[Senate Prints 113-24]
[From the U.S. Government Publishing Office]


113th Congress  }                                           {   S. Prt.
  2d Session    }          COMMITTEE PRINT                  {    113-24
_______________________________________________________________________
 
                      RE-BALANCING THE REBALANCE: 

                  RESOURCING U.S. DIPLOMATIC STRATEGY 

                       IN THE ASIA-PACIFIC REGION 

                               __________

                        A MAJORITY STAFF REPORT

                      PREPARED FOR THE USE OF THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                    One Hundred Thirteenth Congress

                             Second Session

                             April 17, 2014
                                     
                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


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                COMMITTEE ON FOREIGN RELATIONS         

             ROBERT MENENDEZ, New Jersey, Chairman        
BARBARA BOXER, California            BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire        MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware       RON JOHNSON, Wisconsin
RICHARD J. DURBIN, Illinois          JEFF FLAKE, Arizona
TOM UDALL, New Mexico                JOHN McCAIN, Arizona
CHRISTOPHER MURPHY, Connecticut      JOHN BARRASSO, Wyoming
TIM KAINE, Virginia                  RAND PAUL, Kentucky
EDWARD J. MARKEY, Massachusetts
               Daniel E. O'Brien, Staff Director        
        Lester E. Munson III, Republican Staff Director        

                             (ii)          



                            C O N T E N T S

                              ----------                              
                                                                   Page
  Letter of Transmittal..........................................     v
  Executive Summary..............................................     1
  Recommendations................................................     3
  Development of the Rebalance...................................     7
  Resourcing of the Rebalance....................................     8
    Diplomatic Engagement........................................     9
    Public Diplomacy.............................................    11
    Economic Statecraft..........................................    13
    Development Partnerships.....................................    16
    Regional Architecture........................................    17
    Partner Capacity Building....................................    19
    Civil Society and Human Rights...............................    20
  China and the Rebalance........................................    21
  Implementation of the Rebalance................................    23
  Acknowledgements...............................................    27

                                 (iii)
?

                         LETTER OF TRANSMITTAL

                              ----------                              

                              United States Senate,
                            Committee on Foreign Relations,
                                    Washington, DC, April 17, 2014.
    Dear Colleagues: This report by the committee's majority 
staff examines the progress made on the non-military elements 
of the Obama administration's policy to pursue a strategic 
rebalance towards the Asia-Pacific region.
    As Chairman of this committee, I believe that we have a 
duty and responsibility to assure national security resources 
are allocated efficiently and effectively to address U.S. 
foreign policy priorities--and to promote the time, effort and 
attention needed to safeguard our security and prosperity and 
advance our values. Given its significance for U.S. security, 
economic, political and diplomatic interests, a successful 
rebalance must underscore an enduring U.S. commitment to the 
Asia-Pacific region, and do so across the full range of U.S. 
Government activities.
    As this report finds, despite progress in some areas, 
implementation of the rebalance thus far has been uneven, which 
creates the risk that the rebalance may well end up as less 
than the sum of its parts. This report provides additional 
insight and perspective on the rebalance, and recommendations 
on how to properly resource and implement the rebalance to meet 
its strategic goals of enhancing prosperity, security, 
democratic values and human development in the Asia-Pacific 
region.
            Sincerely,
                                           Robert Menendez,
                                                          Chairman.

                                  (v)


                      RE-BALANCING THE REBALANCE:
                  RESOURCING U.S. DIPLOMATIC STRATEGY
                       IN THE ASIA-PACIFIC REGION

                              ----------                              


                           Executive Summary

    In 1900, then Secretary of State John Hay declared that 
``the Mediterranean is the ocean of the past, the Atlantic the 
ocean of the present, and the Pacific is the ocean of the 
future.'' Over 100 years later, his words appear more prescient 
than ever. The economies of the Asia-Pacific region are 
increasingly important markets for U.S. exports of manufactured 
goods and natural resources. At the same time, an ever-larger 
proportion of global trade is passing through the region's sea 
lanes, underscoring the continued need for the United States to 
help maintain maritime security and promote regional stability. 
The economic and strategic implications are clear: our future 
prosperity and security are intimately entwined with the 
prosperity and security of the Asia-Pacific region, and U.S. 
Government policy and resources must reflect this reality.
    The Obama administration recognized this need when it 
committed to ``rebalance'' U.S. Government attention and 
resources for the Asia-Pacific region. The strategy intends to 
strengthen U.S. economic, diplomatic, and security engagement 
throughout the region, both bilaterally and multilaterally, 
with a coordinated, ``whole-of-government'' approach to policy 
implementation. In concept, the rebalance stands out as one of 
the Obama administration's most far-sighted and ambitious 
foreign policy initiatives.
    The United States has successfully moved forward with the 
initial phases of implementing the military aspects of the 
rebalance. But given the broader strategic and policy goals, it 
is essential that the non-military elements also move forward 
with equal speed and weight. An ``unbalanced'' or under-
resourced approach to the rebalance threatens to undermine the 
goals of the policy and, consequently, the prospects for 
greater prosperity and security in both the Asia-Pacific region 
and the United States.
    The Senate Foreign Relations Committee has a duty and 
responsibility to ensure that resources are allocated 
efficiently, effectively and appropriately across all U.S. 
foreign policy priorities, and to promote the time, attention 
and focus needed by the U.S. Government on critical but under-
resourced areas of U.S. foreign and national security policy, 
including, first and foremost, Western Hemisphere affairs and 
the need for additional emphasis on economic statecraft in the 
Western Hemisphere. The Asia-Pacific region is significant for 
U.S. security, economic, political, and diplomatic interests, 
and the intent of this report is to provide additional insight 
and policy perspective on the rebalance in the context of this 
broader range of global obligations and commitments vital to 
U.S. national security interests.
    To that end, the report addresses the question of how to 
best align ends, ways and means across the non-military aspects 
of the rebalance. It provides recommendations for how the 
administration--and Congress--can help address perceptions 
(some fair, others less so) of a lack of progress on the 
diplomatic, economic, and civil society elements of the 
rebalance. While due to the nature of the committee's 
jurisdiction in the Senate this report does not go into detail 
on further developing our military alliances in the region, it 
encourages continued progress in upgrading our alliances with 
Japan, the Republic of Korea, Australia, Thailand, and the 
Philippines. The report also recognizes that the rebalance 
policy necessarily starts with our alliances and that renewing 
and refurbishing those alliances to meet the challenges of the 
21st century must be a cornerstone of U.S. policy in the 
region.
    The methods of policy execution are just as important as 
the results: how a policy is pursued and perceived can impact 
its success as much as the actual mechanics of its 
implementation. To succeed, the rebalance must first address 
how resources are allocated within the U.S. Government, and 
then how they are deployed across the region. Some progress has 
been made. Congress anticipated the need to rebalance when it 
encouraged creation of the position of U.S. Ambassador to 
ASEAN; the State Department has created new diplomatic and 
assistance programs in the region, such as the Lower Mekong 
Initiative and the Asia-Pacific Strategic Engagement 
Initiative; the U.S. Government joined the East Asia Summit in 
2011; and the U.S. Trade Representative is pursuing the 
expansion and completion of the Trans-Pacific Partnership 
multilateral trade agreement, as well as several bilateral 
investment treaties. Furthermore, trade promotion bodies like 
the Export-Import Bank, Overseas Private Investment 
Corporation, and U.S. Trade and Development Agency have 
increased their financial engagement with the region.
    Nonetheless, the State Department has not substantially 
increased diplomatic engagement resources to its Bureau of East 
Asian and Pacific Affairs. Department of Commerce staffing 
levels have not significantly increased, hindering the ability 
of U.S. businesses to take full advantage of new prospects. 
U.S. development assistance to the region, which saw a modest 
increase in the administration's FY 2015 budget proposal, is 
still below levels from several years ago, and the U.S. 
development approach needs updating and upgrading.
    In contrast, the Department of Defense has moved rapidly 
and with an influx of resources. Definitive plans to move new 
assets into the region include 2,500 Marines in Darwin, 
Australia, an additional army battalion in South Korea, 2 
missile defense destroyers to Japan, up to 4 Littoral Combat 
Ships in Singapore, as well as likely increased troop rotations 
in the Philippines and enhanced defense cooperation with 
Vietnam, Malaysia and others. The Department of Defense has 
moved more quickly and more coherently to rebalance resources 
than its far smaller civilian counterparts.
    While most governments have expressed support for greater 
U.S. engagement in the region, the strategy is currently 
perceived as primarily a military strategy, a perception 
reinforced by the under-resourcing of the civilian components. 
As a result, some countries in the region see the rebalance as 
an attempt to contain a rising China, which may limit their 
willingness to deepen cooperation and coordination with the 
United States. As the United States considers how to more fully 
shape and articulate the public diplomacy elements of the 
rebalance, it should make clear that the policy is about 
broadening U.S. engagement, not containing China; the rebalance 
seeks to expand economic growth, ensure regional security, and 
improve human welfare for the benefit of all, not the detriment 
of one.
    Congress must also do its part communicating to its 
domestic constituents and global counterparts the benefits of 
greater U.S. engagement with the Asia-Pacific region. 
Domestically, the case must be made that national security 
spending is not limited to our military but extends to the 
monies we spend on diplomacy and development efforts, which can 
help prevent situations that might otherwise require the use of 
our armed forces. In addition, sufficiently resourcing and 
implementing a successful rebalance will require new 
authorizations and appropriations from Congress. As recent 
events in Europe and the Middle East have demonstrated, any 
efforts by the administration to shift resources and monies 
from other regions to the Asia-Pacific can only go so far. 
Moreover, considering that the United States has vital 
interests in other regions as well--including the Western 
Hemisphere, a traditionally under-resourced area for the State 
Department, USAID, and overall U.S. Government efforts--such 
rebalancing must be done carefully and within the context of a 
broader, global strategy.
    Given the constrained budget environment and unyielding 
calls from some in Congress for draconian cuts to all overseas 
government spending, finding new monies for the rebalance will 
be a challenge. But if the rebalance is to be a success, 
Congress must find a way.
    For now, the administration can improve the effectiveness 
and sustainability of the rebalance policy by increasing 
civilian engagement, strengthening diplomatic partnerships, and 
empowering U.S. businesses. We recognize there are 
institutional bureaucratic, political, and cultural barriers to 
implementing a rebalance of U.S. civilian power. Furthermore, 
we know that increased engagement with some countries will be 
hindered by their records on human rights and governance, as 
well as other challenges. However, a failure to adequately 
deploy U.S. civilian resources to the new global economic 
center of gravity will undermine the stated goals of the 
rebalance policy and the greater interests of the United 
States.

