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Shanghai, China




      Junaid Haq
     Elvin Ivan Uy
     James Yeung
International Policy & Politics
      21 October 2010
Kuala Lumpur, Malaysia




   Overview of ASEAN
   By the Numbers: China & ASEAN
   The ASEAN-China Free Trade Agreement
   Disputes in the South China Sea
   Implications for the U.S.
   Concluding Thoughts
   Questions for Discussion

                                                    2
Total Population (2009)


                           China

                                                        1.33 Billion

                   Myanmar
                     60M     Laos
                             6M
                       Thailand
                           67M     Vietnam
                                     87M         Philippines
                            Cambodia                92M
                               14M

     592 Million                       Brunei
                               Malaysia 0.4M
                                    28M
                           Singapore
                               5M
                                                Indonesia
                                                 232M


                                                                       3
Nominal GDP (2009)


                           China

                                                     $4.98 Trillion

                Myanmar
                    $34B    Laos
                             $6B
                       Thailand
                           $264B   Vietnam
                                     $93B        Philippines
                            Cambodia               $161B
                              $11B

   $1.49 Trillion                      Brunei
                               Malaysia $10B
                                   $193B
                           Singapore
                             $182B
                                                Indonesia
                                                 $539B


                                                                      4
Bangkok, Thailand




         Established by Indonesia, Malaysia, Philippines, Singapore, Thailand
          in August 1967
         Brunei (1984), Vietnam (1995), Lao PDR & Myanmar (1997),
          Cambodia (1999) joined later
         Aims & Purposes:
           – Economic growth, social progress, cultural development
           – Regional peace & stability
         Fundamental Principles:
           – mutual respect & non-interference on internal affairs
           – Peaceful settlement of disputes
           – Effective cooperation
         A diverse grouping of countries
Source: ASEAN. (n.d.) About ASEAN.                                               5
China                  ASEAN                           Total
              Population (2009)                         1,334Mn                      592Mn                          1,926Mn
              GDP (nom, 2009)                            $4.98Tn                    $1.49Tn                         $6.47Tn
              Export to (2008)                         $107.1Bn                     $85.6Bn

                                                        ASEAN Total Trade & Net Import with China ($Mn)
      Top Trade Partners:                                                             Tota Trade      Net Import

       1. Japan                                       50,000                                                           192,672   200,000
                                                                                                           171,118
       2. E.U.                                        40,000
                                                                                            139,961
                                                                                                                                 160,000


       3.China                                        30,000
                                                                            113,394                                              120,000

       4. U.S.                                                    89,066                                                21,557
                                                      20,000                                               15,228                80,000


                                                                             8,879           9,941
                                                      10,000       6,362                                                         40,000



                                                          -                                                                      -
                                                                    2004     2005             2006           2007        2008

Source: Population & GDP data from IMF, ASEAN-China trade data from ASEAN                                                             6
High quality                        1
   of life
                                                                                         Australia
                                              Japan                                                                         U.S.
                                  0.95                                                                                                 Singapore

                                   0.9


                                                Size of bubble based on GDP per capita
        Human Development Index




                                  0.85
                                                                                                     Malaysia
                                   0.8                growth rate from 2000-2009
                                                                                                                                        Thailand
                                                                                                                                   China
                                  0.75                                                                                                             Philippines
                                                                                                                Indonesia
                                                                                                     Vietnam
                                   0.7


                                  0.65

                                                                        Lao PDR
                                   0.6                                                                                  Cambodia

                                  0.55


                                   0.5
                                         24                  29                     34                          39                                     44

                                                                                     GINI Index
                                                                                                                                              High economic
                                                                                                                                                inequality

Source: Gini Coefficient & HDI data from UNDP, GDP per capita growth rate data from World Bank                                                                   7
Ilocos Norte, Philippines




         China part of ASEAN+3 (with Japan & South Korea)
         Closer ties post 1997 Asian Financial Crisis
         Increased need to trade with China due to Japan’s “lost
          decade”; diversification for ASEAN
         Complementary with SG (e.g. services), competitive with
          others (i.e. export-oriented labor intensive manufacturing
          industries)
         Trade in goods signed on 2004, in services on 2007
         ASEAN exports mostly raw materials (e.g.
          rubber, metals), energy products (e.g. oil), agricultural
          produce (e.g. rice, coffee) to China
         China exports textile and electronics, invests in countries

