Address by Minister Baird to the International Institute for Strategic Studies

August 3, 2014 – Singapore

Check Against Delivery

Good morning, and thank you for that kind introduction. It’s great to be here at the IISS [International Institute for Strategic Studies] with such a distinguished audience.

I’d like to thank all of you for deciding to start your no doubt busy week by listening to me tell you about how great my country is, and how much I know about Asia.

Does that kind of speech sound familiar? I can’t promise that I won’t do those things, but I did want to take this opportunity to reflect on where I see this region going, and how Canada can and will play a part in that journey.

It’s a good time for me to do so. I’m in the middle of a journey of my own: a two- to three-week tour of East and Southeast Asia.

I’ll be referencing “Asia” a lot in this speech but I’m mostly referring to the Asia-Pacific region, given the focus of my trip.

A trip of this scale gives me the opportunity to visit a few of the big partners at the same time—as well as Singapore, I’ve been to Beijing and Tokyo, and I’ll be going to Jakarta, Hong Kong and Guangzhou.

But I have also had time to get out to some of the newer, less traditional partners.

I made the first visit of a Canadian Foreign Minister to Mongolia, and the first ministerial visit to the young country of Timor-Leste. I will conclude by attending a dialogue with ASEAN as part of my second visit to Burma.

More seriously, I learn primarily through talking to people. During these travels I have listened to and learned from fellow foreign ministers, business leaders, community leaders, security experts, activists and expats.

From these conversations it’s become very clear to me that Canada and Asian nations have more common interests—and collective needs—than ever before.

And that is my message today.

Canada is well placed in the Asia-Pacific. We have strong common interests.

But in an increasingly unstable world, we also have a collective need, not just a desire, to work together.

Canada as a Pacific nation

Let me say at the outset that I am optimistic about the future for Canada and Asia—not just because of specific policies and priorities, but because of our very nature.

Those who know Canada will know that we are, unequivocally, a Pacific nation.

Asia has been, and remains, an important part of Canada’s nation building. We have welcomed large waves of refugees from Korea, Vietnam, Laos and Cambodia who were displaced by war.

When Hong Kong was reverting to mainland rule, large numbers of residents found new homes in Canada. More recently, we welcomed large numbers from India, Pakistan, Sri Lanka and the Philippines.

And we remain open to immigration from Asia today.

Some 60 percent of all new immigration to Canada continues to originate in Asia. It’s a higher number for foreign students, at almost 70 percent. And it is our fastest growing region for tourist arrivals.

Our Asian-Canadian demographics are central to our core identity. They are part and parcel of the basic fabric of our society. And they are one of our greatest strengths as we commit to deepening partnerships in the Asian region.

In fact, in demographic terms, you could say that Canada is as much an Asian country as is Singapore—5 million Canadians claim Asian origin—and that’s the same size as the entire population here.

You could also say that we have the most Asian major city outside of Asia. Almost half—43 percent—of all residents of Vancouver have Asian heritage. Even in Toronto, our biggest city, that figure is over a third.

These are not just numbers. They make a real difference.

The cultural understanding, family links, business ties and language skills of Canadians of Asian heritage are the rivets and buttresses of the Pacific bridge.

To anyone who says that Canada’s geography is a barrier rather than a bridge to deepened relations with Asia, I would point out that Shanghai is closer to the coast of British Columbia than it is to Sydney.

A flight from Vancouver to Beijing is also shorter than one from Sydney. The same is true for Tokyo and Seoul.

Modern connections with Asia and Singapore

For these and many other reasons, Canada already has a deep and growing presence in Asia. Today, Canada’s diplomatic network in Asia is stronger than in any other region. And it is growing.

In the days ahead, I will open our new embassy in Yangon, with more expansion planned elsewhere.

Our first Trade Commissioner abroad was dispatched to the region more than 100 years ago. Some of our great corporations have roots in Asia of more than a century.

I am very aware that for much of humanity’s existence, Asia has been at its centre—Asia as a leader in commerce, governance, science, literature and the arts.

Whenever there is spare time in my schedule, I always make a point of going to at least one cultural or historical site per visit, and I’ve come to develop a real appreciation for Asian art in particular.

