新東亞區域主義中的美國因素

行政院國家科學委員會專題研究計畫 成果報告

新東亞區域主義中的美國因素

中 華 民 國 94 年 10 月 3 日

US Strategy towards East Asia Economic Cooperation

Linjun Wu

Abstract

The aim of this article is to analyze US strategy towards economic integration in the East Asia, which excludes the United States. In last few years, East Asia is witnessing the emergence of several trade blocs and many ambitious initiatives implying closer integration in East Asia. This new regionalism reflects a process of convergence based on unilateral reform efforts. Currently, China bears the costs associated with providing political and diplomatic resources needed to establish this economic integration.

In response to the China-led evolution of an East Asia trading block, the US strategy is to speed up, discreetly, the conclusion of bilateral free trade treaties with some East Asian countries. The reasons for this strategy are the long-term distrust by the US of multilateral cooperation in East Asia, the need for support from China in fighting terrorism, and the need for counter-terrorism cooperation from ASEAN. Basically, current US strategy continues to consistently reflect US strategic and economic interests but is limited by the need for Chinese support against terrorism.

Key Words: the US, China, East Asia economic area cooperation, ASEAN Plus

Introduction

In the last few years, East Asia is witnessing the emergence of a few trade blocs and many ambitious initiatives all signifying a closer integration and cooperation in East Asia. This new regionalism reflects a process of convergence based on unilateral reform efforts. Currently, China bears the costs associated with providing political and diplomatic resources needed to establish this economic integration. As a result, the influence of China has been increased progressively in the region. In 2001, China and the ASEAN countries announced a plan to establish a “China-ASEAN Free Trade Area” (10+1 FTA) within ten years. It would become the world’s largest market with an entity with 1.7 billion people and a total Gross Domestic Product of roughly US$2 trillion. In November 2002, China also proposed to sign a treaty setting up a free trade zone among Japan, Korea and China. Obviously, China’s determination to expand its influence presents a challenge for the US. After more than a half-century as the dominant power in Asia, the US is now being forced to consider what the emergence of a rival means for its interests.

The main aim of this article is to analyze US’s policy and strategy towards economic cooperation in the East Asia. In general, the response to this China-led “East Asia Trading Block,” the strategy of the US has been very subtle. So far, the US’s strategy is to speed up, discreetly, the conclusion of bilateral free trade treaties with some of ASEAN states. The reasons for this strategy are its habitual distrust of multilateral cooperation among East Asia countries, the need for support from China in fighting terrorism, and the need for counter-terrorism cooperation from ASEAN. 1 After September 11, 2001, the Southeast Asian countries have become the second front in fighting terrorism for the US and, therefore, are even more strategically significant.

1

Nicholas Khoo and Michael L. Smith, “The future of American hegemony in the Asia-Pacific: a Concert of Asia or a clear pecking order?” Australian Journal of International Affairs, vol. 56, no. 1, 2002, pp.61-81.

II. East Asia Area Trade Cooperation and the United States

(1) The Evolution of East Asia Trading Blocks

Since 1997 East Asia has evolved a concept of East Asia regional economic cooperation under the main framework of ASEAN Plus Three, which includes: (1) ASEAN Plus Three; (2) the three ASEAN Plus One groupings (i.e. ASEAN Plus China, ASEAN Plus Japan and ASEAN Plus Korea); and (3) China, Japan, and Korea Informal Leadership Conference. 2 Although the cooperation among ASEAN Plus Three has not resulted in any formal declaration or treaty, it has established a basic framework, under which these ten East Asian nations (ASEAN) and three Northeast Asian nations hold informal annual summit meetings, including trade and financial meetings at the ministerial level.3 For the East Asian countries, this framework is the main structure for economic cooperation, and it is seen as a model and guideline for the future evolution of cooperation within East Asia.4

In 2001, when China and ASEAN announced the establishment of a China-ASEAN Free Trade Area within ten years, several observers believed that that agreement amounted to a breakthrough in advocating multilateral regional economic cooperation.5 A characteristic of this breakthrough is the intentional exclusion of US’s participation. However, the attitude of the US is still of great concern to Asian nations because of its long-term involvement in East Asia. In fact, this was not the first time that East Asian countries had established an exclusive organization. In the early 1990s, the prime minister of Malaysia, Mahathir Mohamad, had proposed the idea of the East Asian Economic Caucus (EAEC), whose member states comprised of ASEAN, Japan, and China.6 Because of the opposition from the US, the idea of EAEC was never realized. 7

2

Zhang Yunling,“The opportunities and challenges to China-ASEAN Free Trade Area,” Asia-Pacific

Economic Review, Mar 2003, pp.2-4.

