ASEAN: The nexus of the Indo-Pacific

Thank you, Tom. Good afternoon ladies and gentlemen, and thank you to Kevin Rudd, the President of the Asia Society Policy Institute, and yes, I have read Kevin's Not for the Faint-hearted. I have a very well-thumbed copy, but I have to admit, I can't wait for the sequel.

Excellencies, our Ambassador to the UN, Gillian Bird, it is an absolute pleasure to be addressing the Asia Society again in New York, following my most recent address last September – although the weather conditions are somewhat different, and coming from Perth, this is what I call a storm!

Just over a week ago, the leaders of our two nations met in Washington. They reaffirmed the importance of our Alliance and the strengthened obligation on Americans and Australians, at this moment in history, to defend and advance a free, open and prosperous rules-based order in the Indo-Pacific.

For generations, our two nations have striven for those goals – in the councils of states, in the international contest of ideas, and, when necessary, on the battlefield.

This mission is continuing.

As we look to the future, we must build on our long history of close collaboration, and focus afresh on supporting our region, the Indo Pacific, and in particular on maintaining an Indo-Pacific that is stable and prosperous. It's a region of great opportunity.

As the US's National Security Statement attests, it is "the most populous and economically dynamic part of the world." However, it also faces some challenges. And as you have said in the past Kevin, the Indo-Pacific's economic dynamism brings with it a heightened strategic contest that asks new questions of diplomacy.

Before I address how we in Australia plan to answer those questions, a few words on the term "Indo-Pacific". The term reflects the strategic and economic reality that the most important part of the world for Australia is embraced by these two oceans. It also reflects the reality that India is an increasingly significant feature of our outlook. That flows naturally from India's status as a major player in our region and one of the fastest growing economies in the world.

And for me, as a resident of Western Australia, it is only natural to consider the important role of the Indian Ocean nations as well as the Asia Pacific. The Indo-Pacific is the context through which Australia is shaping its approach to the region.

Last November, the Australian Government published our Foreign Policy White Paper – it's the framework that we expect to guide our international engagement for the next decade and beyond. The White Paper identifies that strengthening, promoting and defending the international rules-based order in the Indo-Pacific is our highest priority. The importance of the order – underpinned by the evolving network of alliances, treaties, institutions and conventions under international law - cannot be overstated.

This rules-based order was developed after the horrors of World War II, when there was a collective will to ensure that we should never again descend into the dark years of global conflict. There have been times when the order has been under direct challenge. It has proven resilient however, and the peace it has largely brought to the world has seen the greatest expansion of prosperity in human history, with hundreds of millions lifted out of poverty and misery.

We need to strengthen and defend the existing order so individual countries, and the region as a whole, continue to rise economically and peacefully. The rules-based order seeks to regulate rivalries and behaviour, and ensure countries compete fairly and in a way that doesn't threaten others or destabilise the region. It protects the rights of small and large countries by preventing stronger powers from arbitrarily imposing their will on less powerful countries. The rules-based order provides mechanisms that allow states to settle disputes amicably, through dialogue and according to agreed processes.

For Australia, such a use of the rules-based system has come to a successful conclusion this week. I signed yesterday a treaty for the permanent delimitation of our maritime boundary with Timor-Leste.

We achieved agreement on this new maritime boundary following a conciliation process provided for under the United Nations Convention on the Law of the Sea – but the first compulsory conciliation ever undertaken. Through this process, a dispute has become a settlement. A disagreement with our neighbour has been satisfactorily concluded, and the rules-based order has again shown its value in regulating conduct between states.

We must nurture and strengthen this rules-based order. We need to collaborate and deploy our tools of diplomacy and statecraft to reinforce an international system that has served our interests, and those of so many nations in our Indo-Pacific region, and beyond. In doing so, the role of the US in our region is vital. Australia seeks to encourage and support the strongest possible economic and security engagement by the US in the region. This must be a defining feature of the next chapter of our Alliance.

This is complementary to Australia's close engagement with like-minded partners including Japan, the Republic of Korea and increasingly India – all countries which will play an important role in shaping the regional order. We also actively seek ways to work with China, itself a major Indo Pacific power and a vitally important comprehensive strategic partner for Australia.

