Screeria nigeria. Discussion on the use of diplomacy in regions of conflict. The center for strategic and International Studies today looked at the priorities for congress and the white house when it comes to u. S. Policy in the Asia Pacific Region. Topics included u. S. Relations with japan and china, Upcoming Elections in burma and taiwan. This is an hour. Good morning, happy new year. Happy year of the sheep. Im mike green, Senior Vice President for asia. Thank you all for coming on what is probably the first day of work for a lot of people, including, i think, most of us. Tomorrow Congress Comes into session, and we face a new world in washington. A republican congress, democratic president and so far, on issues from immigration to cuba policy there are signs that the new congress and the white house are going to be colliding with each other, politically and over policy. What we wanted to do today and in the short report we have produced is spotlight one area where bipartisan cooperation forming an agenda to move forward is not only possible but necessary. And thats in the area of policy toward the Asia Pacific Region. Which in washington, a very partisan town these days is probably one of the most bipartisan areas of Foreign Policy, unless it becomes corrupted bywzf÷ t disagreements over other areas, so we wanted in this report to try to spotlight issues and actions the administration and congress can take together to keep moving forward what president obama has called the pivot and others call the rebalance. A majority of americans in polls now consider asia to be the most important region in the world to u. S. Interests. We have done surveys of elites in the u. S. And in asia here in csis and support for the rebalance tobssn asia hasd nl over 90 favorable ratings among american experts which means a lot of republicans are behind the idea of focusing more on the asia pacific as well. Our surveys also shoxl however that within the region, while theres pretty robust support for china. There are real questions about weather it can be sustained. That showed up in our survey last sprirk and you hear it increasingly because the president is constrained by budget see questkwes sequestration and pulled into the conflicts in iraq and iran. So we think its critical and bracket kl that the congress we have done a series of nonpartisan, bipartisan dinners and round tables as we thought about this agenda and it seems clear to us that there is a lot of room to move forward together. The report outlines specific actions on china, defense policy in asia the korean prince, india and Southeast Asia, this was internally funded and generated, we did it on our own research budgets. And drew on the asia expertise we have at csis that runs the gamut in terms of regional functional expertise and policy back grouchbd. On my far left, on your far right, chris johnson, scott miller leads our work on business diplomacy here, victor shaw is the korea chair matt goodman is the chair of the intern5xhq1 political economy and the and ernie bauer, the Southeast Asia chair. Now we also want to introduce and welcome one new member of the team, who just arrived and starting this week, scott kennedy, who will be joining us starting this week the chinese economy, which is a terrific edition for us and were delighted to have him here. Im going to summarize the points from the report for you. And then and the questions ill let my colleagues elaborate on the different portions that they wrote. Let me begin with trade, because i think most of us would agree over the coming two years, perhaps the most important thing the United States can do to cement our longterm engagement in the Asia Pacific Region is to Trance Pacific Partnership and Pass Trade Promotion Authority which is constitutionally critical and then tpp itself. Our report recommends that]nfqs the president follow up on statements he made in december to thez 2 business round table stating that he was ready to move forward but thats got to continue and its got to broaden all the history of trade agreements in washington suggest that unless you have a high level sustained case being made to the American Public andqjj to the congress, you cant get these things done. The window is narrow most people think that an agreement has to be reached, primarily with japan, i think with japan right now, were talking economically insignificant areas of liberalization the tariff on auto parts in the u. S. , pork and things like that in japan. But politically charged. And with japan, we can break through and move forward with the other participants in the negotiations. In fact, with japan 95 of the tpp chapters, we have the common view that were trying to establish 21st century views between tokyo and washington. This is critical and to do that some movement on tradekco Promotion Authority is critical. And then get these through, most people think by the summer recess. Matt and scott in particular can elaborate on that. Its the most important part of the pivot. Tpp started in the Bush Administration expanded to more countries and really will be the defining element of the obama administrations asia policy, if we can get it done and as you have probably seen, senator mcconnell has said, this is one of the areas where potentially the white house and congress with Work Together well because republicans are strong promoters of free trade. On china chris and bonnie took the lead the prospects for a major break through in u. S. China relations a major redefinition of u. S. China relations in the region are small, i would argue are almost dangerous. But theres some stabilizing elements in the relationship that