Photo Courtesy of Benjamin Myers

Today, Heritage was honored to host Representative Ed Royce (R–CA), chairman of the House Foreign Affairs Committee, for its annual B. C. Lee Lecture on Asia policy. South Korean Ambassador Choi Young-jin was another special guest and co-host of a reception at Heritage that followed.

Ambassador Choi was joined by several of his fellow ambassadors from Malaysia, Indonesia, Cambodia, the Philippines, and Bangladesh and deputy chiefs of mission from Vietnam, Australia, Thailand, Japan, Singapore, Canada, and Taiwan.

Chairman Royce’s remarks highlighted his concern that in Asia—what Royce calls America’s “Near West”—the attention is shifting away from economic prosperity to security concerns. Disputes over sovereign territories and the threat of attack from North Korea are stirring an arms race in the Asia–Pacific region. North Korea’s change in leadership and testing of nuclear devices and long-range missiles has become a serious issue.

Territorial disputes have continued in the Asia–Pacific region since the end of WWII. And the recent spats over the Senkaku Islands are stressing tensions between Japan and China, while problems continue in the South China Sea.

Despite the U.N.’s recent decision to increase sanctions against North Korea, they are unlikely to have a significant impact when North Korea’s biggest ally, China, refuses to help enforce them. North Korea’s continued access to foreign banks has only propped up the regime and hampers the ability of sanctions to hit North Korea where it really hurts.

Stricter sanctions need to be brought against North Korea by the United States. Royce announced to the capacity Heritage audience that he plans to seek bipartisan legislation to act further against North Korea and their access to foreign currencies and banks.

The U.S. should also implement measures to promote trade and investment among Asia–Pacific countries. As Royce stated, “Where goods and services cross borders, armies do not.”

Since last year, a free trade agreement (FTA) between the U.S. and South Korea has been in effect, bringing the total number of Pacific-based FTAs to which the U.S. is party to three (South Korea, Australia, and Singapore). Japan finally decided to enter in the Trans-Pacific Partnership (TPP), a free trade agreement among Japan, the U.S., and 10 other countries. Trade growth has grown among Asia–Pacific countries, but trade between Asia–Pacific countries and the U.S. has lagged.

“Intraregional trade between China and Southeast Asia has grown tremendously,” noted Royce. “Trade between China and Australia has also grown. Even Japan is now more focused on the Chinese market than the American market.… Let’s consider that of the $11 trillion of new wealth that will be generated worldwide over the next five years, close to half of this amount will be in Asia.”

The U.S. should push for completion of the TPP and for free trade agreements with Taiwan and India, two countries with growing industries and trade. It is up to the U.S. to help India, the world’s largest democracy, cut through government red tape and ensure domestic innovation and growth.

But foreign policy alone cannot bring about prosperity in the Asia–Pacific; the U.S. must look inward as well. Royce acknowledges, “We need more students studying math and science.… I am a strong advocate for increasing the number of visas for foreigners,” noting the U.S.’s tendency to train foreign students domestically but send them back to their home countries to compete with us.

“In the U.S., about 76 percent of all registered patents from the top 10 patent-producing universities come from foreign-born inventors.”

The U.S. has strong ties in the Asia–Pacific. Perhaps the U.S. can help turn around the incipient trend toward conflict with a renewed push for economic freedom.

The following is the text of Representative Ed Royce’s (R-CA) B.C. Lee Lecture.

Good morning Ambassador Choi, Excellencies, distinguished guests, ladies and gentlemen.  It is a pleasure and an honor to be here with you at The Heritage Foundation to deliver the B.C. Lee lecture.

I want to thank my friend Ed Feulner – who has so ably led Heritage – and his team for this wonderful opportunity.  I also want to recognize Walter Lohman, Director of the Asian Studies Center, and Nick Zahn, Director of the Washington Roundtable for the Asia-Pacific Press.  It is because of Nick’s hard work that we have today’s event.  So again, thank you Walter and Nick.

Ambassador Choi, we last were together at a standing room-only event in my congressional district, where you and I stood side-by-side thanking veterans of the Korean War for their sacrifice in defending South Korea.

There is something very special about the bond that exists between veterans and those they fought so dearly to protect.  In recognizing the heroism of our veterans it was a poignant reminder that there is a price for freedom, and indeed, it is exceedingly high.

Today, South Korea and the United States share a special connection that extends well beyond treaty alliances and security agreements.  These include the shared values of democracy, freedom, and the rule of law.  So, on the 60th anniversary of the end of the Korean War, we are reminded once again that our friendship remains as important today as it did during the dark days of the War.