Last week in Beijing, I toured some of the museums in the Forbidden City, looking at ceramics that were many centuries old—yet still relatively modern in the context of its ancient civilization.

But what’s changed in the 21st century, compared to the 16th and earlier, is that we are no longer a planet of largely disconnected regions.

We are now an interconnected and interdependent global society, a single pan-regional marketplace that never sleeps, and a marketplace of goods and services, but also of information and ideas.

The world of tall ships, feudal courts, distant frontiers and the occasional marauding army has given way to instant communications, global brands and multinational companies.

In this hyper-connected world, a prosperous Asia means a more prosperous world. What happens in Asia is now instantly felt across the globe.

That means we not only have a stake in Asia’s prosperity, but also in its peace and security, and in its governance.

Given Canada’s open economy and trade dependence—among the highest in the G-7 with some 60 percent of GDP and one in five jobs tied to exports—this is no small matter to Canadians.

We have learned that countries don’t prosper by accident.

Those who capitalize on global opportunities do so through sound policies, political leadership, international strategies and informed populations.

Canada’s traditional trading patterns have naturally involved the United States and Europe. We now know that we must diversify our economic relationships.

And we know that trading relationships don’t happen in isolation from political and security engagement.

We can look to our friendship with Singapore as the benchmark for this level of engagement. In 2015 we will celebrate 50 years of diplomatic relations between our nations.

Singapore is home to thousands of Canadians—a magnet for over $2 billion in Canadian direct investment and a key ally on regional security.

Canada, too, is a key gateway to North America for Singapore. Many of Singapore’s economic and government leaders have studied there. And it invests more in Canada than any other Southeast Asian nation.

I’m looking forward to meeting my counterpart later today to discuss how we can maintain this momentum.

Trading with a changing Asia

I believe that what Canada has to offer meshes neatly with the changing needs of transformed Asian societies.

As incomes rise, Asian populations are looking for safer, higher quality and diversified food products.

Export markets are transitioning into consumer markets.

Populations are demanding a more sustainable environment—in particular improved air quality, but also cleaner water and greener energy.

Families want better educational opportunities to succeed in competitive societies, and insurance services they can rely on.

And modernizing economies means a demand for secure supplies of high-quality raw materials.

Canada is a world leader in each of these fields.

We have world-class companies that are keen to deepen partnerships in the region. We also have smaller, innovative, and rapidly growing firms that are ready to get started.

In turn, as Asian firms are expanding their global reach, our doors are open to Asian direct investment in Canada in these and other sectors. And you’ll find that we have one of the most business-friendly economies in the world by any objective measure.

Our growing trade in China—across ASEAN, and with other major Asian markets—is a testament to this synergy. China has now become our second-largest trading partner after the United States.

My colleague, Minister of International Trade Ed Fast, just announced another four trade offices there, increasing our network of diplomatic and trade offices to 15 and our team of Trade Commissioners to 100.

Canada is, of course, engaged with the Trans-Pacific Partnership negotiations. At the same time, we have just completed negotiations for a free trade agreement with Korea, and are actively negotiating others, including with Japan and India.

We have the unique advantage of not only being a bridge from Asia to North America under NAFTA, but now also to Europe with the recent agreement in principle on a huge Canada-EU Comprehensive Economic and Trade Agreement.

We also know, however, that we can’t afford to be simplistic about Asia.

We know that the process of modernization and development has been uneven in the region. Some Asian nations are being left behind. And progress in some cases remains fragile.

Canada is stepping up its development support in several countries to address these outstanding challenges. We are building on development assistance to Asia over six decades, with current contributions totalling $1 billion every year.

Global instability

So I think we’ve established the reasons for increasing trade and development in Canada and Asia: our closeness geographically, historically, demographically and economically.

But I believe the collective need for this engagement comes from external reasons just as much as internal.

In the coming years it will be a constant challenge for Asia to keep its balance in an increasingly unstable world.

I won’t go through all of the global trends and crises, which an audience of this quality is more than familiar with, but I think it is becoming a fact of life.

When we met last week, my Chinese counterpart said he believed the world is now systemically unstable—and he was quoting from our former British counterpart William Hague.

An inordinate number of column inches and web pixels have been dedicated to the rise of Asian economies, and the world’s increasing dependence on them.