                            Recommendations

    The below recommendations lay out some steps the 
administration and Congress can take to properly resource and 
implement the rebalance to meet its strategic goals of 
enhancing prosperity, security, democratic values, and human 
development in the Asia-Pacific region.
Strategic Recommendations
    The rebalance reflects the need for the administration to 
approach the Asia-Pacific region with a well-coordinated, 
whole-of-government approach. But that approach requires better 
synchronizing and sequencing the military-security elements 
with the diplomatic, economic, and civil society elements, so 
that all move in a parallel and mutually reinforcing fashion. 
For example, there is a logic that ties together the U.S. 
Government's unilateral and alliance-based military and 
security activities in the region with its approach to regional 
architecture, the maritime commons, partners' capacity 
building, support for international rules and norms, deepening 
alliances, and public diplomacy. However, that logic only works 
if resources are sufficiently allocated across the full 
spectrum of U.S. Government activities and properly deployed in 
a coherent, sequenced, and balanced fashion. To better achieve 
the objectives of the rebalance, the administration should:

   Develop a multi-year, integrated, whole-of-government 
        approach for the non-Department of Defense elements of 
        the rebalance, with targets and timelines for the 
        rebalance from civilian agencies--including both White 
        House and Office of Management and Budget oversight--
        and linked back to the annual congressional 
        authorization and appropriations cycle. The standard 
        policymaking process has been insufficient in bringing 
        about the shift in resources that the rebalance calls 
        for.

   Better communicate the goals and methods of the rebalance 
        to the American public and our allies and partners. 
        While it is important to maintain a positive vision, 
        sweeping policy pronouncements unsupported by hard 
        deliverables create a large gap between expectations 
        and reality. Given the risks of a misalignment between 
        rhetoric and action, the hallmarks of the rebalance 
        should be that the United States under-promises and 
        over-delivers.

    Getting the region right, through an effective rebalance 
policy, is necessary for getting China policy right. And with 
China now the world's second largest economy and a major 
military power, getting China right is necessary for getting 
both regional and global policy right. Although the rebalance 
is not ``only'' about China, it is certainly ``also'' about 
China, including questions about China's future trajectory. 
China will play a role in developing regional regimes. But the 
rebalance should seek to shape and encourage the development of 
a positive and productive China that is fully supportive of 
cooperative and constructive regional norms and institutions 
and that plays by regional rules-of-the-road and international 
law. To achieve that objective, the administration should:

   More clearly articulate the necessary connections between 
        U.S. bilateral policy towards China and the rebalance 
        itself and better coordinate policy across the U.S. 
        Government and with other regional partners.

   Deepen and refurbish alliances, build out new 
        partnerships--especially in Southeast Asia--and 
        integrate alliances and partnerships into a networked 
        approach where the United States plays a vital 
        catalytic role. The core of U.S. policy and strategy in 
        the region rests on our alliances and partnerships, 
        which will be essential to the success of the rebalance 
        and U.S. policy in the region and beyond.
Operational Recommendations
   Diplomatic Engagement: To strengthen bilateral 
        relationships and better pursue U.S. interests in the 
        Asia-Pacific region, the U.S. Government should:

     Increase personnel and resources to the State 
            Department's Bureau of East Asian and Pacific 
            Affairs (EAP) both at State Department headquarters 
            and abroad, as well as for other civilian agencies 
            that work in the region.

     Expand and improve inter-agency coordination and 
            information sharing on the development and 
            implementation of Asia-Pacific policy.

     Send cabinet-level principals to the region on a more 
            frequent basis.

   Public Diplomacy: To better foster business, cultural, and 
        educational people-to-people connections between 
        Americans and citizens of other Asia-Pacific countries, 
        the State Department should:

     Redouble efforts to attract and enable more U.S. 
            students to study in Northeast and Southeast Asia.

     Ensure faster processing and greater issuing of non-
            immigrant visas for tourism, conferences, and 
            exchange programs.

     Increase resources dedicated to public diplomacy and 
            better integrate EAP's public diplomacy efforts 
            with those of the State Department's other bureaus.

   Economic Statecraft: To strengthen bilateral economic 
        relationships, avail U.S. businesses of greater 
        opportunities, and properly implement and monitor 
        complex multilateral trade agreements, the U.S. 
        Government should:

     Increase capacity for strategic thinking on regional 
            economic policy by creating a new Asia-Pacific 
            office in the State Department's Economic and 
            Business Affairs Bureau, and reorganize other 
            functional Bureaus within the State Department to 
            create separate Asia-Pacific offices where 
            feasible.

     Fill all vacant Foreign Commercial Staff (FCS) 
            positions at Asia posts and increase staff at 
            select posts with the greatest growth potential, 
            including Vietnam, Indonesia, the Republic of 
            Korea, and China. In addition, improve the 
            coordination of commercial diplomacy by 
            reintegrating FCS officers into the State 
            Department.
     Continue to aggressively pursue bilateral trade 
            deals, including a Bilateral Investment Treaty 
            (BIT) with China, alongside larger trade agreements 
            such as the Trans-Pacific Partnership (TPP). In 
            addition, involve the Philippines, Indonesia, and 
            Taiwan in either the TPP or bilateral trade 
            discussions and increase U.S. Trade Representative 
            (USTR) personnel and travel to meet the vastly 
            expanded demands placed on the agency.

   Development Partnerships: To improve human development 
        outcomes in the Asia-Pacific region and lay the 
        groundwork for greater economic development, the State 
        Department and USAID should:

     Increase levels of development funding throughout the 
            region and look at opportunities for greater 
            coordination between U.S. export promotion and 
            development agencies.

     Institutionalize the successes of the Lower Mekong 
            Initiative (LMI) and develop more programs that 
            support ASEAN connectivity and that combine staff 
            from across U.S. Government agencies and regional 
            embassies.

     Scale up public-private partnerships and explore 
            greater donor coordination with European and other 
            allies and partners, as well as China.
   Regional Architecture: To expand and transform the U.S. 
        role in Asia-Pacific multilateral institutions, which 
        will play a critical role in developing regional 
        economic and security norms and standards, the 
        administration should:

     Devote more diplomatic support and resources for the 
            development of regional institutions to address 
            maritime security issues.

     Leverage U.S. expertise and capability in 
            humanitarian assistance, disaster relief, and 
            search and rescue to develop a leadership role on 
            these issues in regional multilateral institutions.

     Increase the high level and tempo of engagement with 
            the region's multilateral institutions.

   Partner Capacity Building: To strengthen the U.S. 
        relationship with bilateral partners and transform our 
        multilateral approach to the region, the U.S. 
        Government should:

     Supplement the current bilateral hub-and-spoke 
            relationship model to a more network-centric 
            approach, where the United States helps facilitate 
            a web of relationships throughout the region.

     Enhance allies' and partners' maritime domain 
            awareness capabilities by increasing bilateral 
            maritime assistance and facilitating regional 
            coordination on maritime security issues.

     Expand across-the-board coordination with capable 
            allies and regional institutions and increase rule 
            of law assistance that targets both single-country 
            and multilateral issues.

   Civil Society and Human Rights: To improve the human rights 
        situation in the Asia-Pacific region, which is a 
        fundamental value of the United States and can improve 
        the prospects for economic development, the U.S. 
        Government should:

     Incrementally engage with countries seeking to 
            improve their human rights records, incentivizing 
            specific improvements with the promise of a closer 
            economic relationship.

     Expand assistance programs that strengthen the rule 
            of law, maritime enforcement, and public diplomacy, 
            which are complementary to the goal of promoting 
            human rights in the region.

     Increase support for institutions such as the Asia 
            Foundation and the East-West Center, which help to 
            both build local human capacity and also develop a 
            cohort of U.S. Government personnel and private 
            citizens with the expertise, ability, and ambition 
            to advance U.S. values and interests in the region.