we think the Administration Needs to followthrough on with congressional support. In burglar the confidence building measures, the militarh to u military cbms agreed upon in beijing. We are disagreeing with china it appears on new institutions in asia, proposed to beijing at the end of the day, the recommendation in our report is we need to find a way to aline ourselves to ensure that this new institution is moving as closely as possible as the standards set by the existing banks, the world bank, and the abb. The other aspect highlighted is the importance of maintaining clear red lines with beijing, because we do have problems and they need to be managed skillfully, one highlighted in the report is the growing problem within the domestic chinese political economy, an area that scott will help us unbundle in the coming months. But china in the last few years has seen the investors in the,y l chinese economy as the demanders and china is holding the cards. Thats clearly not the case if you look at changing investments patterns by the u. S. And japan. But there needs to be some disciplining and the report recommends really putting energy into the bilateral investment committees between the u. S. And beijing. On defense policy, which i took the lead on with zack cooper, my colleague here, we had three basic recommendations which draw from reports we havea6n done recently about the pentagon and for the pentagon. We have argued forodd some time, its important for the administration to produce an east asia Strategic Report. Is we have done a piece which is in the war war quarrelly. The priority is listed for the rebalance change theyre in consistent. And congress is a bit confused. And so its going to be important, we think and members of congress, leading members have asked for this that there be a Strategic Report clarifying the priorities. In exchange, congress has usits work to do. A critical part of the military rebalance is reducing the pressure on okinawa, reducing the forces not just in northeast asia and in Southeast Asia and the ingd yang ocean ute liszing access to darwin, arrangements with the philippines, new facile is in guam, much of the cost of this reapliant is being born by our allies. Congress hasnt fully funded those and we think its time to move forward to can demonstrate our intent. And finally this is the hardest one on defense. Were coming down to crunch time over the next few years. We will at the current rate defense cuts and operational demands on u. S. Military start facing choices, do we invest in new capabilities what the pentagon calls acdp, advanced capabilities and deterrence programs, to invest in new capabilities to counter missile threats and Cyber Threats especially in the western pacific. Or do we assumption tan our traditional platforms like Aircraft Carrier and other groups that demonstrate american commitment and presence. The right answer is we do0ui k both. But were getting to the point where we have to choose. Thats not a point that will be missed by our allies. Sequestration is a large part of the problem. One way out of sequestration would be for the congress to pass a nonbinding budget resolution sometime in the spring, that]ufc sets defense spending above sequestration caps. The president might veto this, but it would lay the ground work for increasing defense spending in the reconciliation process which would be justified based on affjincreased revenue, and by the demands on u. S. Forces in the pacific and the capabilities in the pacific will be drawn down to deal with increasing demands anticipated in the middle east. On korea, youll all want to know about the interview and hacking against sony, victor cha did not do it. He has written quite a bit about it, though. The korea piece of this is that we have to keep enhancing tiber abilities particularly between the leg and the u. S. And the uk. Given the movement on condemning north korean Human Rights Violations finally in the u. N. , human rights should be a more central part of u. S. Policy towards north korea an area where the congress is likely to be quite supportive. And this one is hard, but it is strategically imperative for the United States in the next two years to work on improving japankorea relations, which are strained for reasons that are complex and have more to do with identity and politics than geo strategy that definitely complicate koreas Foreign Policy, our Foreign Policy and japans Foreign Policy. The administration has signaled there will be a try lateral information sharing agreement between japan and korea. So this is an area that congress can play a role in the Administration Needs to keep moving forward. On india, india isb part of the overall fabric of the strategic under Prime Minister moody theres potentially theres always going to be an issue. J[6z the new coach agreement moves frafrd. Carter knows all these issues very well. Congress can do its part. The india caucus ask more active. Fyw typically the 2015 elections coming up in myanmar or burma. More needs to be done with the new leader in jakarta, to institutionalize the new geneva partnership. Its time for president obama to go to vietnam. Not easy, because of human rights concerns. Tpp negotiations, but absolutely critical. It is possible to walk and chew gum at the same time, it is possible to engage strategically and address concerns in congress in particular will have with respect to human rights. And we need to support countries like the philippines, that are pursuing legal means through the tribunal to address chinas claim that the 9line defines chinese territorial rights in the South China Sea. These are some of the areas