Source: Gao, H. (2009, Dec). China’s Strategy for FTA: Political Battle in the Name of Trade. Singapore Management University.                      8
Angkor, Cambodia




         3rd largest FTA by GDP, largest by population
         11 parties constitute 13.3% of global trade, half of
          total trade in Asia (2008)
         “mutually dependent & beneficial relationship”
         China’s growth a plus for ASEAN
         ASEAN to be supply chain for China’s economy
         A net positive for all countries – “more jobs, more
          spending power, greater synergies”


Source: ASEAN (2010, Jan). ASEAN-China Free Trade: Not a Zero-Sum Game.   Image from here              9
Bali, Indonesia




         ASEAN signed framework agreement on Nov 2002
         Phased implementation:
                 – 1st with ASEAN-6 (BR, ID, MA, PH, TH, SG), came into force
                   Jan 2010
                 – Next with ASEAN-4 (CM, LA, MR, VN), not until 2015
         Negotiations with ASEAN-6 began in 2005
         Drop in tariffs on Chinese imports from 5 to 0% for
          more than 7,000 types of products



Source: Severino, R. C. (2008, Apr). ASEAN-China Relations: Past, Present and Future. Institute of Southeast Asian Studies.   Image from here.           10
Vientiane, Lao PDR




         China growing at the expense of ASEAN – TNCs moving
          operations from SEA to China
         Devalued yuan a greater pull for FDI vs. SEA currencies
         Problem of smuggled Chinese goods (e.g. VN shoe
          industry, PH shoe & vegetable industries)
         Thai “Early Harvest” debacle – China’s “half open
          model”: free trade for exports, protectionism on imports
         Do ASEAN countries have competitive/comparative
          advantage in any good/service? For how long?
         Reproducing old colonial division of labor arrangement?

Source: Bello, W. (2010, Jan). The China-ASEAN Free Trade Area: Propaganda and Reality. Philippine Daily Inquirer.   Image from here.         11
 Archipelagoes with different names
         3 groups, claimed by
                 – China
                 – Taiwan
                 – Vietnam
                 – Philippines
                 – Malaysia
                 – Indonesia
                 – Brunei

Source: Pham, N. (2009, Nov). Scholars meet to discuss South China Sea disputes. BBC.   12
      30 islets, sandbanks, reefs
              15,000 km2 of sea
              China, Taiwan, Vietnam
              War in 1974




Images (from top, clockwise) from here and here.   13
 A lagoon of rock protrusion of 0.5m – 3 m high
          150 km2 of sea
          China, Taiwan, Philippines




Images (left to right) from here and here.              14
 750
     islets, sandbanks, reefs
    425,000 km2 of sea
    China, Taiwan, Vietnam, P
     hilippines, Malaysia, Indo
     nesia, Brunei
    Mischief Reef incident in
     1995


Images from here.                 15
Current situation
         at Spratlys




Image from here.             16
 Recorded in ancient Chinese history since 2 BC (Han
        Dynasty), then Yuen, Ming, and Ching Dynasties
       In Chinese maps of 18th and 19th centuries
       In Vietnamese map in 19th century
      • 1933, French weather stations on
        Spratlys (Itu Aba), found
        Chinese, protested by ROC (Taiwan)
      • WWII occupied by Japan, everything
        grouped together
      • Sovereignty after WWII…..


Sources: 維基文庫武經總要 (WuJingZongYau)                             17
Oil

                   Strategic    Important                   Neighborhood
                                Sea Route
                   Position                                   Relations

                   Historic      External:     Internal:
                               Expansionism   Nationalism
                   Burden




Image from here.                                                       18
 China: territorial issues are bilateral
         ASEAN: resolve it multilaterally
         1995: Philippine & China reached a Code of
          Conduct to resolve their dispute peacefully
         2002: Declaration of the Conduct of Parties in
          the South China Sea between ASEAN & China
                 – UNCLOS
                 – Refraining from inhabiting on presently
                   uninhabited islands
Source: ASEAN (2002, Nov). Declaration on the Conduct of Parties in the South China Sea.   19
 2003: China signed the Treaty of Amity and
          Cooperation in Southeast Asia
         2005: Joint Marine Seismic Undertaking
          Accord, but ended due to nationalism
         2008: Chinese submarine base at Hainan
         2009: Vietnam tried to revive the proposal for
          a code of conduct, involving US?
        With only the Declaration of the Conduct, peace
        can only rely on self-restraint…
Sources: Chinese Embassy in Australia. BBC in Mandarin. ASEAN Treaty of Amity. Federation of American Scientists.   20
Everyone stepped up
          construction of structures on
          islands already occupied