What I don’t think we hear enough about is the growing dependence, even vulnerability, that this creates for those Asian nations too.

I began this speech by showing off about how much time I’ve spent in Southeast Asia in recent years. But I have to admit that there is another region that has as many plane tickets with my name on it: the Middle East.

It is a priority for obvious reasons. In this hyper-connected world, instability in places like Iraq and Syria can have a direct impact on the stability of places like Indonesia and Singapore.

For example, when ISIS began to roll across Iraq, oil prices surged and Asian stock prices fell. So just as transforming Asian nations have evolving economic needs, I believe they have evolving diplomatic needs too.

Growing economies and stature on the world stage should bring with it growing responsibilities beyond domestic and regional borders.

This is already happening to some extent. In my bilateral meetings last week in China and Japan, we spent as much time talking about global issues like Ukraine and Gaza as we did about bilateral issues.

Canada is an outward-facing, open trading nation. We have a long-standing interest, and yes sensitivity, to global issues.

But if that is a problem, we are also a major part of the solution.

I believe there are three strategic areas in which Canada can make a meaningful contribution to stability in Asia: governance, energy security, and security cooperation.

Stable, democratic governance

Let me start with governance and democratic development.

“Stability” has in the past been a watchword for autocrats who seek to justify their top-down control.

But we know that this is a superficial stability, certainly in the medium to long term. My friend the foreign policy commentator Ian Bremmer, describes this well with the “J-curve” concept that the most stable countries are those that are open and democratic.

I have to say, after the seemingly inevitable march of democracy in the later decades of the last century, it often feels like progress has stalled over the past decade.

Fortunately, some of the great democracy success stories of the last generation are found right here in Asia: Korea, Japan, Indonesia and Mongolia.

I am optimistic about a fresh era in Indonesia following its historic elections last month.

This hasn’t been made public yet, but I’ll actually be meeting with president-elect Joko Widodo this evening. So I’m very much looking forward to that.

India’s recent election was also breath-taking in its sheer size, scope and complexity.

But there are clearly also continuing challenges in the region. In some cases, democratic practices are sliding backwards and reforms are stalling.

Vietnam’s restrictions on bloggers. Thailand’s military coup. Sri Lanka’s oppression of its Tamil minority. Pakistan’s vibrant civil society under assault by extremists, sometimes with the support of deep state actors.

And probably worst of all, North Korea’s insistence on remaining in its democratic and moral darkness.

This darkness is quite literal too—if you look at night-time satellite images of the region, there is a North Korea-shaped black hole next to the bright lights of South Korea and other neighbours.

We, of course, need to understand that democratic development takes time. Cultivating a culture of democracy involves entire societies, the old and the young, the rich and the poor.

And we need to engage and support societies as a whole—governments and civil society alike.

To avoid doing so risks nations being held back—both individually and the region as a whole.

Societies that fail to develop democratic checks and balances, transparency and accountability, and freedom of expression, contribute to instability and risks of conflict.

Just look at Russia.

The decline of the Russian Federation’s democratic space in recent years has contributed to a leader who is increasingly insulated from reality, and isolated from his own people.

This has resulted in an aggressive foreign policy, reckless actions, delusional justifications, and an economy in a tailspin.

Russian’s illegal annexation of Crimea was a reversion to 19th-century practices. And its dangerous provocations in eastern Ukraine resulted in the shocking downing of Malaysia Airlines flight MH17.

Successful and enduring societies of the 21st century are not built on strongmen and secrecy. They are rooted in democratic norms and standards, independent institutions, the rule of law and accountable, representative governments.

Democracy is not just about elections. And democracy takes work—from those governing as well as from the governed. It is a journey, not a destination.

Canada is committed to working together with our Asian friends and partners to ensure that this region continues to move forward as a region of democracies. The people of Asia, and the world as a whole, will benefit.

Energy security

The second strategic area I would highlight is energy security.

The IEA [International Energy Agency] projects that most energy demand growth will take place in Asia, with China and India alone accounting for half of that demand expansion.

In a time of global concern about risks in energy supply, the world is looking to Canada as a stable, reliable, resource-rich partner.

We have been blessed with enough resources to become an energy superpower.

Canada has the third-largest proven oil reserves. We are already the fifth-largest crude oil producer and the fifth-largest natural gas producer. We are the second-largest uranium producer and exporter, and a major producer of renewable and clean energy sources.