   For Congress: To strengthen the legislative branch's role 
        in the rebalance and enhance the effectiveness and 
        benefits of the policy, the U.S. Congress should:

     Increase funding levels and consider new 
            authorizations for departments and agencies 
            involved in implementing the rebalance.
     Increase the size and frequency of congressional 
            delegations to the region to highlight its 
            importance and build relationships with 
            counterparts. Similarly, more members of Congress 
            should meet with officials from the region when 
            they visit Washington, D.C.

     Give the United States a seat at the table in a 
            critical international forum on maritime issues by 
            giving advice and consent to ratification of the 
            United Nations Convention on the Law of the Sea 
            (UNCLOS). In addition, ratify reforms to the 
            International Monetary Fund (IMF) that will give 
            emerging economies in the region a greater stake in 
            the institution, further weaving them into the 
            existing international system.

                      Development of the Rebalance

    The rise of the Asia-Pacific region may well prove to be 
the single most transformative geopolitical shift of the 21st 
century. In the past 20 years, China and India's share of the 
global economy has tripled. By 2025, the Asia-Pacific region 
will account for almost half of the world's economic output. In 
2011, U.S. exports to the Asia-Pacific region totaled $895 
billion and accounted for 60 percent of total U.S. exports. 
Those exports have created and sustained American jobs in vital 
industrial and service sectors of the U.S. economy. The 
region's economic dynamism is accompanied by the hard and 
pressing challenges of its shifting security landscape, 
including the threat of North Korea's nuclear weapons programs, 
on-going disputes over maritime security and territorial 
issues, and non-traditional security challenges like 
transnational crime and the effects of climate change.
    Building on efforts initiated in 2009 to focus additional 
attention on the Asia-Pacific region, the Obama administration 
in the fall of 2011 and early 2012 formally announced that it 
would intensify the role of the United States in the Asia-
Pacific region. To do so, it sought to raise the region's 
priority in U.S. military planning, foreign policy, and 
economic policy. With U.S. troops gone from Iraq and poised to 
be drawn down in Afghanistan, administration officials said 
they intended to ``rebalance'' U.S. attention and resources 
toward planning for future challenges and opportunities, 
specifically those represented in the Asia-Pacific region, 
reflecting a recognition of the region's growing importance for 
a range of U.S. interests.
    In her October 2011 article in Foreign Policy magazine 
entitled ``America's Pacific Century,'' then-Secretary of State 
Hillary Clinton wrote that the Obama administration would 
continue to ``dispatch the full range of our diplomatic assets 
. . . to every country and corner of the Asia-Pacific region.'' 
Furthermore, the State Department's FY 2013 Congressional 
Budget Justification for Foreign Operations refers to the Obama 
administration's rebalancing policy as a principal driver of 
its objectives in the Asia-Pacific region:

          In order to advance the administration's pivot to 
        East Asia and the Pacific, the U.S. Government will 
        maintain a presence in the region as a preeminent trade 
        and investment partner, security guarantor, and example 
        of democracy and good governance. This new strategy for 
        the Asia-Pacific region will guide the Bureau's 
        activities, including reinvigorating already strong 
        relations with treaty allies, building new partnerships 
        with emerging powers in the region, engaging with 
        multilateral institutions, expanding trade and 
        investment, forging a broad-based military presence, 
        and advancing democracy, human rights, and the rule of 
        law.

    While the U.S. military has made several high-profile and 
attention-grabbing deployments of additional resources to the 
Asia-Pacific region, U.S. civilian agencies have less clearly 
shifted their priorities. Though most regional policymakers and 
analysts outside of China have welcomed the rebalance, a 
frequent criticism of the initiative is that it is too 
military-focused and should be more diversified. U.S. military 
leaders have acknowledged the critical role of the non-defense 
aspects of the rebalance. In mid-2012, then Secretary of 
Defense Leon Panetta spoke of ``the crucial part that 
diplomacy, trade, and development will play in our engagement 
[in the Asia-Pacific]'' \1\ and current Secretary of Defense 
Chuck Hagel, in a joint op-ed with Secretary of Commerce Penny 
Pritzker, wrote of how America's ``economic ties and people-to-
people contact with nations like Japan, the Republic of Korea, 
Australia, Thailand and the Philippines have provided the 
necessary stability for Pacific nations to focus on giving 
their people a more inclusive, peaceful and prosperous 
future.'' \2\
---------------------------------------------------------------------------
    \1\ U.S. Department of Defense, "Secretary of Defense Speech: 
Shangri-La Security Dialogue," June 02 2012, http://www.defense.gov/
speeches/speech.aspx?speechid=1681.
    \2\ The Wall Street Journal, "America is Committed to Asia," 
February 17, 2014, http://online.wsj.com/news/articles/
SB10001424052702304675504579388202324713822.
---------------------------------------------------------------------------
    A successful rebalance must underscore the strategic 
message that the policy represents an enduring U.S. commitment 
to the region, assuring our partners that we are in it for the 
long haul. This will require the full range of U.S. Government 
activities, not just those of the Defense Department. Military 
forces can be moved in and out in a relatively short period of 
time, but substantial, long-term U.S. investments in 
development, trade, and diplomacy are not as fungible and 
indicate a stronger, more comprehensive commitment to the 
region. But with implementation thus far uneven across the U.S. 
Government, the rebalance may well end up as less than the sum 
of its parts.

                      Resourcing of the Rebalance

    Effective implementation of the rebalance requires devoting 
resources concomitant with the task. When compared to other 
regional bureaus, the State Department's EAP Bureau is 
resourced well below levels appropriate for a region of its 
magnitude and importance to current and future U.S. economic 
and strategic interests.
    If the United States intends to increase its engagement and 
influence in the Asia-Pacific region, it will need to improve 
its efforts in a range of areas, including diplomatic 
engagement, public diplomacy, economic statecraft, development 
partnerships, partner capacity building, regional architecture, 
and civil society and human rights.
Diplomatic Engagement
    Dollars spent are surely not the only way to judge the 
effectiveness of diplomacy in the 21st century, but budgets, 
not rhetoric, are a leading indicator of real commitment by a 
government. From this vantage point, the administration's 
requested FY 2015 funding level for the Bureau of East Asian 
and Pacific Affairs (EAP) diplomatic engagement budget does not 
reflect the economic and strategic importance of its 
jurisdiction or the policy of rebalancing U.S. Government 
resources to the region. The FY 2015 budget request for EAP's 
diplomatic engagement is the second-to-last of all 6 regional 
bureaus, or 8 percent of the total, despite the region's 35 
countries accounting for nearly a third of both the world's 
population and GDP. Furthermore, EAP bureau funding has 
decreased nearly 12 percent since its FY 2011 peak.
    Several U.S. civilian agencies have grown their foreign-
deployed staff in East Asia. USAID has increased its personnel 
in East Asia from just 84 in September 2008 to 183 in June 
2013. Over the same period, the Department of Treasury 
increased personnel from 3 to 10, and the Department of 
Commerce from 78 to 91, though the Department of Agriculture 
decreased staff from 59 to 55. The proportion of these 
agencies' total foreign-deployed staff based in East Asia 
varies nearly as widely as the absolute numbers. Those 183 
USAID employees account for only 11 percent of foreign-based 
USAID staff and Treasury's East Asia-based employees account 
for just 17 percent of its staff abroad. Alternatively, the 
Departments of Commerce and Agriculture base a healthy 41 
percent and 31 percent of their foreign-deployed staff in East 
Asia, respectively.
    Given the range of U.S. interests and the variety of U.S. 
Government agencies with a footprint in the Asia-Pacific 
region, sufficiently addressing complex regional issues will 
require institutionalizing whole-of-government efforts and 
methods of information sharing. U.S. missions in Asia appear to 
have adopted such an approach toward commercial matters by 
establishing Interagency Commercial Task Forces, and there is 
great potential in applying this approach to regional goals.

        Table 1. Regional Demographic and Economic Data and State  Department Regional Bureau Resourcing
                                            (percent of world total)
----------------------------------------------------------------------------------------------------------------
                                                                                                FY 2015  Budget
                Population  of                         Regional  Two-way    FY 2015  Budget    Request  for U.S.
    Rank            Region         GDP of Region*     Trade  With the   Request for  State    Assistance  by
                                                            U.S.*          Dept.  Bureaus*         Region*
----------------------------------------------------------------------------------------------------------------
 1            East Asia  and      Europe and          Western             Near East $1,555.7  Near East $6,986.0
               Pacific             Eurasia             Hemisphere          (35%).              (36%)
               2,250,795,287       $29,723,060 (46%).  $1,545,800 (39%).
               (33%).
----------------------------------------------------------------------------------------------------------------
2             South and  Central  East Asia  and      East Asia  and      South and  Central  Africa  $6,934.8
               Asia                Pacific             Pacific             Asia  $1,213        (36%)
               1,726,997,019       $19,792,200 (31%).  $1,226,000 (31%).   (27%).
               (24%).
----------------------------------------------------------------------------------------------------------------
3             Europe  and         Western             Europe  and         Europe  and         South and  Central
               Eurasia             Hemisphere          Eurasia  $813,800   Eurasia  $601.2     Asia  $2,959.2
               1,348,804,078       $7,729,000 (12%).   (21%).              (14%).              (15%)
               (19%).
----------------------------------------------------------------------------------------------------------------
4             Africa              Near East           Near East           Africa  $379.9      Western
               925,764,585 (13%).  $3,317,660 (5%).    $215,000 (5%).      (9%).               Hemisphere
                                                                                               $1,326.7 (7%)
----------------------------------------------------------------------------------------------------------------
5             Western             South and  Central  Africa  $91,650     East Asia  and      East Asia  and
               Hemisphere          Asia  $2,580,791    (2%).               Pacific  $342.6     Pacific  $810.7
               633,071,719         (4%).                                   (8%).               (4%)
               (8.7%).
----------------------------------------------------------------------------------------------------------------
6             Near East           Africa  $1,379,665  South and  Central  Western             Europe  and
               396,755,169 (5%).   (2%).               Asia  $74,329       Hemisphere  $332    Eurasia  $492.3
                                                       (2%).               (8%).               (3%)
----------------------------------------------------------------------------------------------------------------
* In millions of U.S. dollars.
 2013
Source: CIA World Factbook; USTR; World Bank; U.S. Department of State