3

“China-Japan-Korea Dialogue Conference” started from 1999.

4 _{Although cooperation within the three ASEAN Plus One groupings remains as a parallel pattern, it helps} to build up the foundation of ASEAN Plus Three cooperation.

5 _{Richard Stubbs, “ASEAN Plus Three: Emerging East Asia Regionalism?” Asia Survey, vol.42, no.3, 2002,} pp.440-455.

6 _{The original name is “East Asia Economic Group, EAEG,” there are also some other trade organizations} excluded America, include “ASEAN Free Trade Area, AFTA” and “East Asia Economic Cooperation”.

For decades, the US has seen itself as the main architect of economic and security arrangements in the region; hence, it would be difficult to prevent the US from influencing cooperation among the East Asian countries.

(2) The Significance of East Asia Regional Economic Cooperation to the United States

Generally, East Asian economic integration will not have great consequences for the US, in the short run, because the East Asia Free Trade Zone will not be implemented until 2015. Currently, each ASEAN states country has its own domestic political and economic problems preventing the partners from addressing the challenges of future economic integration.

Moreover, the US is the most important trading partner and the provider of capital and technology to ASEAN countries, whereas China and ASEAN states are not the most important trading partners for each other. Although exports from ASEAN to China rose from 5.8% in 1991 to 8.3% in 2000, ASEAN is only the fifth largest trade partner of China; and although trade from China to ASEAN increased from 2.1% in 1994 to 3.9% in 2000, China is merely the sixth biggest trade partner of ASEAN. Given that the growth in such trade is limited, it is clear that neither is likely soon to be the most important trading partner for the other.8 At present, East Asia cannot escape from its trade dependency on the US market; hence, the US still has strategic economic advantages.9

Nevertheless, China-ASEAN free trade block might still have a negative impact on the US economy in the long term. The further development of East Asia regionalism will inevitably cause uncertainty. Moreover, for those ASEAN countries with strong anti-American sentiment, the build up an anti-US trading group, will damage long-term US economic interests.10 Jeffrey J Schott, a senior researcher in the US International

7 _{The fundamental spirit of the current East Asia Area Economic Cooperation is quite similar to that of the} earlier EAEC, which is to establish an economic cooperation organization exclusively for the East Asian countries, but under a more mature structure.

8 _{Forging Closer ASEAN-China Economic Relations in the Twenty-first Century A Report Submitted by the} ASEAN-China Expert Group on Economic Cooperation, October 2001.p.7.

9 _{China Times (Taipei), November 6, 2002.} 10

Sun Cheng, “Relations between Big Countries and Cooperation in East Asia,” International Issue and

Economic Research Center, warned during a Congressional Hearing that the absence of the US from evolving trade relationships would have two serious consequences: first, it would cause discriminatory treatment to US exporters when competing with treaty countries; second, it would affect US competitiveness. If the US is not one of the treaty nations, it cannot influence the rules of game.11 Fred Bergsten, a well-known American economist, believes that the US leadership in the East Asian economy seems to have declined and that an East Asia area trade circle has been built up without the presence of the US. In the future, the establishment of an Asian Monetary Fund would also be possible. If the US allows this evolution to continue and does not take timely precautionary steps, the US will certainly suffer consequences.12

In addition to these long-term economic uncertainties, there is a group of Americans who believe that China has actively established and improved its image in the East Asia area by increasing foreign direct investment, bilateral trade and foreign aid. Its new image has already allayed the fears of a “China threat.”13 If the economic participation of the US has declined in regional trade, it would increase the chances for China to achieve hegemony within Pan-Asian regional organizations.14 For the US, China is still the most significant economic and political rival in East Asia. According to Asia-Pacific specialists, including those from China, one of the main purposes of China in promoting and establishing this trade zone is to diminish US influence in East Asia and disturb the US’s deployment plan in East Asia in the twenty-first century.15

