 Thanks for staying with us. This is, you've managed to make it through the portion of this morning's presentation about life and liberty. We're now going to turn to the pursuit of happiness. So we'll try to keep things rolling. My name's Scott Miller. I run the Programming International Business here at CSIS. It's my great pleasure to be part of Team Asia at CSIS and we welcome the opportunity to interact with you this morning on the issue of economic reform and leadership throughout Asia. Thanks, but before we start with the clickers, we want to get the audience involved fairly soon, so we'll get to you very quickly. But let me just first introduce our topic and introduce our panel. We, people who fiddle around in economics, tend to look very closely at action at trends versus year ago or versus previous quarter and often miss the big picture. And I think I'd like to start today with the big picture in Asia, the big picture in Asia over the past generation, say 30 years or so. Economic reform in Asia has probably lifted more people out of poverty and improved more lives in that period of time than any comparable period in human history in any area. It's been a remarkable advance in human development and prosperity and it is really a stunning achievement when you look at it in total. There's a lot of concern now about whether this party keeps going, whether we continue on that track and clearly there have been signs of slowing in recent years and months and so the key question facing us this morning is what happens next? And what are some of the key reform challenges on the economic side that leaders are facing? Who will lead economic reform in Asia Pacific and the Asia region? And are there any common themes cut across the region? We're gonna explore these and other questions and importantly the nexus between leadership and economic reform. I'm delighted to be here today with our panel of experts from my left and your right, Ernie Bauer. Ernie Bauer is our Cemetery Chair in Southeast Asia Studies. Next to him, Matt Goodman. Matt Goodman is the Simon Chair in political economy but also importantly for this panel, our expert on Japan. Matt has lived in Japan for I think about nine years, lived and worked there, is deeply familiar with the culture of politics and economics of Japan and will talk broadly about Asia economics but also specifically about China. Next is Rick Rasa. Rick is a Wadwani Chair in US India Policy Studies and we're delighted to have Rick with us. He has just returned from India so if you see him not off during the presentation, use the clickers to remind him that it's time for a response but he's actually in amazingly good shape for a man who's just back from a three day trip to India, most impressive. Finally at the end of the panel is Scott Kennedy who is a new comrade of CSIS but a long time student of the Chinese economy. Scott is Deputy Director of the Freeman Chair in China Studies and Director of the Project on Chinese Business and Political Economy here at CSIS. A new position and we're delighted to have Scott as part of CSIS Asia Team. In any case, let me start off with a question, a general question in the audience. Your views about economic challenges but first look at your clicker and find the on off switch and make sure it's on. We have about 300 people in the room. We had about 100 people responding on our surveys before. So in any case, please look at your clicker. So first question, presuming your clicker is on and you're using it. Which economy faces the most daunting reform challenges? China, A, B, Japan, C, India, D, Indonesia. India is C, if you didn't notice that. It seems a little low for most years. All right, and thank you for responding to letter E. Those of you who are there, but we do have, so we have a, I guess, Japan continues to be probably the most daunting, but let me turn first to Matt Goodman for some overall comments. Matt, if you want to comment on Japan's particular, but also what's going on economically in the region? What are the growth expectations and what are the core challenges? Well, thank you, Scott. Yeah, I'm surprised by that answer, but I will, I'll come to Japan in a second. So yeah, it's going to be, I think, a difficult year for growth in the Asian Pacific region and therefore an important year for reform. You know, if you break down the growth challenge to the sort of demand side and the supply side, I think there's good news and bad news on both sides. On the demand side, you have hundreds of millions of consumers with pent up demand and potential purchasing power that could create a new source of demand and you have, importantly, the US growing more strongly and so we're providing demand for the region. So that's sort of the good news. On the other hand, China is clearly slowing and potentially more significantly slowing and that is, obviously, has been a source of demand for the region over the last decade or more and so that's a real question mark and concern, I think, about the growth outlook for this year. And then on the supply side, again, you have good news and bad news. I mean, oil prices falling is obviously good news for the most part for growth in the region except for those countries that are exporting energy and for countries like Japan that are dealing with deflation because, obviously, low oil prices is a mixed blessing if you're in that situation. And then importantly, and this gets to the reform thing, on the supply side, all of these countries, to some degree or another, maybe Indonesia, maybe the exception, well, and India to some extent, but they have demographic problems, they have debt problems, they have deeps and this is definitely true of India and Indonesia as well, deep structural rigidities and issues that impede growth and then vested interests that make it difficult to address those reforms. So I think with all of that, I'd say that there is, there will be growth in the Asia Pacific this year, but it's going to be challenging and it's going to, there's gonna be a higher premium on reform and following through. Certainly in all those countries, and by the way, Korea should probably also be on the list, I think Korea is in a similar camp of slower growth and lots of structural reforms. Just quickly on Japan, I mean, clearly, Japan has huge problems and those traditionally have ranged, they've traditionally been called sort of the big three Ds, which are demography, debt and deflation and now I'd add, you know, denuclearization following Fukushima disaster is another D which they're struggling with and those are huge problems in and of themselves, each one of them and together, they really put a huge burden on Japan to find new sources of growth and dynamism. On the other hand, Japan is really, has a lot of assets. It's obviously a very wealthy country and has a lot of capacity, a lot of technological capacity and I think that, you know, to me, and I'm gonna maybe pass to Scott, this Scott at this end of the table next, because to me, I think if I were, if I measure this by who loses the most sleep at night over reform, I think it's gotta be Xi Jinping. You know, at least Abe has a wealthy country that has a lot of capacity and the worst that can happen to him is he goes out of office with a 9% approval rating like many of his predecessors, I'm not predicting that, but I'm saying that that's about the worst that could happen, whereas, you know, she has much more significant challenges and I wouldn't wanna be him. Scott, would you like to follow up on that? Sure, I agree. And I think if the question is, if we're examining the depth of the problem, how difficult the structural problems are, China, to me, comes to the top of the list and that's despite the fact that they've grown the longest, the fastest of any country in history, as you were suggesting at the beginning, but they also have just monster problems, over 240% leveraging of outstanding debt to GDP, which became worse last year, didn't get better and so that deleveraging is gonna be particularly hard. They have anyone who's been to China knows what the environmental problems are like, which is one reason people don't wanna go to China and they're moving out of China and it's why I'm so happy to be at CSIS because the air outside here is much better than in Beijing and a lot of imbalances within the domestic economy, dealing with state-owned enterprises and so if the question also could be asked, if nothing is done, then, yes, I'd agree with Matt that she would be in much more trouble than probably the other leaders. So at the same time, China has always shown an ability to not stand still, so I think if we're looking, if we ask the question, does China have the potential to actually do a lot or are they in big trouble? I think actually Xi Jinping has a lot of tools in his tool belt and so I don't expect them to stand still and I expect them to try and tackle some of these structural problems this year and roll out a lot of new policies. Thanks, Scott. Let's move to the second question and then we'll involve the rest of our panel. The second question is about leadership, okay, and it's a simple question. Which leader do you think has the best chance of delivering on reform in 2015? A is Xi for China, B is Abe, C is Modi and D is Jokowi in Indonesia. We still have some clickers that are probably turned off looking at the size of the room and the number on the board, but all right, interesting response from the audience and perhaps because of the recent trip or perhaps because of great press clippings or maybe real results, there's great hope for Modi. And basically we have a dead heat here, I guess, between China and India, but with that response, it's settling it in. Okay, all right. So let me turn sort of in sequence here and talk at the panelists to discuss sort of the leadership challenges in the face of economic reform challenges. And Rick, could you kick us off? Well, so it was May of last year that the BJP won a majority in the lower house of parliament in the parliamentary election. And Modi came in, I think with the good head of steam, the sentiment was that people wanted to see a return to high economic growth rates. That's one of the good things both about India's domestic economy as well as U.S.