      
      
    More high-level travel to the region will also be required. 
The U.S. Trade Representative (USTR) travelled to East Asia 
just 8 times during the Obama administration's first term, 
compared to 23 times and 18 times during the Bush 
administration's first and second terms, respectively. And 
while President Obama and his other major cabinet officials 
have travelled to the region about as frequently as in past 
administrations (with the exception of former Secretary of 
State Clinton, whose travel schedule far surpassed her 
predecessors), more high-level engagement, especially with 
regional institutions, would send an important signal.

       Table 2. EAP Foreign-Deployed Staff of Select U.S. Agencies
------------------------------------------------------------------------
                                   EAP-Based                 Percent of
                                   Foreign-     EAP-Based       Total
                                   Deployed      Foreign-     Foreign-
          U.S. Agency              Staff in      Deployed     Deployed
                                   September     Staff in    Staff Based
                                     2008       June 2013      in EAP
------------------------------------------------------------------------
USAID..........................  84            183          11%
Treasury.......................  2             9            16%
Commerce.......................  70            79           36%
Agriculture....................  56            51           39%
Energy.........................  4             6            26%
------------------------------------------------------------------------
Source: Congressional Research Service


    Table 3. Number and Percent of Visits to East Asia-Pacific Region for the President and Heads of Civilian
                      Agencies in Second Bush Administration and First Obama Administration
----------------------------------------------------------------------------------------------------------------
                                           Second Bush Administration            First Obama Administration
                                     ---------------------------------------------------------------------------
                                         Number  of       Percentage of        Number  of       Percentage of
                                           Trips           Total Trips           Trips           Total Trips
----------------------------------------------------------------------------------------------------------------
USAID...............................  1                9%                   3                12%
Treasury............................  9                28%                  9                32%
Commerce............................  10               20%                  11               48%
Agriculture.........................  4                31%                  5                50%
Energy..............................  3                9%                   6                27%
USTR................................  18               36%                  8                22%
State...............................  28               11%                  51               20%
President...........................  12               15%                  10               24%
----------------------------------------------------------------------------------------------------------------
Source: Congressional Research Service

Public Diplomacy

    Public diplomacy takes advantage of the United States' 
greatest assets: our people and our values. When citizens of 
other countries develop scholarly, religious, civil society, 
and business connections with Americans from all walks of life, 
they learn who we are, what we stand for, and how we contribute 
to making the world a safer and more prosperous place. False 
stereotypes and generalizations fall by their own weight, 
replaced by a clearer understanding of what a diverse and 
vibrant nation the United States truly is. For Americans, these 
interpersonal connections foster a richer understanding of 
other nations' histories, cultures, and languages. These 
insights inspired the Fulbright scholarships and the Peace 
Corps, amongst other pillars of American public diplomacy, and 
they should be an integral part of U.S. foreign policy as we 
move to build stronger ties to the Asia-Pacific.
    State Department funding for public diplomacy, which 
sponsors scholarships and grants such as the Fulbright Program, 
remained roughly flat from FY 2010 to FY 2013, and saw a modest 
increase in FY 2014, before plateauing again in the FY 2015 
budget proposal. Furthermore, there was no significant increase 
in the number of Americans studying in Asia between academic 
years 2009-10 and 2011-12, and the same goes for the number of 
non-Chinese Asians studying in the United States. While Chinese 
students are flocking to U.S. schools in ever-greater numbers, 
the number of American students in China has not appreciably 
increased, despite the 100,000 Strong Initiative (a program 
explicitly designed to get more American students to China) and 
the Chinese Government's offer of 20,000 scholarships. To 
better develop the people-to-people connections so critical to 
U.S. interests and development, the administration must 
redouble its efforts to encourage more Americans to study in 
China and other countries of the Asia-Pacific region. In 
particular, more efforts need to focus on Southeast Asia; the 
number of U.S. students in Southeast Asia in academic year 
2011-12 was less than one-fifth of the total number in East 
Asia.
    Given the importance of the U.S.-Japan Alliance, the 
administration should also take steps to arrest the slide in 
the number of Japanese studying in America (from 42,215 in 
academic year 2004-5 to 19,568 in 2012-13), which is due in 
part to an insular Japanese corporate culture that can 
underestimate the value of an American degree. The United 
States can mitigate this effect by promoting semester or year-
long study abroad programs in the United States, offering more 
scholarships for advanced degrees, and supporting alumni 
networks for Japanese who have attended U.S. universities.
    For Southeast Asia, the administration's FY 2015 budget 
request would fund a new Young South-East Asian Leaders 
Initiative academic exchange, as well as a Fulbright University 
in Vietnam. These programs reflect the need for a ``rebalance 
within the rebalance'' to Southeast Asia, and the 
administration should pursue this trend within other programs, 
agencies, and departments.
    But student exchange is just one way to promote 
interpersonal ties with the region. Other means include 
reducing travel restrictions and increasing visa issuance (such 
as the 36 percent increase from FY 2011 to FY 2012 in non-
immigrant visas issued to Chinese citizens) to promote short-
term stints in multi-national companies, professional 
conferences, joint entrepreneurial initiatives and research 
ventures, as well as expanding opportunities for exchanges 
throughout the U.S. Government, including at the state and 
local level.
    Efforts to improve public diplomacy will also require more 
personnel and better coordination. While the administration's 
FY 2015 budget request seeks to create three new public 
diplomacy positions to support the rebalance, effectively 
communicating the policy will require far more resources. In 
addition, the State Department should take steps to better 
integrate EAP's public diplomacy efforts with those of other 
department bureaus and U.S. civilian agencies.
    At a wider aperture, the United States Government needs to 
better calibrate its messaging of the rebalance to the American 
public and the world at large. While broad policy speeches and 
pronouncements are useful to set a positive vision, if 
unsupported by hard deliverables, they risk creating a gap 
between expectations and reality. The administration would do 
better to return to its earlier messaging strategy of the 
rebalance, which was to under-promise and over-deliver. 
Bureaucracies can be slow to implement policy, and the 
administration must be careful not to let its rhetoric get too 
far in front of the facts on the ground.

Table 4. East Asia-Pacific Region Students Studying in the United States and U.S. Students Studying in East-Asia
                                                 Pacific Region
----------------------------------------------------------------------------------------------------------------
                                  Foreign Students Studying in the U.S.        U.S. Students Studying Abroad
                               ---------------------------------------------------------------------------------
                                                               Percent                                 Percent
                                   2009/10       2012/13       Change        2009/10      2011/12       Change
----------------------------------------------------------------------------------------------------------------
Total.........................  299,008       408,251       37%           39,499        41,722       6%
  China.......................  127,628       244,156       75%           13,910        16,365       18%
  Japan.......................  24,842        19,568        -21%          6,166         5,283        -14%
  South Korea.................  72,153        70,627        -2%           2,137         2,695        26%
  Taiwan......................  26,685        21,867        -18%          850           820          -4%
  Indonesia...................  6,943         7,670         10%           221           369          67%
  Malaysia....................  6,190         6,791         9%            125           176          41%
  Myanmar.....................  695           955           37%           18            3            -83%
  Philippines.................  3,815         3,215         -15%          238           273          15%
  Singapore...................  4,051         4,558         13%           841           1,130        34%
  Thailand....................  8,531         7,314         -15%          1,231         1,437        17%
  Vietnam.....................  13,112        16,098        23%           686           878          28%
  Australia...................  3,296         4,121         25%           9,962         9,324        6%
  New Zealand.................  1,103         1,311         31%           3,113         2,969        -5%
----------------------------------------------------------------------------------------------------------------
Source: Institute of International Education