From China’s perspective, the benefits of an ASEAN and China FTA are both political and economic because this arrangement is a good way for China to expand its political influence in ASEAN. It is consistent with China’s desire to maintain good

11Jeffrey J. Schott, “Free Trade Agreements: The Cost of U.S. Non-Participation.” Testimony before the Subcommittee on Trade House Committee on Ways and Means Washington, D. C. March, 29, 2001. 12 _{C. Fred Bergsten, “America’s Two-Front Economic Conflict,” Foreign Affairs, vol.80, no. 2, pp.19-21.} 13 _{Robert Sutter, “China’s Recent Approach to Asia: Seeking Long-Term Gains”, Seattle: National Bureau}

of Asian Research, NBR Analysis 13, No.1, (March 2002): 13-38.

14 _{Robert W. Radtke, “China’s ‘Peaceful Rise’ overshadowing US influence in Asia?” Christian Science}

Monitor, vol. 96, no. 9, 2003, p.9.

15 _{Douglas Webber, “Two funerals and wedding? The ups and downs of regionalism in East Asia and} Asia-Pacific after the Asia Crisis. The Pacific Review, vol.15, no.3, 2001, p354. Gilbert Rozman and Noah Rozman, “The United States and Asia in 2002” Asia Survey, vol.43, no.1, pp.1-14. Cao Yunhua, “Sino-ASEAN Relations: The Status Quo and Prospect” Southeast Asian Studies, No.1, 2002, pp.55-57. Cheng Humg Yu, “Analysis of ASEAN-China Free Trade Area,” Studies in Communism, Vol.27, No.12, December 2001, p.4.

relationships with all countries in Asia. Many political observers have been most impressed by Beijing leaders’ pragmatic approach in pushing the cooperation with ASEAN countries. After 2001, China and ASEAN declared the “10+1” FTA, China signed a Comprehensive Economic Cooperation Framework Agreement with ASEAN in 2002, making the free trade zone a reality. In 2003, at the China-ASEAN Summit in Bali, Indonesia, three agreements were signed, including a “Joint Declaration of the Heads of State/Government of ASEAN-China on Strategic Partnership for Peace and Prosperity”, a “Treaty of Amity and Cooperation in Southeast Asia”, and a “Protocol to Amend the Framework Agreement on Comprehensive Economic Co-operation Between ASEAN and China”; thus, the two parties made significant progress in their relations.

In fact, before ASEAN plus one agreement became effective, China had already agreed to provide ASEAN countries several special preferences in advance. In addition, China provided numerous reductions of tariffs on agricultural and industrial products to ASEAN countries. In other words, products from ASEAN could be exported to China with favored tariff rates and enjoyed the benefits and advantages of the free trade agreement prior to the signing of the treaty.

The Research Institute for Asia and Africa of the Ministry of Commerce in China recently published a report on “establishing a free trade agreement among China, Japan, and Korea.” This report indicates that the fundamental requirements for the establishment of such a free trade area have already been met. 16 This report suggests that China has been promoting the tripartite free trade zone treaty recently.

Some Chinese scholars have described the progress of East Asian cooperation as rolling forward on ‘four wheels’ at the same time. The first is ASEAN Plus Three, which refers to dialogue and cooperation among all the players in the East Asia area. The second is ASEAN, meaning the development and cooperation within ASEAN itself. The third is known as “ASEAN and the Three,” covering bilateral dialogue and cooperation between ASEAN and each of China, Japan, and Korea and the fourth is simply called “Three,” designating conversation and cooperation among China, Japan and Korea.17

16 _{Economic Daily (Taipei), August 18, 2003.}

17_{Zhang Yunling,“The opportunities and challenges to China-ASEAN Free Trade Area,” Asia-Pacific}

Economic Review, Mar 2003, pp.2-4.

Given the nature of East Asian regional cooperation and the many formal and informal processes by which it has evolved, East Asian regionalism is gaining momentum, and will certainly have some degree of impact on the Pan-Asian and wider international political environments in the future.

