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Senate Approves Legislation to Strengthen U.S. Economic Ties with Indo-Pacific Region

The U.S. Senate on 4 December approved by unanimous consent the Asia Reassurance Initiative Act of 2018 (S. 2736), which reflects the upper chamber’s interest in the Indo-Pacific region. The chief co-sponsors  of the legislation were Sens. Cory Gardner (Republican-Colorado) and Ed Markey (Democrat-Massachusetts), the chairman and ranking member of the Senate Foreign Relations Subcommittee on East Asia, the Pacific and International Cybersecurity Policy. The bill attracted additional co-sponsors from both parties when it was approved by the Senate Foreign Relations Committee in October.

According to Sen. Gardner, “ARIA provides the U.S. a whole-of-government, long-term strategy in Asia that advances American national security interests, promotes American businesses and creates jobs through trade opportunities, and projects American values of respect for human rights and fundamental freedoms.” Sen. Markey added in a separate statement that “the rules-based international order is absolutely fundamental to global peace and security; but Asia, arguably the most consequential region for the United States, faces critical challenges such as non-proliferation, human rights, and respect for democratic values.”

Mainland China is clearly a key focus of the legislation. Section 203 of ARIA states that “it is the sense of Congress that the United States should welcome a decision by China to change course and pursue a responsible results-oriented relationship with the United States and engagement on global issues; encourage China to play a constructive role in the Indo-Pacific region and globally; and continue to call out Chinese actions that undermine the rules-based international system.” Committee passage of the bill had followed five subcommittee hearings, including one focused on the U.S.-mainland China relationship.  Following one hearing, Sen. Gardner noted that “for decades, U.S. policy was rooted in the belief that support for China’s rise and for its integration into the post-war international world order would liberalize China; contrary to our hopes, China expanded its power at the expense of the sovereignty of others.”

The legislation would authorise more than US$1.5 billion in new funds over the next five years for the State Department, the U.S. Agency for International Development and the U.S. Department of Defense. One source indicated that the US$1.5 billion amount came out of a 2017 bi-partisan proposal from the late Senate Armed Services Committee Chairman John McCain, who called for the establishment of an Asia-Pacific Stability Initiative to counter mainland China’s military build-up. It is worth mentioning in this regard that, under the U.S. federal budget system, authorisation by legislation is necessary to be able to justify spending money on a project but appropriation of specific amounts is also required before any funds can actually be spent.

A factsheet issued by Sen. Gardner divides the bill’s main elements into three sections: security interests, economic engagement and promotion of values. The economic engagement section clarifies how the bill would promote trade with all countries in the region. In addition to authorising bi-lateral and multi-lateral trade negotiations with Indo-Pacific nations, the legislation would encourage a robust U.S. commercial presence throughout the Indo-Pacific region to promote U.S. exports and additional trade facilitation efforts. The imposition of penalties on entities and governments engaged in the theft of U.S. intellectual property would also be authorised.

With regard to trade negotiations, the legislation specifies that Congress supports (i) multi-lateral, bi-lateral or regional trade agreements that increase U.S. employment and expand the economy; (ii) formal economic dialogues that include concrete, verifiable and measured outcomes; (iii) high-standard bi-lateral investment treaties between the United States and nations in the Indo-Pacific region; (vi) negotiations of the Trade in Services Agreement and the Environmental Goods Agreement that include several major Asian economies; and (v) the proactive, strategic and continuing high-level use of the Asia-Pacific Economic Cooperation forum, the East Asia Summit and the Group of 20 to pursue U.S. economic objectives in the Indo-Pacific region.

The legislation is less specific regarding the promotion of a robust U.S. commercial presence, as it simply encourages the president to produce a robust and comprehensive trade capacity building and trade facilitation strategy, including by levelling the playing field for American companies competing in the Indo-Pacific region.

With respect to intellectual property, the legislation singles out mainland China by requiring the president to submit a report to Congress describing U.S. government efforts to combat intellectual property rights violations and commercial cyber-enabled theft in the Indo-Pacific region, particularly in mainland China, and providing a country-by-country assessment of priority areas for U.S. engagement and capacity building assistance. The bill also urges the United States to elevate its relationship with the Association of Southeast Asian Nations to a full “strategic partnership” and would authorise the administration to negotiate a “comprehensive economic engagement framework” with ASEAN.

A companion bill, H.R. 6888, was introduced in the U.S. House of Representatives in late September by House Majority Leader Kevin McCarthy (Republican-California). ARIA backers in the Senate are urging the House to pass H.R. 6888 so that ARIA could become law in the current Congress. Whether this can be done in the few remaining legislative days of this Congress remains to be seen, but with such strong bi-partisan support ARIA may be well positioned for legislative action early in 2019.

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