Foreign Relations of the United States, 1981–1988, Volume I, Foundations of Foreign Policy

229. Address by the Under Secretary of State for Political Affairs (Armacost)¹

New York, January 29, 1985

The Asia-Pacific Region: A Forward Look

As the Reagan Administration begins its second term, it is a timely moment to take stock, to identify salient trends and notable developments in the Pacific, and to examine their implications for American interests. Let me begin with three general observations.

First, the growing interest of the United States in East Asia and the Pacific is widely acknowledged. The reasons are clear. Our trade with the Pacific Basin exceeds our trade with Europe and is growing more rapidly. Political cooperation with Asian friends is growing apace. We have learned through bitter experience that a balance of forces in the region is indispensable to our own security and that no equilibrium can be achieved without our active participation. A growing appreciation of the importance of Asia has been buttressed in recent years by the influx of hundreds of thousands of Asian immigrants, who are making an extraordinary contribution to our national life in every field of human endeavor.

Second, there is a growing national consensus regarding the importance of our ties to the Pacific and, I might add, the efficacy and advisability of the policies we are pursuing there. This consensus was evident in last year’s election campaign which, for the first time in a generation, provoked no partisan debate or controversy over Asia policy.

Third, the growing American interest in Asia need not come at the expense of our interests in other regions. My predecessor, Larry Eagleburger, suggested about a year ago that the center of gravity in American politics was shifting westward and that our interests would shift increasingly toward the Pacific as a result of the economic and technological dynamism of that part of the world. His remarks greatly alarmed many Europeans, whose worst fears, I suspect, were confirmed by my appointment to succeed Larry.²

These fears are groundless. As we have consistently reminded our European friends, a strong American strategic presence in East Asia contributes directly to European security by confronting the Soviets with the prospect of a two-front war if they undertake aggressive moves on the Continent. By the same token, our efforts to liberalize access to the Asian market afford European as well as American entrepreneurs expanded trading opportunities.

But it is not my purpose to speak about European fears concerning a “Pacific era.” I wish, rather, to speak of the policy opportunities and problems which face the United States in that region—so let me turn to recent developments in Asia.

Regional Developments

I would single out these items of major consequence, beginning with the good news.

First, I’d mention the extraordinary economic dynamism of the region. Although America’s recovery has been the engine of growth for the world economy during the last 2 years, the East Asia-Pacific economies have, year-in and year-out, displayed the greatest resilience and the world’s highest rates of growth. Our trade with the region is immense. Preliminary data indicate that, in calendar year 1984, U.S. exports to the East Asia-Pacific region were valued at $54.6 billion; our imports from that region, $114 billion. U.S. investments in the Pacific are conservatively valued at over $30 billion. Since East Asian economies generally pursue export-led growth, periods of U.S. expansion inevitably lead to large increases in our imports from the Pacific, and we pile up huge trade deficits. Asia now accounts for more than 50% of our global deficit. This pattern will presumably continue, though hopefully at a lower level in 1985.

Second, Japan continues to assume a political role more commensurate with its economic power. Prime Minister Nakasone has continued his predecessor’s search for a policy of “comprehensive security”; he is associating Japan more closely with the West through his determination that Japan shall be seen and accepted as a “full partner with the West”; he is promoting Tokyo’s accomplishment of defensive military roles and missions; and he is further expanding the scope and strategic importance of Japan’s economic aid contributions.

Third, China is redoubling its modernization efforts and has embarked on a stunning program of economic reform. While China remains a planned, socialist economy, market forces are playing an expanding role, and the Chinese—while praising Marx—are openly questioning his relevance. The most dramatic results of reform are apparent in the countryside in increased productivity and higher peasant incomes. Reform of the industrial sector will be more difficult, but [Chairman of the Central Military Commission] Deng [Xiaoping] appears determined to press ahead. To spur technological change, China’s policy of opening to the outside encourages imports of foreign products, capital, and management skills, and promotes investment in joint ventures. The Chinese are permitting localities and provinces broader autonomy in dealing with the outside world.

