By Julianna Goldman and Margaret Talev - Nov 17, 2011 11:20 AM GMT+0700
President Barack Obama said cutting the U.S. budget won’t reduce the nation’s military and economic commitments to the Asia-Pacific region in remarks that reflect a U.S. effort to contain China’s growing regional influence.
“Our enduring interests in the region demand our enduring presence in this region,” Obama said in remarks to Australia’s Parliament today. “The United States is a Pacific power, and we are here to stay.”
The 25-minute address in Australia’s capital of Canberra is intended to be the anchor of Obama’s nine-day trip to the region as he outlines what he called a “deliberate and strategic decision” to put the U.S. in position for a long-term role in an area that accounts for half of the global economy. Obama is seeking to address concerns that the U.S. won’t be able to act as a counter-weight to China’s rising military and economic influence because of domestic budget constraints.
“Reductions in U.S. defense spending will not -- I repeat, will not -- come at the expense of the Asia Pacific,” Obama said. “As we plan and budget for the future, we will allocate the resources necessary to maintain our strong military presence in this region. We will preserve our unique ability to project power and deter threats to peace.”
Debt Cutting
The president is in Australia as a 12-member special committee in the U.S. Congress is closing in on a Nov. 23 deadline to come up with a plan to trim the U.S. budget deficit by at least $1.5 trillion over the next decade. Failure to enact a debt-cutting plan this year would force $1.2 trillion in automatic spending cuts beginning in 2013, including $500 billion from the defense budget over 10 years. That would be on top of about $450 billion in Pentagon cuts already planned in the next decade.
Obama and Australian Prime Minister Julia Gillard yesterday announced a defense accord to deploy U.S. Marines in northern Australia beginning next year. The troops will be deployed on a six-month rotation, starting with 250 personnel and eventually expanding to as many as 2,500. The two nations also agreed to more cooperation between the Royal Australian Air Force and the U.S. Air Force, resulting in more U.S. aircraft passing through northern Australia.
Backing Up
“Doing this with Gillard is a way to tell everyone in Asia ‘look, the U.S. is in town and the U.S. will back you up if you need to be backed up,’” said Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University’s Tokyo campus. “This is part of the entire process of strengthening relationships against China.”
Japan’s Chief Cabinet Secretary Osamu Fujimura said today his country has been briefed by both Australia and the U.S. on their agreement.
“We believe the decision will improve the capability of U.S. forces in the region and contribute to regional security, which we welcome,” he told reporters in Tokyo.
Obama pledged that U.S. commitments to the security of South Korea will never waiver and that it would be vigilant against aggression from the North.
“Indeed, we also reiterate our resolve to act firmly against any proliferation activities by North Korea,” Obama said. “The transfer of nuclear materials or material by North Korea to states or non-state entities would be considered a grave threat to the United States and our allies. And we would hold North Korea fully accountable for the consequences of such action.”
Obama said U.S. engagement in the region is about economics as well as defense.
Obama’s Priority
“Asia is critical to achieving my highest priority: creating jobs and opportunity for the American people,” he said. “With most of the world’s nuclear powers and nearly half of humanity, this region will largely define whether the century ahead will be marked by conflict or cooperation, needless suffering or human progress.”
The U.S. this year has exported more to the Pacific Rim than to Europe and exports to the region last year supported 850,000 U.S. jobs, according to figures from the Commerce and State Departments. Obama has set a goal of doubling U.S. exports in five years to $3.14 trillion a year by the end of 2014, from $1.57 trillion in 2009, and Asia is central to that plan.
Company Earnings
Asia’s growth has boosted earnings for its companies and led to stock market gains that have beaten U.S. equities. The MSCI Asia Pacific Index of stocks has outperformed the Dow Jones Industrial Average seven of the past nine years through 2010.
Some of the best-known U.S. brands count on Asian customers to fill their order books. Dallas-based Texas Instruments Inc. (TXN) gets 74 percent of its $14 billion in annual revenue from Asia. For Santa Clara, California-based Intel Corp. (INTC), it’s 67 percent of $58 billion, and Phoenix-based Freeport-McMoran Copper & Gold Inc. (FCX) reaps 42 percent of its $22 billion annual revenue from the region.
At the Asia-Pacific Economic Cooperation summit he hosted in Hawaii during the weekend, Obama announced the U.S., Australia and seven other nations will join in forming a Trans- Pacific Partnership trade accord within a year in what would be the biggest U.S. pact since the 1994 North American Free Trade Agreement.
After standing yesterday alongside Gillard and saying that U.S. moves on defense and trade aren’t meant to isolate China and he will continue to seek a cooperative relationship with the world’s second-biggest economy, Obama said the U.S. won’t back down from criticizing the country when necessary.
Welcoming China
“All of our nations have a profound interest in the rise of a peaceful and prosperous China -- and that is why the United States welcomes it,” Obama said. “We will do this, even as we continue to speak candidly with Beijing about the importance of upholding international norms and respecting the universal human rights of the Chinese people.”
At various points over the past week in Honolulu and in Canberra, Obama has stepped up criticism of China on security, trade and economic issues, saying the country needs to adhere to international standards if it wants to compete in the global marketplace. Today, without mentioning China, Obama indirectly continued that criticism, noting currency and intellectual property issues, repeatedly saying 21st century economies must adhere to common standards.
Clear Rules
“We seek economies that are open and transparent,” Obama said. “We seek trade that is free and fair. And we seek an open international economic system, where rules are clear and every nation plays by them.”
The defense initiative will anchor an American presence in the western Pacific that can help safeguard sea lanes that carry more than $5 trillion of commerce, about $1.2 trillion of it U.S. trade, and boost the U.S. military presence close to the South China Sea.
The area also is a potential new source of energy as demand in Asia rises with economic growth. Chinese studies cited by the U.S. Energy Information Agency in 2008 said the South China Sea could hold 213 billion barrels of oil. While the sea borders several countries, China claims “indisputable sovereignty” over most of it.
South China Sea
The South China Sea will be part of a discussion on maritime security at the East Asia Summit in Bali, Indonesia, Obama’s next stop on his trip.
Obama noted that he’ll be the first U.S. president to attend the summit and said together nations can “address shared challenges, such as proliferation and maritime security, including cooperation in the South China Sea.”
The Philippines is to propose an initiative at the summit for resolving South China Sea disputes. Secretary of State Hillary Clinton said yesterday in Manila that the U.S. will upgrade a defense treaty to give the Philippines more naval support.
Obama will meet with the 10-member Association of Southeast Asian Nations in Bali tomorrow, where leaders will decide whether to endorse Myanmar’s bid to chair the regional meetings in 2014.
Obama was more cautious in his criticism of Myanmar, saying that human rights violations persist despite the release of political prisoners, including Nobel laureate Aung San Suu Kyi.
“We will continue to speak clearly about the steps that must be taken for the government of Burma to have a better relationship with the United States,” Obama said.
Later today, Obama will travel north to Darwin, which was attacked by the Japanese during World War II and symbolizes the U.S.-Australian alliance. He’ll address Australian troops and U.S. Marines at the Royal Australian Air Force Base.
To contact the reporters on this story: Julianna Goldman in Canberra at jgoldman6@bloomberg.net; Margaret Talev in Canberra at mtalev@bloomberg.net
To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net; Mark Silva at msilva34@bloomberg.net
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