-India relations is that in the not too distant past, we can think of the good times, about the time that the BJP lost office last time a decade ago, just after that India spiked up to growth rates of eight, nine, 10%. People remembered that. And so when growth rates dropped to 4.5% for consecutive years, the difference that India feels between 4.5%, which to us in the United States feels pretty good to 10% is huge. India's got 100 million people every decade that are moving to cities. A lot of unemployed youth, a lot of need for development and industry and things like that. So Modi came in with the good head of steam and an outlook I think that focused first and foremost on economic development. There are some limitations. I was actually pretty warmly surprised, I think, by the last slide, because the limitations in India, people look at the fact that he's got a majority in the lower house means that he's got supreme power or something, but it's far less. And that's unlikely to change dramatically over the coming years. It's gonna be about three or four years until they'll be able to control the upper house. Also, a lot of reforms that we'd wanna see happen on electricity, on water, on land acquisition require the assistance of state leaders. And right now his party, the BJP, is only in charge of eight states of the 29 in India. So the ability to actually get things done on the ground is fairly limited. Of course, some states, even if you're not aligned with the BJP, are gonna carry out good positive reforms that the center tries to do, but not every state will. But I think much like we saw with China, it's not gonna be every single person across all of India in every state that's gonna feel the benefits of a reform program first. The West Coast, particularly some of the productive states like Maharashtra and Gujarat that the BJP controls, and that we've seen do state level reforms, and also have some of the most powerful industrial development assets, ports, LNG terminals, things like that. So it'll be the reforms and how people actually feel it, it's gonna be regionally first. And then hopefully that'll start to spread throughout the wider swaths of the country. Thanks. Scott, it looks like the room also, like you, has a fair amount of confidence in the Chinese government to execute reform. How would you like to discuss that? I think people were just following my lead. And I really appreciate it. And that was an excellent voting system. So just listen to what I say and then hit the clicker. And also watch what everyone else is doing. So then we just sort of follow in line. Wonderful herd mentality, I think it's perfect. So as I was saying, I do think we're gonna see significant rollout. Xi Jinping has had a majority in his party for a long time. The Communist Party's dominating, they haven't needed an election for a while, probably not gonna need one this year. And so he can get stuff rolled out. And so we will see a variety of things in financial reform with state-owned enterprises, with reforms related to local governments and the fiscal sector, and even on the foreign side, despite some of the individual problems that we're seeing pop up as we saw yesterday that Chris Johnson mentioned in the first panel. But despite the fact that they are able to push out a lot of reforms, and there still will be problems with implementing. And so I expect some serious challenges with getting things through. I think they'll get the most important things through to stave off the biggest problems. But they're trying to do a lot of things at once. And another thing that they're working on is anti-corruption. And this anti-corruption campaign is meant to solidify his leadership, deal with entrenched interests, shake things up at the same time that's really causing a lot of folks who are important in implementing policies to slow down what they're doing, because they're really nervous, and they are focused heavily on anti-corruption, and less on the other specific types of economic reforms. In addition to that, local governments, the central bureaucracy, very critical to implementing and rolling out reforms. There's a lot of conflict between the different parts of the Chinese bureaucracy and between Beijing and the local governments. Local governments have done particularly well over the last 20 years in figuring out how to deal with this system and have a lot of off-budget income, which Xi Jinping wants to bring on budget. And so they need to be compensated. So I expect we'll see lots of reforms, the most critical ones pushed forward. So there's not to avoid a crisis, but the sustainability of these reforms I'm quite concerned about. Thanks. Matt, Prime Minister Abe just won a big electoral victory and seems to be well positioned with his voters. He's somewhat discounted here in the room. How would you... Well, I think the relatively low Japan score here obviously reflects the previous question because people think that the Japanese challenges are greatest and probably also reflects a deep-seated cynicism in this room about reform in Japan after 30 years, in my case of watching this and waiting. But I do think, I mean, based on the question, I think Abe should score higher because he does have, I would say, he's in a better position to implement economic reform than any leader in the past, again, 30 years. He has a strong electoral mandate, strong majorities in both houses of parliament, of the diet. He has no real opposition party to contend with. He has no opposition, no serious opposition within his own party. And he has really staked out economic reform. He's made very clear that that is the highest priority and that's not just the litmus test, that is the key to whether his administration is gonna be successful or not. In an op-ed earlier this month, he actually clearly linked economic reform to his other objectives. We all know that he has other passions and there are other things he wants to get done, but and even for the best of us, even those of us trained in it, economics is not always the most fun thing to work on. It's obviously very difficult to push through these reforms as I alluded to earlier, but I do think that he's made very clear that this is a top priority. And let me say one final thing. I think we're gonna have a question later about TPP so I won't get into that now. But I would say that a lot of us have been pushing and saying that the test of whether Abe is serious about economic reform is whether he moves forward to seal a TPP deal with the United States and then with the other 10 negotiating partners. And I would say that I think we're on the brink of a historic agreement between the United States and Japan on trade. And I think that Abe is ready to make that step towards a deal. And I think that is going to make him, it's gonna give a huge momentum to economic reform in Japan. And I think we'll put his seal on his place and history as one of the greatest economic reform leaders in Japan. So I'm really sticking my neck out there. Thanks Matt. Ernie, Indonesia doesn't quite have the profile in Washington of the other countries, but as I understand it, Jokowi is about as popular at home as Modi is at home. And he's on a roll. Could you talk more about the plan? Sure. You know, a lot of parallels with Jokowi and Modi. Jokowi's running now the fourth largest country in the world. Brazil is the Indonesia of Latin America. Carl Meacham, where are you? No, I think Jokowi's really interesting. I mean, I think the audience may be underestimating Jokowi a bit, but the cynicism is fair, given how hard it is to move things forward in Indonesia. He has a significant opposition to deal with in parliament and even within his own leadership coalition. He's got some very complex parties to manage Megawadi and her PDIP group. I think members of his cabinet that were assigned sort of surprised people that he did include some politicians in that makeup. But what I look at is Jokowi has been moving very carefully. He's appointed a very serious decision maker, Luhut Panjaitan to be his chief of staff. He's reorganized the palace, which is the