Economic Statecraft

    As Secretary Kerry has stated, ``foreign policy is economic 
policy,''\3\ and economic statecraft presents the best 
opportunity for the United States to deepen its relationships 
with the fastest-growing economic region in the world.\4\ The 
administration is pursuing a two-pronged strategy of using U.S. 
foreign policy to support the growth of the U.S. economy, also 
known as commercial diplomacy, while using economic engagement 
to support foreign policy priorities.
---------------------------------------------------------------------------
    \3\ United States Senate Committee on Foreign Relations, "Senator 
John Kerry's Opening Statement at Nomination Hearing to be U.S. 
Secretary of State," January 2013, http://www.foreign.senate.gov/press/
chair/release/senator-john-kerrys-opening-statement-at-nomination-
hearing-to-be-us-secretary-of-state-.
    \4\ International Monetary Fund, ``World Economic Outlook 
Database,'' October 2013, https://www.imf.org/external/pubs/ft/weo/
2013/02/weodata/index.aspx
---------------------------------------------------------------------------
    Developing and implementing a long-term strategy that 
combines commercial diplomacy and economic engagement is a 
complex undertaking and may not receive the attention it 
deserves from officials who are often rushing to put out the 
latest fire. The Department of State should therefore create 
more capacity for strategic thinking on commercial diplomacy 
and economic engagement by creating a new East Asia-Pacific 
office in the Bureau of Economic and Business Affairs. The 
Bureau of Democracy, Human Rights, and Labor took a similar 
step in 2013. The Department of State should also expand EAP's 
Office of Economic Policy, which has been understaffed and 
unable to fulfill its growing responsibilities effectively.
    Reaping the benefits of increased U.S. trade and investment 
in the Asia-Pacific region will also require an associated 
increase in resources and personnel, especially if 
unprecedented regional trade deals like the Trans-Pacific 
Partnership (TPP) are to be properly implemented and made use 
of by U.S. businesses. While the Department of Commerce is 
exploring the addition of new Foreign Commercial Service (FCS) 
officers to the region, increased staffing levels should 
coincide with reintegration of FCS officers into the State 
Department, which would improve the coordination of commercial 
diplomacy.
    While the USTR has a critically important and ever-
expanding portfolio in the region, it currently lacks the 
funding and personnel to meet current demands, much less future 
challenges and opportunities. Beyond the TPP, USTR is also 
conducting Trade and Investment Framework Agreement (TIFA) 
consultations with Taiwan and Bilateral Investment Treaty 
negotiations with China and India, as well as expanded 
engagement with ASEAN. As these agreements come online, USTR 
will require more funding for personnel and travel to protect 
U.S. economic interests by ensuring proper implementation.
    The administration has made the TPP the principal focus of 
U.S. trade policy in the region and a cornerstone of the 
rebalance. The TPP aims to create a new high standard of rules-
based trade in the region that is open to all members of APEC 
(and possibly all ASEAN members in the future). In November 
2012, the administration launched the U.S.-ASEAN Expanded 
Economic Engagement (E3) Initiative, which builds on an older 
agreement and aims to help non-TPP ASEAN members to meet the 
standards that would qualify them for TPP membership. The 
initiative focuses on limited aims such as streamlining customs 
procedures and developing principles in areas like investment 
and communications technology. Some ASEAN members have 
expressed fears that the TPP could undermine efforts to build 
greater cohesion in their group and point to the Regional 
Comprehensive Economic Partnership (RCEP) as a more inclusive 
alternative. But it is not an either-or choice: the agreements 
are not mutually exclusive and seven APEC members already 
belong to both.
    Given the critical importance to U.S. interests of trade 
and economic engagement with the region, a high-standard TPP 
will be necessary to protect U.S. businesses from unfair 
business practices and allow them to leverage their competitive 
advantages. The TPP offers them considerable opportunities, 
especially with the addition of new members like Japan and the 
prospect that Korea and other significant economies are 
seriously contemplating joining the next round. According to 
the USTR, as currently configured the TPP agreement would cover 
37 percent of all U.S. exports and include foreign markets that 
support 4 million jobs in the United States.\5\ A completed and 
successfully implemented TPP deal could therefore be a boon for 
U.S. exporters and help the administration achieve its National 
Export Initiative (NEI) goals of doubling exports and 
supporting two million American jobs. As part of that effort, 
the administration announced in October 2013 plans to enhance 
the SelectUSA program, which promotes investment into the 
United States, by making investment promotion part of the 
portfolio of U.S. ambassadors and their embassy staff. Such 
efforts will be critical to increasing investments by Asia-
Pacific companies in the United States, which already total 
over $400 billion and directly employ over 900,000 
Americans.\6\
---------------------------------------------------------------------------
    \5\ Office of the United States Trade Representative, "The Trans-
Pacific Partnership: Economic Benefits," December 2013, http://
www.ustr.gov/about-us/press-office/fact-sheets/2013/December/TPP-
Economic-Benefits.
    \6\ Organization for International Investment, ``Insourcing Fact,'' 
August 2012, http://www.ofii.org/resources/insourcing-facts. The jobs 
figure is an estimate based on Asia's share of overall inbound FDI to 
the United States.

                     Table 5. U.S. Trade Promotion Agencies Activity in Asia-Pacific \1\ \4\
                                            Millions of U.S. Dollars
----------------------------------------------------------------------------------------------------------------
             Agency                  FY 2008       FY 2009      FY 2010      FY 2011      FY 2012      FY 2013
----------------------------------------------------------------------------------------------------------------
Ex-Im Bank
  Authorizations................  $1,841.6      $3,987.4      $2,340.7     $7,057.7     $6,945.8     $7,078.9
    % Worldwide.................  12.8%         19.0%         9.6%         21.6%        19.4%        25.9%
    % Change from Previous Year.  --            116.5%        -41.3%       201.5%       1.6%         -1.9%
  Exposure......................  $16,163.0     $18,554.2     $17,183.0    $21,270.3    $25,463.2    $29,820.3
    % Worldwide.................  27.6%         27.3%         22.8%        23.9%        23.9%        26.2%
    % Change from Previous Year.  --            14.8%         -7.4%        23.8%        19.7%        17.1%
----------------------------------------------------------------------------------------------------------------
OPIC \2\
  Commitments...................  $61.0         $110.0        $245.0       $948.0       $539.0       $528.0
    % Worldwide.................  4.6%          3.2%          9.7%         34.6%        14.8%        13.4%
    % Change from Previous Year.  --            80.3%         122.7%       286.9%       -43.1%       -2.0%
  Exposure......................  $1,096.0      $1,135.0      $1,216.0     $2,019.0     $2,404.0     $2,694.0
    % Worldwide.................  9.7%          8.5%          8.7%         14.0%        14.7%        14.9%
    % Change from Previous Year.  --            3.6%          7.1%         66.0%        19.1%        12.1%
----------------------------------------------------------------------------------------------------------------
TDA \3\
  Funding.......................  $14.6         $12.1         $13.5        $14.8        $13.6        $17.1
    % Worldwide.................  31.5%         28.3%         27.2%        36.0%        30.9%        41.2%
    % Change from Previous Year.  --            -17.4%        11.2%        10.0%        -8.3%        25.8%
----------------------------------------------------------------------------------------------------------------
Source: Ex-Im Bank and TDA data from respective agencies' annual reports.OPIC data based on OPIC-shared data.Notes:
\1\ The countries included here as part of the Asia-Pacific region generally are: Australia, Cambodia, China,
  East Timor, Hong Kong, India, Indonesia, Japan, Malaysia, Marshall Islands, Mongolia, New Zealand, Palau,
  Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.\2\ In the case of OPIC, commitments data are for Asia and exposure data are for the Asia-Pacific (based on OPIC
  definitions of East Asia and South Asia), and may include countries beyond those included in the general Asia-
  Pacific definition here.\3\ U.S. trade promotion agency activity may include support for regional multi-country projects.\4\ In some cases, a regional project may support activity in a country outside of what is defined generally as
  the Asia-Pacific region here.






    Federal financing agencies are also a key pillar of U.S. 
economic statecraft, and have increasingly directed their 
resources toward the Asia-Pacific region over the past several 
years. Between FY 2008 and FY 2013, Export-Import (Ex-Im) 
Bank's total exposure in the Asia-Pacific grew by over $14 
billion, while the region's share of worldwide exposure dropped 
1.4% during the same period. The Overseas Private Investment 
Corporation's (OPIC) exposure in the Asia-Pacific region grew 
from a little over $1 billion in FY 2008 to nearly $2.7 billion 
in FY2013, accounting for almost 15% of OPIC's total worldwide 
exposure. In FY 2013, over 41% of the Trade and Development 
Agency's (TDA) spending went to the Asia-Pacific region. TDA 
spent over $7.5 million on programming in East Asia and over 
$9.7 million in South and Southeast Asia, including feasibility 
projects in Indonesia and Vietnam under the U.S.-Asia Pacific 
Comprehensive Partnership for Sustainable Energy, an initiative 
that came out of U.S. participation in the East Asia Summit.
    Note that Ex-Im Bank and OPIC are ``demand-driven'' federal 
agencies. U.S. businesses use their resources only when 
commercial incentives are sufficient. While it is no surprise 
that Ex-Im and OPIC have increased their engagement in the 
Asia-Pacific region to such a degree, it is disappointing that 
``supply-driven'' federal agencies have not followed suit, 
especially when a virtuous circle of investment, trade, and 
prosperity is the likely result.