III. The US Strategy

Basically, US policies in the region are one of the reasons that have led East Asia countries to establish their own institutions. Since the establishment of APEC, the US and many developing countries had many disagreements. Some East Asian countries were dissatisfied with the US dominance prompting them to organize their own cooperation group. For example, during the 1997 Asian financial crisis, the US insisted on having the IMF be the financial provider aggravating the crisis and further accelerating the progress of cooperation among the East Asian nations. Given these policies and the anti-American sentiments that they generated, it was not a best time for the US to seek to join in emerging East Asian cooperation. The media in China expressed the view that US participation was very likely to diminish the enthusiasm of the ASEAN countries for the China-ASEAN free trade cooperation.18 Nor was it possible for the US to block the trade liberalization between China and ASEAN, because the US had always emphasized the importance of liberalization.

In 2001, when China and ASEAN overcame their difficulties and decided to establish a China-ASEAN Free Trade Zone in ten years, the US was focused on fighting terrorism. Although the US made no official statement, American officials indicated privately that the US had paid close attention to China’s every move.19 Under the dual pressures of anti-terrorism and the rise of China, US strategists had to be both realistic and idealistic. The first strategy adopted by the US administration was to speed up its lobbying effort to overcome domestic obstacles to the signing of a trade agreement. On the other hand, the US has decided to speed up bilateral trade deals with East Asian countries and attempted to establish an advanced trade relationship with ASEAN.

18 _{http://big51.china.com.cn/chinese/OP-c/389853.htm.}

(1) Overcoming Domestic Obstacles

The US is a relatively late convert to free trade agreements. It is only recently that the US has begun to sign any such treaties, such as with Israel in 1985 and with Canada in 1989. Later, the US formed North America Free Trade Agreement (NAFTA) with the Mexico and Canada. In response to the European Union actively sought to establish FTAs with Central Europe, Africa, and Latin America, the US promoted the concept of a Free Trade Area of the Americas (FTAA).20

The US Administration believes that it needs the authority from the Congress to catch up with regional free trade tendency. Robert Zoellick, then the US Trade Representative under the George W. Bush administration, lobbied in Congress to pass the Fast Track Procedure (Fast Tract Bill) to empower the Administration in trade treaty negotiations.21 Zoellick supposed that the reason the US was lagging behind regional free trade agreements is that the Administration’s trade negotiation authority had expired in 1994.22 In 1974, the US Congress passed the Trade Agreement Act, which delegated the power to regulate US trade policy to the President. To speed up the legislative procedure, the US administration decided to push “Fast Track Review Procedures” on trade bills submitted by the US President; the Congress had to vote on the submissions within 90 days but had no right to amend any content based on this legislation. The main purpose of this Act was not only to reduce pressure on Congressmen from interest groups, but also to enshrine the expectation that when the US President negotiates trade agreements with other countries, he would consider both the needs of foreign partners and the interests of the US economy. The process of trade negotiation is very complex, and if other countries

20 _{European Union (EU) is the most aggressive area in signing the free trade agreement, and itself is a free} trade area. Besides the free trade states within Europe, other members include the countries in the Middle East, Africa, Caribbean, and ACP. In addition, the EU also strengthens the relationship between South Africa and Latin America countries. So far, the EU has reached mutual settlement and research agreement plan with Chili and Southern Common Market, MERCOSUR. Within the EU, it is also expanding from current 12 member states. In 2001, the EU had signed free trade or tariff agreements with twenty-seven countries then signed with fifteen more countries. Lim Chin Beng, “Regionalism: a Singaporean Perspective,” Asia-Pacific Review, vol.8, no.2, 2001.p.12. Institute for International Policy Studies, http://iips.org.

21 _{The 2001 Trade Policy Agenda, www.ustr.gov; “Trade promoting Authority (TPA)” Statement on the} Second of two days, of senate Finance Committee Hearings, June 21, 2001, USTR Zoellick on Bid for Trade Negotiating Authority.

knew that the US President was not fully authorized from his own country, so that any agreement reached might be altered or withdrawn, then the motivation for them to negotiate with the President would be diminished. Hence, at that time, the Congress believed that it was necessary to increase the US President’s authority on trade negotiation. Although the Congress cannot amend the final draft of any trade negotiation agreement, it can still control the agreement by voting “Pass” or “Object”. In addition, during the negotiation, the Administration will communicate with Congressmen in advance in order to ensure final support from the Congress. In other words, the Congress is still involved in the content of the treaty, despite having formally relinquished all trade negotiation power to the Administration. Since then, most US trade Acts have been referred or modified based on the 1974 Trade Agreement Act.