We have a strong interest in a modernized China which is open to foreign trade and investment and which, consequently, creates economic opportunities for the United States and other developed countries. This process strengthens China’s resolve to broaden and deepen cooperative arrangements with the West, even as it gives it parallel incentives for reducing the risks of conflict with the Soviet Union.

In the recent negotiations on the future of Hong Kong, both Beijing and London displayed an admirable combination of pragmatism and patience in working toward a satisfactory agreement. The detail of the transitional arrangements plus the lengthy period of the post-1997 transition should provide investors with ample reason for sustained confidence in the future of Hong Kong as an attractive and thriving commercial center.

Fourth, there have been some hints of change in the relations between North and South Korea. One round of direct economic talks were held in mid-November, as was a preparatory round of North-South Red Cross talks on family reunification and other humanitarian issues.³ Regrettably, North Korea postponed scheduled talks in December and seized on the annual U.S. “Team Spirit” military exercise with the R.O.K. [Republic of Korea] to postpone economic talks that had been scheduled in January.⁴ We hope these discussions will resume in the spring.

Other developments have a less sanguine appearance.

First, the Soviet Union continues its military buildup in East Asia and the Pacific. Its Pacific fleet is now its largest. Its facilities in Vietnam continue to expand, thus extending the “reach” of Soviet naval forces in the west Pacific and Indian Oceans. It is deploying its most advanced equipment to forces along China’s frontier.

Fortunately, the Soviet Union has not yet been able to translate this growing military power into effective political influence. Its ideological appeal in Asia remains negligible, its economic leverage limited. Territorial disputes with Japan and China limit prospects of accommodation with its most important Asian neighbors, and its support for Vietnam fuels the suspicion with which all ASEAN [Association of Southeast Asian Nations] states regard Moscow.

Second, the Vietnamese show no signs of reducing their military pressure on Cambodia. Nor, despite more moderate rhetoric recently, do they seem willing to negotiate a political solution to the problem. The coalition embracing Prince Sihanouk and Son Sann as well as the Khmer Rouge has earned Cambodia’s resistance greater international support. However, the sustainability of the coalition and its acceptability to the Cambodian people require that the noncommunist factions increase their strength relative to the Khmer Rouge.

Third, East Asia’s relative stability is tempered by the reality of human mortality and the prospect of political transitions in several important countries. Chiang Ching-kuo, Lee Kuan Yew, Suharto, and Marcos [leaders of Taiwan, Singapore, Indonesia, and the Philippines, respectively] have all exercised power for many years. Much attention has already been directed to Deng Xiaoping’s efforts to ensure the continuation of his policies in China. Kim Il-sung has groomed his son to succeed him in North Korea. Vietnam’s collective leadership has seen little new blood for decades. As these leaders age, succession politics becomes a source of uncertainty and potential instability in those countries whose political institutions are weak. At the same time, there is hope in some countries that changes could bring about increased popular participation in the political and economic process.

Fourth, antinuclear sentiment is rising in the South Pacific. An allergy to nuclear weapons has existed there for some time, sustained by regional concerns about current nuclear testing by France, along with the more general problem of disposing of radioactive wastes. The election of a Labor government in New Zealand committed to banning from its ports and territorial waters all nuclear-powered and nuclear-armed ships has brought this issue to the fore and is imposing strains on ANZUS [Australia, New Zealand, United States Security Treaty]—one of our oldest alliances.⁵

These then are the most salient developments—favorable and otherwise. They bring opportunities for the United States to:

• Expand commercial and investment opportunities;
• Associate Japan even more closely with the West;
• Propel China toward patterns of closer cooperation with us;
• Work constructively with regional groupings in the area, particularly ASEAN; and
• Foster a North-South dialogue on the Korean Peninsula.

