On July 30, the White House released a statement announcing that U.S. Vice President Kamala Harris will pay a visit to Singapore and Vietnam this month. This makes Harris the highest-ranking Biden administration official to visit Asia and the first vice president ever to visit Hanoi. Although the White House has not specified either the exact dates or the specific agenda of the trip, it is expected to apply the final brushes of paint to Washington’s approach toward Southeast Asia, essentially defining the level of ASEAN centrality in Biden’s new-look “pivot to Asia.”
Harris’ visit follows a series of events – U.S. Defense Secretary Lloyd Austin’s recent trip to Singapore, Vietnam, and Philippines; the second Mekong-U.S Partnership ministerial meeting; and the U.S.-ASEAN Foreign Ministers’ Meeting – which have already covered defense partnerships, development support, and the regional/international challenges of COVID-19, climate change, human capital development, and the Myanmar crisis. Although the White House’s statement on Harris’ visit refers to these general topics of mutual interest, there are reasons to believe that this visit will deliver what previous ones failed to.
Harris’ visit to Singapore and Vietnam will shed light on the United States’ more active approach to the region – in particular, its focus on the digital economy and digital trade partnerships. In that case, then ASEAN will play a central role in the U.S. Asia-Pacific strategy.
Digital trade cooperation should top the agenda of Harris’ visit. Indeed, if the ultimate goal is to contain Chinese influence and maintain U.S. dominance in the Asia-Pacific, then strengthening the digital economy and trade partnerships should not be overlooked.
Why should promoting digital trade partnerships be placed high on the U.S. agenda? The first immediate reason lies in the proven ineffectiveness of the U.S. conventional approach: verbally criticizing China’s expansive territorial claims and conducting Freedom of Navigation Operations (FONOPs) in the South China Sea. The U.S. Navy has conducted regular FONOPs since 2013. Other allies like Australia, Japan, France ,and the United Kingdom have also occasionally joined the U.S. in these endeavors. While these efforts aim to reinforce norms of freedom of the high seas and deter Chinese aggression, they also pose a high risk of military confrontation, which is not to the benefit of any party.
It is important for the U.S. to recognize its natural disadvantage, being an ocean away, while China is ASEAN’s neighbor. No matter how hard the U.S. tries, it cannot beat China in terms of its military presence in the region. That is not to say that the U.S. should stop its FONOPs altogether; they are essential to secure U.S. physical influence in the region. But FONOPs are far from enough and it is high time to consider, as one observer put it recently, “better means.”
While the U.S. is busy pondering what those “better means” might be, China has been working diligently to win on another front: digital trade. Through the Digital Silk Road, which dates back to 2015, China has been expanding its influence over digital infrastructure as well as selling Chinese digital standards for cyberspace. There are two key aspects to the Digital Silk Road: First, the supply of internet connections through undersea cables and internet broadband; and second, the establishment of China’s BeiDou satellite navigation network as an alternative to the GPS system created by the U.S. government. If successfully implemented, the Digital Silk Road will set up a concrete base for Chinese influence over the world’s communications infrastructure.
One vivid example is the effective assertion of Chinese standards over blockchain, one of the most influential digital technologies. China is currently the world leader in blockchain developments; two-thirds of blockchain-related patents are of Chinese origin. In January 2019, claiming to deter criminals’ misuse of blockchain technology, the Cyberspace Administration of China passed the Regulation for Managing Blockchain Information Services. This regulation required blockchain companies to register through a “complete certification system,” demanded users to apply with their real identities, and allowed the CAC to store data, which essentially removes the anonymity feature that lies at the core of blockchain technology.
These actions clearly demonstrate the Chinese government’s appreciation of blockchain, and its intention to champion “de-intermediarization,”rather than the “decentralization” praised in the West. And it seems China has succeeded in promoting blockchain standards with Chinese characteristics. By October 2019, the CAC reported having certified 506 domestic companies that offer blockchain services in a diverse range of sectors, including law, e-commerce, health care, and cultural tourism. Considering that Alibaba, a champion of blockchain application with an active consumer base of up to 811 million globally, is registered with the CAC, we could already imagine the scale of Chinese blockchain standards being promoted and practiced. Meanwhile, the U.S. has yet to develop a national strategy for blockchain.