there are certainly more and my colleagues can elaborate. Where we think its practical, its consistent with what Republican Leaders and the white house has said they want to do. And where the American Public wants, clearly, bipartisan efforts to advance our interests in the region. Let me open it up now for questions. My colleagues will want to weigh in and answer specifics. We started the new year hopeful we think this agenda is realistic, and we hope that you will help ushah4÷. So please raise your hand, we have microphones and itm jp÷ can get to you quickly if you have a question or a recommendation. Please. i all rightwhen you suggest stretching sequestration to add more money for defense, i hope you also support keeping the 50 50 relation in the bca, budget control act between domestic and defense. Do you have a positionps oniz that . Ill speak only for myself, and to say how ultimately that 50 50 split is are resolved is beyond my pay grade. If we can keep the 50 50 sblit i wouldnt oppose that. But i think one of the big challenges ash carter is going to face is this tough tradeoff between investing in capabilities to sustained h maaqce in the future and engagement as well. And thats critical. And its critical enough that the congress ought the to table it. The president and the congress ought to debate it, the answer is a 50 50 split. I dont think anybody panel would object to that. Mynk thank you for doing this. I have two questions, first is about korea. I wonder, how does this feel like china is changing its view on korea. There are more you know preparation on chinas side if theres a collapse of you know, north korea and they will be more willing to accommodate a possible unification future for the korean people. And the second question with the election just concluded last november in taiwan. Theres some uncertainty developing in taiwan. Do you feel like issues will be a new concern for the u. S. . And what do you think about the medical parole of a president , a formal president , do you think there will be imp indication for the domestic politics . Thanks. Thank you nadya for the question. I do think that there is a potential that both of the parties in taiwan. In particular with the dpp. But theres still a lot that can be done in this period,io to so more arms sales, which of Course Congress would be involved in as well. They taiwan as you know is extremely interested and has recently announced it will be building its own submarines. And the United States could have a role to play in that and i think the United States should be bolstering taiwans participation in the international community. But in the runup to this election in taiwan, i think its important for the United States as i said to maintain consultations, so that china does not overreact to the potential election of the dpp president and at the same time i would say that the United States should remain neutral. On the koreachina question, let me just Say Something im sure chris will want to Say Something as well. so my sense is that, the chinese have a lot of indigestion when it comes to north korea. Its not an ulcer yet, but its certainly a very sour stomach and i dont think that has changed over the past quarter and i dont think its going to change over the next quarter. The South Koreans have been quite aggressive in trying to develop a strategic understanding with beijing, with the government on north korea. Its one of the reasons that hes been so enthusiastic about holding as many meetings, nfc ties, defense exchanges, to try to deepen that understanding. Apeckrpx we saw that they announced a tree trade agreement, which again i think is another sign that korea is trying to step into a space that they see opening up between china and dprk. Contrary to some perceptions, i dont think that the that doesnt mean the chinesen doesnt see it that way, im sure the chinese opportunity to pull South Koreans out of the threeway alines and so in that sense i feel like theyre winning at the game theyre playing. Whereas the reality is probably neither of them are winning but either of them are inching a little closer to their desired objective. Yay, i would agree with that as we have talk my own view is a lot of ink has been spilled about the issue of have they changed their policy, i think we would all agree at the fundamental level, theyre still trying to keep the North Koreans going, and i think its edging more toward an ulcer at this stage, and i think were going to see the same chinese approach, which is denying kim jongun a visit to beijing which is very significant. I dont see any former chinese leader going to korea. So the issue for me really isnt about change, its about the normalization of the relationship. I agree with everything bonney said but its one that my sense is that this issue will be back on the agenda, i think we should be doing everything we can to accrue a possible ddp victory. But i dont think the chinese are going to be able to help themselves in that regard. What will be interesting is to look the chinese made a deliberate decision to kind of forego their interests in the South China Sea or at least put it on the back burner what they focused on exclusively we look and see what they have been doing down there. It will be interesting to see. He is a man whose family suffered a lot in the process of democratizization. Hes afbs during his time in the presidency. And in the interests of democracy, in taiwan, i think its important for a new era where changes of government are not followed by vichb÷ dickive act act paying the get back to society, for taiwans longterm democracy, thats my own ivsview. On the election, i think