White House in Jakarta, Istana, and he has formed a new National Security Council, if you will, based on a sort of a hybrid model between Ten Downing Street and the White House's National Security Council. So he's actually reforming quietly how you make decisions and implement them. He is an implementer. He's a businessman. And I think Jokowi could surprise us here. So I actually like the audience underestimating Indonesia. Underestimate Indonesia and it will outperform in my view. So maybe next year you guys will be a little bit surprised by Jokowi in Indonesia. Excellent, thank you. What I'd like to do now, let's turn to each of the four countries and give each one a little more depth. And I'd like to start with China. And before I turn it to Scott Kennedy for remarks on China, let's talk about the question on many people's minds, which is Chinese growth. And if we could have the next question for the clicker. Will China meet its expected 7% growth target in 2015? A, no, the Chinese economy will slow sharply. B, no, because reforms will drive a faster than expected rebalancing. C, yes, but faster growth will come from delaying reforms. And yes, D, yes, reforms will drive faster than expected growth. So the question is both yes and no, and then there's some shading on the rationale. I'll let this settle for a few seconds. Well, if I interpret this correctly, the plurality of the room is looking for a disappointment that China will not meet its expected 7% growth. That would be the sum of A and B, but there's a division in why that might happen. And we have roughly a third of the room on the optimistic side that China will meet 7% growth, but there's again a split, not about a two to one split in the rationale for meeting the growth. So Scott, with that as a background, I'll let you explain. Sure, everyone was with me on Xi Jinping being a reformer, and then you were abandoning me or some of you. So those that stayed with me on B, I appreciate the support. Again, I do think that we're gonna see significant reforms announced and rolled out, but there's a lag between the time one adopts policies, announces them, rolls them out, and you see economic consequences. In fact, a lot of the problems that we're facing now are the consequence of policies that were announced and rolled out in 2003, four, and five. And sometimes it really takes a long time for things to work through the system. So I expect, even though I'm optimistic from a policy political perspective of the rollout of reforms that it's gonna take a while to bite, and for us to see positive improvements in Chinese productivity and dealing with their deleveraging problem, which is quite serious. At the same time, I think all of the talk that I see has been about the structural problems and the structural transition that China is facing, and very little attention to cyclical problems and to the cyclical nature of growth in China. And you just go and you look, China has very clear business cycles. And we are now at the bottom of both a business cycle and in the midst of trying to implement significant structural reforms at the same time. So growth now is particularly low. Chinese 7.4% doesn't come anywhere close to the quality of American 3.0% growth. And I expect growth this year to be below 7% for sure. The only way it will be above it is if the official numbers need to be tinkered with just to make them feel happy and get close to it. But it sounds like what everyone is saying is that they're gonna be comfortable coming in somewhere around seven. I would expect it to be on the south side of seven. You, in your closing comments there, you mentioned tinkering with the numbers. And I know CSIS and led by Matt and others have done some very important research over the past year about what do we know about Chinese data collection and how reliable is it? Would either you Scott or you Matt like to comment on sort of where, what we think about the numbers and what we think about it as being able to plan based on. Sure. This has evolved been an evolving problem over time. Obviously in a system originally where central numbers were based on actual physical activity at each lower level and then passed on and then accumulated and added up that creates the opportunities for massive problems. So I'll allow the great leap forward. Embellishment at the county level it leads to greater embellishment at the provincial level and on and on and you get that building. I think China's done a lot of work in their statistics to avoid that. One is they've focused much more on sampling now rather than individual economic units reporting. And in addition to that, they are bypassing those parts of the political system that have a strong incentive to lie and embellish. So the central government's statistics are based on the actual surveys and work of the National Bureau of Statistics not the provincial governments. But of course you can do a lot of things if you wanna tweak things in one way or another with the money supply or other types of things. So when I was saying tweaking, if they wanna get growth well they can just inject a little bit more money to the economy or play with the exchange rate a little bit to make exports a little bit more competitive. So I wasn't just saying that they were gonna just sort of x out some numbers on the paper and then put in some new numbers but there's some things that they can do if they queue for as always a time when China does a little catch up. And so they could do it with those type of tools. Great, let's move on to one more audience question about sort of the purpose and motivation of economic reform in China. What is the purpose of Xi Jinping's economic reforms? Is it A, increasing transparency in the rule of law? B, enhancing economic competitiveness? C, implementing a new vision for China's future? D, consolidated political power? And we finally reached E, none of the above. Well I guess we can count out increasing transparency in the rule of law. See, basically the room is either about implementing a new vision for China's future or consolidated political power with the winner by a narrow margin consolidating political power. Scott, what do you make of this? Those, the clickers we have are terrific. I love them. But we need to add one more button. We need an F button so that we can have an answer which is B, C, N, D. Because I think that's really the right answer. Xi Jinping, he didn't study economics at the University of Chicago. He's a politician that's risen up through the Communist Party over many years. And so he, I think he has a very broad vision that encompasses all of these things, consolidating his own personal power, reinforcing the power of the party to avoid instability which means threats to the party's rule, increasing China's international influence. He doesn't separate all these things and all of those things are connected as well to fixing problems in the economy. So it's not an either or, it's an and. So I'll talk to the designers after the event and see what we can do next year. Maybe we can have an F button. Sounds like clicker 2.0 for next season. In any case, thank you. What I'd like to do now is move on to Japan. There will be, we'll try to leave plenty of time for questions. So if you have a specific China question, hold that thought and we will get to you when we can. Let me turn now to Japan and Matt and pursue HHTOF's Matt's talk with the next question about structural reform in Japan. And that is, will the third arrow of Abinomics that is structural reform make progress in 2015? A, no, Abe does not have the political capital. B, no, but he has the political capital but will choose to spend it on other things. C, yes, Abe has the capital and will spend it on implementation of structural reform. And D, yes, but the business sector will drive the reform from the bottom up. Starting to settle out with a clear win for both structural reform and the leadership of Abe. Those of you who've spent any time in the Japanese business community would not be surprised by letter D. But in any case, but a fair amount of confidence. Looks like over three quarters of the room believes that structural reform will make progress. Matt. Well, I guess my giddy optimism at the end of my last intervention infected the audience. So now let me try and tamper that down a little bit. I mean, I do think TPP is gonna happen and I think that Abe's gonna get a lot of credit and I think it is gonna give momentum to reform in Japan but let's not get too far ahead of ourselves. I mean, clearly answer A is wrong because he does have the political capital, as I said. So the question is, what's he gonna spend that political capital on? And as I said, he has made a very clear statement since the election, since the election at the end of December that he is going to spend it on economic reform. And I think that there is every reason to believe that he is serious about that. That said, there are gonna be some real challenges and difficulties in implementing reform as I'm sure all of us are gonna say or have said because there are some deep seated interests that have to be cut through. But first I would highlight that things are already