Briefing on The Indo-Pacific Strategy
Alex N. Wong
Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs
Press Correspondents Room
April 2, 2018
MR GREENAN: Good afternoon, everybody. Glad we could do this today on a Monday. We have with us Deputy Assistant Secretary Alex Wong with us. We have about 30 minutes. DAS Wong will open up with some remarks on – about Indo-Pacific strategy and the – obviously to take your questions. Nicole will help moderate that, so if you could introduce yourself and the outlet that you're with when you ask the question, that'd be helpful, as DAS Wong is getting to know a number of you here today.
So with that, I'll turn it over to Alex.
MR WONG: Great. Thanks, Robert. Good to be here with all of you. So as Robert said, I'm a deputy assistant secretary in the East Asian and Pacific Affairs Bureau. And what I cover is regional and security policy. So the best way to explain that is any kind of policy that you see going vertically this way, that's bilateral, that's not me; any policy that goes horizontally, east-west across the region, that's me. So multilateral, security, strategic issues, I cover.
Under that portfolio, the main focus of my time right now is the Free and Open Indo-Pacific Strategy, and I want to talk a little bit more about that today so you and your readers can fully understand what we mean by that.
If you look at the first year of the Trump administration, it was a significant year in terms of U.S. policy toward the Indo-Pacific. President Obama, even – I'm sorry, President Trump, even before he was inaugurated, engaged deeply with our – with allied leaders in the region. He hosted a number of leaders at Mar-a-Lago and for state visits. On top of that, we sent a number of cabinet officials on trips to the region – from the secretary of defense to the secretary of state and others – and we capped the year with a historic trip by the President to the Indo-Pacific, which was the longest trip a president has taken to the region in a generation. And during that trip, President Trump, in a speech in Da Nang, Vietnam, introduced the strategic concept of the Free and Open Indo-Pacific Strategy.
So looking back on the first year, we really consider the first year a year of introducing the strategic concept. But now as we look to the second, third, and fourth year of at least the first term of the Trump administration, these are really years of formulation and implementation of the strategy. And that's where I, the Bureau of East Asian and Pacific Affairs, and others throughout the interagency really come in as we push this strategy forward.
So again, I want to be – I want to discuss what we mean by Free and Open Indo-Pacific Strategy. And the best way to do that is to focus on the two modifiers that we've chosen to describe the strategy: free and open. So by free we mean, first of all, the international plane. We want the nations of the Indo-Pacific to be free from coercion, that they can pursue in a sovereign manner the paths they choose in the region. Secondly, we mean at the national level, we want the societies of the various Indo-Pacific countries to become progressively more free – free in terms of good governance, in terms of fundamental rights, in terms of transparency and anti-corruption.
Moving on to open – by open, we first and foremost mean open sea lines of communication and open airways. These open sea lines of communication are truly the lifeblood of the region. And if you look at world trade, with 50 percent of trade going through the Indo-Pacific along the sea routes, particularly through the South China Sea, open sea lanes and open airways in the Indo-Pacific are increasingly vital and important to the world.
Secondly, we mean more open logistics – infrastructure. There's an infrastructure gap throughout the Indo-Pacific. What is needed throughout the region to encourage greater regional integration, encourage greater economic growth? We want to assist the region in doing infrastructure in the right way, infrastructure that truly does drive integration and raises the GDPs of the constituent economies, not weigh them down.
We also mean more open investment. For decades, the United States has supported more open investment environments, more transparent regulatory structures, so that it's not – so that the region is not only open to more U.S. foreign direct investment, but that indigenous populations, indigenous innovators, indigenous entrepreneurs can take advantage of the investment environments to drive economic growth throughout the region.
And we also mean more open trade. Free, fair, and reciprocal trade is something the United States has supported for decades and that the Trump administration supports.
So when I explain these principles underlying the strategy, one comment I get is that doesn't sound that different from what has come before. And the answer to that is, it's true. It doesn't sound that much different. In truth, the United States, for at least over 70 years, has pursued a free and open Indo-Pacific strategy in the region since World War II. But two things are different.