its going to be important for the administration to be very disciplined. o0 t which appear to be an administration ea . Hit against it may not have been. But i think it would be very important Going Forward to put as a first and foremost priority for u. S. Policy respect for the democratic process. And there are ways to signal expectations with respect to cross state relations and the relations between washington and taipei. I think the administration has to be more careful and more disciplined than it was last time. Thats not easy. Taiwans Democratic Politics are not for the feint of heart. Theres lots of well i was going to say theres lots of stuff flying in the air and literally theres lots of stuff flying in the air. I think the administrations got to be very, very disciplined this time. Its important for our overall stance in the region. Thank you very much for the use of trying to maintain a bipart season approach to asia. My question is theres no real detailed treatment on the taiwan taiwanjapan relationships. We have issues in okinawa and be more complicated in oak now wankxa u politics. Raises history issues as a problematic thing. I wonder what your thoughts are in managing u. S. Japan relations over the next few years. Matt has graciously asked me to do the history question. And hell address things that vo numbers, although history does involve numbers, as you say its the 70th anniversary and its the anniversary of several other things the 21 demands. Prime minister abe will keep the previous apologies by then chief cabinet secretary and that is his own statement of remorse the model that i hear about, you probably too as well rusty, is the canberra speech, which everyone should read if youre interested in japan. Because it was really a very emotional and forthcoming disposition by Prime Minister abe before the Australian Parliament on what japan did to australia. Very emotional, very important for u. S. Australiaexcuse me for japan australia diplomatic and strategic ties. I think a lesson that the people around the Prime Minister and the Prime Minister himself will be taking away as they look at the 70th anniversary. Okinawa is going to be harder after the gubernatorial election. Im personally not convinced the new governor wants this to be the defining issue for a preeffect sure that has some economic challenges but its going to be harder. That is one of the reasons why i think its important for the u. S. Congress to begin were serious about lightening the burtd on the oak now wan people and aligning our forces more geographically and politically in a sustainable way. Obviously this is a report with recommendations for the u. S. Side of this story. By as the economics guy its hard not to say, from a japanese perspective, i think the most important thing they could do and the thing which abe could do which would have the greatest return on investment would be to get the Trance Pacific Partnership done and that means agreeing to, as mike said were very close on the substance the u. S. And japan need to reach an agreement on these final details. This morning anything else abe is trying to do, certainly in the5dgp economics sphere would have very powerful impact on japans economic prospects on its strategic position and i think on u. S. Japan relations. I think this is the thing that the u. S. Should be in the near term most focussed on because its the iron that is hottest in the fire right now that we could strike a deal very quickly, i think the negotiators are going to reengage later this month and i very much hope and i dont see why they shouldnt be able to reach an agreement and if abe is serious about economics being at the center of his agenda, and if president obamas serious about it being a part of his legacy, i very much hope and expect that they will reach an agreement at the beginning part of this year. I think the magic the imagine i believe agreement will be until now, every tree trade agreement we have done, as scott has explained has been preceded byehf. D trade promotional thorkts with one small jordan, right after 9 11 which is really not, you know, a unique case. The administration has decided this time to sort of move tpa and tpp sort of parallel, its asking a lot of our trade partners to trust us on tpa, and give their best deals, thats asking an awful lot, there arent many big issues left. But the ones that are there are stuck over this issue in a way politically over japan. My sense of the magic bullet would be that the president s initial volley in early december with the business round table about his commitment to getting tpa done is followed up with more engagement. Inxa tokyo they hear thissdfj not just from the administration, they start hearing from the republicans in congress. When they start hearing from the republican congress, we can get this done, then i think the negotiations bilaterally will be much, much easier. So thats why scott and matt emphasized in this report, how important it is for this sustained high level campaign, not just a one off speech. But a real sustained campaign on tpp and tpa with the midwestern public, with key interest groups, especially with the leadership in congress. I s have two questions concerning china. Al china is having a big diplomacy shift china also gave priority to its neighboring countries, so my question ispt how its going to affect u. S. Relations with asia, the second4dw÷ question is about chinese vice premiers rent comments hes saying that i couldnt remember the exact words, but its like to the effect that u. S. Is still the leader of the world. So whats the interpretation here. Thank you for the question. Yeah, the, you