happening in some areas. I mean, if you look at the one that I think is the most interesting and actually give some endorsement to answer D is corporate governance reform. That's something we've all been looking for and waiting for for a long time in Japan. There's some very interesting developments on corporate governance reform, establishing of a new index, the JPX 400 index, which has sort of incentives for companies to show they've got good return on equity, good board structures and so forth, good corporate governance practices in order to get into this index, to be listed on this index. And some prominent companies have failed to make the cut. And so that's creating a little bit of a competitive dynamic. You do have boards adding independent directors and even female directors. You have a new stewardship code. You have a corporate governance code in the work. So there's some interesting things happening in corporate governance. A lot of that is not actually being driven by law and policy per se, more by business. So I think D deserves a little more credit. And then you have some other things. You have some serious moves on agricultural reform, consolidation of farms and pending changes that would promote, would help. I mean, Abe has made a strong statement about trying to limit the power of this powerful lobby, J.A. And I think he's serious about that. And I think that kind of change is going to come and be more significant than I think people think. And then, of course, the big one is labor, the labor markets where clearly you need to see, everybody agrees, there are really two things that need to happen. You need better participation. You need more people working in Japan and you need each of those people to work harder. I'm sorry to say for Japanese, but its bottom line is they need more productivity. They're already very productive, so that's a real challenge. But in order to grow, you need one of those, you need both of those things. You need more people working, which means more women at the margin, more immigrants, although I don't think that's gonna solve the problem. And you need everybody to be more productive, more innovative, and that means more reform that creates more flexibility in the labor markets, ability for people to move jobs with their incomes, their pensions, and their dignity intact. And that's the real challenge, which is the one that I think is gonna be hardest to crack and the reason that if you've still got real skepticism, that's the one that you should be looking at because I think that's the hardest. In transition here to Indonesia and India, is ask Matt to respond to one more question, and it has to do with really macroeconomy, macro finance. There was clearly a disruption in emerging markets, including India and Indonesia at the start of quantitative easing by the Federal Reserve Bank. We've now reached a point in global central bank management that free money may be coming to an end of the United States, but it's just beginning in Japan and now in Europe with major projects toward macroeasing, which will press interest rates very low. In fact, I think in a couple of places they've turned negative in Europe. And so it appears to be some patience also by the Federal Reserve in terms of keeping interest rates very low. And what I'd like to do is first go to the audience and then have Matt, Rick, and Ernie respond, but let's go to our next question, which is what effects will the feds move, and not just the fed, but this would be the European Central Bank and the Japanese Central Bank? What effects will fed moves toward normalizing monetary policy have on Indian and Indonesian economies? A, we'll see a repeat of the 2013 taper tantrum. B, Indonesia is vulnerable, but India's fundamentals have improved. C, Indonesia's fundamentals have improved, but India's vulnerable. Or D, no effect at all. Both economies fundamentals are strong enough to handle this massive quantitative easing. Well, I think really these guys should answer, and I'm not gonna deign to answer on Indonesia and India, but I mean broadly, first of all, the premise of the question is right, that there will be normalization, it seems the fed is going to raise rates, although maybe a little bit later than people think this year. And whereas other central banks are going in the other direction, as Scott said, and the Bank of Japan actually has not been recently doing this, they've been doing it for two years aggressively, and unfortunately it looks like the targets that they've set of 2% inflation are not going to be met. In fact, the Bank of Japan has sort of admitted that now, largely because of oil price declines, as I mentioned earlier. So you are gonna have this disparity or divergence of monetary policy, and that is going to create some challenges in terms of international financial flows and macroeconomic management, but I'll let these guys comment on Indonesia. I thought Patriot's head coach, Bill Belichick, was headed to Japan to work on the deflationary term. Oh! I had to do it. Look, I think Gohawks, I like the answer D with a little bit of B. I mean, I think the impact, there will be little effect, I think, of the Fed's moves on Indonesia, mostly because it's such a large domestic economy. And I think Rick is gonna have a little bit a flavor of this answer in his comments too. It's driven largely by Indonesians and consumerism. I think this goes to a feeling that pervades Indonesian sentiment, I think consumer sentiment and economics, which is that it's Indonesia's time. It's become an economy with real scale. It is well over a trillion dollars GDP. It's now more than almost half of ASEAN's economy and Indonesia sort of has arrived. And a lot of that is on the backs of Indonesians who spent in Indonesia. So I don't think the Fed moves or the central bank moves, Scott, that you talked about is gonna have a significant effect on Indonesia, where they are vulnerable is in the commodity price slide. And Indonesia finds itself in a very uncomfortable position, which is that they didn't make hay when the sun was shining. In other words, when commodity prices were skyrocketing. And Indonesia was really just, you know, killing it in terms of exports of raw materials and natural resources. That was the opportunity to really drive economic reform and build and enhance their foreign direct investment, enhance their manufacturing sector. And quite frankly, they didn't do enough on that front. Well, I think on this question, you know, India sort of failed miserably the practice exam and then passed with flying colors the actual exam. So if you look at Fed tapering, the threat of tapering in 2013 forced May, June, July of that year for massive FII outflows, triggered a run on the currency, triggered the near downgrade of Indian debt, sovereign debt to uninvestment grade worthy. So it was a rough situation there. But actual tapering took place last year. In between that, of course, we had a new Reserve Bank of India Governor, Raghavan Rajan from University of Chicago. And he came out there in his first speech. Everybody was expecting to try to stimulate more growth that the first thing he would do was begin to bring India's high interest rates down. And in fact, he actually lifted interest rates at his first review. And that surprised a lot of folks, but he said, my primary interest is building a bulletproof balance sheet, that line, bulletproof balance sheet. The primary thing you wanted to guard the economy against was when tapering actually did happen that they wouldn't have the same thing happen with the threat of tapering. And whether it was him, whether it was other things in the economy, they survived tapering last year without even noticing that it happened. In fact, we put out a paper from my chair here at CSIS talking about the fact that tapering had happened and Indian markets hadn't noticed. And I was a little bit nervous to send that out. You know, the old Bugs Bunny commercial where Wiley Cowley runs off the edge of the cliff and doesn't realize he's on thin air until somebody hands him a book of gravity. A little bit of that, like you just don't want to mess with something that appears nobody's paying attention to when things are going well, but worked out terrific. So, you know, I think India at 6.5%, 7% growth is just going to have a lot more stability than India 4.5% growth. And I suspect that the growth rates are going to pop back up. The Reserve Bank, apart from lifting interest rates, although they did just finally bring it down a quarter, has also done a lot of things to rehabilitate banks right now where it's carrying a lot of bad loans. And also growth, they're going to make those bad loans look a little bit better. So I think India is a pretty good spot. Thanks. Let's stick with India and start with a question. This is sort of the audience wild guess about 2019. But it's a yes-no question. So ignore the bottom half of your clicker. By the end of Modi's first term, 2019, will India's annual economic growth rates be higher than China's? A yes, B no. Interesting. I don't know whether that's confidence in India or hedging on China or both, but Rick, over to you. Well, predicting the