First, as the economy – excuse me, as the population and the economic weight of the Indo-Pacific grows, our focus and our efforts in the region have to commensurately grow with it. Secondly, I want to turn your attention to the term "Indo-Pacific." It's significant that we use this term. Before, people used the term Asia Pacific, or just simply Asia, but we've adopted this phrase for two reasons, and it's significant for two reasons.
Number one, it acknowledges the historical reality and the current-day reality that South Asia, and in particular India, plays a key role in the Pacific and in East Asia and in Southeast Asia. That's been true for thousands of years and it's true today. Secondly, it is in our interest, the U.S. interest, as well as the interests of the region, that India play an increasingly weighty role in the region. India is a nation that is invested in a free and open order. It is a democracy. It is a nation that can bookend and anchor the free and open order in the Indo-Pacific region, and it's our policy to ensure that India does play that role, does become over time a more influential player in the region.
So I think I will stop there and maybe open it up to questions and we can really talk about anything you guys would like.
MS THOMPSON: So before we get started, I just want to remind everyone that we are on the record, and I think Robert said that earlier. So this is on the record, everyone. Okay.
QUESTION: Hi, I'm Dave Clark from AFP. In describing the open quality of the Indo-Pacific, you talked about free trade. How does that tally with the imposition of tariffs and the pulling out of the TPP?
MR WONG: Sure. So a couple of things. The United States, as I said, for decades has supported free, fair, and reciprocal trade. We have one of the most open markets in the world where nations are allowed to trade and invest with us. And if you look specifically at the Indo-Pacific, the two-way trade every year with the region is $1.4 trillion. U.S. foreign direct investment in the region is $860 billion a year. And both those numbers are going up. But when you talk about free, fair, and reciprocal trade, there are two parts to that. Number one, there is setting the rules of the road of free trade for trade agreements – if you're working on a bilateral basis to lower trade barriers and working through organizations like APEC to reform economies in the region so that they are more open to trade and investment. So you have to set the rules of the road.
But number two, you have to enforce the rules of free trade. You have to ensure that nations cannot abuse the rules, cannot force technology transfer, cannot prize their national champions, can't steal intellectual property. If you don't do this, if you don't enforce the rules of free trade, what ends up happening is that over time, the free, fair, and reciprocal trading regime is weakened, and that's to the detriment not just of the United States's prosperity but to the prosperity of the region and the world as a whole.
So what you're seeing the Trump administration do here and what you're seeing President Trump do is enforce the rules of free trade and ensure that countries that have freely signed up to the rules of free trade begin to abide by those rules.
QUESTION: That doesn't – but that doesn't explain the walking away from TPP.
MR WONG: Well, let's talk about TPP. I think the nations of the region and a lot of strategic thinkers will understand that there are strategic benefits to a regional free trade pact that includes the United States and our partners in the region. But when you talk about strategic benefits and you talk about trade agreements, it's important not to put the strategic cart before the economic horse. Trade agreements are about economics. Trade agreements are about ensuring, from the U.S. perspective, that there are benefits for U.S. workers and U.S. businesses, and that's for two reasons – or in part for two reasons.
Number one, trade agreements, when done right, have to be approved by the U.S. Congress. So if there aren't significant benefits to U.S. workers and U.S. businesses, you're not going to get these trade agreements passed. That's number one.
But number two, if you're looking at the strategic value of trade agreements, if there is not significant economic benefit to U.S. workers and U.S. businesses, over time the trade agreement will serve to fray the strategic relationship, not bolster it. So in order to have that long-term strategic value, in order to gain the strategic benefits that everyone acknowledges a trade agreement in principle would entail, you have to ensure there are those economic benefits and you have to ensure that U.S. workers and U.S. businesses are benefiting.
That's what President Trump is trying to do, and what he did when pulling out of TPP and now as he pursues exploration of bilateral free trade agreements with partners who are willing to live up to the principles of free, fair, and reciprocal trade.
I'll just stop there.
QUESTION: Could I have a follow-up on that? Lesley Wroughton from Reuters. But Secretary Mnuchin said recently that the U.S. was open to going back to TPP. How do you see that proceeding in any way, given that the President has said that he's not really interested in going back --
MR WONG: Well --
QUESTION: -- to TPP? And how do you see the Chinese move today affecting any sort of open-door policy to going back into TPP? Do you think anybody's going to want --
MR WONG: The – I'm sorry. The Chinese --
QUESTION: What – the Chinese tariffs today.