There are also risks:

• That burgeoning trade deficits will stimulate increased protectionist sentiment and protectionist trade measures in the Congress;
• That succession crises could lead to political instability adversely affecting our financial flows, economic development, and strategic interests;
• That antinuclear sentiment could check our naval access to New Zealand and vitiate a key alliance;
• That failure to address the imbalance within the Cambodian resistance could undermine future possibilities for a political solution; and
• That the Soviet Union will continue to build its military strength in Asia while playing for any diplomatic and political breaks that may come along.

The Major Policy Challenges

Let me comment briefly on our major policy challenges in the period ahead.

Our growing trade deficit with Asia highlights the need for a new trade round which the Administration—along with the Japanese—endorsed at the last London summit.⁶ A new round not only would help in checking protectionist pressures but could extend liberalization into the important fields of agricultural trade, the service sector, and high technology. Pending the initiation of a general round of trade negotiations, we will be focusing particular attention on opening Japan’s market further. Talks are now being held in Tokyo to kick off sectoral negotiations in the fields of electronics, telecommunications, forest products, medical equipment, and pharmaceuticals.⁷ Progress in these negotiations will be the subject of our subcabinet consultations in March.⁸

In addition, we have an intensive round of consultations coming up with ASEAN. U.S. Special Trade Representative Bill Brock will meet with the ASEAN trade ministers in Malaysia in early February.⁹ One focus of his talks will be proposals for a U.S.-ASEAN reciprocal trading arrangement, as well as a new multilateral trade negotiating round. We will meet in Washington in late March or early April with ASEAN economic and trade ministers for our periodic high-level dialogue covering both policy and practical trade and investment matters.¹⁰ And Secretary Shultz will again lead our delegation to the ASEAN Post Ministerial consultations to be held this year in mid-July in Kuala Lumpur.¹¹

I have mentioned the Philippines, where we face significant problems. Since the assassination of Ninoy Aquino,¹² the United States has consistently pressed for a thorough, impartial, and complete investigation of the killing and urged Philippine authorities to open up the political process and rely more heavily upon market forces to stimulate a revival of economic growth.

During the last year, there has been some progress. A forthright report was produced by the Agrava Board; indictments have been brought against key military leaders for participation in a conspiracy to murder Aquino and cover up their involvement. Restrictions on press freedoms have been relaxed; political activity has been resumed by opposition groups; the procedures for succession have been altered; relatively free elections held; opposition representation in the legislature increased; constraints on the arbitrary power of the government multiplied; an IMF [International Monetary Fund] agreement initialed; and a restructuring of Philippine debt negotiated.

We shall continue to encourage the further democratization of Philippine politics, the opening up of the Philippine economy to the freer interplay of market forces, and reform of the military—which requires, above all, unsullied leadership—to enable the Philippine Armed Forces to counter a growing insurgency in rural areas.

Much remains to be done, but we should neither exaggerate our capacity to shape internal developments in the Philippines nor offer gratuitous public criticism and counsel. Nonetheless, we do have significant influence and should continue to exercise it to promote the strengthening of democratic institutions. We shall try to be helpful both through the advice we extend quietly to the regime and through the contacts we maintain with the opposition.

Vis-a-vis Japan, our policies are well defined. The President’s meeting with Prime Minister Nakasone earlier this month¹³ resulted in a renewed commitment by both sides to work closely together on a variety of global issues. There was also agreement to address promptly the problems in our economic relationship—the urged need for more balanced trade and extension of the role of the yen as an international currency. We shall continue to urge Japan to assume a larger responsibility for its own conventional defense while extending the range of its surveillance and patrolling capabilities along its sealanes to the south. We will not, however, encourage Japan’s assumption of regional military security responsibilities.

We will consult with the Japanese on how best to coordinate our growing foreign assistance efforts, not only in Asia but throughout the world. Japan is already a leading donor not only to East Asia but also countries like Pakistan, Turkey, Egypt, and Sudan—countries which the Japanese consider important to the security of the West. In close coordination with us, Japan has also provided significant support for Afghan and Cambodian refugees and has responded generously to the emergency situation in Africa.