future is difficult. India, I think the growth rates, I'm quite certain, are going to return. They're a country that enjoyed 8% to 10% growth rates. And we talk about a lot of these big reforms and hoping they can do them. But they didn't have those reforms in place before and they hit 8% to 10% growth. So very simplistically, it shouldn't be impossible or difficult for India to get back there. Now, the growth would have to come from different places. When India's growth really peaked, there was a couple of sectors that had been touched off by privatization and liberalization, telecom, cross-border IT services, insurance. There's various reforms that have been done and you could point to a couple of years later the fact that those sectors were going at 70%, 80%, 90%, 100% year-on-year and really kind of fueled India's jump from 5% to 10%. So, you know, I think especially for telecom where India's got relatively high teledensity now, it's difficult to see the same kind of growth rates in telecom and for IT services. They're not putting out enough trained graduates for the IT service industry. And so other countries, including Philippines, by some counts have actually surpassed India and the total number of bodies employed in IT services. So the growth would have to come from other places and so far, you know, Modi has really kind of focused on building infrastructure, which the BJP has always been good at and trying to stimulate for the first time the development of a real industrial sector. Manufacturing as a share of GDP in India is about 13%, which is half the rate of a lot of other developed economies that India is typically paired with. They announced this big make in India campaign where they're really trying to break global manufacturers to India. I don't know whether or not just the slogan put on top, absent the reforms that we all know need to happen is going to be that big of a deal. But the fact that, you know, China is picking up less of that additional manufacturing investment than it was a few years ago, at least it's not absorbing all of it. So I'm sure India is going to pick up, you know, some incremental increase in manufacturing investment, even if it doesn't become quite the workshop of the world like China had before. But, yeah, we'll have to look back in a couple of years and see whether or not, you know, they've got this goods and services tax, which somebody called India signing a free trade agreement itself, because every state in India is a separate customs union. I mean, to move a product from Delhi to Bombay, you get stopped 12 times by internal customs unions. And unless you're willing to pay the bribe, you're going to be in the back of the line. And, you know, so there's, like, a lot of reforms that we know are right on the cusp that the government is trying to move on. But, again, as I mentioned before, the fact that they're weak in the upper house of parliament and the fact that they're weak in terms of the number of states they control, there's limitations. But I know, I can't say India vis-à-vis China, but I'm going to take it off. Thanks. Let's stay on India and turn to a question about India's relationship with the rest of the world. India has characterized by a very large, principally domestic economy, smaller export economy, smaller import economy, and historically, I would characterize neuralgic relationship with the trading system. Many of us note that India's leaders were present at the Havana conference, the founding conference of the General Agreement of Trade in 1947, and yet has relatively few commitments. Okay? So this is a question about how they'll deal with that neuralgia. Will India indicate a willingness to join mega-trade deals? A, only the Trans-Pacific Partnership. B, only the Trade and Services Agreement. A WTO agreement, for those of you who aren't trade nerds, is being negotiated in Geneva among like-minded parties on liberalization in services, India, of course, has world-class services industries, which would be interesting. C, both, D, neither. You have a couple seconds to settle. Room is basically split between both and neither, so take that at what you will, Rick. This is a weird, weird answer. I mean, I think, you know, the thing about India being a nice, vibrant democracy where everybody feels empowered to speak their mind, will India indicate, well, 1.2 billion people, somebody's going to say yes, and a lot of people are going to say no. There's not going to be an answer on whether or not there's going to indicate a willingness. But will they seriously commit to doing the things they need to do, join multilateral trade agreements? I don't see that happening. I don't think at the highest levels of government that they're going to do that. I hope I'm wrong, but I don't think they're poised to do so. With the election of Modi and the fact that, you know, people talked about in pro-business, too, that's a bit of a Rorschach test for the people in Washington, right? In the trade community, that meant that he was pro-trade. And when the first big international thing came to his door, the WTO trade facilitation agreement, and the government decided to back away, well, that meant that he wasn't pro-business. Well, you can be pro-business, but not pro-trade. You know, for him, it's two different things. Developing a domestic economy versus tying up more robustly with global trade patterns, they can keep, you know, separate minds about those two issues, and they've done so pretty successfully so far. Well, successful to them. But again, you know, looking at, I mean, how do you convince India to finally start to warm up the multilateral trade deals? And I'll say this, you know, from how India looks at that statement when Americans, when foreigners come and say, you should join these things. You know, having worked with India for 20 years on the economic side, we had the same arguments back 20 years ago when India had customs duties of 60% on most products. It said, liberalized is going to be good for you. And today, India's trade deficit and goods trade is about 10% of GDP. Their trade deficit and goods is 10% of GDP. That's about three times higher than ours. And if you notice, we have a little problem with our trade balance here in the United States. India's is three times higher as a percent of GDP. So to go back and say, this time it's going to be really good for you, we really promise. It's tough for them to digest that and say that, yes, I see that it will. But at the same time, you know, about 40% of India's trade balance, trade total is about 40% of GDP. With respect to whether they're embracing these deals, they're becoming a global player. They're becoming a big trader. Particularly for the trade and services agreement where they've got offensive interest in services that aren't yet matched by manufactured goods, you know, IT services, film, TV. They've got a lot of offensive interest in services. Their banks are strong. Their insurance companies are quite large, especially the government-owned ones. So they've got offensive interest in the trade and services agreement. That will probably be the most likely. And the other one where I think there's a nascent kernel of interest is on the ITA too, the Information Technology Agreement. You know, again, India wants to make an India campaign and they want to focus on IT products. But without being part of the Information Technology Agreements update, it's difficult for them to be part of the supply chain for IT manufacturers. It just, you know, it doesn't make sense to keep yourself like a rock sticking out of the river. But again, it's a minority right now that is even showing any interest in any of these. I think if any of them, Tee says the one that I think makes the most sense immediately. And hopefully we'll see a warming up over the year for the other ones. A small note made in the joint statement after President Obama's trip was that, you know, America supports India's interest in joining APEC. It's not quite the same as we support India joining. We support their interest in joining. But still, the fact that India put that on the table as something that they were interested in seeing as part of the joint statement is pretty telling that it's not a uniform opinion and maybe swinging slightly back towards trying to tie in a bit. Let me take it one click deeper and Matt can think about getting in on this. But the click deeper is the connection between trade and investment liberalization and domestic economic reform. In a lot of markets, and I would say most economies in Asia Pacific, leaders have made the clear link and they have used their deepening of trade relations and their commitments to particularly bilateral and regional free trading arrangements to drive their internal domestic economic reform. China perhaps the best example of joining the WTO and using their accession protocol to the WTO and the commitments that they made to drive very deep, very broad economic reform. That's never really played in India. I recall New Zealand's Ambassador Mike Moore was at one time the Director General of the WTO and Ambassador Moore told me he had been burned in effigy in India more than any other