After China and ASEAN reached their free trade agreement, the US Administration accelerated their response. 23 Zoellick communicated more aggressively with Congressmen, addressed numerous meetings, and attempted to persuade public opinion in favor of Congress passing the Fast Track Procedure to strengthen Washington’s hand when negotiating trade agreements.24 Zoellick indicated that the Congress usually uses many excuses, such as human rights, and domestic unemployment rates to stop the US from signing agreements with other countries. These countries therefore expected that the Congress would veto any agreements negotiated with the Administration; hence, they would not even have the motivation to go to the negotiating table with the US.25 In May 2002, the House of Representatives voted to pass an Act authorizing President Bush to exercise more power in negotiating future trade agreements.26 However, the Senate version of this Act still reserved for Congress the

23 _{“Bush Urges Senate to Grant Trade Power, Bar Congressional Amendments to Pacts,” Wall Street}

Journal, Apr 5, 2002, p.A2; Robert B. Zoellick, “Falling Behind on Free Trade,” New York Times; New

York, N.Y.; Apr 14, 2002, p.4&p.13. BUSH REITERATES CALL FOR SENATE TO RENEW TRADE

AUTHORITY, Congress Daily, April 23, 2002.

24 _{For example, Robert B. Zoellick, “Falling Behind on Free Trade,” The New York Times, April 14, 2002,} p.4 & 13. Jeff Faux, “Fast Track to Trade Deficits: Mushrooming Foreign Debt Begs for Strategic Pause before Approving New Agreements, EPI Issue Brief, No. 170 November, 27, 2001, p.1.

25 _{Statement of Robert B. Zoellick, “U.S. Trade Representative, “President Bush’s Trade Agenda,”} Subcommittee on Trade, Committee on Ways and Means, U.S. House of Representatives, March 8, 2001. 26Although the voting is a big success to George Bush, the Congress still has the right to amend the agreement of international trade. There is still a gap to reach what Bush requests, the “Fast Track Procedure”.

main power in trade negotiations; hence, there would still be obstacles in such talks.27 After President Bush’s personal lobbying to secure the votes, on July 28, the House passed the Fast Track Procedure by 215 votes to 212 followed by the Senate on August 1, by 64 votes to 34. Under its terms, although Congress can veto a trade agreement outright, it has no right to modify its contents.28 In other words, the US administration has gained more authority to negotiate trade agreements with other countries.29

(2) US Strategy: Bilateral Free Trade Agreements with ASEAN Countries

While persuading Congress to pass the Fast Trade procedure, high-level US administration officials began to visit East Asia frequently and attempted to accelerate the signing of bilateral free trade agreements with ASEAN countries. On January 31, 2002, Zoellick publicly announced economic integration was inevitable once the economy of China entered the international system and that the US would accelerate the search for free trade agreements with Asian countries.30 Subsequently, in March 2002, there were reports that the US and Singapore were close to completing their 7th free trade negotiation.31 The US also floated the idea of the Enterprise for ASEAN Initiative (EAI) as a channel for exports to the US and expressed its intention to proceed with bilateral meetings with individual ASEAN countries.

On April 4, 2002, Zoellick began his Asia tour from Thailand. After visiting Indonesia and Singapore, Zoellick declared immediately that the US would establish an Integrated Sourcing Initiative (ISI) system under the US-Singapore free trade agreement. The plan was to involve other ASEAN countries individually in the free trade zone

27_{Economic Daily,(Taipei) May 25, 2002; United Daily News (Taipei), May 25,2002.}

28 _{United Daily News (Taipei) August 3, 2002; Economic Daily (Taipei), July 28, 2002.}

29 _{Linjun Wu, “Bush Government and East Asia Multilateral Economic Cooperation,” Conference on}