A strong, stable and constructive relationship between the US and China is essential to the ongoing health and strength of the rules based order. While all these elements are important features of our engagement with the region as set out in our Foreign Policy White Paper, today I want to focus my remarks on our engagement – Australia's and America's – with Southeast Asia.

Australia's perspective is that the states of ASEAN are pivotal to any debate about the future of the Indo-Pacific. Geographically, diplomatically and strategically, ASEAN sits at the heart of this important region. It is the collective voice of Southeast Asia; it has helped develop significant parts of our rules-based order; and it convenes the most important diplomatic forums in which the great powers of the Indo Pacific meet, such as the East Asia Summit. ASEAN lies at the nexus of the Indo-Pacific.

Key trade routes that fuel the growth of Asia pass through the waterways of ASEAN nations. All the major economies in Asia, including China, Japan and South Korea, rely on the Strait of Malacca as the vital connection between the Pacific and Indian Oceans.

In other important ways, Southeast Asia exemplifies what is fascinating and compelling about the Indo-Pacific region. The states of ASEAN are comprised of fully industrialised and advanced economies, as well as nations that are still developing. The region has been the home to many great civilisations and empires, such as the Angkor Empire in Cambodia and the Pyu City States in Myanmar as well as the Thai monarchy which continues to this day.

Although ancient and more modern rivalries continue to shape interactions in the region, it is a great credit to ASEAN and its members that the region has remained relatively peaceful for decades. A mixture of continental and maritime nations, Southeast Asia's demography varies – some countries with populations in the hundreds of millions and others with a few million.

Even though there is great diversity in terms of the political and economic institutions of the 10 member states, ASEAN has bolstered its prosperity by driving economic integration in Southeast Asia - and in the process fostered peace by building habits of dialogue and collaboration.

ASEAN's most advanced economies have also prospered through their openness. Singapore, one of the most open economies globally, has transformed itself, as Lee Kuan Yew said, from Third World nation to First. We should learn the lessons of the benefits of economic openness and reflect on the pitfalls of protectionism.

Some of the risks of closing markets are very much in our minds today, as a dispute over steel and aluminium threatens to widen.

For the past 70 years, the US has been the most critically important supporter of openness and the rules-based system on international trade. This support has underwritten prosperity – in the US and globally. If the current dispute widens, and action leads to counter-action, we might see a downward spiral that could put at risk the open trading environment and that would harm us all.

We of course understand the concern for fairness in global trade, but the best response to unfair competition is to use the global enforcement mechanisms that are available, in particular the dispute settlement processes of the WTO.

Australia has long recognised the importance of the ASEAN region. As our Foreign Policy White Paper articulates, we have undertaken to strengthen this effort, and to ensure that Australia is a leading security, economic and development partner for Southeast Asia.

To do this, we will:

• continue to give priority to elevate the status of our bilateral relationships in Southeast Asia;
• focus our regional engagement on supporting a prosperous, outwardly-focused, stable and resilient Southeast Asia;
• enhance cooperation on transnational challenges like terrorism, crime and people smuggling;
• boost our defence engagement bilaterally and through ASEAN-led mechanisms;
• deepen trade and investment links, through concluding a high quality Regional Comprehensive Economic Partnership free trade agreement (RCEP), and building on our free trade agreements with Singapore, Thailand, Malaysia and ASEAN;
• partner with Southeast Asian countries on development programs that promote economic reform and inclusive growth, reduce poverty and address inequality; and
• increase the number of senior ministerial visits.

We also continue to be strong supporters of ASEAN's leadership and central role in the Indo-Pacific's most important regional architecture.

In particular, we strongly support the vision of ASEAN leadership to entrench the East Asia Summit as the region's key forum for discussing strategic challenges.

We have sponsored statements at successive Summits that focus the attention of countries in our region on the need to step up efforts in response to security threats such as terrorism financing and nuclear proliferation.

In this strengthened focus on ASEAN, a key event will occur in the next fortnight – when we host the region's leaders in Sydney for the ASEAN-Australia Special Summit; the first time we will have ASEAN's leaders together on our soil.