                                                         What is the Way Out?
Images (from top, clockwise) from here, here and here.                          21
Yangon, Myanmar




         Military Maneuvers (Sept 27, 2010)
         In Vietnam, Gates to Discuss Maritime Claims
          of China (Oct 10, 2010)
         Region benefits from U.S. interest in South
          China Sea: envoy (Oct 19, 2010)




Sources: Marshall, A. (2010, Sep). Time; Shanker, T. (2010, Oct). New York Times; The Mainichi Daily News. (2010, Oct).   Image from here.
Singapore




          Positive role in the multilateral process
          Keep South China Sea off agenda of regional
           meetings in near term – track-two diplomacy
          More proactive in promoting direct dialogue
           among the claimants




Sources: Kurlantzick, J. (2010, Sep). Avoiding a Tempest in the South China Sea. Council on Foreign Relations; Cossa. R. A. (1998, Mar). Security Implications of Conflict
in the South China Sea: Exploring Potential Triggers of Conflict. Pacific Forum CSIS.     Image from here.
Hanoi, Vietnam




         China treats SEA as its own backyard, will
          continue to expand political & economic clout
         The U.S. will continue to serve as
          counterweight
         Increased trade between parties preserves
          status quo with regard to SCS disputes




Image from here.                                         24
Goodwood, Adelaide




1. If China supplants Japan & EU (as
   projected), will this be a net positive for
   ASEAN?
2. Will ASEAN increasingly be seduced, and
   eventually follow, the ‘Beijing Consensus’?
3. Is China really a benign power in the region?
4. How does ‘tough talk’ in the U.S. shift stance
   of ASEAN economically & politically?
  “..even under the most crushing state machinery, courage rises up again and again for fear is not the natural state of civilized man.”
                                                                                                                    – Aung San Suu Kyi
                                                                                                                              25

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The Geo-Political and Economic Implications of the ASEAN-China Free Trade Agreement