Asia-Pacific Integration, Department of Diplomacy, NCCU, Taipei, June 1, 2002

30 _{China Times (Taipei) February 2, 2002.} 31

The negotiation between the US and Singapore began from Clinton administration and it did not have any progress until October 2001. “Zoellick to Meet Trade Ministers in Singapore, October 13-14, 2001, USTR News Release, October 11, 2001. http://usinfo.state.gov; “Richard Feinberg, “New Deals Give Bush Blocks for Trade,” LATimes.com, January 2, 2001,

http://www-irps.ucsd.edu/irps/innews/lat.com010200.html.”ustr; “USTR Zoellick and Singapore Minister for Trade George Yeo Review Progress on U.S.-Singapore FTA, The office of International Information Programs, U.S. Department of State, http://usinfo.state.gov March 6, 2002.

created under favored-tariff treatment between the US and Singapore, which would greatly increase flexibility in the manufacturing distribution of ASEAN enterprises. For example, the first touchstone of this plan was the preferential treatment toward IT merchandise produced in Bintan and Batam. This system meant that Bintan or Batam produced component parts assembled into a final product in Singapore would be treated as original production under the US-Singapore Free Trade Zone and enjoy the tariff rate applied to the Zone and non-tariff reduction rate. Generally, analysts believed that this plan would reinforce and attract foreign investment to ASEAN countries, and thus improve their competitive position with respect to China.32

After signing the US-Singapore FTA, the US initiated negotiations for a free trade treaty with Thailand. To encourage more trade agreements in the region, the US Trade Division signed the Trade and Investment Framework Agreement with five export-oriented ASEAN countries, including Indonesia, the Philippines, Thailand, Brunei, and Malaysia. It is believed that the agreement would lead to bilateral free trade agreements between the US and other signatory countries. 33

Although the US was quiet about East Asia’s regional economic collaboration, it is clear from a number of activities of the Administration that the US did not ignore the evolution of East Asia regional economic integration. For example, the Administration lobbied in the Congress to pass the Trade Negotiation Authority Act in relation to the Fast Track Procedure, strove for the authority to negotiate on foreign trade, and worked to speed up trade agreements with Singapore and other countries. In November 2003, US Trade Representative Zoellick stated that once the US had reached trade agreements with individual ASEAN countries, these states would gain greater benefits than by dealing with China. All these are the indications that the US has actively pursing its interests in the region.34

IV.

The Impact of 9/11

32 _{United Daily News (Taipei), April 8, 2002; Commercial Times (Taipei), April 8, 2002.} 33 _{http://www.epochtimes.com/b5/4/5/11/n535707.htm.}

After the attack on 9/11, the US viewed Southeast Asia as a second front of counter-terrorism, and has, therefore, begun to link its policies towards the Southeast Asian regional economy in line with its strategic security interests. 35

(1) US Regional Economy and Strategic Interests

The US has strong economic, political and trade policy reasons for the launch of bilateral negotiations to devise free trade agreements. Early experiments in FTAs such as between New Zealand and Australia date from the nineteen-eighties and their economies are now closely integrated.36 The US obviously believes that multilateral organizations will not effectively serve its economic or security purposes. For example, although the US has promoted anti-terrorism activities in many organizations in East Asia, such as APEC and ARF, the Administration declared that it would put pressure on each nation by going through bilateral negotiations to make sure anti-terrorism is in force.

Currently, the US links bilateral free trade agreements with its anti-terrorist security needs. It understands most ASEAN states are interested in negotiating FTAs with the US and takes advantage of the opportunity to link security and economic interests as a condition for a FTA. The US first pursued the US-Singapore FTA because there were few economic and trading conflicts and strong security considerations. 37 Strategically, Singapore has been very significant for the US as a naval base. This deployment connects the Diego Garcia base in the Indian Ocean through Singapore with Japan joining the Indian Ocean and Pacific Ocean through the Malacca Strait to form a defensible strategic line.38 In addition, the US Defense Department recognizes Singapore as a “friendly country.” Lee Kuan Yew had repeatedly stressed the balance of power and hoped that the US could be a power to balance China in Asia and avoid a situation where Asian

35 _{Catharin E. Dalpino, “Second Front, Second Time: Counter-Terrorism and US Policy toward Southeast} Asia, Cambridge Review of International Affairs, vol.15, no.2, 2002, pp.350-351.

