterprise Institute.