MR WONG: Well, let me just talk a little bit about CPTPP 11, which is what I think Secretary Mnuchin was talking about, and I will note that the President mentioned in his comments in Davos. So again, going back to what I said, trade agreements have to yield economic benefits for U.S. workers and U.S. businesses, and that is the focus of President Trump and I assume the focus of Secretary Mnuchin carrying out the policy of President Trump.
So if it is in the benefit of all, as the President said, to look at CPTPP 11, to look at other multilateral or regional type arrangements, if that is in the benefit of all, and particularly in the benefit of U.S. workers – for the benefit of U.S. workers and U.S. businesses, that's worth looking at.
QUESTION: Does a free trade agreement have to benefit all U.S. workers at the same time?
MR WONG: Well, I'm not going to get into the particulars of – you're asking a question on, like, Pareto efficiency and in Kaldor-Hicks efficiency from an economic standpoint?
MR WONG: I'll leave it to my USTR folks to carry out the particular negotiations. What I am saying is President Trump is focused on ensuring that there are benefits to U.S. workers and U.S. businesses, and that's why he pulled out of TPP.
QUESTION: But if U.S. manufacturers have to pay more for steel and U.S. steelworkers sell more steel --
MR WONG: Well --
QUESTION: -- is that a net benefit for the U.S. or a net loss?
MR WONG: Well, I'll defer to my USTR and Commerce folks on the particulars of an industry, but maybe we should move on.
QUESTION: But isn't that what you told the other TPP members when you were encouraging them to join it, that there would be benefits in the aggregate for the Pacific region?
MR WONG: Again --
QUESTION: When the U.S. Government, the previous U.S. government was encouraging --
MR WONG: I'm not sure – I'm not sure I --
QUESTION: -- was encouraging members to join the TPP pact --
MR WONG: Well, I --
QUESTION: -- the idea was that whereas some industries in some countries would suffer --
MR WONG: I'm not --
QUESTION: -- in aggregate the Asia Pacific economy becomes more efficient and that workers benefit in the U.S. and in Asia.
MR WONG: I'm not following your question. So if it's a particular of a negotiation point during the Obama administration, then maybe I'd refer you to them. But again, I defer to the USTR and Commerce folks on particular industries.
QUESTION: All right.
MS THOMPSON: Lalit.
QUESTION: Yeah, Lalit Jha from PTI, Press Trust of India. In your remarks you said it is our interest that India play an increasingly weighty role in the region. What do you mean about the weighty roles? What kind of role do you want India to play?
MR WONG: Well --
QUESTION: And do you think India has that capabilities to do that?
MR WONG: Well, India for sure has the capability and potential to play a more – a more weighty role. But the role is on all fronts, whether it's security, economic and diplomatic. I think one great example that you've seen recently is Prime Minister Modi invited the leaders of the ASEAN states to Delhi for your National Day. That was, I think, the only – second – the second time that foreign leaders have been invited to that event, and a truly significant sign of the increasing ties that India is pursuing particularly in Southeast Asia.
But I will say it's not just India that is pursuing greater engagement with East Asia and Southeast Asia. There are a number of crisscrossing strategies throughout the region. So if you look at India's Act East Policy, if you look at South Korea's New Southern Policy, if you look at Japan's own Free and Open Indo-Pacific Strategy, if you look at Australia's Foreign Policy White Paper, if you look at Taiwan's new Southbound Policy, these partners in the region are all seeking to increase political, security, and economic ties, particularly with the ASEAN states. And that's in our interest. If we can have these crosscutting relationships that form a very strong fabric devoted to a rules-based free and open order, that can only strengthen the prosperity of the region, strengthen the fabric of stability in the region, and that's something that we support.
QUESTION: And secondly, the deep inroads – inroads that China has made in Maldives – now it owns around nine islands there – does it any way threaten the free and open trade in Indo-Pacific region?