Not to mention our stable economy, society and democracy.

Secure energy supplies are key to sustained and predictable economic growth in this region, at a time when current sources are predominantly in the volatile Middle East, North Africa and Russia.

This coincides with increased energy self-sufficiency in the United States, Canada’s primary destination for current oil and gas exports.

So there is a natural and mutually beneficial potential to significantly deepening the Canada-Asia energy partnership.

Asia needs more energy—reliable energy. Canada is a natural supplier.

But we have work to do. Canada is committed to expanding our infrastructure to bring our energy to tidewater.

Energy has the potential to transform Canada-Asia relations. It is up to all parties to make that happen. It is in our collective interests to do so.

Security cooperation

Third, and not entirely unrelated to energy security, is the need for security cooperation.

The number of security fault lines and trip wires in Asia are multiplying. They are also becoming more dangerous and unpredictable.

It’s becoming widely recognized that more must be done through institutions in the region to deter, manage and respond to these security tensions.

The world’s prosperity now depends on stability in Asia at least as much as it does on a peaceful and responsibly governed Europe or North America.

The world’s most active shipping lanes are in Asia. Two-thirds of the world’s container traffic comes from here. It is difficult to overstate the importance of Asian seas to global prosperity.

Canada is, naturally, deeply concerned by the rise in tensions surrounding maritime boundary disputes.

We don’t choose sides in maritime boundary disputes. We even have a couple of our own, and we deal with these peacefully.

We do, however, call on nations in the region to refrain from provocative actions, to commit to peaceful solutions, and to strengthen the institutions and norms that can underpin regional stability.

The stakes are too high to fail.

Canada is prepared to do its part to help strengthen peace, security and stability in Asia. And we are well positioned to do so.

We are a founding member of regional institutions, such as APEC and the ASEAN Regional Forum.

Canada has a long and proud tradition of involvement in Asian security.

Whether serving in India, Burma and Hong Kong during WWII, or in the more than 60 missions in the region since 1947—including, of course, the Korean War, and most recently in Afghanistan.

We have stood with our allies and friends in Asia. And we are not turning our backs on Asian security now, nor will we in the future.

I believe that Canada can continue to make a difference in areas of defence and security of priority to the region, and where Canada can really add value—not just maritime security, but in areas like cyber security, military medicine, and counterterrorism capacity building.

A key vehicle for our support is ASEAN. We see ASEAN as a vitally important institution in the region, and welcome its work with China toward establishing a code of conduct for the South China Sea. We urge all countries in the region to embrace such a code.

While in Jakarta tomorrow, I will meet with ASEAN’s Secretary General, Le Luong Minh.

And I can announce today that Canada is committing additional funds—building on the $30 million I announced last year in Brunei—to enhance security cooperation in ASEAN. This funding will help tackle non-traditional security threats such as trafficking and radicalization.

Canada also believes that the East Asia Summit has the potential to evolve into an organization that can play a more consequential role in addressing the complex challenges—economic, socio-cultural, security—that Asia and Canada face together.

We have already signalled our willingness to join the East Asia Summit as soon as it is ready to expand its membership. And we are encouraged by the strong support that Canada’s candidacy has received from across the region.

Conclusion

If we get them right, increased democratic development, energy security, and security cooperation can be pillars of stability in this region.

A secure, stable world is something we should all care about as a value in itself, but seeking it isn’t just about liberal internationalism or being an altruistic global citizen.

The cold hard economic facts demand it too. Prosperity is inextricable from stability and security.

You can’t maximize the potential of a country when its people’s needs are not being satisfied by responsible, responsive governance.

You can’t have a free flow of crucial resources like LNG [liquefied natural gas] when a key maritime area like the South China Sea is bubbling with tensions.

You can’t have a sustainable reliance on certain Middle Eastern sources when a clerical regime in Iran threatens to start a nuclear arms race.

You can’t have open trade when it is necessary to take actions like sanctioning Russia over its provocations in Ukraine.

And frankly, you can’t have a prosperous air industry bringing the world together when planes are being shot out of the sky.

As I conclude, I’d like to reaffirm that on all of the themes I have discussed this morning, Canada’s engagement is particularly strong with Singapore.