  • 1. Shanghai, China Junaid Haq Elvin Ivan Uy James Yeung International Policy & Politics 21 October 2010
  • 2. Kuala Lumpur, Malaysia  Overview of ASEAN  By the Numbers: China & ASEAN  The ASEAN-China Free Trade Agreement  Disputes in the South China Sea  Implications for the U.S.  Concluding Thoughts  Questions for Discussion 2
  • 3. Total Population (2009) China 1.33 Billion Myanmar 60M Laos 6M Thailand 67M Vietnam 87M Philippines Cambodia 92M 14M 592 Million Brunei Malaysia 0.4M 28M Singapore 5M Indonesia 232M 3
  • 4. Nominal GDP (2009) China $4.98 Trillion Myanmar $34B Laos $6B Thailand $264B Vietnam $93B Philippines Cambodia $161B $11B $1.49 Trillion Brunei Malaysia $10B $193B Singapore $182B Indonesia $539B 4
  • 5. Bangkok, Thailand  Established by Indonesia, Malaysia, Philippines, Singapore, Thailand in August 1967  Brunei (1984), Vietnam (1995), Lao PDR & Myanmar (1997), Cambodia (1999) joined later  Aims & Purposes: – Economic growth, social progress, cultural development – Regional peace & stability  Fundamental Principles: – mutual respect & non-interference on internal affairs – Peaceful settlement of disputes – Effective cooperation  A diverse grouping of countries Source: ASEAN. (n.d.) About ASEAN. 5
  • 6. China ASEAN Total Population (2009) 1,334Mn 592Mn 1,926Mn GDP (nom, 2009) $4.98Tn $1.49Tn $6.47Tn Export to (2008) $107.1Bn $85.6Bn ASEAN Total Trade & Net Import with China ($Mn) Top Trade Partners: Tota Trade Net Import 1. Japan 50,000 192,672 200,000 171,118 2. E.U. 40,000 139,961 160,000 3.China 30,000 113,394 120,000 4. U.S. 89,066 21,557 20,000 15,228 80,000 8,879 9,941 10,000 6,362 40,000 - - 2004 2005 2006 2007 2008 Source: Population & GDP data from IMF, ASEAN-China trade data from ASEAN 6
  • 7. High quality 1 of life Australia Japan U.S. 0.95 Singapore 0.9 Size of bubble based on GDP per capita Human Development Index 0.85 Malaysia 0.8 growth rate from 2000-2009 Thailand China 0.75 Philippines Indonesia Vietnam 0.7 0.65 Lao PDR 0.6 Cambodia 0.55 0.5 24 29 34 39 44 GINI Index High economic inequality Source: Gini Coefficient & HDI data from UNDP, GDP per capita growth rate data from World Bank 7
  • 8. Ilocos Norte, Philippines  China part of ASEAN+3 (with Japan & South Korea)  Closer ties post 1997 Asian Financial Crisis  Increased need to trade with China due to Japan’s “lost decade”; diversification for ASEAN  Complementary with SG (e.g. services), competitive with others (i.e. export-oriented labor intensive manufacturing industries)  Trade in goods signed on 2004, in services on 2007  ASEAN exports mostly raw materials (e.g. rubber, metals), energy products (e.g. oil), agricultural produce (e.g. rice, coffee) to China  China exports textile and electronics, invests in countries Source: Gao, H. (2009, Dec). China’s Strategy for FTA: Political Battle in the Name of Trade. Singapore Management University. 8
  • 9. Angkor, Cambodia  3rd largest FTA by GDP, largest by population  11 parties constitute 13.3% of global trade, half of total trade in Asia (2008)  “mutually dependent & beneficial relationship”  China’s growth a plus for ASEAN  ASEAN to be supply chain for China’s economy  A net positive for all countries – “more jobs, more spending power, greater synergies” Source: ASEAN (2010, Jan). ASEAN-China Free Trade: Not a Zero-Sum Game. Image from here 9
  • 10. Bali, Indonesia  ASEAN signed framework agreement on Nov 2002  Phased implementation: – 1st with ASEAN-6 (BR, ID, MA, PH, TH, SG), came into force Jan 2010 – Next with ASEAN-4 (CM, LA, MR, VN), not until 2015  Negotiations with ASEAN-6 began in 2005  Drop in tariffs on Chinese imports from 5 to 0% for more than 7,000 types of products Source: Severino, R. C. (2008, Apr). ASEAN-China Relations: Past, Present and Future. Institute of Southeast Asian Studies. Image from here. 10
  • 11. Vientiane, Lao PDR  China growing at the expense of ASEAN – TNCs moving operations from SEA to China  Devalued yuan a greater pull for FDI vs. SEA currencies  Problem of smuggled Chinese goods (e.g. VN shoe industry, PH shoe & vegetable industries)  Thai “Early Harvest” debacle – China’s “half open model”: free trade for exports, protectionism on imports  Do ASEAN countries have competitive/comparative advantage in any good/service? For how long?  Reproducing old colonial division of labor arrangement? Source: Bello, W. (2010, Jan). The China-ASEAN Free Trade Area: Propaganda and Reality. Philippine Daily Inquirer. Image from here. 11
