As Prepared

Good afternoon, and thank you, Dr. Schake, for the introduction. I’m honored to be here at the Shangri-La Dialogue, especially to join you and my co-panelists today.

Throughout the day, we have heard a lot about regional security and defense issues. I’d like to continue that theme, of course, but from a different perspective.

As the Assistant Secretary of State for Economic and Business Affairs, in my work, I have full view of a key principle of President Trump’s National Security Strategy: that Economic Security is National Security.

This has never been more true than in today’s digitally connected world. National security and economic security are interwoven, and economic measures play a direct role in fostering security.

The United States has a centuries-old trading relationship with the region. American businesses have historically been a critical part of forming these strong bonds.

The same is true today as U.S. business interests in ASEAN continue to grow and adapt to the expanding opportunities here.

Economic partnerships are a strong foundation for our greater engagement with the region.

In light of the nature of this dialogue, I’d like to discuss a few ways the U.S. government – often in cooperation with other governments and the private sector – employs economic tools in service to national and regional security.

Sanctions – North Korea and Iran

The first, and very prominent, of these tools are sanctions. The recent developments regarding North Korea are a prime example of the impact of effective sanctions in furthering key security goals.

The United States has led a global effort to enact critical sanctions that have compelled North Korea’s regime to reconsider escalation in favor of diplomacy.

All the countries represented here at the Shangri-La Dialogue, convinced of the threat posed by the DPRK’s development of nuclear and ballistic missile technologies, have contributed to the effectiveness of these sanctions.

Recent overtures made by North Korea are encouraging, but they need to be the first steps of many toward the unnegotiable objective of the international community: the complete, verifiable, and irreversible denuclearization of the Korean Peninsula.

President Trump has announced that June 12 Summit will be taking place right here in Singapore.

The United States has also increased pressure on the regime in Tehran.

By withdrawing U.S. participation in the JCPOA, President Trump signaled the need to counter the full range of threats Iran poses to our collective interests, including their aggressive ballistic missile development and proliferation, and their support for terrorism.

Moving forward, we intend to work with allies to conduct an economic pressure campaign on Iran, among other measures.

This effort will bring necessary pressure to bear on Iran to change its behavior and pursue a new framework—one which needs to comprehensively address all aspects of the concerns of the United States and the international community.

Again, economic sanctions will be a critical tool in achieving a necessary security objective.

Cyber-security

I’d like to turn to another key topic in the economic security arena and that is cyber security– perhaps the dominant emerging foreign policy and security challenge of the twenty-first century.

All of our nations are affected by threats to connected networks, and every year our economies become more digitally enabled. With increased connections come increased vulnerabilities.

For example, last year’s NotPetya attack caused over a billion dollars in losses to companies that were effectively untargeted collateral damage.

This sort of indiscriminate, destructive attack is destabilizing and can cause irreparable, catastrophic harm. We must act to counter such threats.

The United States works with partners around the world to impose consequences on those actors whose malicious actions threaten global and regional economies.

Cyber security policies made by governments around the world are necessary to enable our businesses to safely and effectively operate across borders.

Similarly, digital economy, internet, and telecom policies shape the cyber security environment.

We believe the more the internet reflects the ideals of freedom, fairness, and transparency, the better it will be for all countries and all economies.

ASEAN nations have made cybersecurity a leaders-level issue as a part of their efforts to strengthen cyber cooperation and demonstrate their commitment to act as responsible states in cyberspace. We welcome such progress.

Maritime and Border Security

A related area of focus is maritime security.

We’ve been talking about how cyber threats to our collective national and economic security transcend national boundaries, and the importance of a collective response.

Maritime security is another area where unity of effort is important. There are too diverse and too many challenges for any one agency or government to address them all.

Since the end of the Second World War, the United States has demonstrated a commitment to a free and open Indo-Pacific region grounded in a rules-based international order.

That commitment continues today. Fundamental to this is the openness that comes from the freedom of seas. Economic prosperity relies on a maritime system that freely and securely connects the world’s markets.

As Secretary Mattis said this morning, sea lanes are arteries of economic vitality for all.

Improving maritime security and maritime domain awareness is a key component of our bilateral relations in many parts of the world – from the Caribbean to the Pacific to the Gulf of Guinea.

The State Department, along with our Department of Defense, is involved in a number of aviation and maritime security-capacity building efforts around the globe.

We need to expand these efforts to include maritime cyber security as a key component.

Investment Security

A final area for cooperation is in how we review foreign investments, given the growing recognition that free and open economies must have and use such tools in support of their national security.

The link between investment security and national security is abundantly clear.

President Trump has stressed the importance of promoting American prosperity by pursuing free, fair, and reciprocal economic relationships while also protecting U.S. critical infrastructure and other security interests.

When sensitive technology and intellectual property cross borders, they are only as secure as the weakest of the national regulatory frameworks that holds them.

This challenge requires effective investment review mechanisms and enhanced information sharing and collaboration among likeminded nations.

It is in our mutual interest to cooperate with allies and partners to address national security risks related to foreign investment to prevent loop holes in any of our individual investment screening mechanisms.

A separate but related area of significant concern is the increased scope and scale of state-directed investment that may undermine our shared objectives of national security and economic prosperity.

Such state-directed investments and development assistance have the potential of leaving developing countries worse off.

The U.S. is committed to working with our partners to devise more market-friendly, transparent, and sustainable alternatives to an approach that is based on state subsidies, and unsustainable debt that may make recipients vulnerable to strategic coercion.

Conclusion

In closing, as Secretary Mattis did this morning, I’d like to reiterate U.S. commitment to this region. Our Indo-Pacific strategy is focused on:

  • Ensuring the freedom of the seas and skies,
  • Promoting market based economies
  • Supporting good governance and liberty and
  • Insulating sovereign nations from external coercion.

Our economies are intertwined across the Indo-Pacific region, and our deep cooperation to economic security reflects that. It is important that we continue to find ways to improve coordination to our mutual advancement. We look forward to working to enhance liberty, prosperity and security for everyone in the region.

U.S. Department of State

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