With China, we shall continue to nurture an expanding economic relationship. China’s economic modernization will contribute to regional stability and progress, even as it will generate new issues in our bilateral relationship and place China in competition with several of its Asian neighbors for access to our market. Care will be necessary to ensure that our own trade policies encourage the Chinese to continue to look to us for the technology, products, and capital they need.

On the military side, our help—in the form of technology transfer and sales of equipment—can help Beijing bolster its defenses along the northern border. As we expand cooperative arrangements in the military field as in others, we must remain sensitive to the views of our other friends and allies in the region, and that will counsel close consultations and caution in helping China strengthen its defensive capabilities.

As we continue to expand and improve our ties with the People’s Republic of China, we will maintain our unofficial links with Taiwan. We have a continued interest in the well-being and prosperity of the people of Taiwan and note that our economic ties, though troubled by a large deficit, have grown dramatically in the past decade.

In Korea, we should sustain close cooperation with the R.O.K. as it explores the potential for direct North-South talks. In the past the North has sought to ignore the South in order to resolve basic issues with us. We shall resist being drawn into talks with Pyongyang at the South’s expense. There can be no durable reduction of tension on the peninsula until North and South Korea resolve through direct negotiations the basic issues which divide them. South Korea consistently has proposed that Pyongyang join in agreeing to various confidence-building measures. That is a sensible strategy and deserves our support. Indeed, all regional powers share a responsibility to do whatever they can to promote stability and ensure peace on the peninsula.

With regard to the other friendly nations of Southeast Asia and ASEAN collectively, we will continue our unambiguous support of efforts to achieve a political settlement in Cambodia as part of our fundamental policy of upholding the national integrity of these peaceful and free countries. Thailand, as the “front-line” state, plays a crucial role in those efforts, and its security will remain a paramount concern to us. We want to further our close economic cooperation with ASEAN—as typified by the extensive range of consultations I mentioned earlier—and we will do everything possible to combat protectionism in the interest of long-term mutual benefit, investment, and trade expansion. We will also continue to consult closely with ASEAN on other matters of common interest.

We must sustain our support for the noncommunist resistance elements in Cambodia. Our support is essentially humanitarian and political, and that should be increased. They need our help, and without it the growing Khmer Rouge dominance within the resistance will harden Vietnamese intransigence, undercut Sihanouk’s role, and reduce prospects for a future political accommodation.

In addition to our objective of seeking a Cambodia free from Vietnamese domination, we will continue to work with the nations of Southeast Asia in our efforts to manage the human problems created by the continuing flow of refugees from Indochina. On the question of refugees—and in the important effort to seek additional information on U.S. personnel still missing in action from the Vietnamese war—we will continue to engage Hanoi, both directly and through appropriate international organizations.

In the South Pacific, if the Lange government in New Zealand continues to challenge nuclear-powered warship visits or insists upon no visits by nuclear-armed ships, the future of our alliance relationship with New Zealand is in jeopardy. It is scarcely possible to maintain a defensive alliance without the regular interaction between military establishments which gives practical meaning to such an alliance. Thus, we have worked for the removal of barriers and efforts to discriminate among our forces according to their weaponry or propulsion. We have sought to give the Lange government time to alter the consensus within the governing party. But we have also insisted that we need concrete indications that progress is being made and that a restoration of normal access is possible within a reasonable timeframe.

The problem with New Zealand underlines the importance of our ties with Australia. Prime Minister Hawke will be visiting Washington, February 5–7.¹⁴ The security situation in Asia and the Pacific, along with East-West issues, will be high on the agenda. We will be discussing with the Prime Minister the key contribution that Western strength and unity have made to the resumption of U.S.-Soviet arms control discussions. I am sure that we will also be discussing ways in which we can both seek to convince the Government of New Zealand to restore its full cooperation in the ANZUS alliance.

During the months ahead, we will be following through in completing the transition to free association with the Federated States of Micronesia and the [Republic of the] Marshall Islands, and we will continue to work with the elected leadership on Palau as it likewise seeks to work out a future relationship with us under the Compact of Free Association. The Northern Mariana Islands have already opted to enter into a commonwealth status with us upon termination of the trust.

