Closer Thai-China ties will not risk US security link

Significance Both the Thai and Chinese militaries are participating. The Thai junta -- keen to bolster strategic cooperation with Beijing and to attract Chinese infrastructure investment -- has made much of Chinese participation in the exercise, to the consternation of Japan and Thailand's long-standing treaty ally the United States. Beijing, for its part, seeks to build alliances in South-east Asia and capitalise on Thailand's market and investment opportunities. Impacts US firms are unlikely to be marginalised in the Thai market, even though their presence in Thailand is limited. Security relations will dominate US-Thai relations for the foreseeable future. Japan will continue to boost security relations with South-east Asian partners.

Subject South-east Asian defence budgets. Significance The pressure of responding to the COVID-19 pandemic is prompting many South-east Asian governments to cut defence spending and postpone or cancel new arms acquisitions. Meanwhile, China and the United States continue to vie for influence in the region. Impacts Piracy attacks will increase across the region as socio-economic distress rises and budgets for navies and coast guards fall. ASEAN unity will fracture as tensions among member states increase. Economic problems will cause political instability across South-east Asia, possibly even leading to military coups in certain countries.


Subject Development of South-east Asian coastguards and their geopolitical implications. Significance Senior coastguard officers from Australia, Japan, the Philippines and the United States will meet later this year to discuss cooperation and capacity-building -- and the assertive actions of China's coastguard in littoral waters. With external partners' support, South-east Asian states are developing their coastguards to fight crime and assert maritime territorial claims. Impacts Fishing activities will probably trigger spats between South-east Asian and China's coastguards. Gradually, inter-operability between South-east Asian coastguards will expand. Tokyo and Washington will use coastguards to deepen ties with South-east Asian countries. There could be frictions between Indonesia's and Malaysia's coastguards over waters around Ambalat.


Significance US policymakers feel there is sufficient support for the United States elsewhere in the Philippine government and population to erode Duterte's threats to unravel the alliance. Nonetheless, Washington is considering alternative South-east Asian partners. Impacts Japan's role as an interlocutor between Manila and Washington on security issues could grow. Duterte might meet outgoing President Barack Obama in Peru at the November 19-20 APEC meeting. However, should this occur, it is unlikely to improve Philippine-US ties much if at all. Rumours of human rights abuses in the Philippines will anger US members of Congress, further deteriorating ties.


Significance The preferential US trade programme faces renewal or lapse by December 31. South-east Asia’s economies are structured to take advantage of the GSP and many of the products exported to the United States under GSP (such as light manufactures and seafood) are important for South-east Asia’s supply chains. Impacts Vietnam may make another application for inclusion in the US GSP programme. The more authoritarian South-east Asian countries could find it easier to gain US GSP preferences under Trump. The Trump administration could use the GSP as a bargaining chip in trade negotiations or renegotiations.


Subject Headwinds for US-ASEAN trade. Significance The Office of the United States Trade Representative (USTR) last month withdrew ‘developing country’ status from several countries, including half the ASEAN states. This 'developing' status to a large extent protects countries that have it from US investigations into their trade practices. Impacts US companies will file more trade complaints against their South-east Asian rivals because the threshold for such complaints will be lower. More US tariffs on goods from ASEAN countries would increase the cost of doing business for South-east Asia. South-east Asian public opinion towards the United States will deteriorate.


Significance The kings of Malaysia and Thailand, respectively, are at the centre of attention amid their countries’ ongoing political crises. The pandemic-related state of emergency declared by Malaysia’s king has eased pressure on the beleaguered prime minister. Pro-democracy protesters in Thailand continue to press for reform of the country’s monarchy. Impacts Under President Joe Biden, the United States will urge several South-east Asian countries to improve their human rights records. Malaysia’s premier will face pressure from governing partners and opponents alike to call snap elections as soon as the emergency ends. The Thai establishment will steadfastly resist calls for monarchical reform.


Significance The load was primarily symbolic, of Hanoi’s response to pressure from Washington to reduce Vietnam's 38.3-billion-dollar (2017) trade surplus with the United States, although there are likely to be further imports in this sector, including of soybeans. However, US-Vietnam trade ties face tensions: Vietnam is disillusioned that President Donald Trump withdrew from the Trans-Pacific Partnership (TPP); his subsequent reaffirmation of that decision reinforces Hanoi’s nervousness that the Trump administration will continue to take a hard line on trade. Impacts The Trump team will likely be keen to explore further new arms sales opportunities in Vietnam. Despite stronger Vietnam-Russia ties, Moscow will mostly be an arms source: Russia has limited money and resources for South-east Asia. Further Vietnamese regulatory reform and infrastructure improvements could reduce Vietnam’s US trade surplus. For the foreseeable future, India will lag China in deepening South-east Asian ties economically and militarily.


Subject The outlook for the current migrant crisis in South-east Asia. Significance Over the last three weeks, an estimated 25,000 Rohingya and Bangladeshi migrants have sought to reach Indonesia and Malaysia, on boats mostly abandoned by people smugglers based in Myanmar, Bangladesh and Thailand. Malaysia and Indonesia have received around 3,000 such migrants so far. Seeking a solution, a regional summit will be held in Bangkok on May 29, including representatives from Myanmar, Australia and the United States. Meanwhile, suspected people-smuggling camps discovered in Thailand and Malaysia in May have led to allegations of official complicity. Impacts Amid allegations of official complicity in people smuggling and trafficking, scrutiny of the Thai and Malaysian governments will increase. Discovery of further people smuggling camps in other ASEAN countries, and allegations of official complicity, are possible. Capacity-building for ASEAN states' police forces, and ASEAN itself, is needed to counter people smuggling and trafficking. South-east Asian countries will enhance maritime patrols to search for other migrants.


Subject The outlook for the growing Japan-Philippines defence partnership. Significance Japan-Philippines naval exercises will be held off Palawan, near the disputed Spratly islands, between June 22 and 26. Japan is fast becoming the Philippines' second-closest security partner after the United States. Security relations and the threat which Japan and the Philippines feel from China's growing maritime assertiveness were the focus of President Benigno 'Noynoy' Aquino's state visit to Japan between June 2 and 5, where he met Japanese Prime Minister Shinzo Abe. Impacts Japanese infrastructure investment in the Philippines will bolster Manila's development aims. Japanese (and US) support will spur the Philippines armed forces' modernisation, and their acquisition of defence equipment. A Japan-Philippines military basing deal is possible; if agreed, this would extend Japan's ASEAN-region influence, concerning Beijing.


Subject Piracy attacks in South-east Asia. Significance An incident of kidnapping for ransom in the Sulu Sea last week and a series of attacks on shipping in the Singapore Strait last month have refocused attention on the persistent problem of piracy in South-east Asia. The safe passage of shipping through the region’s waterways is crucial to global trade. Impacts South-east Asian states will respond to piracy outside the framework of ASEAN. The United States and Japan will take the lead in providing capacity-building support for regional coast guards and navies. Piracy in the region is unlikely to become conflated with the South China Sea dispute.


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