America pivots south

  • There is a real opportunity at hand for expanded US engagement with Asia, including Nepal
America pivots south

Feb 1, 2015-

Nepal might not yet be on a US president’s travel agenda but a much anticipated recent return visit to India by US President Barack Obama may signify that South Asia is finally getting some well-deserved attention as part of the so-called American rebalance—or what was once known as the ‘pivot’—to Asia. Who knows? Nepal—and the Himalaya’s glaciers—might be next. After all, climate change seems to be very much on this US president’s agenda.

That’s a welcome change, as America and America’s policymakers wake up to the obvious, namely that there is more to Asia than China, and that a South Asia strategy must be more than a grab bag of programmes seeking to match China’s efforts.

Yet, in his State of the Union address to the American public this January, Obama gave short shrift to Asia, while proclaiming past successes and outlining an agenda for further improving the US economy. “The shadow of crisis has passed,” he declared, “and the state of the union is strong.”  

Pointedly, the US president chose not to use his 70-minute annual address, to explain what can be a critical part of his economic agenda. That is, increased engagement and strengthened trade relations with the entire Asia-Pacific region, including nations, such as India and Nepal, which rarely make the US headlines.  

Too often, East Asia alone has seemed the predominant focus of the US policy pivot eastward. Understandably, there might have been no mention of tiny Nepal, but there also was no mention even of his then upcoming visit to India. Americans may well have wondered where their president had gone so soon after concluding his State of the Union address.

Expanding engagement

Now, back in Washington after his trip to India—the first time a sitting US president has visited that nation twice—Obama has some easy explaining to do. Indeed, a real opportunity for expanded engagement to go beyond East Asia is at hand, and Nepal could be part of it.

The Asian Development Bank estimated that Nepal’s economy grew by an estimated 5.2 percent in the 2014 fiscal year, exceeding forecast. But, it will have to grow nearly double this rate if it is to reduce the staggering level of unemployment, which stands at 46 percent. A US ‘business pivot’, which brings investment and jobs, could be instrumental in achieving this, and would be good for both the US and Nepal.

There is an admittedly small, relative to India, but solid base of trade and investment, to build on. Nepal and the US had some $110 million in total two-way goods trade during 2013, according to the Office of the US Trade Representative. US goods exports to Nepal totalled $33 million, while goods imports from Nepal totalled $78 million. By import category, the US, in 2013, imported some $35 million in textile floor coverings, $10 million in woven apparel, $6 million in art and antiques, $5 million in knit apparel, and $3 million in leather goods from Nepal. According to the latest available data, US foreign direct investment (FDI) in Nepal (stock) was $5 million in 2012, up 25 percent from 2011.

And in the area of education exchange, small numbers can matter. At historic Howard University in Washington, DC, a quarter of  incoming freshmen from overseas come from Nepal, according to the Washington Post. The students from Nepal, some 26 at last count, outnumber Jamaicans, Nigerians, and every other international group in the class of 2018.  

Rebalancing the rebalance

So, what might an expanded US pivot to all of Asia, including Nepal—a rebalance of the rebalance if you will—encompass?

First, the US must embrace a ‘business pivot’ that goes beyond the China marketplace, and that looks to opportunities that exist in South Asia and Southeast Asia.  Already, US investment in Southeast Asia surpasses that in four BRIC nations—Brazil, Russia, India, and China—and can be built upon. This would entail a concerted effort to ‘geographically rebalance’ US efforts across the region, with a particular emphasis on strengthening economic ties with South Asia.

Second, a bipartisan effort is needed to implement a trade policy that benefits small businesses, not just big multinationals. Additionally, Washington must also set an example for the rest of the world by ensuring that intellectual property rights are protected, and that tax policies do not discourage business success by its own citizens, particularly American entrepreneurs, whether working directly in Asia or exporting product from America.

Third, US companies must also do their part by acting responsibly in every market they operate. This may well entail going beyond the letter of the law in the emerging markets of South Asia and Southeast Asia such as Nepal and Cambodia, where regulatory deficiencies make it challenging to operate, but where US investment and good practices can have a significant impact.

Though major US companies such as Microsoft and Coca-Cola might capture the most attention given their size, American entrepreneurs and small businesses also can have an impact on the ground in Nepal, and this too should be encouraged. As an example, US Ambassador Peter Bodde last year highlighted in a speech a software company in Kathmandu called Cloud Factory. The small business was founded by an American who came here as a tourist and, according to the ambassador, was amazed by the talent that he saw in Nepal.  Like many entrepreneurs, the founder saw an opportunity and built a company around it.  

A central benefit of peace and stability in Asia—a stated goal of the US rebalance to the region—is greater commercial opportunities throughout Asia. Trade and economic ties can be part of the means to a strategic solution in the region, and not just the ends. This can also be true in a strengthened, deeper US-Nepal relationship.

State visits to India, State of the Union addresses, and participation in Asia’s annual array of summits may provide for beautiful photos, but what really matters is the hard work that follows. America certainly matters to Asia, but building the support of the American people and the US Congress for strengthened economic and trade ties with not just India but the entire Asia-Pacific region—including the smaller nations of South Asia such as Bhutan, Sri Lanka, and Nepal—will also require US leaders who are also serious about showing that Asia matters to America.  

Chin, a former US ambassador to the Asian Development Bank, is a managing director of the advisory firm RiverPeak Group. Collazo is a Southeast Asia analyst and an associate of River Peak Group  

@CurtisSChin @JoseBCollazo

Published: 02-02-2015 09:16

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