This strength comes from the bonds of common values, joint interests and a mutual and enduring commitment to work together in advancing them.

I’d also add that this strength comes from personal connection to my Singaporean counterpart, whose advice I’ve come to greatly value.

I want this to be reflective of our relationship with the rest of the Asia-Pacific region. Canada’s common interest in this region’s peace, prosperity and role in global affairs is clear.

We have deep roots here, and as I have tried to explain today, I firmly believe that both Canada and the countries of the region can and will benefit from deepening them further.

We have an unprecedented opportunity to do so. But it won’t come about without energetic and strategic leadership.

Let’s seize that opportunity today.

Thank you.

Speeches: ASEAN and America: Partners for the Future

As Prepared for Delivery

Thank you, Phil. I’m glad to be in San Francisco, and with all of you here at the Commonwealth Club.

You’re here today because you understand the importance of Asia to America. This is especially evident in a Pacific Coast state like California. More than 5.5 million Asian-Pacific Americans live in California, and millions more Californians do business, study, or otherwise benefit from their ties with the region. California exported nearly $70 billion in goods to the region last year, more than any other state. And Asia matters to the entire United States – to our economy, to our security, to our families.

As a Pacific power and a trading nation, we can’t afford not to be in the Asia-Pacific. That’s why President Obama decided, before he even took office, to institute a long-term, strategic emphasis on the region. And I’m confident that strategy will extend far beyond his presidency, because we have strong bipartisan support for it – both parties understand the importance of Asia.

Now, there is a lot going on in Asia today, from the dramatic rise of China and the historic reforms in Burma, to the ongoing threat from North Korea’s pursuit of nuclear weapons, to the dangerous tensions in the South China Sea.

And while I know that as a topic, “strengthening regional institutions” probably ties for last place with “corporate tax policy” in its headline-grabbing power, it’s one of the most consequential undertakings in terms of American interests. And that’s what I’d like to discuss with you today — namely, the effort to shape a rules-based order that is stable, peaceful, open and free.

First let me say that the region I am responsible for–East Asia and the Pacific–is a diverse one. Northeast Asia, Oceania–which includes Australia, New Zealand, and the Pacific island states–and then Southeast Asia, are all quite different.

Northeast Asia is home to two of our important treaty allies – Japan and the Republic of Korea. We’ve modernized defense cooperation with both countries to address the very real threat posed by North Korea. And we’ve deepened economic engagement through free trade agreements such as the one reached with South Korea.

Northeast Asia is also home, of course, to China–with which we’ve dramatically increased our engagement.

I was with Secretary Kerry, Treasury Secretary Jack Lew, and other Cabinet officials earlier this month for the annual Strategic and Economic Dialogue covering nearly every area of our relationship with China, from concrete steps to combat climate change and wildlife trafficking, to preventing nuclear proliferation on the Korean Peninsula and in Iran, to facilitating business and investment between our two countries.

These exchanges show the conviction of both sides – as the world’s two largest economies, two of the strongest military powers, and the two largest carbon emitters – to cooperate on the world’s toughest problems whenever we can. And just as important, they show our shared commitment to tackle problem areas frankly and openly, instead of merely agreeing to disagree on issues like human rights or intellectual property protection.

Australia, New Zealand, and the Pacific island states are extremely important partners. We’ve upgraded our defense cooperation with our Australian treaty ally, and we’re working to create jobs and shared prosperity with both Australia and New Zealand through the TPP trade agreement.

We’re also working with the vulnerable island states to protect the environment. Last month, Secretary Kerry hosted the “Our Ocean” conference, a first-of-its-kind diplomatic effort rallying heads of state, scientists and advocates from the Pacific Island nations and beyond to protect this shared resource.

But in many respects, the dynamic center of the region is Southeast Asia, and the ten countries that make up ASEAN.

Let me first say a few words about each.

Our ally the Philippines is a stable democracy with strong economic growth. We completed an enhanced defense cooperation agreement during President Obama’s visit in April, which enables us to better address common security challenges and provide relief for disasters, such as Typhoon Haiyan. Our economies also continue to grow closer, with two way trade reaching $24 billion last year.