  • 12.  Archipelagoes with different names  3 groups, claimed by – China – Taiwan – Vietnam – Philippines – Malaysia – Indonesia – Brunei Source: Pham, N. (2009, Nov). Scholars meet to discuss South China Sea disputes. BBC. 12
  • 13. 30 islets, sandbanks, reefs  15,000 km2 of sea  China, Taiwan, Vietnam  War in 1974 Images (from top, clockwise) from here and here. 13
  • 14.  A lagoon of rock protrusion of 0.5m – 3 m high  150 km2 of sea  China, Taiwan, Philippines Images (left to right) from here and here. 14
  • 15.  750 islets, sandbanks, reefs  425,000 km2 of sea  China, Taiwan, Vietnam, P hilippines, Malaysia, Indo nesia, Brunei  Mischief Reef incident in 1995 Images from here. 15
  • 16. Current situation at Spratlys Image from here. 16
  • 17.  Recorded in ancient Chinese history since 2 BC (Han Dynasty), then Yuen, Ming, and Ching Dynasties  In Chinese maps of 18th and 19th centuries  In Vietnamese map in 19th century • 1933, French weather stations on Spratlys (Itu Aba), found Chinese, protested by ROC (Taiwan) • WWII occupied by Japan, everything grouped together • Sovereignty after WWII….. Sources: 維基文庫武經總要 (WuJingZongYau) 17
  • 18. Oil Strategic Important Neighborhood Sea Route Position Relations Historic External: Internal: Expansionism Nationalism Burden Image from here. 18
  • 19.  China: territorial issues are bilateral  ASEAN: resolve it multilaterally  1995: Philippine & China reached a Code of Conduct to resolve their dispute peacefully  2002: Declaration of the Conduct of Parties in the South China Sea between ASEAN & China – UNCLOS – Refraining from inhabiting on presently uninhabited islands Source: ASEAN (2002, Nov). Declaration on the Conduct of Parties in the South China Sea. 19
  • 20.  2003: China signed the Treaty of Amity and Cooperation in Southeast Asia  2005: Joint Marine Seismic Undertaking Accord, but ended due to nationalism  2008: Chinese submarine base at Hainan  2009: Vietnam tried to revive the proposal for a code of conduct, involving US? With only the Declaration of the Conduct, peace can only rely on self-restraint… Sources: Chinese Embassy in Australia. BBC in Mandarin. ASEAN Treaty of Amity. Federation of American Scientists. 20
  • 21. Everyone stepped up construction of structures on islands already occupied What is the Way Out? Images (from top, clockwise) from here, here and here. 21
  • 22. Yangon, Myanmar  Military Maneuvers (Sept 27, 2010)  In Vietnam, Gates to Discuss Maritime Claims of China (Oct 10, 2010)  Region benefits from U.S. interest in South China Sea: envoy (Oct 19, 2010) Sources: Marshall, A. (2010, Sep). Time; Shanker, T. (2010, Oct). New York Times; The Mainichi Daily News. (2010, Oct). Image from here.
  • 23. Singapore  Positive role in the multilateral process  Keep South China Sea off agenda of regional meetings in near term – track-two diplomacy  More proactive in promoting direct dialogue among the claimants Sources: Kurlantzick, J. (2010, Sep). Avoiding a Tempest in the South China Sea. Council on Foreign Relations; Cossa. R. A. (1998, Mar). Security Implications of Conflict in the South China Sea: Exploring Potential Triggers of Conflict. Pacific Forum CSIS. Image from here.
  • 24. Hanoi, Vietnam  China treats SEA as its own backyard, will continue to expand political & economic clout  The U.S. will continue to serve as counterweight  Increased trade between parties preserves status quo with regard to SCS disputes Image from here. 24
  • 25. Goodwood, Adelaide 1. If China supplants Japan & EU (as projected), will this be a net positive for ASEAN? 2. Will ASEAN increasingly be seduced, and eventually follow, the ‘Beijing Consensus’? 3. Is China really a benign power in the region? 4. How does ‘tough talk’ in the U.S. shift stance of ASEAN economically & politically? “..even under the most crushing state machinery, courage rises up again and again for fear is not the natural state of civilized man.” – Aung San Suu Kyi 25