know, big diplomatic shift in chinese Foreign Policy was evidence in the president s recent speech to the socalled central foreign poll speech. In that speech and i think the subsequent things we have seen, it really is a reaffirmation of this notion that his leadership that china has decided to take a much more multidirectional Foreign Policy, and it was interesting in the speech that in terms of the batting order of prioritization we did put what that did call diplomacy ahead of major country relations, thus being u. S. China relations. Its not a shift and so on but these things get i think what it means and we mention this in the record, for our own administration and Congress Talks about using their economic leverage in the region. I think the administration has been slow to acknowledge this shift. To see that it is a major change in t w 9y they approach thing. They are going to respond to some kind of tit for tat manner and thats why we so strongly recommend in the trying to deepen our relationships with these people who are advising on these major issues. He has substantially changed the method of advisory inside the system as well now. Those the formal organs dont play the role that the day did under the previous administration. I saw it, i didnt see anything particularly new there, they frequently reaffirm this sort of position, it is interesting that someone at his level chose to do so, but i didnt find it surprising. G its very important because it does signal a number of things, more pro active. P ÷ really means great power Foreign Policy with a special characteristics. 40 i but the question remains, i think as to whether putting the periphery at the tom, really means a recognition of . Yn deterioration of chinese relations with the neighborhood, and therefore leading to an adjustment in chinese Foreign Policy Going Forward. What were seeing so far is chinas emphasis on economic integration and trying to give the neighbors economic incentives to connect them through the 21st Century Maritime silk road and the economic the traditional economic silk road to try to bind them more to chinas own development and in turn to assist8 q chinas development. This is not just about giving, its about getting. This is what china means by a win, winwin approach. I think the jurys still out on whether youre going to see a reduction in chinas more provocative policies particularly in the territorial dispute disputes, thats what the United States, i think, is particularly concerned about. ] ÷ we certainly dont want to see continued intimidation of chinas neighbors and i would agree with chris that it has been said before that the china doesnt want to push the United States out of the region. But it is important, i think at this particular juncture for a leader at that level to be saying, not only that the u. S. Remains the main superpower in the world but that china wants integrate itself into the prevailing international system. The devil is in the details. The Asian Infrastructure bank is going to be a critical test on whether or not china is going to adopt the rules and norms developed over the course of many year ss. I want to return to ttp both on the japan side and in relation to china. You and matt are very optimistic in terms of what is needed for the United States. There are some talk in tokyo that a Prime Minister cant go forward until the upper house elections later this spring. Is your view that this is realistic, or is that more of a block than is realistic to be thinking about . Secondly in terms of china a year ago at this time, there was much consideration in beijing about possibly joining tpp. Governor huntsman has resurrected as you have others. What in japan there is as much concern on tpp as we say there needs to be. Thanks. Well i can start and im sure others will have you, scott and chris. So theres always another election in japan. And, you know i dont think that that should be and i dont think it is an obstacle to japan and Prime Minister abe moving forward. As they say, theyre close, they could with a little bit of Political Capital on his side and i do think in the scheme of things, its not a huge amount of Political Capital that Prime Minister abe has to invest in this, in the scheme of things. He could get this done and there could be another election. He made the decision to join tpp against another house election. And that requiress a with this new mandate and with him having focused on economics as the f1 o right course, the only course for japan, i think that the iron is hot and it time to strike. Just to confirmwl i think they understand and probably agree that they need to be part of this system of rules thats being negotiated in tpp. I would expect eventually they will join something in the ÷foh region that is a i think based on a tpp agreement Going Forward, it may be called something different. I would agree with mat, that a 12 Party Negotiation like tpp, somebodys always holding an election. These things happen. More importantly, i think we have our own work to do here. Everyone, since the election, all the leaders, the u president , incoming majority leader mcconnell, speakser boehner, new chairman hatch all the leeders have said the right things. What matters now is what they do. And it is a fairly tricky process, particularly the president will need to manage his own partys politics of trade which are complicated and difficult. It would look the model is the trade act of 1988 which took about five months start to finish, and once again, you had a divided government you had a republican president in the last year of his term and democratic congress, so these5uu things can be