We have strong partners in Indonesia and Malaysia, both pluralistic and tolerant Muslim-majority nations with growing economies. Indonesia’s recent presidential election shows the strength of their democracy. And President Obama’s recent visit to Malaysia highlighted our growing economic, people-to-people, and security ties.

Singapore is an influential and effective economic, diplomatic and security partner. Brunei is a major energy producer that, while small, has been a valuable partner for us on crucial regional issues like renewable energy and free trade.

Vietnam, of course, has a complicated history with the U.S. But our relations are now flourishing. Trade is increasing dramatically as Vietnam’s economy grows. And we’re forging closer security ties, even as we encourage greater political openness and respect for human rights.

We cooperate with Laos and Cambodia on a range of development issues, and we also push them to adhere to global standards of human rights.

With our longtime treaty ally Thailand, despite the recent setback of a military coup, we remain committed to our enduring friendship.

Perhaps no other country shows the promise of this region better than Burma, which has made a turn of historic proportions towards democracy and reform.

But that turn is by no means complete. Burma faces many challenges, and the success of its reform process is by no means certain. Burma is working to negotiate a lasting peace to end the world’s longest running civil war. It is grappling now with the key issue of constitutional reform, of military versus civilian control over its government, and of who it deems eligible to serve as head of state.

It continues to face hard choices in determining how to resolve an ongoing humanitarian crisis in Rakhine State. On that issue, we have seen some positive movement in the past week, as the government announced its intent to welcome the return of assistance providers, like Doctors Without Borders, and put forth its strategy on how to bring access to livelihoods and security back to populations that have been living tenuously for many months because of ethno-religious violence and discrimination.

Secretary Kerry will be very focused on seeing how this process is proceeding, when he visits in early August. He, and then President Obama when he visits in November, will be keen to get a sense of Burma’s preparedness for its landmark elections next year. The world will be watching, and we will continue to stand with the government and people of Burma as they enter this testing period. So we will continue to press Burma’s leaders to protect and respect all of their peoples, and their human rights and fundamental freedoms. And we will continue to support that country’s transformation.

That’s the overview of Southeast Asia today. The region’s economic dynamism and strategic importance has made it a particular focus of this administration – the ‘rebalance within the rebalance,’ if you will.

These ten countries have many differences, but they are bound by the conviction that they can achieve more together than they can apart. But before we talk about where they’re headed, it’s important to know how they came together.

Today’s ASEAN began in 1967 when the Vietnam War was heating up, and the Cold War seemed never-ending. In this uncertain world, five Southeast Asian nations signed a Declaration that they would support each other as they sought to build prosperous, independent states.

Now, nearly half a century after its founding, ASEAN has doubled to 10 nations with more than 620 million people, and a GDP of $2.2 trillion.

As Southeast Asia has grown and developed, ASEAN’s relations with the U.S. have grown as well. Under our Trade and Investment Framework Agreement signed in 2006, we have deepened our economic ties.

Since President Obama decided in 2009 to sign the Treaty of Amity and Cooperation–a treaty that ASEAN has extended to key neighbors–we’ve deepened our political ties as well. This is shown by the President’s decision to participate annually in the East Asia Summit, as he will again this year in November. This commitment to enhanced engagement with ASEAN is a key feature of the rebalance.

And we’re strengthening our ties with ASEAN across the entire U.S. government. Take this past April, when Secretary Hagel, USAID Administrator Raj Shah, and U.S. Pacific Commander Admiral Sam Locklear hosted defense ministers from the ASEAN nations in Hawai’i. This was the first-ever ASEAN meeting here in the United States–a recognition that our security and prosperity are more intertwined than ever before.

For instance, California already sells over $11.6 billion worth of goods to ASEAN. Exports to ASEAN support more than 90,000 California jobs [in 2012]. And both of those numbers can grow a lot more. Your state also stands to gain from more tourists and students from the region.

And ASEAN matters to the entire United States. We had $206 billion worth of trade in goods last year. ASEAN is our fourth-largest export market and trading partner. With a diaspora reaching across America, the region contributes to our culture. And sitting astride vital trade routes, it is important to our security.

A stable Southeast Asia that meets the aspirations of its people–for economic growth, clean air and water, education, and a voice in how they’re governed–is in America’s national interest. And one of the best, most efficient ways for America to help the region meet its aspirations is by investing in ASEAN.