Editor's Notes

  1. Chinese called them Xisha Group (West Sandy Islands) and Nansha Group (South Sandy Islands)Vietnamese called it East Sea and named them differently.English names are given by European voyagers.
  2. Chinese used to group it with Spratlys.
  3. Not all of them have structures. Some just have flags or marks. In fact many are too small to hold any meaningful structure.China and Taiwan always have a united front on this issue.
  4. Oil reserve: 7.7 billion barrels (proven), 28 billion (estimate). Chinese consumption of oil: 7.8 million barrels per day. Source: US Energy Information Administration. <http://www.eia.doe.gov/cabs /China/Oil.html>; SouthChinaSea.org http://www.southchinasea.org/docs/Chinese%20Territorial%20Assertion%20The%20Case%20of%20the%20Mischief%20Reef.htmAround 50% of the world’s annual merchant fleet tonnage pass through this area, including China’s import and export. Since the archipelagoes are documented in Chinese ancient history and geography books, the Chinese government can hardly convince the people of giving up the territories, which was the cause of revolutions in the early 20th century.Nationalism also exists in other countries. The governments of Philippines and Vietnam faced the same problem.UNCLOS – counting 200 nautical miles from the “baseline” which is the low water mark of a piece of land. If China has the right to occupy ItuAba, (the biggest island in the Spratlys occupied by Taiwan for half a century and with documentary prove of Chinese presence for hundreds of years) can the distance be measured from there? Source: UNCLOS <http://www.un.org/Depts/los/convention_agreements/texts/unclos/closindx.htm>; Nansha.org.cn <http://www.nansha.org.cn/islandsdatabase/3/122_taiping_dao.html>
  5. China has softened its stance on bilateral negotiation.But its stance is still clear that parties not having a dispute in the area should not be involved, e.g. USA.Officially, ASEAN held the same stance. USA’s involvement was declined.
  6. Difficulties faced by the countries (same for everyone):A soft stance will benefit all, say if there is oil, it can be exploited by joint venture.But nationalism prevents that from happening as it mean giving up part of the country’s resources to foreigners.The Joint Marine Seismic Undertaking Accord among China, Philippines and Vietnam was the first cooperative effort under the Declaration of Conduct.It was however stalled because the Filipinos found that the arrangement made by their president was unconstitutional. (a) The undertaking was made secretly.(b) It involved an area which should be territories of the Philippines.(c) It violated the rule that any partner of a joint venture for exploitation of natural resources must be 60% Filipino owned.Source: GMANews.tv <http://www.gmanews.tv/story/85173>Nationalism always pushes for a hard line. But a hard line will mean conflicts which is not the governments want to see.
  7. What would you do if you were the ASEAN governments?What would you do if you were China?What would you do if you were USA?
  8. 1- Indonesia has just taken delivery of the last of six Russian fighter jets worth $300 million. Thailand has received the first of 96 Ukrainian armored personnel carriers ($125 million), with the first of six Swedish fighter jets and two other aircraft ($574 million) arriving in early 2011. Singapore will soon launch the second of two Swedish attack submarines ($128 million), while Malaysia has already spent $1 billion on two Franco-Spanish subs of its own. IMPLICATIONS: The acquisition of sophisticated weapons indicates two things: First, that Southeast Asian nations are more wary of each other than fraternal declarations at ASEAN meetings suggest. Second, that a region that publicly welcomes China's soft power is also quietly tooling up for the hard version. i.e. they are wary of China’s assertiveness in the region. 2- US Defense Secretary Robert M. Gates went to Vietnam where he held private talks with his Vietnamese counterpart during a conference of defense ministers from across the region. KEY ISSUES DISCUSSED: How to manage China’s expanded claims of maritime rights in the South China Sea. China has backed those claims with threats of economic retaliation against some nations in the region. 3- This is an excerpt from THE MAINICHI DAILY NEWS which reports that many Asia-Pacific countries have benefited from U.S interest in the South China Sea and its commitment to keeping sea lanes open to enable free trade and commerce. The news highlights the conflict of U.S “national interest” vs. China’s “Core Interest” in the region. Huntsman, U.S ambassador to China, touched on sensitive issues like “resuming U.S-China military-to-military ties” which were suspended earlier this year as a result of US $6.4billion arms sales to Taiwan. He also spoke about the recent awarding of the Nobel Peace Prize to imprisoned Chinese activist Liu Xiaobo signifying it as an important gesture to freedom and democracy.
  9. 1- In private, officials from the Philippines, Malaysia, and Vietnam, among others, all have pushed the United States to weigh in much more heavily on the South China Sea disputes. Vietnam, in particular, has sought a closer security relationship with the United States as a balance to China. The United States and Vietnam have launched an annual defense dialogue between the Pentagon and Hanoi's defense ministry, and the United States may be about to embark upon a deal to share nuclear fuel and technology with Hanoi. In fact, while the Obama administration came into office planning to make a drastically upgraded relationship with Indonesia the center of its Southeast Asia initiative, it may turn out that its greatest legacy in the region is a new security relationship with Vietnam that eventually could be on the level of the U.S. relationship with Singapore--not a treaty ally, but virtually one. US should also engage its multilateral organizations to seek projects viz-a-viz the USAID. This would further its aim and ambitions to increase its engagement in the region. 2-In the short term, the United States, China, and the key Southeast Asian nations could quietly agree to tamp down rhetoric over the South China Sea, keep the South China Sea off the agenda of regional meetings in the near term, and utilize track-two diplomacy to explore durable solutions.3- One which underscores the U.S strategic interest in Southeast Asia in general and in assuring a peaceful settlement of any South China Sea dispute in particular.