Moreover, undersea cables deliver 99 percent of the global data traffic and thus serve as the backbone of the internet. Looking at the density of submarine cables under the South China Sea, it is unquestionable that the U.S. should look to engage ASEAN partners in securing this important digital infrastructure and establishing liberal digital trade standards.
It is no longer sufficient for Washington to peripherally engage in ASEAN through the promotion and facilitation of e-commerce. It is time for the U.S. government to sketch a region-wide digital trade agenda, touching upon regulations over key digital technologies including artificial intelligence, blockchain, the internet of things, and 3D printing.
Finally, the U.S. should benefit economically from investing in digital trade in the Asia-Pacific. The region has been and will continue to be the hub of the digital boom. Asia is home to half of the world internet users. Some 94.2 percent of the population of the Asia-Pacific is covered by a 4G network, while 70.3 percent of the region’s 15-to-24-year-olds used the internet in 2019. The Asia-Pacific similarly leads the pack on e-commerce sales, with projected revenues of $2.45 trillion in 2020, tripling that of North America, which clocked $749 billion in e-commerce revenues the same year. It is estimated that the Asia-Pacific region alone accounted for 63 percent of global e-commerce sales last year.
Considering the fact that Facebook, YouTube, and WhatsApp are the top three most popular social media platforms, it won’t take long for the U.S. to regain its influence in the Asia-Pacific digital market, should the government truly commit to investing in the region’s customer base.
If the White House considers the possibility of an Asia-Pacific free trade agreement, it must go beyond what e-commerce chapters in the existing trade agreements cover. Inter alia, such an agreement should focus on the following: First, it should cover regulations governing emerging digital technologies like AI, blockchain, the internet of things, and 3D printing. Second, it should promote investment in and management of digital infrastructure, including 5G, cloud computing, Submarine Telecommunications Cable Systems, broadband, and semiconductor supply chains.
The agreement should focus on express shipments, cross-border data transmission, data innovations, open government data, and creating a U.S. competition policy for digital markets. Finally, the agreement should aim to create a safe online environment, and to differentiate between the U.S. commitment to freedom of speech and the Chinese tendency to filter content deemed to affect “national security.”
The recently signed Digital Economy Partnership Agreement between Singapore, Chile, and New Zealand and the Singapore-Australia Digital Economy Agreement – which have been credited for the ambitious incorporation of regulations for emerging technologies as well as for taking a flexible modular approach – could provide a good reference point for the U.S. digital trade agenda in the Asia-Pacific region.
ASEAN in general, and Singapore and Vietnam specifically, stand a good chance of becoming an essential part of a putative Digital Marshall Plan. Geographically, ASEAN sits at the heart of the Asia-Pacific, and its netizens lead the world in terms of both time spent online and social media use. Moreover, in pioneering the new generation of digital trade agreements, Singapore has laid the foundation for a U.S.-led Asia-Pacific free trade agreement.
Apart from its existing partners – New Zealand, Chile, and Australia – Singapore has been pursuing digital trade negotiations with South Korea, the U.K., and Vietnam. For its part, the U.S. has concluded a digital trade agreement with Japan. These countries, together with other digitally advanced ASEAN nations like Indonesia, Malaysia, Thailand, and the Philippines, will form a good base for future U.S. digital engagement in the Asia-Pacific.
Digital trade forms a crucial part of the Biden administration’s “pivot to Asia.” The U.S. government has described China as “the biggest geopolitical test of this century.” At the same time the U.S. has been underestimating its competitor and overlooking investments in an area that represents one of its core strengths: advanced digital technologies. It was not until the Biden administration that concrete investments in the United States’ digital potential were enacted. In February 2021, Biden signed the executive order to improve American production of semiconductors, pharmaceuticals, and other cutting-edge technologies, aiming to establish a “China-free” tech supply chain.
In June 2021, Biden and other G-7 leaders finally announced the long-waited global infrastructure alternative, Build Back Better World (B3W) Partnership, to counter Beijing’s Belt and Road Initiative. The same month, the Biden administration began seeking bipartisan support for investing $100 billion in an ambitious broadband infrastructure plan aiming to close the digital divide in rural America.
Given this momentum, it seems reasonable to expect that Kamala Harris’ trip will prioritize discussions on digital trade and lay the foundation for Washington’s digital trade policy in the region. Developing a free-trade agreement that addresses digital concerns should not be a “possibility,” but rather a “must-be” action during the trip of the highest-ranking Biden administration official to Asia.