MR WONG: So let's talk a little bit about China. The Free and Open Indo-Pacific Strategy is not just about China, and this is for the very simple reason that the region is much larger than China. In the ASEAN states alone, we have 600 million people. In India, we have 1.2 billion people. And if the United States, together with our partners, can sew together and unify all the peoples of the Indo-Pacific – China included – under a vision that is free and open, that prizes free market economics, that prizes sovereignty, that prizes increasingly freer people and nations free from coercion, that's not just to the U.S. benefit; that's to the benefit of all nations in the Indo-Pacific, China included.
QUESTION: What about Maldives, the question of Maldives?
MR WONG: I'll refer to the – our SCA colleagues on Maldives in particular. It's not my area. I don't want to speak out of turn. I want you to get the best information you can.
MS THOMPSON: Sir.
QUESTION: Okay. Thank you.
QUESTION: My name's Kenichi from NHK. You mentioned about the infrastructure support.
MR WONG: Yes.
QUESTION: I think Secretary Tillerson said that you – that he wants to propose alternative support mechanism. So what – could you provide, like, the update, or is this administration going to really propose the alternative for the infrastructure support?
MR WONG: Sure. So let me speak a little bit about what the U.S. interest is in infrastructure and connectivity throughout the Indo-Pacific. We're less concerned with where the financing or from what country financing for infrastructure across the region comes from. We are more concerned with how that financing for infrastructure is structured, number one, and number two, how the particular infrastructure projects are conceived – conceived of and implemented.
So we're concerned, first of all, with the financing structures for connectivity projects, because if they're not structured in a way in which the nations of the region can sustainably pay them back, over time, you will see that that tends to compromise their sovereignty. Secondly, we're concerned with how projects are conceived of and implemented because we want these projects to be economically feasible. We want them to be connected with the economies of these nations in a smart way that increases their GDP, truly drives regional integration, and doesn't weigh them down.
So for decades, the United States has been advocating for strong connectivity principles, facilitating good connectivity projects, preparing the investment frameworks and the investment environments in the region to drive private capital to these types of projects. And that's something that we want to continue to do and I think we should do more of.
If you look at the Indo-Pacific, the Asian Development Bank says that there's about a $1.7 trillion per year investment gap for infrastructure, what they truly need to encourage the type of GDP growth we've been seeing for a number of years in the Indo-Pacific. But that gap won't be filled by only state-backed financing. It can only be filled by getting private sector money off the sidelines. Currently, there's $50 trillion in private sector capital and cash instruments that's uninvested around the world. If we can get that into the Indo-Pacific to invest in quality best-value infrastructure, that'll be to the benefit of many of the countries in the region, and – but to our benefit, as the GDP of the region grows and our trade and our investment grow.
But there is a problem right now in the Indo-Pacific. If you look at the developed world, for every one dollar in state financing that goes to infrastructure, you get two dollars in private capital. But in the Indo-Pacific, for every one dollar in state financing, you only get 30 cents of private capital into these projects. There's a gap there, and we need to help and – the nations of the region ensure that they can access that private capital, craft the projects in a way that does attract investment money, ensure that their regulatory environments and their bidding processes are attractive to private capital. And then if we can do that, we can fill that infrastructure gap, provide the alternatives that are needed by the nations of the region, so that infrastructure is done right and truly ensures economic growth.
QUESTION: Hi, Kylie Atwood with CBS News. As you're developing this strategy, you obviously must be talking with these players about the potential Kim Jong-un and Trump summit, so what has been their reaction to this possible summit? And also, what are you updating them on in terms of if it's going to happen or if it's not timeline-wise?
MR WONG: So when we talk about DPRK and the nuclear program, I think it's important to understand how we've gotten to this place. Over the past year, the Trump administration has pursued a maximum pressure campaign on North Korea. The administration has gone to the UN Security Council, gotten multiple resolutions placing sanctions on North Korea, but we've also worked across the world with a number of partners to increase North Korea's diplomatic isolation as well as its economic isolation. And this has created the conditions now where we can have these talks that are moving towards our clear objective, which is complete, irreversible, and verifiable denuclearization of the Korean Peninsula.