Development Partnerships

    Development partnerships are a critical pillar of U.S. 
economic statecraft and foreign policy. U.S. development 
partnerships support the markets, infrastructure, and rule of 
law necessary to attract and sustain U.S. businesses, all while 
fortifying bilateral relationships important to other U.S. 
interests and values.
    As a result of the renewed focus on Asia and the number of 
nations in the region who are eligible for and could benefit 
from enhanced development partnerships, funding levels should 
be increasing significantly. Unfortunately, USAID budgets 
neither reflect the importance of the region nor comport with 
the stated goals of the rebalance policy. The FY 2015 budget 
request for U.S. development funding to the region is merely a 
return to FY 2010 levels, even while USAID staff numbers have 
increased 65 percent and new missions have been established in 
Burma and Papua New Guinea. In fact, compared to the FY 2011 
spending levels, only Foreign Military Financing (FMF) saw 
significant increases through FY 2014 (and even within that 
program the amount of funds going to EAP in 2014 was lower than 
those earmarked for Europe and Eurasia). Furthermore, U.S. 
development funding to the Asia-Pacific region ranks fifth out 
of six, surpassing only Europe and Eurasia. The resources we 
devote to a region speak to the level of our commitment, and 
the administration should increase its budget request for 
development funding to the Asia-Pacific region.
    In allocating resources for the rebalance, it is not good 
enough to merely reshuffle from within and across the Asia-
Pacific budget allocation; new money must also be brought to 
the table to reflect the strategic priority of the rebalance. 
Given other important national security priorities, the 
rebalance cannot be built by raiding other ``Function 150'' 
International Affairs accounts, either, but should be funded 
with genuinely ``new'' money. For example, the Lower Mekong 
Initiative (LMI), a post-rebalance development program, aims to 
improve education, the environment, infrastructure, and women's 
rights in Cambodia, Laos, Thailand, and Vietnam. The 
administration's initial LMI proposals to Congress in 2013 were 
in the form of reprogramming from other EAP accounts. While not 
exactly robbing Phan to pay Phung, this budgetary maneuver did 
not provide the region the boost it deserves. At Congressional 
insistence, the Department of State was able to develop 
genuinely new funding sources for the LMI, thus increasing 
capacity in the Asia-Pacific region and not merely engaging in 
budgetary sleight of hand.
    Furthermore, EAP appointed only two nonpermanent staff 
members to manage the LMI, which is insufficient to oversee the 
program's complicated interagency activities and $140 million 
in annual U.S. spending\7\ (which is still dwarfed by Japan's 
$362 million in grants and technical assistance to the LMI 
countries in 2011).\8\ Nonetheless, the LMI presents a smart 
and effective model for using our limited development dollars, 
and the State Department should formulate a plan to 
institutionalize the successes of the initiative and approach 
future LMI engagement, perhaps in cooperation with China. The 
U.S. Government should also look at other aspects of our 
development funding that can support ASEAN connectivity.
---------------------------------------------------------------------------
    \7\ U.S. Department of State, ``Lower Mekong Initiative FAQs,'' 
accessed January 02, 2014, http://www.state.gov/p/eap/mekong/faq/
index.htm
    \8\ Ministry of Foreign Affairs of Japan, ``ODA by Region--East 
Asia,'' November 15, 2013, http://www.mofa.go.jp/policy/oda/
page_000008.html
---------------------------------------------------------------------------
    Given our relatively low levels of development funding to 
the region, it is critical that the U.S. Government increase 
coordination within the activities of our trade and investment 
promotion agencies and aggressively pursue more public-private 
partnerships. For the latter, the U.S. Government should review 
and streamline the process for establishing partnerships. 
Recognizing the currently constrained budget environment in the 
United States, the administration should also explore greater 
donor coordination with our allies in Europe and East Asia, 
expanding overall foreign assistance and utilizing economies of 
scale. Australia and Japan could be particularly helpful, given 
their location and strong economic ties with other countries in 
the region. Such efforts should not preclude the administration 
from requesting and reallocating additional development funding 
to the Asia-Pacific, where China alone pledged $107 billion in 
aid in 2011, up from $16 million in 2001.\9\ Given its 
tremendous level of participation in the region, the United 
States should also explore donor coordination opportunities 
with China.
---------------------------------------------------------------------------
    \9\ Charles Wolf, Jr., Xiao Wang, Eric Warner, ``China's Foreign 
Aid and Government-Sponsored Investment Activities,'' RAND Corporation, 
2013.
---------------------------------------------------------------------------
    Finally, as Congress works with the administration to 
review the FY 2015 budgetary proposals for the rebalance, both 
will need to show genuine support to increase resources for the 
region. This means not just reprioritizing within it, as 
perhaps reflected in the large plus up for Burma programs--
certainly a worthy endeavor--but with funding flat or declining 
for other regional priorities elsewhere.

Regional Architecture

    In addition to developing a shared architecture and 
approach to address maritime security issues, the countries of 
the Asia-Pacific face a host of common challenges, including 
climate change, transnational crime, infectious disease, and 
human trafficking. These are regional problems that require a 
regional approach. Climate change in particular appears set to 
pose major challenges for the Asia-Pacific region in the years 
and decades to come--including as a driver for related security 
issues such as migration, food and water security, and 
infectious diseases. These challenges demand a concerted and 
coordinate response. Multilateral institutions provide an 
effective platform for the development of new methods, the 
sharing of best practices, and the collective implementation of 
solutions. Importantly, they also offer a forum for the 
management and resolution of disputes.
    The administration has taken several steps to enhance U.S. 
participation in regional institutions, such as creating within 
the EAP Bureau a new Deputy Assistant Secretary of State for 
Multilateral Affairs and a new U.S. Ambassador to ASEAN. The 
administration also signed ASEAN's Treaty of Amity and 
Cooperation and raising participation in the East Asia Summit 
(EAS) to the head of state level and the ASEAN Regional Forum 
to the Secretary of State level. Then Secretary of State 
Hillary Clinton also attended the Pacific Islands Forum (PIF) 
in 2012, marking the highest level of U.S. participation ever. 
These efforts have increased the U.S. profile in the region and 
yielded positive, tangible results for U.S. interests and 
values. The United States can continue to demonstrate its 
reliability by increasing its level and tempo of engagement 
with the region's multilateral institutions, without allowing 
other crises to distract from the important work of improving 
and expanding our relationships within the region.
    The United States already pursues several initiatives in 
cooperation with Asian multilateral institutions, including 
public health and energy issues through the LMI, trade and 
investment through APEC (whose 21 member economies account for 
approximately 55 percent of global GDP),\10\ economic growth 
and climate change through ASEAN, and transnational crime and 
clean energy through the East Asia Summit (EAS). On energy, the 
U.S. Embassy in Bangkok established an Asia-Pacific Clean 
Energy Program, staffed by officials from the Trade Development 
Agency (TDA), State Department, and OPIC. The initiatives 
recently proposed at the APEC forum, such as a proposed fund to 
improve supply chain connectivity and the creation of an Anti-
Corruption and Transparency Working Group, are also good 
examples of programs that combine staff from across U.S. 
Government agencies. In addition, there are increasing signs 
that the region is starting to organize itself diplomatically 
around the areas of humanitarian assistance, disaster relief 
and search and rescue (as demonstrated in the recent case of 
the missing Malaysia Airlines flight MH370). The United States 
is second to none in these areas and should take a leading role 
in developing regional response mechanisms.
---------------------------------------------------------------------------
    \10\ U.S. Department of State, ``21st Annual APEC Economic Leaders' 
Meeting Fact Sheet,'' October 8, 2013, http://www.state.gov/r/pa/prs/
ps/2013/10/215195.htm
---------------------------------------------------------------------------
    The United States should also begin to develop more 
multilateral structures among allies and partners around shared 
issues of concern, including common environmental and security 
threats. Furthermore, the United States can leverage the 
convergence of India's ``Look East'' strategy with our own 
rebalance strategy to increase joint U.S.-India cooperation 
with ASEAN and other allies and partners. For example, a U.S.-
India-Japan trilateral could be very effective at addressing a 
range of regional issues. In addition, the United States should 
ensure that Taiwan is included in all appropriate regional 
architectures and institution building efforts.
    The speed with which the Asia-Pacific's regional 
architecture is expanding and the growing set of critical 
issues that it is needed to address demands greater U.S. 
engagement. In particular, regional institutions can play a key 
role in the resolution and management of contentious maritime 
issues, a critical area of friction in the region and an area 
where the United States can contribute substantial technical 
expertise. While our bilateral alliances and partnerships 
underpin our engagement with the region, the U.S. Government 
could better realize its policy goals by working more through 
regional institutions like ASEAN and EAS, and the United States 
should devote more diplomatic support and resources for the 
development of regional institutions to address maritime 
security issues.