done and i dont know if they should join tpp or something else. I know at apex immediatings at the chinese iyinitiative of discussing what is the what is the sort of the future of Asia Pacific Trade after the completion of the arsof agreement, constructive discussions thatf0 a commercial standpoint pretty obvious, but i wouldnt note the genuine interest on the part of the chinese. Right here in front. Thank you. I would be interested in the teams reflections or reactions to the question of wild cards, things you havent thought of that might come from outside the region or the United States. Let me just suggest three. The president will need to decide on keystone. If he decides no then that creates Energy Issues for canada and wheresr they mightzc kr export to, which might suit the chinese very nicely. But in a year of election canada, that creates an issue for americas closest ally. Second issue is a broad area of cyber. In a situation where there was a little more important from a or even creates a physical attack, traceable somewhere. What happened what happens . Because clearly there are various people in their discussions about how the internet should be governed, which india and china seem to be defining the stake holders . If theres further turbulence in the middle east. Or if russia starts to create problems with the world is trying to figure out russia and china. Im just suggesting there maynqgitt others that you thought or going to write about, thank you. We every january, the last few januarys we have all gathered here to do an exercise we call asia forecasting. Bf n what will happen to japan korea. U. S. India and so forth. And well start making predictions for 2015 about the chess board in asia. And then a second panel will start predicting or handicapping the prospectingss for international reform. Youre welcome to join, we put the questions u up we asked the audience for debate. We may have had a wild card session, im not sure well have to find a technological reason to put the wild cards up. In terms of wild cards, north korea is always a big one. Especially since theyre probably prepared for another nuclear test. And dont let crisesv a chance to escalate them. I think youre right to mention the middle east which will exacerbate the problems in the asia pafblg. The pacific kmangd stretches to southwest asia. So these could all affect asia and then historically, the last two years of administrations on asia, are not often very good. George Herbert Walker bush on an unfortunate business Prime Minister bill clinton, bill clinton in his last two years had the famous japan passing where he traveled to china. In all three cases the problem was political band wit at home. You know, when youre in your final years, its pretty tired, a lot of the strategic heavyweights who started the administration are gone. Some talented people come in. You spend a lot more time dealing with the race to succeed you. So these wild cards could have an even bigger impact filibustered enough so we can hear a few more. Yeah. Ill touch on a couple that werent directly called about in the report but southwest asia related. You talked about energy and oil prices spiraling down could play in a couple of ways. For one, import bill drops dramatically, the import bill is part of the reason they put up a lot of trade measures that impaired u. S. india trade in the last couple years. There might be reduce pressure to slow down their import bill. That would be good for u. S. india relations. The impetus behind Economic Reforms in indy could be reduced somewhat if thatuyj helps to repair the economy. For south asia of course, you have two others that are closely related. One is the u. S. Changing presence in afghanistan. If not even as a result of that but if you see an increase in terror attacks on india, the perception in del li right now is that it will play a bigger role including cross border to india. Whether its directly related or not, there will be a perception that it could contribute tou s g match we talked about we need toduy collaborate more closely with india on afghanistan. We have a trilateral but it hasnt been meeting as often as it should. The last wild card ill say in south asia is pakistan. The Pakistan Military i just did a lecture tour across india and they continue to press on why does america continue to support the government in pakistan. Dating back six months or longer, the Pakistan Military has had a successful military campaign against insurgence on its own territory. That has only escalated. U. S. india relations its a strange lens. If they continue and is successful on its own domestic war on terror, they want to help to support that, which by its nature would push us away from india. Afghanistan and pakistan are a couple of i mean, afghanistan i dont think anybody would call that a wild card one of the biggest issues in world foreign policies. Pakistan is another. Ernie, since there are never any wild cards in Southeast Asia everyday is just boring and we you know, we always know exactly what to expect. Exactly. I think Southeast Asia will surprise us this year. I would look to thailand. Thailand is a powder zb8ykeg, i think politically. The coup , government, the military government said they cant do elections this year as they had hoped to do and probably will do them in 2016. I personally believe they wont do those until other events that i wish we could talk about probably not on tv happen. But i think the thais are getting fed up. The economy is not performing at the level it should. And when the Business Community turns against the government or starts to have worries about it i think we should be