Strengthening regional institutions is a long-term strategy. We pursue it because it’s essential to building the foundations for progress–from ease of trade, travel and transport, to systems for resolving legal disputes, to the ability to act together on pressing issues like environmental protection. We all benefit from a rules-based system.

Strong institutions harness a powerful force. A force you see in both daily life and in international politics–peer pressure. In fact, ASEAN shows that the best way to create positive peer pressure in the long term is through strong institutions.

ASEAN is working towards forming a cohesive economic community by next year through lower barriers and increased trade volumes with each other. For the U.S. economy, this will mean easier and more efficient market access to all 10 ASEAN countries. And in the longer term, a more prosperous ASEAN will be able to buy more American exports–from farm products to manufactured goods, to services.

Even as ASEAN pursues its ambitious agenda of internal integration, it has taken on the challenge of bringing the entire Asia-Pacific region closer together. This fills an important gap – APEC is a forum for economic cooperation, but there was no forum in the region where countries could deal with political, security, and humanitarian issues.

So in 1997, ASEAN started meetings with Japan, South Korea, and China… then with Australia, India, and New Zealand… and four years ago with the United States and Russia, bringing the number of world leaders attending what is now known as the East Asia Summit to 18.

The growth of the East Asia Summit shows ASEAN’s measured advance on the international stage as the hub that connects the region.

Less visible than the leaders’ summit, but even larger, is the ASEAN Regional Forum, an annual gathering of foreign ministers and other senior officials representing 26 countries from Pakistan to the Pacific Rim, and the EU.

This is perhaps the region’s most important ministerial meeting of the year, and it takes place in a few weeks in Burma. Secretary Kerry and his counterparts will discuss political and security issues, and begin fleshing out the agenda for the East Asia Summit, or EAS, which President Obama plans to attend in November.

Why the emphasis on EAS? In Europe, we’ve seen for decades how a region can develop effective institutions tailored to their unique needs, such as NATO and the OSCE. Those organizations have helped tackle regional, political, security and humanitarian problems. We believe the EAS can become the premier forum for addressing pressing issues in the Asia-Pacific region. But it is relatively new, and members are still trying to shape it to increase its usefulness and effectiveness.

We joined EAS because, as an Asia-Pacific nation, we want to be at the table for a strategic discussion about how we build and shape the institution over time.

Let me give you a little preview of the issues that will be at the top of Secretary Kerry’s agenda. We expect to advance collaboration on issues ranging from non-proliferation to humanitarian assistance and disaster response.

Disaster response is incredibly important, since the Asia-Pacific is hit by 70 percent of all natural disasters, costing the region $68 billion annually over the past ten years.

We have worked closely with partners, including China, on improving regional responses to problems and accidents such as oil spills, for example. We are supporting the EAS declaration on Rapid Disaster Response, helping spread the lessons learned in the Philippines from the recent Super-typhoon Haiyan, and working to improve the capabilities of ASEAN’s Centre for Humanitarian Assistance and disaster relief.

We’ve also teamed up with regional partners to develop a strategic plan for exercises that will prepare us to better coordinate delivery of life-saving relief in future disasters. And we are preparing to host an ARF climate change adaptation workshop to help countries protect their people from this growing problem.

In addition to advancing these areas of collaboration, we will have frank discussions about pressing political and security challenges. In recent months, the main security challenge facing ASEAN has been tensions in the South China Sea.

This is, of course, most important to the countries with overlapping territorial and maritime claims there. Let me note up front that the U.S. is not a claimant and does not take a position on others’ claims to land features in the South China Sea. So the United States can be impartial. And we are impartial; we are not taking one claimant’s side against another.

However, peace and stability in the South China Sea is important to the international community, because the South China Sea is essential to the global economy. Up to 50 percent of the world’s oil tanker shipments, and over half of the world’s merchant tonnage, pass through the South China Sea. National interests like freedom of navigation, international law, the peaceful settlement of disputes, and unimpeded commerce are at stake.

Rival maritime and territorial claims have existed here for decades, as countries jostle over islands, shipping lanes, historically rich fisheries, and more recently, oil and gas reserves.