place in the world. He liked it. It was one of those things. Mike, he bore it as a badge of honor. But in any case, but this connection, that link never seems to get made in India and I don't know if you have a comment on that. It is, but in the negative. I mean, really, if India were to drop its borders right now and manufactured, would that increase or decrease their trade deficit? And they'll say it'll probably increase. So that's the sentiment there. And again, we tried to convince them that unilaterally liberalizing would be good and it hasn't worked out as well. I mean, it's worked out well in the sense that India's competitive companies have actually picked up their exports. But you still have a much larger number of industries that are globally non-competitive. So you try to encourage, obviously, the ones that are competitive. And so I think Modi right now is focusing on that, you know, encourage competitiveness of some others. And then maybe liberalization comes up later. The important thing to remember, though, is that at least right now, if nothing else, India has a boss. And it's been 30 years since India really had a boss, somebody to make decisions. Somebody that's going to look beyond silos. So it's not quite perfect yet. But there's been some talk, you know, when they merged together the External Affairs Ministry and the Commerce Ministry, so that foreign relations trade is actually a part of that. So there's various mechanisms, I think, that they're sort of looking at to try to further smash down these silos and be a bit more forward-leaning instead of keeping these things as separate universes unto themselves. But, you know, to this point, we don't really have indications that's going to move forward. But at least, you know, if something reaches the Prime Minister's desk, you know, he can make a decision on it and enforce his will. So the question is, I mean, the best way, frankly, trade agreements for India to come on board is for the group of American CEOs, not the U.S. government. He doesn't care about governments. He wants to talk to investors. And so if every single foreign CEO that meets with Modi says, getting free trade agreements done is top priority for my company to invest in yours, that's the key. There's no other key. Thanks. Thanks. Let's turn to Indonesia and then more broadly the ASEAN region. And as we get any engaged in the conversation more deeply, I want to start with Jokowi's foreign policy in Indonesia. So our next question is, what will most characterize Jokowi's foreign policy in 2015? Will it be, A, increased pressure on China? B, increased engagement with the United States, Australia or other powers? C, increased engagement with ASEAN and other multilateral parties? D, decreased engagement with ASEAN or E, don't know? The audience sees Indonesia as ASEAN-centric. Well, that's good. Indonesia is the anchor of ASEAN. It's key to it. But other ASEAN countries are actually concerned about this question. They're worried about whether Jokowi is going to do what the audience thinks he'll do which is increased engagement with ASEAN. And I think there's reason they should be worried. Jokowi is his approach to foreign policy actually reminds me a lot of what I see in Modi. He's a businessman. He's challenging his foreign policy team to answer the question why should I go to these ASEAN countries? I met the leaders at the summit and this is it's a given when you're ahead of a state of an ASEAN country you first make the rounds to the other ASEAN countries. He's challenging this. He's asking why? What does Indonesia get in return for this? He like Modi, what Rick just said I think is also interested in what the private sector thinks. So I think the private sector will also be a driver of how Jokowi thinks about engagement with foreign countries is pretty interesting. There are real pressures on Jokowi from his military in particular and from Indonesians in general to stand up to China and support other ASEAN countries particularly the Philippines and to a lesser extent Vietnam in their challenging China's own challenge where they're near neighbors sovereignty over the South China Sea and you can see an increasingly assertive narrative coming out of the Chinese military concerns suppressed about the Natuna Sea for instance and the fact that the Nine Dash Line tips the Natuna Sea. All of this is sort of going to play out over the next year Jokowi has described Indonesia's vision as a maritime nexus and I think Jokowi in this sense is dialing into a real sense that the new geopolitical center of gravity of the world you know the geopolitical naval of the planet is right there between the Indian and the Pacific Oceans and Indonesia is the archipelago with its 17,000 islands that links those two oceans and it does provide the naval lanes to transverse between the two oceans so a lot of the world's trade and a lot of its most strategic straits are through Indonesia and of course Malacca is shared by Indonesia and Malaysia so what Jokowi means by this global maritime nexus is still being teased out but I think I personally think events in this year will help him define that and my view is with taking into account Chris Johnson and Bonnie Glazer's remarks in the last panel I think China's actions will have a large impact on shaping Indonesian foreign policy Okay let's look at ASEAN more broadly for the past 30 years or so one of the safest threats in economics is that the ASEAN nations would increase their economic engagement with one another that there would be deepening integration in ASEAN so let's turn to an audience question and this one looks like it was written by the Gallup Organization how significant an impact will the establishment of the ASEAN economic community have on regional integration regional growth excuse me A very significant D insignificant and E don't know or are sitting on clicker Okay well somewhat significant is right I think the killer bees have it here look the big story of the 21st century economically will be the economic integration of Asia generally and my view my clear view is that ASEAN is place an absolutely central role in that in that economic integration it is the place where China Japan Korea the United States Europe India it's the place where all these countries are going to meet and compete and it's got it's role has been this traditionally right it has been the place it has been defined it's culture it's very culture it's religions have been defined by the larger nations around it trading through it and I think it's therefore ASEAN's economic community the AEC which was a commitment the leaders made in their ASEAN charter to significantly or fully integrate the ASEAN economies by 2015 won't be that that goal won't be fully realized in 2015 but have they made significant progress yes will they continue to drive integration within ASEAN yes are the are the world supply chains getting more and more linked to and through ASEAN yes and if you look at the impact of Thai flooding in 2011 on global supply chains and the automotive and electronic sector it was very significant flood massive flooding in Thailand very serious had a had a an impact you know it decreased availability of key parts that stop supply chains and it dropped growth in some of those sectors by very significant numbers and I think you're going to see that again I'm afraid when we Thailand goes through it's what I think will be sort of an existential political crisis I think will probably happen this year or early next year we're going to see that another truncation of those supply chains thanks what I'd like to do is close the conversation before we get to your questions where the CSS Asia team started our conversations in January on January 5th of this year CSS hosted an event called the pivot 2.0 where the the Asia team made its recommendations to the administration and Congress about how they can work together to deliver the pivot to Asia in 2015 and 2016 and of the six key recommendations recommendation number one was conclude the Trans-Pacific Partnership and so that I think remains our strong view that that needs to be done by our administration and Congress that we need to get on with it but let's start with an audience poll and then discuss the Trans-Pacific Partnership so the audience how far will the Trans-Pacific Partnership be and what it is that we need to say as a nation in 2015 completion being with the existing 12 members the current 12 negotiating parties A. No agreement concluded B. Trade promotion authority passed by the Congress but TPP not concluded C. Both TPP and TPA concluded and D. the wild card the Sandy 11 option TPP completed which this sooner or later you have to believe the glass is half-full, the TPA will be both concluded and that prior to that the trade promotion authority will be enacted. So with that, let me turn to really Matt and Ernie for your comments. Okay. So I think you know where I stand, but I do think C is right, although there's a possibility that the TPP vote won't actually happen this year because TPP itself has to be scrubbed. And C is on pages of bad English right now or bad legal English. It needs to be scrubbed and it