Named after the founder of the Samsung Group, the Byung-chull Lee Lecture Series celebrates Mr. Lee’s visionary leadership and his commitment to Korean-U.S. relations.   B.C. Lee was well-known for his relentless pioneering spirit, and his willingness to commit to new markets even when their potential was not so apparent.  It was his willingness to take risks that propelled Samsung and South Korea to the highest level of innovation and success.

I believe that B.C. Lee would agree with me that the enduring legacy of America’s commitment to the Asia-Pacific region is without a doubt, the long-term economic prosperity that is at the heart of Asia’s dynamism.  America’s contribution to Asia’s growth has been overwhelmingly positive, particularly in the free market and open trading system that the U.S. helped build in the region after World War Two.  As a result, many Asian countries have enjoyed unprecedented prosperity, and so has the United States.  Our nation is after all a Pacific Power, and as a Californian, I am particularly aware of that.  For us, Asia is not the Far East; it is indeed the Near West.

Of course, none of this prosperity would’ve been possible without the stability that America’s security umbrella brought to the region.  But what has been the norm for generations is now starting to change.  Perhaps the catalyst of this change is the perception, either rightly or wrongly, that the balance of power in Asia is undergoing a once-in-a-lifetime transformation.  What we are seeing is that Asia’s collective attention is gradually shifting away from economic prosperity to security concerns.  Where nations used to focus on trade and commerce, now they discuss nationalism, military budgets, and even provocative behavior.   Look no further than the territorial disputes in the East China and South China Seas as prime examples.

For these reasons, we must shift away from the old approach to diplomacy in Asia, which unnecessarily divided the region and separated economic engagement from our political engagement.  The old way of doing business is not only cumbersome but it is becoming less relevant.  We must somehow find a way to reinvigorate our engagement in Asia not for fear that we may be left out, but rather, we must engage so that we can once again move the focus squarely back to economic prosperity.  This noticeable shift in focus from trade to nationalism worries me, and that’s why I believe there must be some urgency to this.  We’ve seen the alternative before; there are no winners in arms races or open conflicts.

I selected Asia as the destination of my first overseas trip to send an unmistakable message that the region is critically important to the United States.  I was heartened by the warm welcome that my Ranking Member and I received in Japan, Taiwan, Philippines, China, and South Korea.  During the visit, three issues dominated our discussions: North Korea, territorial disputes, and economic prosperity.  You see, the region has changed so much that the old way of doing business will not help us achieve our objectives in the future.

A fundamental restructuring of U.S. involvement in the Asia-Pacific region will resolve the endless standoff with North Korea once and for all.  India will no longer be artificially separated from the rest of Asia, and we will firmly anchor Taiwan into the global trading system.  The U.S. must take an in-depth look at its relationship with China and find a balanced approach that takes into account America’s interests while striving for a productive relationship.  Finally, we must once again make America the most attractive location to do business for the Asia-Pacific region.  Let’s get the conversation back on to economic prosperity and away from divisive nationalism.

America’s North Korea policy has been a failure by all measures, including both Democrat and Republican Administrations.  Our inability to bring about real change inside North Korea has resulted in a region that is more insecure today than it was in 1994, when the Agreed Framework promised a nuclear-free Korean peninsula.

Earlier this month, I called a hearing examining policy options for imposing truly crippling sanctions against North Korea.  I must tell you, it is time we did something meaningful.  That is why I plan to introduce bipartisan legislation in the next few weeks to target North Korea’s access to hard currency via its many illicit activities and use of foreign banks.  If we do nothing, then it is almost a guarantee that North Korea will develop a nuclear warhead and plunge Northeast Asia into an open arms race.

If the U.S. can solve the North Korea challenge, then it will succeed in reducing one of the major reasons behind the recent acceleration in defense spending currently underway in neighboring countries.  And if a nuclear armed North Korea isn’t worrisome enough, consider the fact that North Korea is actively assisting Tehran with its own nuclear program.  The time to act is now.

Looking towards South Asia, it behooves the U.S. to encourage better integration of India into the Asia-Pacific region’s broader economic trading system.  We must include India, not as a counterbalance to China, but because it makes economic sense.  Indeed, many have advocated a larger role for India, but few have articulated why this greater role is in India’s own self interest.  This is simple: economic prosperity.   India is the world’s largest democracy and will soon be one of the world’s largest economies; surely its involvement in Asia will be a welcomed addition.