As for Soviet ambitions in Asia and the Pacific, we need not be obsessed with their prospects in the region. They are playing with a weak hand politically and have regularly displayed the kind of cultural insensitivity which undercuts their prospects for gains. But we cannot ignore their growing military strength and must work to counteract it by maintaining a strong presence of our own and by bolstering mutual defense arrangements with our friends.

Conclusion

You will note that I have avoided any grand design for American policy in the next 4 years. The hallmark of our approach is the patient tending of policy lines that have already been well laid. This is an approach more akin to gardening than to architecture. The roots of our policy, I believe, are strong. Our prospects are good. The current requirement is patience, attentiveness, and perseverance rather than dramatic new initiatives.

1. Source: Department of State Bulletin, April 1985, pp. 34–37. All brackets are in the original. Armacost spoke before the Far East-America Council/Asia Society.
2. See Document 188 and footnote 2 thereto.
3. North and South Korean officials met in Panmunjom November 15, 1984, to outline goals for continued talks on economic issues. (Clyde Haberman, “North and South Korea Hold Talks on Economic Contacts,” New York Times, November 16, 1984, p. A6) Meeting in Panmunjom on November 20, North and South Korean officials agreed to resume talks on family reunification, to be conducted by their respective Red Cross societies. The talks would begin in Seoul and then, if necessary, reconvene in Panmunjom. (John Burgess, “Koreans Agree to Talks On Reuniting Families,” Washington Post, November 21, 1984, p. A10)
4. On January 9, the North Koreans called off both the economic and Red Cross talks scheduled to take place during January, citing the annual U.S.-South Korean joint exercise scheduled to take place beginning February 1. The North Korean message “conveyed to the South over a special telephone hotline, called ‘Team Spirit’ a ‘provocative act and an insult to us who made a peaceful proposition.’ Conducting it during the talks served to create an ‘artificial obstacle’ to progress, it said.” (John Burgess, “N. Korea Cancels Talks, Citing U.S. Exercises,” Washington Post, January 10, 1985, p. A24)
5. In general elections held on July 14, 1984, the New Zealand Labor Party defeated the conservative National Party. David Lange became the next Prime Minister of New Zealand. (Bernard Gwertzman, “Conservatives Ousted in New Zealand Voting,” New York Times, July 15, 1984, pp. 2, 17)
6. See footnote 5, Document 198.
7. Wallis led the delegation to the initial round of talks in Tokyo, January 28–29. In telegram 2170 from Tokyo, January 31, the Embassy summarized the talks. (Department of State, Central Foreign Policy File, Electronic Telegrams, D850069–0012) Documentation on the talks is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXI, Japan; Korea, 1985–1988.
8. The economic sub-cabinet consultations took place in Tokyo, March 14–15. In telegram 5690 from Tokyo, March 19, the Embassy provided a summary of the consultations, noting that they “began with a frank opening statement in which Undersecretary Wallis warned of the crisis in U.S.-Japan trade relations and urged rapid marketing opening as a solution.” (Department of State, Central Foreign Policy File, Electronic Telegrams, D850185–0549)
9. In telegram 1268 from Kuala Lumpur, February 11, the Embassy noted that the February 7–9 ASEAN economic ministers conference “provided an excellent opportunity for Ambassador Brock to hold consultations on a wide range of trade issues with ASEAN ministers.” (Department of State, Central Foreign Policy File, Electronic Telegrams, D850094–0634)
10. The sixth annual ASEAN-U.S. dialogue was scheduled to take place in Washington, April 2–3. For the text of Shultz and Wallis’s April 2 statements and a joint statement released on April 3, see Department of State Bulletin, June 1985, pp. 41–45.
11. Scheduled to take place July 10–12.
12. Aquino was assassinated at Manila International Airport on August 21, 1983.
13. See footnote 5, Document 220.
14. Documentation on Hawke’s visit is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXII, Southeast Asia; Pacific.