needs to be translated into Spanish and French. Thanks Canada for that contribution to the process. And so that's going to take a long time and I think it's possible that it's not going to happen this year. But I do think the U.S. and well, let's put it this way. I think that we get there, despite the fact that there are three substantial risks and hurdles along the way. Number one is that the U.S. and Japan do not actually agree to a bilateral deal on market access. Until a few weeks ago I would have shared the skepticism about that or the greater concern about that. I think that things have moved substantially in the last few weeks and I think the most significant harbinger of this to me is that the pork producers in the United States are now saying that they're close and that the deal that there's been progress and the deal can be done. The pork industry has been one of the most concerned about access to the Japanese market. And so to me that's a signal that we're very close. And I also think from Abe's point of view, as I said, I think in the end he's going to say, yeah, this is difficult. I got vested interests. I have to break through. But the strategic and economic case for TPP is so compelling that I've got to move beyond sort of arguing over little details of pork or auto parts or other things that are still on the table. And so I think that gets done, but I admit there's a risk there. Then there's the 12. And in the room, among the 12 negotiating parties, there are still a couple of countries that are of concern. One of them I've already mentioned, Canada, which is being very difficult on some agricultural issues. And Malaysia is kind of an uncertainty, I'd like Ernie's view on that, but as to whether Najib can deliver. And then there's some substantive issues like state-owned enterprises, IPR, environment that are still not quite there. But I think they're close. And if Japan and the U.S. agree, I think that gives the momentum to get rid of those remaining issues. And if Canada doesn't want to get on the bus, I'm sure no tears will be shed if they're left standing on the side of the road. Ouch. And then finally, obviously the biggest risk is here in Washington that the politics don't allow for TPA to be concluded. TPA does need to be concluded, and that requires both the Republican leadership in Congress and the President to continue to do what they've been doing, which is to talk and act as though they really want to get TPA done, notwithstanding all the other many things they disagree on. There's been a sort of an obviously studied effort to put TPA into isolation ward and not let it be infected by all of the other things that they disagree on. And as long as that continues, I think that TPA does move forward. Again, I admit huge risks there for a lot of reasons, but I do think that's the sort of chain of events that gets you to answer. See? Yeah, those are great comments. And what I'm going to do is just make a couple quick comments. I love talking about TPP, but these two guys are fantastic. So I'm going to make a few brief comments and cede some of my time to you, Scott, because you're fantastic on this issue. I would just say that among the other TPP negotiating countries outside of Japan and Canada, that TPP has become not only vital for driving economic reform in their countries, which has become politically difficult in both Malaysia and Vietnam, because Najib is stuck. He's stuck between his own Tea Party, which is led by former Prime Minister Mahathir and a group called Prakasa, sort of the right wing of the ruling UMNO Party, and Anwar and the opposition. Both Anwar and Mahathir agree again on something, which is that Najib is always wrong and that TPP is bad. And that's really, it's Malaysian politics here. Mahathir has other reasons for not wanting TPP to pass. But Najib needs this to go and he wants it to go. And he, I think that just in spite of the heat that Malaysia's going to get in the next couple of weeks over their sedition law and the Anwar verdict coming up, that Malaysia's a very important partner for the United States. And I think the White House understands this is trying to balance and balance equity. So Malaysia will make it and they'll be in this agreement, but it has to go this year. If it leaks into next year, I think you might lose Malaysia. Frankly, Vietnam also, the geopolitical value of TPP for Vietnam and the economic reform value for the country is absolutely crucial for the current group. But the Vietnamese are moving into their own political cycle and the party congress is coming up in 2016. And just like anywhere else with political cycles, the closer you get to that, the harder it is for the Politburo and existing leaders to say, look, we've got to do this. And so I think if TPP doesn't, if C isn't right, I could see some of the key ASEAN members, two of the key, two of the four, really have a problem with TPP. Scott, I'll defer to you. Well, thanks. And I am likewise optimistic. I'm encouraged ever since our November elections in the United States, all the key leaders have said the right things. This week, they started to do the right things, which is spectacular. Okay. There were very supportive, positive hearings in the Senate Finance Committee and the House Ways and Means Committee this week. A lot of very encouraging signs. It will take work, the Trade Promotion Authority will take time. I would note I actually went back and looked at previous authorizing legislation that included a grant of fast track or TPA. The fastest it's ever been done was the Trade Act of 1988. And from the day the bill was introduced to the day President Reagan signed it, it was a little over five months. Okay. That's the fastest. The Trade Act of 2002, that same timeframe was 10 months from the day it was introduced in the House to the signing ceremony at the White House. So these things do take time. They'll require some patience. Regular order in the Senate means probably three weeks of debate. There will be many perils of Pauline, but my guess is by summer, if we're done with the Trade Promotion Authority, we'll be in a position because of the hard work of the negotiators of the 12 parties to close TPP this summer and get scrubbed and translated and presented to our legislature and other governing bodies by the end of the year. So that's my hope and we're working hard to make that happen. So with that as a closing note, let me open the floor to questions. Three rules for questions. First, wait for the microphone. We have an online audience. They won't hear your question if you don't wait. Second, when you get the microphone, let us know your name and your affiliation or organization. If you have a question for a specific panel member, let us know. And third, please make sure your question is in the form of a question. No questions from the clandestine services. Questions. Yes, sir. Back here. Hi, my name is James Frigovitch. I'm a graduate student at Georgetown University's Public Policy School. And my question is about China. I was curious about the panel's thoughts on the housing bubble in China and how likely that bubble may burst and cause a crisis. Thank you. Thanks. It's a significant bubble in that you have a great deal of excess capacity, regionally focused in certain parts of the country overall. If you take a very long-term perspective out, China needs to expand the amount of housing that it has overall. You have people moving from the countryside to cities, from smaller cities to larger cities. And overall, over a 5, 10-year period, you need more housing. But in the very short term, you've got neighborhoods, even cities with very low, very high vacancy rates. And that is part of that leverage problem that I mentioned before, 240% of GDP, an outstanding debt that has to be dealt with. I think that that type of debt and this leveraging issue can be dealt with without prompting a monster crisis. Of course it can. And there is the possibility and likelihood we'll see a variety of defaults on corporate bonds in China this year. My guess is that adults will prevail and not see this as a part of a structural problem and just lead to a whole wide stream of defaults. But you never know. That's how things could go off the rails in China. And thinking about the domestic potential, that would be the one to look at. We have two questions first here in the front. You hear the microphone up here. Thank you. My name is Paula Stern. I have my own consulting firm. Headlines yesterday in the Wall Street Journal dominated probably by announcements from a number of multinationals about the exchange rate and the impact of the very strong dollar on particularly manufacturing, but even on other leading US corporations. And that's likely to continue. Obviously in Congress, one of our biggest issues for TPA is the currency issue. My question is whether you feel that this pressure from the exchange rate will shift your optimistic schedule for passage of TPA this year. Not so much the TPP, but the TPA. In other words, Congress. Matt, if your treasury chip still upsurates, you want to take a question on currency, or I can try to finesse it? Well, yeah, as Scott's alluding to, when you