Author: Shiro Armstrong, ANU
The economic architecture in East Asia and across the Pacific is rich and overlapping and has been built up over decades. Habits of cooperation and consensus building have been entrenched across the region but they are now challenged by geopolitical distrust and US–Chinese strategic competition.
At the core of regional architecture is ASEAN. The new Australian government has refocused on the intersection of its interests with those of ASEAN, as have other regional dialogue partners. But the ASEAN Outlook on the Indo-Pacific, the Regional Comprehensive Economic Partnership (RCEP) and other Southeast Asian initiatives are not yet integrated in a way that helps manage the broader fractures in global politics and economic governance.
In the world we live in, global powers are deploying politically motivated trade sanctions and unleashing industrial subsidies that shut down and divert trade in international markets. The multilateral rules-based system, on which the success of Asian economic cooperation has been based, doesn’t seem robust enough to constrain the ignoring of international rules and norms by big countries when they want. That describes the United States today. And China.
The United States is no longer able or willing to play the role of principal guarantor for the multilateral trading system as it did in the past. It has resorted to industrial subsidies in its CHIPS and Science Act, exactly what it pressured Japan over, and is now accusing China of doing. Worse still, its escalating economic sanctions on China and holding of the WTO’s rule-enforcement mechanism to ransom make it a source of considerable uncertainty internationally.
China’s use of economic coercion has put it on a collision course with the United States and its allies. China’s trade integration with regional partners is seen as a vulnerability by some governments and commentators. But open and contestable markets blunt the effect of intervening in markets for political or economic gain by providing alternative markets and suppliers.
Multilateral rules constrain the use of raw economic power and blunt the costs of such interventions. A top priority is to work out how to strengthen them.
On this, leadership must come from East Asia where the major global geopolitical, economic and security fault lines lie.
The first regional priority is to ensure the United States remains committed to the Western Pacific to help constrain Chinese assertiveness. But a zero-sum approach of containment or decoupling will end in a poorer and less secure world.
The US alliance framework remains the bedrock of Australian, Japanese and regional security and stability. US alliances with Australia, Japan, Singapore and South Korea, US bases in Japan, joint facilities in Australia and now the Australia–United Kingdom–United States (AUKUS) trilateral agreement lock the United States into the defence of the Western Pacific. But it is through economic engagement that the region needs to entrench US interests in rule-making in Asia.
A comprehensive regional security framework has to be based upon economic interdependence, multilateralism and contestable markets that diffuse power. It also needs to emphasise security cooperation and the primacy of peaceful resolution of political differences. It transcends zero-sum balance of power calculations through multipolarity in favour of positive-sum engagement.
No one country, however big, ought to dominate the Asia Pacific or Indo-Pacific and multilateral principles can set terms of engagement that help to constrain the exercise of raw political power.
The 1976 Treaty of Amity and Cooperation (TAC) in Southeast Asia, signed at the first ASEAN Summit, provides a template for relations between countries beyond ASEAN and their dialogue partners that have signed onto these principles—Australia, China, India, Japan, South Korea, New Zealand and the United States.
ASEAN’s TAC includes the principles of mutual respect for the independence, sovereignty, equality, territorial integrity and national identity of all nations; the right of every state to lead its national existence free from external interference, subversion, or coercion; non-interference in the internal affairs of one another; settlement of differences or disputes by peaceful manner; renunciation of the threat or use of force; and effective cooperation among themselves.
A comprehensive regional security arrangement that affirms commitment to multilateral economic rules and signs on to TAC principles will help secure a free, open, inclusive, prosperous and politically stable region. This frames a vision for the region in which ASEAN dialogue partners would shape their future in a way that references principles of crucial importance to our prosperity and security.
Russia’s invasion of Ukraine brings increased uncertainty to the global order. Energy security now has to be managed alongside the energy transition towards net zero emissions. Asian cooperation would help facilitate both. The pandemic reminds us all that no country is immune from global problems. The transition to a stable multipolar regional order will require commitment to security that integrates national security, economic and environmental sustainability objectives. A broader conception of security beyond military security is needed in an interdependent world.
Seeking regional multilateralisation of the TAC over time will entrench habits of cooperation, mutual respect, equal treatment and sustainability. Established regional and global arrangements encompass different dimensions of those principles and they need to be strengthened and entrenched. TAC principles are core to economic, political and strategic engagement and comprehensive security in the region. That also means strong undertakings on sustainability. The process towards achieving a multilateralised TAC would provide an organising vision for regional cooperation that would involve trust, confidence- and institution-building around a comprehensive regional security agenda that is as important as the end-goal itself.
A multilateralised TAC would be a game-changing geopolitical initiative in Asia of the same kind that the signing of the Atlantic Charter was in 1941.
Shiro Armstrong is Associate Professor and Director of the Australia-Japan Research Centre and the East Asian Bureau of Economic Research in the Crawford School of Public Policy at The Australian National University.