Our current approach to India lacks substance.  India’s participation in the East Asia Summit is more process than an accomplishment.  At the very least the U.S. must work with India to reduce her domestic constraints to growth and increase foreign direct investment.  Reducing red tape, increasing the supply of electricity, improving the tax system, and strengthening the ability to enforce contracts will lift India’s ranking and spur business growth in a way that has been missing thus far.  If I can risk a generalization and say that since Asia’s economy is largely based in global supply chains, then it is absolutely critical for India to develop its manufacturing sector and tap into this regional market.  This is how India anchors itself in the Asia-Pacific region, and we should do what we can to help.

We must appeal to India’s own long-term interests in order to achieve success.  That is why I believe the Administration must redouble its efforts to secure a U.S.-India Bilateral Investment Treaty (BIT).  Current negotiations are proceeding too slowly.  There are important issues to resolve, and it will take a concerted effort to make progress.  But once the BIT is firmly in place, the U.S. should work with India on a free trade agreement that will foster trade between two of the largest democracies in the world.  We should also work with India on high-tech visas where both of our countries jointly benefit.

I strongly believe that where goods and services cross borders, armies do not.  If this isn’t motivation enough, let’s consider that of the $11 trillion of new wealth that will be generated worldwide over the next five years, close to half of this amount will be in Asia.

With this in mind, the United States must not shy away from including Taiwan into the broader international trading regime.  For far too long, the discussion about Taiwan has been dominated by arms sales.  This myopic approach to an island of 23 million people, which boasts a world-class manufacturing sector, is sadly inadequate.  Taiwan is a robust democracy with a strong commitment to human rights, free speech, and free markets.

So let’s complete the U.S.-Taiwan Trade and Investment Framework Agreement (TIFA), and then in short order, let’s begin negotiations regarding a Bilateral Investment Agreement.  After that, it’s onward to a U.S.-Taiwan Free Trade Agreement.

China’s rise cannot be ignored, but it also does not need to be our collective obsession as well.  The U.S. must engage China and seek a more productive relationship, because it’s really in our best interest to make this relationship work.  All the concerns about China, whether they are trade disputes or human rights, will never fully go away.  But to choose a path of contentiousness really limits what we are able to achieve.

When it comes to China, it’s likely that we will continue to have disagreements.  Regardless of the issue, we have to keep talking and maintain open lines of communications.  That is why I am a strong advocate for increasing military to military exchanges between our two countries.

Unfortunately, the U.S. doesn’t have quite the economic influence in Asia it once had to drive this agenda.  The center of economic activity within Asia has shifted gradually away from the U.S. to China.  Intraregional trade between China and Southeast Asia has grown tremendously.  Trade between China and Australia has also grown.  Even Japan is now more focused on the Chinese market than the American market.  And while I fully support Japan’s expressed interest to join the Trans-Pacific Partnership (TPP) free trade agreement, the TPP alone cannot reverse this trend.

If the U.S. is going to remain an economic leader in Asia, if we are going to succeed, we need get better at home.  To do that, we must make the most of our human resources and that requires better education.  We need more students studying math and science.  And we must fully embrace the rich diversity of Asian Americans.

In my congressional district, for example, we have one of the highest concentrations of Asian Americans in country.  This includes Chinese Americans, Taiwanese Americans, Korean Americans, Filipino Americans – the list goes on.  In fact, there are 95 countries of origin represented within California’s 39th Congressional District.  I have long consulted with my constituents to better understand developments abroad.  Many of my constituents are active in trading and investing in Asia, which is a source of our national strength.

Last Congress, I sponsored legislation to make it easier for state universities in California to teach strategic languages, such as Chinese, so that our students are better equipped to do business and conduct diplomacy overseas.  I am a strong advocate for increasing the number of visas for foreigners who receive advanced degrees in critical science, technology, engineering, and mathematics (STEM) fields.  In the U.S., about 76 percent of all registered patents from the top 10 patent-producing universities come from foreign-born inventors.  In our current system, we welcome foreign students to the U.S., provide them the world’s best education, and then send them home so that they can compete against us.  This makes no sense.

America’s current involvement in Asia must not be confined by the same old approaches that may have once served a purpose but is now woefully out of date.  Indeed, we must harness the full potential of American ingenuity to address the spectrum of challenges that await us.  This is how B.C. Lee built Samsung in the aftermath of the Korean War, and much like the mythical phoenix rising from the ashes, South Korea and Samsung are today truly world-class.  Together, we can ensure that the future legacy of America’s engagement in the Asia-Pacific region is focused on economic prosperity.

Thank you for this opportunity, and I look forward to answering your questions.