The claimants have, at various times, shown that cooperation in the South China Sea area is possible. They have jointly explored for and managed resources. The Philippines and Indonesia peacefully settled a 20-year maritime boundary dispute just outside the Sea earlier this year. China and Vietnam have settled similar issues in the past. And some claimants have jointly developed energy resources further away from disputed land features.

In 2002, the ASEAN nations and China signed a Declaration on Conduct in the South China Sea. The Declaration, among other things, said that the parties would resolve disputes peacefully and in accordance with international law, and would refrain from actions that would escalate disputes, such as setting up new outposts on unoccupied features. And they agreed to work toward a more detailed Code of Conduct.

But tensions have flared over the years as well, and this year, they are running high. No claimant is solely responsible for the state of tensions. However, big and powerful countries have a special responsibility to show restraint. China’s recent pattern of assertive, unilateral behavior has raised serious concerns about China’s expansive claims, and its willingness to adhere to international law and standards.

Tensions spiked recently when China sent a deepwater drilling rig and armed ships into an area near the Paracel Islands that Vietnam also claims. The resulting weeks-long confrontation resulted in damaged ships, including the sinking of a Vietnamese fishing vessel, and damaged relations, including anti-Chinese riots in Vietnam.

At the same time, public evidence indicates the claimants are upgrading outposts on small land features in the South China Sea. What worries me is that China’s projects are far outpacing similar upgrades that other claimants are making. This important, resource-rich area should not be heavily militarized.

And actions off the water can raise tensions as well.

All parties should be able to bring disputes for adjudication under international law if they conclude that regular diplomatic efforts will not succeed. The Philippines has done this in a dispute with China over the validity of its claim that a 1948 Nationalist Chinese map “proves” that China owns the land and water within a “9 dash line” in the South China Sea.

But instead of engaging constructively and arguing its case as the Tribunal has proposed, China has pressured the Philippines to drop its case, and attempted to isolate the Philippines diplomatically.

International law, not national power, should be the basis for pursuing maritime claims in the South China Sea.

The United States works to lower tensions and help the parties peacefully manage their disputes in several ways. We have told the claimants – including the Chinese – directly and at the highest levels, of our growing concern. And we’ve encouraged all sides to avoid provocations and make clear claims based on international law.

We’re working with ASEAN and the international community to promote regional structures and arrangements, like a meaningful Code of Conduct, to lower tensions and manage disputes.

Rules and guidelines work best when they’re agreed to by the parties, through institutions that build habits of cooperation.

The U.S. is also investing more than $156 million in the civilian maritime capabilities of allies and partners in the area over the next two years. This includes equipment, training, and infrastructure. And it augments our own security presence in the region, which has been enhanced by the rebalance.

These are steps the U.S. is taking. But the claimants are the ones who must manage and settle the disputes. They are the ones who must generate the peer pressure – who must hold themselves to high standards, and then set an example for each other.

For instance, China and ASEAN already committed under the 2002 Declaration on Conduct to avoid activities that “would complicate or escalate disputes and affect peace and stability.”

However, these problematic activities are not well defined. We are urging China and the other claimants to have a conversation about what activities are acceptable to each of them – both to help reduce tensions now, and manage differences in the long run.

We have called for claimant states to define and voluntarily freeze problematic activities. The exact elements of a freeze would be decided by consensus among the claimants, and would not prejudice the competing claims.

We’ve offered these ideas, in greater detail, both in public and in private. And we plan on advancing this important discussion at the upcoming ASEAN Regional Forum meeting in Burma.

Over time, strong institutions can influence the conduct of all their members, helping to avoid conflict and incentivize peaceful resolution of disputes. We see beneficial outcomes of positive peer pressure with environmental issues, in trade, and human rights. It doesn’t work every time, but it’s responsible for enormous progress.

The Asia-Pacific region has almost limitless potential, if it can avoid the pitfalls ahead. Strong institutions are key – not just to avoid and resolve disputes, but also to lower barriers to trade, and protect human rights and fundamental freedoms.

The U.S., as a resident Pacific power and participant in many of the region’s institutions, will do all we can to strengthen those institutions even further.

We do this through our alliances and our security partnerships–and through our growing business and people-to-people ties, in which California plays an incredibly large role. And together, the American people and our government will continue to help provide a foundation of peace and stability on which the region can grow.