POLICY

Southeast Asia’s Three Level Game

ISEAS-Yusof Ishak Institute, Singapore

April 25, 2016

Much of the success, or failure, of Japan’s new “proactive contribution to peace” security policy will be determined in maritime Southeast Asia. For this policy to achieve its goals, the Abe administration and its successors need to forge close, long-term security relations with like-concerned Southeast Asian states and recognize the centrality of ASEAN in Southeast Asian states’ foreign and security policy stances.

Fortunately for the proactively tasked security policymakers, Japan’s trade diplomacy approach to Southeast Asia offers a good model for modified replication. Over the last decade, Japan has pursued a three-level approach to its trade diplomacy in the region that has both recognized the centrality of ASEAN to many Southeast Asian states’ trade diplomacy, especially the poorer and more protectionist members, while achieving broader and deeper agreements outside of ASEAN with the wealthier and more open ones.

Recent Japanese trade diplomacy has actively engaged all ten Southeast Asian states through the ASEAN platform in two stages. First, Japan negotiated a comprehensive economic partnership agreement with ASEAN signed in 2008. From 2013, Japan also has been involved in the Regional Comprehensive Economic Partnership (RCEP) negotiations that seeks to elevate ASEAN’s separate trade agreements with China, Japan, South Korea, India, and Australia and New Zealand into a single East Asian agreement. Japan’s ASEAN-level trade diplomacy has two noteworthy elements that are wisely adopted for all interactions with ASEAN. First, the ASEAN-Japan Comprehensive Economic Partnership recognizes the economic development differences among ASEAN member states with the timelines and goods covered in the tariff schedules varying according to the level of economic development of the ASEAN member states. Second, ASEAN is leading the RCEP negotiations.

Japan’s bilateral trade diplomacy in Southeast Asia precedes these engagements with ASEAN and has focussed on negotiating deeper and broader agreements with the more like-minded and important Southeast Asian economies starting with the Japan-Singapore deal signed in 2002. Japan now has bilateral agreements with the six largest Southeast Asian economies – Indonesia, Thailand, Malaysia, Singapore, the Philippines, and Vietnam respectively by GDP size – that together host over 99% of Japan’s FDI stock in Southeast Asia. In contrast, China negotiated its trade agreement at the ASEAN level first and only negotiated bilateral agreements with Thailand and Singapore.

Finally, Japan has followed U.S. regional leadership and signed the U.S.-led mega-regional Trans-Pacific Partnership Agreement that presently includes four Southeast Asian states – Malaysia, Singapore, Vietnam and Brunei Darussalam respectively. Just as Japan’s bilateral agreements with six Southeast Asian economies are broader and deeper than the agreement Japan reached with ASEAN, the Trans-Pacific Partnership, if ratified, will hold Japan and the four Southeast Asian economies to commitments in new areas of trade.

This three-level approach of reducing regional inclusivity and increasing depth and scope of integration should be the approach Japan takes to deepening security relations in Southeast Asia with some signs that this is already happening. At the ASEAN level, Japan should limit itself to being a willing dialogue partner in the ASEAN-led East Asia Summit and ASEAN Defense Ministers+ process that involve the same eighteen states. Echoing the trade diplomacy experience, Japan should not be the public protagonist for changes of focus or institutional role of these bodies due to Southeast Asian fears of major power capture of these ASEAN-led bodies. Prime Minister Abe’s call for reform to the East Asia Summit in his 2014 keynote address to the Shangri-La Dialogue in Singapore stoked these deeply-rooted and widely held fears. Rather, Japan should support ASEAN member states and ASEAN chairs with similar interests in ASEAN-led institutions. Malaysia used its chairing of ASEAN in 2015 to push for changes to the East Asia Summit in line with Japan’s interests.

As in trade diplomacy, Japan should focus most of its efforts at the bilateral level among the Southeast Asian states with the most similar security concerns as Japan and the most to offer Japan in return for closer security ties. The recent agreement between the Philippines and Japan for the transfer of defence equipment, the first with a Southeast Asian state, and the invitation for a Japanese Maritime Self Defense Force vessel to visit Vietnam’s Cam Rahn Bay are just two signs of how much faster and deeper security cooperation in sensitive areas can proceed at the bilateral level. Japan’s 2014 easing of its decades-old ban on arms exports could further deepen bilateral defense ties if and when Southeast Asian militaries purchase (or lease) Japanese equipment. The Philippines, Vietnam, Malaysia, Indonesia and Singapore (the same six that Japan has bilateral trade deals with) are the most promising bilateral partners.

Finally, echoing the Trans-Pacific Partnership, Japan could leverage its alliance relationship with the United States and the alliance’s role as a main pillar of regional security and stability to develop minilateral cooperation mechanisms with the U.S. and willing Southeast Asian states. Last year’s trilateral war-gaming exercise between the U.S., Japan and the Philippines in the waters near Palawan in the South China Sea is a good example of this as is the participation of Japanese and Australian officials in workshops for the preparation of Balikatan 2016, the largest annual U.S.-Philippine military exercise.

Over the last half-century, Japan’s trade and investment flows to and from Southeast Asia have been vital for Japanese and regional security, something long recognised by security planners in Japan. Today, as Japan’s security environment grows more severe and Japanese security planners seek closer security relations in the region, they should also recognise that Japan’s trade diplomacy provides them a good model to achieve these. Officials at the Ministry of Defense in Ichigaya, on their way to Southeast Asia, should first head over to the Ministry of Economy Trade and Industry in Kasumigaseki.

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