Partner Capacity Building

    An oft-stated element of the rebalance is the strengthening 
and modernizing of U.S. bilateral alliances and developing 
deeper cooperation with emerging partners. These approaches 
allow the United States to leverage existing and potential 
partner networks to address issues in a far more cost-effective 
and impactful way than going at it alone.
    Although our bilateral alliances remain at the heart of 
U.S. strategy and policy in the Asia-Pacific region, including 
the rebalance, the United States has the opportunity to 
supplement a ``hub-and-spokes'' model with a more network-
centric approach in the region, knitting together alliances and 
partnerships to efficiently leverage complementary capacities 
in addressing common challenges. Such an approach could involve 
helping regional partners and allies to more efficiently 
allocate resources, coordinate, and cooperate in areas of 
regional importance, such as maritime security and natural 
resource exploitation. The United States can play an important 
role in helping build a web of relationships throughout the 
region to bring about more effective security cooperation, 
allowing for greater coordination and the efficient application 
of allies' and partners' comparative advantages.
    For example, discussions on common maritime domain 
awareness can benefit from the participation of the United 
States. The initiation in September 2013 of official 
consultations on a code of conduct to govern behavior in the 
South China Sea provides an opportunity to improve and leverage 
the capacity of our allies and partners, while simultaneously 
defusing a potential conflict environment. In addition, the 
State Department's recent announcement of $32.5 million in 
regional and bilateral maritime assistance--including up to $18 
million to improve Vietnam's coastal patrol units--will go some 
way toward upgrading partner capacity. Further policy options 
to improve the maritime domain awareness, defense and law 
enforcement capabilities of partners and allies should be 
considered. For example, both New Zealand and Japan are 
interested in improving their amphibious capabilities. South 
Korea and Singapore have expressed interest in Global Hawk 
unmanned aerial vehicles. Indonesia, with over 17,500 islands 
and piracy problems, needs more advanced airlift and logistics 
capabilities. While considering ways to improve our allies' and 
partners' maritime capabilities, the U.S. Government should 
simultaneously work to facilitate greater regional coordination 
on maritime security issues. One concrete, low-cost way to 
promote that effort is to offer excess U.S. frigates to partner 
states in the region, bolstering their maritime capabilities.
    But U.S. efforts must also go beyond defense and 
intelligence issues to include improving partner capacity for 
interagency coordination, trade enforcement (where the TPP is a 
welcome development) and rule of law. On rule of law, the 
United States can provide unmatched legal, technical, and 
infrastructure support to countries improving their judicial 
systems. The Support for Trade Acceleration (STAR) program, 
which brought legal experts to Vietnam to help draft commercial 
laws, could be a model for other emerging partners in the 
region. Bolstering the rule of law can help pave the way for 
future trade agreements based on clear rules and strong 
protections for intellectual property rights. Importantly, rule 
of law assistance provides an essential avenue for improving a 
country's human rights record, which is a core U.S. value and 
in some instances a barrier to further U.S. economic 
engagement. The U.S. Government should expand across-the-board 
coordination with capable allies and regional institutions on 
this issue and increase rule of law assistance that targets 
both single-country and multilateral issues.

Civil Society and Human Rights

    The economic imperatives of the rebalance coexist with the 
need for progress on human rights, especially as the United 
States engages with emerging partners in the Asia-Pacific. We 
can use the benefits of economic partnership to influence 
countries with weak records on human rights and democratic 
governance; through incremental engagement with those countries 
that seek to improve their records, we can incentivize specific 
improvements with the promise of a closer economic 
relationship. We can also help countries realize that the 
failure to provide basic rights can undermine economic 
development, especially when it comes to media and internet 
freedom, two areas where the United States leads and 
development efforts could be expanded. U.S. development 
programs that strengthen the rule of law, maritime enforcement, 
and public diplomacy are complementary to the goal of promoting 
human rights in the region and should be expanded wherever 
possible. In addition, the United States can use aspects of 
military-to-military relationship building to improve other 
countries' human rights practices.
    The United States faces several new and challenging 
questions when balancing human rights and democracy goals among 
other U.S. objectives in the Asia-Pacific: How should human 
rights and democracy promotion fit into the U.S.-China 
relationship? How will the United States effectively promote 
human rights and democracy in Burma as the country implements 
broad political reforms? How will the United States respond to 
democratic developments, for good and bad, in countries such as 
Cambodia and Thailand? How can the United States best promote 
human rights and democracy in Vietnam as that important 
bilateral relationship continues to develop?
    In FY 2014, the State Department requested an additional 30 
percent in funding ($98.6 million) for ``Governing Justly and 
Democratically'' programs in the EAP region over the FY 2012 
level, and the EAP Bureau receives the largest amount of 
Democracy, Human Rights, and Labor (DRL) funding among the U.S. 
foreign aid regions. The committee supported this request, as 
increased funding is required to expand programs in Burma, 
Indonesia, and Vietnam, among others. Furthermore, the DRL 
Bureau created an East Asia and Pacific office in 2013, whereas 
previously the Asia portfolio was handled by multiple offices. 
Other functional Bureaus within the State Department should 
implement similar reorganizations where feasible.
    Finally, the United States should increase support for 
institutions such as the Asia Foundation, the Fulbright 
Program, and the East-West Center. It should also encourage 
greater attention and focus on Asia-Pacific programming at the 
United States Institute of Peace. These institutions help to 
both build local human capacity and also develop a cohort of 
U.S. Government personnel and private citizens with strong 
expertise in Asia and the ability and ambition to advance U.S. 
values and interests in the region. Unfortunately, in its FY 
2015 budget, the administration requested cuts in allocations 
to the Asia Foundation and the East-West Center by 29 percent 
and 35 percent, respectively. These institutions offer a large 
potential return on investment and play unique roles in the 
region, and cutting their budgets hardly reflects positively on 
the administration's level of commitment to the rebalance.

                        China and the Rebalance

    While the rebalance should not be seen as a reaction to 
China's changing role in the region, clearly its rise, and 
uncertainties about its future trajectory, are important 
contextual elements for understanding the strategy. While in 
Seoul, Vice President Biden said that, ``We're also working to 
get our relationships with China right, with the right 
standards. It's not only in our interest, it's in the interest 
of the region, the interest of the world that we get that 
relationship right with China.'' \11\ And for the United States 
to ``get China right,'' we must at the same time ``get the 
region right'' as well, through a properly resourced and 
successfully implemented rebalance. A signal measure of the 
success of the rebalance will be its ability to shape and 
support the emergence of a regional order and architecture that 
facilitates the rise of a China that adheres to the ``rules of 
the road'' and contributes to regional and global stability, 
security and prosperity.
---------------------------------------------------------------------------
    \11\ The White House, ``Remarks by Vice President Joe Biden on 
U.S.-Korea Relations and the Asia-Pacific,'' December 2013, http://
www.whitehouse.gov/the-press-office/2013/12/06/remarks-vice-president-
joe-biden-us-korea-relations-and-asia-pacific.
---------------------------------------------------------------------------
    Policy-makers should also be aware that excluding China 
from the conversation around the rebalance will jeopardize both 
the goals of the policy and the health of the bilateral 
relationship. While China will of course make its own choices 
about its role and future in the region, the inclusion and 
participation of a China that chooses to play a positive and 
productive role should be welcomed, especially when it comes to 
regional institutions and trade liberalization. China is the 
region's largest economy and many of its neighbors see economic 
relations as the foundation for their strategic relations. 
Boosting our trade and diplomatic relationships in the region 
therefore requires increased and positive engagement with 
China.
    But the United States must walk the fine line of continuing 
to improve trade relations with China while simultaneously 
pushing back against unfair practices, including subsidies and 
both cyber-enabled and ``traditional'' theft of intellectual 
property. Some of these issues can be addressed in the 
Bilateral Investment Treaty (BIT) that China and the United 
States restarted negotiations on in July 2013, but most cannot 
wait for BIT negotiations to conclude before action is taken. 
In addition, China appears to have eased its stance on the TPP, 
which has strong standards on industrial subsidies and 
intellectual property protection, and has adopted a more 
positive tone toward joining in as a long-term goal.
    To capitalize on recent developments, the U.S. Government 
should accelerate BIT negotiations with China and emphasize 
that the TPP is an open agreement that welcomes newcomers, 
including China. Stronger economic relations will reinforce 
mutual strategic goals like the denuclearization of the Korean 
Peninsula and the peaceful resolution of maritime disputes. 
There is significant potential in cooperative work with China 
to develop reliable mechanisms within regional institutions to 
resolve disputes early on. In addition, increasing donor 
coordination with China holds great promise for improving human 
welfare in the region.
    Enhancing our interaction with China on these issues is 
vital to our national security interests and requires 
heightened levels of civilian resources. Alternatively, a 
failure to adequately apportion civilian resources risks 
stagnation of our economic and strategic objectives. Even 
worse, a lopsided rebalance that appears to focus mostly on 
military resources could produce a counterproductive response 
from China. Uneven implementation of the rebalance also risks 
creating the perception among other countries in the region 
that a fault line has been drawn between the United States and 
China and that they must pick a side. In reality, expanding and 
improving economic and strategic relations with both China and 
the United States is not a mutually exclusive endeavor, and the 
choice is not between the United States and China, but rather 
between support for a region with strong institutions, norms of 
behavior, and respect for international law versus a region of 
revanchism, aggression, and conflict. U.S. policy-makers must 
ensure this message is understood by China and the region; 
successful implementation of the rebalance requires nothing 
less.
    A major challenge for the rebalance is to bring China into 
the process of updating and strengthening existing 
international rules and norms. At the same time, the United 
States must remain vigilant in standing up to challenges to its 
interests, values, and allies. Strengthening rules and norms in 
Asia is a fundamental U.S. interest, and realizing this goal 
will require persistent engagement. In particular, U.S. 
engagement must focus on encouraging China to adopt and adhere 
to rules and norms and play a productive role in the regional 
institutions that develop and enforce them. Ultimately, the 
benefits that China will inevitably experience from playing a 
positive role within regional institutions and abiding by 
regional norms can help inform its behavior on the 
international stage.