join the US Treasury, you get a little chip implanted in the back of your head saying never talk about currencies in public. So this is a difficult one for me. But look, I mean, it does seem that the currency issue is back. It's been on and off as a part of this discussion about trade for a long time. There were a lot of questions about it at the hearings the other day in addition to the press reports you're alluding to. And I think it is a serious issue in the TPA, TPP context. But my sense, and it is a risk, and I would say there is a risk that this is an issue that could disrupt the negotiations over either TPP or TPA and they're linked. But my sense is, bottom line, that the body language is that this is manageable as an issue that when you look at the way Mike Froman is handling it, he's in a narrow sense he's passing it off to Jack Lou and saying it's Treasury's problem, correct thing to do. Thank you, according to that chip. But I think that the reality is that this were introduced into the TPP negotiations at this point, it could be a deal breaker. And I think that Froman is trying to find a way to manage the issue so that it doesn't disrupt those negotiations. I think that probably Treasury's going to have to do something. I mean, there may be some parallel effort, whether legislative or policy effort to try to address this issue. In a sense, that's what happened in 1988 when the Treasury was there was a tremendous pressure to call Japan a manipulator in those days, and no longer in the sites in this regard for most purposes. But what happened in the end was that there was a provision written in the Trade Act of 1988 that required Treasury to write this report every six months saying, you're a manipulator, and if you don't stop, we're going to have consultations with you. And so there may be some tweaking of that. Maybe that becomes a quarterly report. No, I mean, actually, I don't mean to trivialize this. I think it could be something more significant than that, where there's some threshold number that has to be estimated. And if somebody's exchange rate is away from fair market value as determined by that number, then there might be, you could see a range of possibilities like countervailing duty cases or something that are required to be taken. But I think it's going to be more that than it'll be settled in parallel to the TPA-TPP debate, but not destroyed. That's a judgment call. I'm much more sort of 60-40 on that, as opposed to 75, 25. I think that's the right way. I think it is an issue that we'll have to be dealt with. I think it will be dealt with in parallel, not embedded in the trade agreements, ultimately. But we'll see how it turns out. It's an important issue. So yes, sir, you've been very patient. Oh, you're here. It's here. I'm sorry. Yes, sir, up front. Sir. Yes. Bernard Gordon, University of New Hampshire. I follow up Paula Stern in not only raising the currency issue, but a week ago today, Sandy Levin, now a ranking member of Ways and Means, led out a very long and very serious document where I think it implies that he's favorable to TPA. He's favorable to TPA, but he listed a series, a long series of serious reservations that need, in his view, to be overcome. I wonder whether, I mean, that's not in the Senate side, but on the House side, whether that is being given sufficient weight, because I took it to mean a gentle, a gentle positive movement, but not an easy way out. That's a very good question. And clearly, Mr. Levin is a serious player on these and many other issues. And his views are usually very well thought through. I think ultimately, the House, being a majoritarian body, will ultimately come down to the number of members who share Mr. Levin's views and the degree to which they become the part of the majority that ultimately passes this bill. Trade bills tend to pass in the center of the Congress. They tend to be bipartisan, not particularly regional anymore, but bipartisan. Fringes drop off on both sides. And the agreements that are reached in that center are the ones that carry the day. So it's unclear to me at this point how that will play out, but then again, we're at early stages in both the House and Senate debate. But thank you. Could you just talk to the math there? I mean, how many Democrats do they need in the House to make that work? Well, it's not perfectly clear, but my guess is 40 would be a winning hand. So 40 to 50 House Democrats, given the large 90% or so of Republicans who voted yes on the three free trade agreements in 2011, which were put forward by President Obama. So given the first of all, the United States is much more pro-trade. Second, the Republican conference as a whole is much more pro-trade than it was 10 or 20 years ago. I mean, the Taft wing of the party is gone. Being from Ohio, it's hard to say that, but it is. It was a very protectionist wing of the Republican party. It really doesn't exist anymore. And for many of new members of the Republican conference, the free trade is part of their agenda of economic freedom. It's very close to their own philosophical views. So the trade agreements have actually gotten easier over time. And they've gotten easier mostly because the Republican support has grown. But still, I think there's an important to have this as a bipartisan bill. I think 40 Democrats in the House is a winning hand. Certainly you'll need 10 in the Senate just to get past cloture. So there's no question the Senate will be a bipartisan bill just because of the way the Senate operates. But I think that is all achievable. So one more question in the back. Yes, ma'am? Hi, my name's Julie Pekowski. I'm with USAID's Asia Bureau. I'm the Indonesia desk officer. And I just want to turn our attention back to Indonesia and address this to you, Marie. I think that Indonesia definitely has been underestimated as far as how far it could go in the next year. And last week there was an article on Joe Kuiz bringing back direct elections, which I think was a huge victory for him. But then the media turned on him this week and there was an article in time about how the first 100 days of his presidency has been veiled in scandal and in decreased popularity. Outside of what we discussed today, what are some of the other challenges that you think he'll face this year and how do you think he'll overcome them while still trying to manage the ministries? You know, Joe Kuiz has got a real challenge because it's an existential challenge actually in Indonesia because he actually comes from outside of the traditional power structure of Indonesia. So he's not part of, he's not traditionally part, he's not in the military. He doesn't come from the major families, the business families, and he's not part of the political elite. He doesn't come from one of the political families. So he literally is coming from outside of Indonesia's political structure, which I think is partially why, a big part actually, of why Indonesians overwhelmingly wanted him to lead them. So that's the positive side that outweighs the other. But the problem is that he's dealing with a structure that has been organized over time and adjusted over the last 20 years since the fall of Suharto to promote the interests of those sort of, I guess you could call it sort of status quo political and economic forces. And these guys aren't sure about who Joko We is and what he really wants to do with the country. So they're chipping away at him with every bureaucratic trick in the book. And this is not gonna stop. He's gonna face I think a very tough time in the DPR, maybe even within his own party where a lot of these forces at his own party and his own coalition where a lot of these forces exist. So for Joko We to succeed, he's gonna have to keep Indonesians with him. So what I would watch is his, how he talks to Indonesians, how his popularity rating is gonna be key. And he's going to have to be, combine that with a sort of a deft hand at navigating the bureaucracy. I saw, well, a lot of Indonesians were disappointed with the choice of his cabinet, which did include a couple disappointing politicians and some of the usual suspects. And I think people thought, oh, here it is, Joko We doesn't have the political will to drive reform. I didn't read it that way. I read it as a more practical understanding of what he needs to do to drive reform there. So I'm gonna reserve the right to be optimistic about this guy for now, but this is gonna be a very tough year. And I think a lot of the issues that time, the very good time article underlined were ones that bear watching. So thanks for the good question. Thank you for, I'm sorry, we're out of time, but thank you for your questions and your attention. And please join me in thanking our panel. Thank you very much. As Yogi Beres said, prediction is difficult, especially about the future, but not if you have clickers. So thank you for participating in this with us. We're gonna continue this discussion on our blog, Coged Asia, with a G as in Cogitate, Coged Asia. And we're doing podcasts on some of these issues with the panelists, which you can get on iTunes or CogedAsia.com. So thanks very much again, and we'll see you at this event next year.