At the Summit, we will

• underline our continuing support for ASEAN and its regional centrality;
• emphasise ASEAN's important role in shaping the character of the Indo-Pacific;
• discuss how we can partner to respond to the region's challenges and engage with its opportunities; and
• develop stronger economic integration with this dynamic region.

ASEAN is strongest and most confident when its friends and partners work closely with it and are heavily engaged in the region.

The US has been a solid partner for ASEAN over many years.

I welcome the Trump Administration's strong focus on Southeast Asia and ASEAN, building on the work of past administrations.

That focus has been highlighted by high-level contact, for example:

• Vice President Pence visited Indonesia and the ASEAN Secretariat in April 2017;
• Secretary Tillerson hosted ASEAN Foreign Ministers in Washington in May;
• President Trump visited Vietnam and the Philippines in November for APEC and the East Asia Summit, as part of his broader trip to Asia, in fact the longest visit to Asia by a US President in more than 25 years; and
• Secretary Mattis has been very active in the region – to pick out a few specifics, the Secretary visited Singapore in June last year and Indonesia and Vietnam in January this year.

Engagement by the US builds regional resilience and gives countries the confidence and freedom to defend and champion a regional order governed by rules and international law, and where openness and inclusiveness remain the principles that characterise our interaction.

Ongoing American leadership and influence is needed to ensure that they endure. In turn, the US has much to gain from deep engagement with ASEAN nations. The ASEAN region is home to over 630 million people and is collectively equivalent to the fifth largest economy in the world.

ASEAN members' real GDP has more than doubled in the last two decades, and their growth continues to significantly outpace the global average. The number of middle class households across the ASEAN region is forecast to more than quadruple by 2030 to 161 million. This is driving mass urban development, expanding cities and a growing consumer class.

ASEAN's urban consumers have more discretionary spending power and a greater demand for premium products like cars, high quality food including beef and dairy, digital products, travel and education at leading global universities.

Regional economic integration is also powering ahead.

Much of this is being led by ASEAN through its building of the ASEAN Economic Community and its convening of the Regional Comprehensive Economic Partnership (RCEP) negotiations.

A strong and commercially credible RCEP would complement the Trans-Pacific Partnership 11 (TPP-11), of which Australia is a member.

Even without the US, the TPP-11 is a landmark trade and economic integration deal for the region that sets high quality rules and standards that will support trade and investment and job creation.

Together with a concluded RCEP, TPP is a pathway to further economic integration and growth for our region, including for the US if it so chooses.

A further mechanism to engage ASEAN is through infrastructure.

Later this year, I expect to formally open the Cao Lanh bridge in Vietnam. This 2 kilometre long bridge will directly benefit 5 million people, and it is estimated that 170,000 people will use it each day. It will be a symbol of Australia's support for Vietnam and ASEAN connectivity. In fact it was an initiative of Kevin Rudd and I'm pleased to see it through to completion.

Given the infrastructure demands in our region, I hope that Australia and the US can partner to deliver strategic infrastructure projects such as this in the future. The US has much to gain by strengthening its economic connections with Southeast Asia. In 2015, two-way trade between the US and ASEAN exceeded $270 billion US dollars. The US-ASEAN Business Council estimates that almost 42,000 companies across the US export to ASEAN. These exports directly and indirectly support more than half a million American jobs.

In 2015–16, 55,000 students from ASEAN countries studied in the US. All this boosts both the US economy and lifts the living standards of Americans. At the same time, US trade and investment flows help improve the efficiency, professional expertise and levels of innovation in ASEAN economies.

To date, American companies have created new jobs and even whole new industries, and new opportunities abound. There is a compelling story to tell of the importance of the US economy and the tremendous contribution it has made to the emergence of a rapidly growing, prosperous Southeast Asia.

It's a powerful narrative which is not being told frequently or persuasively enough. The enormous strength, the impact and the enduring character of deep economic engagement with the US must be better understood in Southeast Asia.

We all need to tell that story in a way that resonates across ASEAN.

Australia and the US want an Indo-Pacific that is open, prosperous and inclusive and where the rights of all states are respected.

The seven decades since the end of World War II have proven that a region that embraces these values will be more peaceful, richer and better integrated.

These are values worthy of our energy and advocacy.