                    Implementation of the Rebalance

    The Senate Foreign Relations Committee has a duty and 
responsibility to ensure that resources are allocated 
efficiently, effectively and appropriately across all U.S. 
foreign policy priorities, and to promote the time, attention 
and focus needed by the U.S. Government on critical but under-
resourced areas of U.S. foreign and national security policy, 
including, first and foremost, Western Hemisphere affairs and 
the need for additional emphasis on economic statecraft in the 
Western Hemisphere. While due to the nature of the committee's 
jurisdiction in the Senate this report does not go into detail 
on further developing our military alliances in the region, it 
encourages continued progress in upgrading our alliances with 
Japan, the Republic of Korea, Australia, Thailand, and the 
Philippines. The report also recognizes that the rebalance 
policy necessarily starts with our alliances and that renewing 
and refurbishing those alliances to meet the challenges of the 
21st century must be a cornerstone of U.S. policy in the 
region.
    The unique insight of the rebalance is its integrated 
approach to the Asia-Pacific region. The strategy sees the 
whole as greater than the sum of its parts, and a similar 
approach toward the allocation and coordination of U.S. 
Government resources will be required to effectively implement 
the rebalance. Namely, the rebalance calls for a new posture of 
U.S. Government military and civilian resources in the Asia-
Pacific region. While this report touches only on the latter 
side, it is critical that U.S. military efforts to enhance 
regional security are closely coordinated with diplomatic 
initiatives to strengthen regional institutions and economic 
programs to improve regional growth. Otherwise, haphazard or 
improperly calibrated implementation of the rebalance strategy 
could create several potential negative outcomes and 
consequences. At the same time, policy makers must be aware 
that barriers to implementation will require sustained 
political will to overcome.
    First, an effort that is too fast or too heavy handed could 
hamper U.S. Government operational efficiency. While the 
implementation of the civilian side of the rebalance may be 
lagging behind the military side, policy-makers should not rush 
haphazardly to make up the difference. Haste makes waste, and 
while there should be short-term indications that a shift is 
taking place, the rebalance is a long-term endeavor requiring 
deliberate and well-conceived implementation.
    Second, policy makers should look closely at the proportion 
of resources devoted to Southeast Asia within the context of 
the rebalance. The distribution of personnel and resources 
should be determined by where they can have the most impact on 
developments of importance to the United States, not by the 
largest economies or most headline-grabbing issues. To that 
end, more attention should be paid to the countries of 
Southeast Asia, where U.S. influence has the potential to play 
a defining role in the economic development and geopolitical 
orientation of our emerging partners.
    Third, Congress has an important role to play in avoiding 
negative outcomes that might result from too few resources 
devoted to the rebalance. Congress holds the power of the purse 
and, as the saying goes, it takes money to make money. 
Appropriators need to recognize that increased U.S. engagement 
in the Asia-Pacific must go well beyond more warships and 
submarines; we will need significantly more diplomats, 
commercial officers, and technical experts in the region to 
allow U.S. businesses to take full advantage of the myriad 
economic opportunities.
    Finally, the U.S. Government must ensure that the military 
and non-military aspects of the rebalance are coordinated and 
complementary. Each element of the rebalance policy should 
reinforce the other elements, building upon previous activity 
while laying a foundation for future engagement. As a regional 
strategy, the rebalance cuts across a spectrum of U.S. 
interests, requiring intensive coordination across the whole of 
government; it will not be enough for the left hand to simply 
know what the right hand is doing--they must work in synch.
    Barriers will inevitably arise when putting a major policy 
initiative like the rebalance into practice, and variance in 
implementing the policy across its many dimensions is expected. 
While a de facto shift in civilian resources was already 
underway during the last several years of the George W. Bush 
administration, those efforts were modest in scope and do not 
justify the recent lack of movement in the civilian sphere. A 
few possible explanations are bureaucratic inertia, budgetary 
constraints, and resource development.
    Large bureaucracies are not celebrated for their ability to 
change course quickly. In the case of the rebalance, government 
employees whose work focuses on other regions might feel their 
interests threatened by a proposed shift of resources to the 
Asia-Pacific. Such shifts must take place within the context of 
a broader global strategy, and the standard policymaking 
process is insufficient to bring about the movement in 
resources that the rebalance requires. More high-level 
directives tying budgets to strategy--such as the 2012 joint 
memo from the National Security Council and Office of 
Management and Budget advising departments to make Asia a 
priority in the FY 2014 budget--may be necessary. Overcoming 
bureaucratic inertia will require substantial and sustained 
political will.
    Greater coordination is also required among U.S. Government 
agencies to properly ``rebalance the rebalance.'' While some 
agencies are more involved in the region than others, either 
due to differing priorities or budget constraints, more 
effective inter-agency coordination would make for more 
effective use of the resources already deployed. Stove-piping, 
an anathema for information-sharing, and turf battles have long 
plagued large bureaucracies, and an undertaking as 
comprehensive as the rebalance will require overcoming old 
habits.
    Budgetary constraints present another significant barrier 
to effective implementation of the rebalance. Yet helping U.S. 
businesses take advantage of the rapidly expanding economic 
opportunities in the Asia-Pacific region will require 
significant and sustained investments by our government; to 
eschew those investments for the sake of reducing the non-
defense national security budget by a few percentage points is 
the essence of ``penny-wise and pound-foolish.'' Fortunately, 
the military drawdowns from Iraq and Afghanistan make it 
possible to increase resources to the Asia-Pacific without 
damaging our operations and interests elsewhere.
    Some of the civilian aspects of the rebalance will simply 
take time, regardless of the choices made by senior U.S. 
policy-makers. The hardware of civilian foreign policy, such as 
Embassies and USAID missions, can take several years to 
construct. The software of our efforts, including training in 
language and area skills, can take even longer to develop. The 
long lead times required to implement these initiatives 
underscore the need to get started as soon as possible. As 
Albert Einstein once pointed out, ``nothing happens until 
something moves.''
    Finally, political leaders in the United States, especially 
the President and Members of Congress, must do more to make the 
case to the American people that the Asia-Pacific region 
deserves greater investment of government resources, and that 
increased international engagement will benefit Americans from 
all walks of life and all across the country. Sustained 
engagement in the region will require buy-in from the American 
people, so political leaders must raise the visibility of the 
region's importance and our government's role there in 
promoting economic growth and safeguarding American interests. 
In January 2011, 47 percent of Americans reported that Asia was 
the most important area for the U.S., but that number had 
fallen to 35 percent by November 2013--back to late 2001 
levels.\12\ Americans need to be told just how and why, in the 
words of President Obama, ``Asia will largely define whether 
the century ahead will be marked by conflict or cooperation, 
needless suffering or human progress.'' \13\
---------------------------------------------------------------------------
    \12\ Pew Research Center, ``America's Place in the World 2013,'' 
December 3, 2013, http://www.people-press.org/files/legacy-pdf/12-3-
13%20APW%20VI%20release.pdf
    \13\ The White House, ``Remarks by President Obama to the 
Australian Parliament,'' November 17, 2011, http://www.whitehouse.gov/
the-press-office/2011/11/17/remarks-president-obama-australian-
parliament
                            Acknowledgements

    In drafting this report, the Congressional Research Service 
provided the committee with invaluable information and analysis 
including a September 2012 in-depth analysis of the degree to 
which selected civilian U.S. agencies have placed a greater 
emphasis on East Asia since 2009; and a second, 126-page 
analysis in December 2012 of the broader question of the degree 
to which the Obama administration had implemented the civilian 
side of its rebalancing strategy. In the fall of 2013, CRS 
provided follow-up with an array of memos substantially 
updating the research they had performed the previous year. CRS 
analysts who provided support included: Mark Manyin, Specialist 
in Asian Affairs, coordinator; Ben Dolven, Specialist in Asian 
Affairs; Ian Fergusson, Specialist in International Trade and 
Finance; Charles E. Hanrahan, Senior Specialist in Agricultural 
Policy; Shayerah Ilias, Specialist in International Trade and 
Finance; Alan Kronstadt, Specialist in South Asian Affairs; 
Susan V. Lawrence, Specialist in Asian Affairs; Thomas Lum, 
Specialist in Asian Affairs; Michael Martin, Specialist in 
Asian Affairs; Wayne Morrison, Specialist in Asian Trade and 
Finance; Ian Rinehart, Analyst in Asian Affairs; Barbara L. 
Schwemle, Analyst in American National Government; Fred 
Sissine, Specialist in Energy Policy; Alex Tiersky, Analyst in 
Foreign Affairs; Bruce Vaughn, Specialist in Asian Affairs; 
Matthew Weed, Analyst in Foreign Policy Legislation; Martin 
Weiss, Specialist in International Trade and Finance; Mary 
Irace, Section Research Manager, International Trade and 
Finance Section; Julie Kim, Section Research Manager, Foreign 
Policy Management and Global Issues Section; Lisa Mages, 
Section Head, Foreign Affairs, Defense and Trade Section 
Knowledge Services Group; Michael Moodie, Assistant Director, 
Foreign Affairs, Defense and Trade Division; and, CRS 
Information Research Specialists Maureen Bearden, Carol Canada, 
Beth Cook, Susan Chesser, Nese DeBruyne, Mike Donnelly, Hannah 
Fischer, Michael Greene, George Mangan, Beth Roberts, Carolyn 
Smith, and Barbara Torreon.

                                  
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