36_{United States– New Zealand (US-NZ) FTAs , Fred Bergsten and Professor Robert Scollay, Council, A} report prepared for the US-New Zealand Council, (Institute for International Economies, 2002).

37 _{“Singapore Unveils New Economic Plan” International Herald Tribune, August 21, 2001, p.9.} 38 _{China Times (Taipei), July 22, 2001, p. 11.}

countries would have no choice but to lean to China.39 After 9/11, Lee Kuan Yew frequently expressed pro-American opinions and, domestically, the Government of Singapore has been very aggressive in rooting out terrorists. The US is able to cooperate with Singapore in defense planning and security research.

The US-Singapore FTA became effective on January 1, 2004. From that date, 78.7% of merchandise exported from Singapore to the US was totally free of duty; one year later, the duty-free percentage was increased to 92%. All US goods exported to Singapore were immediately tariff-free. Singapore’s economy is also more open to US corporations. Based on initial estimates, once US-Singapore FTA became effective, Singapore was expected to save between two and three billion Singapore dollars, approximately equivalent to between 118 million and 176 million US dollars.40

ASEAN member states were greatly divided in their attitudes toward the US-led Iraq operation. The Philippines, Singapore, and Thailand supported the Iraq war, providing the US with political and ethical support.41 The US colonized the Philippines at one time, and the two countries still enjoy a security partnership and a cooperative military relationship. Between February and August 2002, US forces joined military exercises in the Southern Philippines. The Philippines and Thailand followed the US request to expel Iraq diplomats. Hence, it was not difficult to predict that after signing an agreement with Singapore, the US would next consider cooperation with Thailand and the Philippines. In 2003, President Bush visited six countries including the Philippines, Thailand, Singapore, and Indonesia; he was in Bangkok for the APEC annual conference to gain support for counter-terrorism. At the same time, Bush gave a speech in the Philippine Congress to urge support for comprehensive economic reform as a condition for an FTA. In US foreign policy, economics and politics are two facets of a single strategy. 42

39 _{Lee Kuan Yew, “ASEAN Must Balance China in Asia,” NPQ, Summer 2001. pp.20-22.} 40

http://www.epochtimes.com/b5/3/12/30/n439801.htm.

41 _{Julius Caesar Parrenas, “Washington Could Help Southeast Asia to Get Itself Together,” International}

Herald Tribune, May 15, 2001. p.8;

42

The three targets of George Bush’s visit: the postwar reconstruction, anti-terrorism, and the economics. http://big5.chinanews.com/n/2003-10-22/26/359903.html.

The Indonesian President Megawati was the first leader of an Islamic country to visit the US. The US and Indonesia strengthened their intelligence exchanges and the US helped to train Indonesian police in counter-terrorism, then Indonesia also expressed her determination to fight terrorist activities. In order to end Indonesian anti-American sentiment over the Iraq war, the US emphasized that the war on terror is not just a world war against all Muslims.43 After the war started, Indonesian officials warned domestic anti-war people that if the relationship between the US and Indonesia were to deteriorate, this would damage the economy and security of Indonesia; and the government also enhanced the protection of the US embassy in Indonesia. After the Afghanistan war, the US continuously stressed cooperation with Indonesia against terrorism. After US diplomats in Indonesia had greatly praised Indonesia’s anti-terrorism activities, the US then signed a “Trade and Investment Framework Agreement” with Indonesia.

Initially, cooperation with Malaysia was a difficult challenge for the US. Not only had the two countries had great disputes in the past on the issue of human rights, but also the US repeatedly criticized Mahathir about the Anwar incident. 44 Following the Afghanistan intervention, the US started to change its policy and attitude towards Malaysia. When US Deputy Secretary James A Kelly visited Malaysia in April 2002, he dealt with the Anwar incident by discrete diplomacy, at the same time indicating that Mahathir was a strong partner in fighting terrorism. Then, in May 2002, Mahathir was invited to the US, suggesting that consensus had been reached. In June, the two sides began military cooperation. At Malaysia’s request, the US set up a Southeast Asia counter-terrorism center in Malaysia.45 At the beginning of 2003, Malaysia cooperated with US anti-trafficking measures by signing a “Container Automatic Surveillance System Agreement” to prevent illegal exports of weaponry and to strengthen vigilance in the Malacca Strait. In May, both sides signed a “Trade and Investment Framework Agreement”.46

43 _{James Cotton, “Southeast Asia After 11 September,” Terrorism and Political Violence, vol.15, no.1} Spring 2003, pp.164-166.