And as you're saying, there's a lot of movement right now. There's discussions between the South Koreans and the North Koreans. Kim just went to visit Xi in Beijing. So there's a lot of movement, and it's understandable a lot of questions arise about how we're going to manage all this movement and move towards that objective. But I will say that it's a good thing that there is movement. It's a good thing that we have opportunities that we can seize and that we can manage towards that objective, because if you look at the prior years – a number of years before President Trump came to office – there really wasn't any movement. There was no diplomatic movement on the ground, and the only movement you saw was the slow, creeping expansion of North Korea's nuclear program. And in that light, I think we're in a pretty good place right now.
MS THOMPSON: We can take one more. Conor.
QUESTION: Conor Finnegan from ABC News. I wanted to ask you – you talked a little bit about countries free of coercion from outside powers. Does that explicitly apply to Taiwan? And if you could talk a little bit about your recent visit there. What message does the Trump administration have for China about Taiwan?
MR WONG: Well, our – we have a longstanding policy with regard to Taiwan as encapsulated in the Taiwan Relations Act and the three joint communiques. And the basis or the core of that policy is to a) deepen relations with the Taiwan people and b) provide them with adequate military arms so they can defend their democracy. And if you look at Taiwan, they truly are an example for the region for the types of reforms that we want to encourage throughout the region: commitment to free market economics, commitment to democracy. So to that extent, we are pursuing the longstanding policy with regard to Taiwan, again, under the TRA and the three joint communiques.
But regarding the coercion point, something I do want to emphasize in this forum so that it's communicated very clearly to your readers as well as to our partners in the region is that a key to insulating the nations of the region from outside coercion so they can preserve their sovereignty is strengthening regional institutions in the Indo-Pacific, and namely ASEAN and APEC. If you look at the strategic logic of an organization like ASEAN, it's an opportunity for small and medium-sized countries to band together, use their collective weight, work in consensus in order to balance larger powers in the region and throughout the world. And that's in our interest. We want these nations to work cooperatively, to work by consensus, to pursue shared goals of strengthening the free and open order. So the corollary policy for us is to invest or continue to invest in ASEAN, continue to invest in APEC, to ensure that these regional organizations which convene the nations of the entire Indo-Pacific are committed to the principles that we see as yielding these strategic, economic – economic benefits that have arisen in the past 70 years as we've pursued our own strategy.
QUESTION: So when you – you mentioned the TRA and the three communiques, but you did not, as most people do, repeat the "one China" policy phrase. Is that supposed to be included in the three communiques, or --
MR WONG: Well, the United States has our "one China" policy and we continue to abide by that.
QUESTION: You still do.
MS THOMPSON: Okay.
QUESTION: One quick follow-up on the North Korea. Are – is everyone still working under the assumption that these – that the summit will be in May?
MR WONG: Well, I don't have any updates for you. Maybe I'll defer to our Korea team on that. I don't want to give you any bad information, but I – I mean, that's the last I heard, but – unless there are updates, Justin.
STAFF: No updates.
QUESTION: What did President Trump mean in his speech in Ohio when he said that he might delay the implementation of the trade deal in South Korea?
MR WONG: Maybe I should defer to Justin. Do you have any updates?
STAFF: Defer to the White House on that. (Laughter.)
QUESTION: Does that mean you don't --
STAFF: We'll wrap it up here.
QUESTION: Does that mean you don't know?
MR WONG: Well, I'm going to defer to Justin on this, and the White House.
MS THOMPSON: All right, guys.
QUESTION: Because you just spent most of the time talking about trade, so this is a trade issue. Presumably you're involved in it.
STAFF: Again, I'd refer you to the White House or USTR for clarifications or updates.
QUESTION: This is a broad – this is broader than just a trade issue. He said – the President said – that this is – he would – he might delay it so that you could increase your leverage in the North Korea negotiations.
STAFF: Again, I'm going to leave that one with the NSC. Contact them.
QUESTION: In other words, you guys don't know.
STAFF: I'll let you talk to them about that.
QUESTION: No, I want you to admit that you don't know. (Laughter.)
STAFF: We're done. Thanks, appreciate it.
QUESTION: Yeah, you are. So are we all.
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