44 _{Mahathir did not visit the US between 1994 and September 2001.}

James Cotton, pp.162-163.

46 _{The US and Malaysia signed free trade agreement, Agence France-Presse (AFP), May 11, 2004.} http://www.epochtimes.com/b5/4/5/11/n535707.html.

The US strategy has been to balance the power of China in the East Asia economic trade area through bilateral agreements. The counter-terrorism cooperation between the US and Thailand, the Philippines, Indonesia, and Malaysia represent movement towards this goal. There is, therefore, a very clear strategy of military and economic cooperation.

(2) US Competition and Cooperation with China

Many people have seen China as an essential engine of Asian economic growth.47 The US Administration has sought to increase its influence in trade negotiations and has used Singapore to extend trade relationships with ASEAN so that China would not continue to erode US power in the area.48 While China and ASEAN focused on achieving an ASEAN Plus One FTA, the US has had to deal with terrorism. In other words, the US had to focus of the goal of fighting terrorism as the immediate priority, although China’s rising status and influence threaten the US in the long run. 49

In 2001, when Bush Jr. became US President, he considered China as a “strategic competitor.” The Quadrennial Defense Review Report published in 2001 described China as a possible “competitor” with great resources.50 After September 11, the US changed their focus to terrorism, and the “China Threat Theory” was temporarily off the table. The US National Security Strategy, published in September 2002, set new national security priorities, the most important of which was the fight against terrorism. Many official statements such as: “the US is seeking a constructive relationship with China;” “America should welcome a strong, peaceful, and prosperous China;” “the US would be better to cooperate with China in fighting current war on terrorism and in promoting stability on the Korean peninsula and the future of Afghanistan,”51 suggest that the US no longer viewed China as a strategic competitor.

47_{See “China’s Improving Image Challenges U.S. in Asia”, The Washington Post, November 15th, 2003 A1} & A 15

48 _{Kurt M. Campbell and Michele E. Flournoy, To Prevail: An American Strategy for Campaign Against}

Terrorism (Washington DC: The CSIS: Press, 2001), p.271. US added the East Turkestan Islamic

Movement (ETIM) to the Department of State’s list of foreign terrorist organization in 2002.

49 _{Kurt M. Campbell and Yuki Tatsumi, “ In the Aftermath of the Storm: US Foreign Policy in the Wake of} 9/11 and its implications for the Asia-Pacific region,” Asia-Pacific Review, Vol., 9, No. 2, 2002. p. 40. 50

U.S. Department of Defense, Quadrennial Defense Review Report (Washington, D.C.: Department of Defense, 2001)

After 9/11, the US redefined its strategic view of China. Hence, the US appears to have adopted a softer attitude towards the China-led economic trading bloc with the purpose of countering China’s influence in a very subtle way. 52

V. Conclusion

According to Zoellick, there are important political purposes informing US economic policy in East Asia. He holds that US trade policy reflects the values of American democracy. He emphasizes that any trade agreement can never be a purely commercial treaty.53 It is true that trade policy cannot be separated from political and security policies. After 9/11, the US needed to gather as much foreign support as possible leading to a low-key strategy. However, this strategy may be temporary. In the future, when the counter-terrorism task has been completed or has made sufficient progress, the consequences of China’s rising influence could be put back onto the table as an important US strategic concern. Generally speaking, there are many factors that may change US policy toward China-led East Asia economic integration. Present, US policy represents its best interests in the face of the many uncertainties and shifting situations that emerged after 9/11.

52 _{Rommel C. Banlaoi, “Southeast Asian Perspectives on the Rise of China: Regional Security after 9/11,}

Parameters, Summer 2003, p.102.

53

Robert B. Zoellick, “Falling Behind on Free Trade,” The New York Times, April 14, 2002, p.4&13 Jeff Faux, “Fast Track to Trade Deficits: Mushrooming Foreign Debts Begs for Strategic Pause before Approving New Agreements, EPI Issue Brief, no. 170, November 27, 2001, p.1.