A ‘New Trilateral Chapter’ for the United States, Japan, and the Philippines

Commentary by Erin L. MurphyandGregory B. Poling

Published April 15, 2024

President Joe Biden and his counterparts, Kishida Fumio and Ferdinand "Bongbong" Marcos Jr., held the first-ever U.S.-Japan-Philippines trilateral summit on April 11. It was a manifestation of the importance of the U.S. Indo-Pacific Strategy, which emphasizes both military and economic security in cooperation with partners and allies. The Biden administration has emphasized that both economic and military support are necessary to ensure deep and resilient partnerships. That is especially true in this case, as the three leaders pledged to work toward a shared vision of a free and open Indo-Pacific "for decades to come."

Security and the South China Sea

The Philippines' deepening strategic alignment with the United States and Japan-along with Australia and other partners-is a response to Chinese coercion. In late March, two China Coast Guard vessels used high-pressure water cannons on a Philippines resupply vessel en route to Second Thomas Shoal, severely damaging the ship and injuring two Filipino sailors. Despite this aggression, the Philippines successfully completed the resupply mission, as it has every month for two years despite China's aggression.

The United States and Japan both responded to the latest violence at Second Thomas Shoal by reiterating support for the Philippines and condemning China's behavior. Secretary of State Antony Blinken visited Manila that same week and reiterated U.S. resolve to support the Philippines and, if necessary, respond to any Chinese attack as required by the U.S.-Philippines Mutual Defense Treaty. Then on April 7, naval vessels from the Philippines, Australia, Japan, and the United States conducted their first-ever four-way exercise within the Philippine exclusive economic zone in the South China Sea.

This momentum carried into the leaders' summit in Washington, during which President Biden and Prime Minister Kishida expressed support for the Philippines and announced a few new concrete steps to support Manila's maritime capacity. The three countries plan to undertake a trilateral coast guard exercise in Philippine waters, and for the first time, Philippine and Japanese personnel will embark on a U.S. Coast Guard vessel patrolling the Indo-Pacific this year. The United States and the Philippines also announced plans to deepen cybersecurity cooperation. This has been a particular priority of President Marcos given the frequency with which China-based hackers have targeted Philippine government systems in recent months. Better Philippine cyber capabilities may also advance the torturously slow effort to conclude a U.S.-Philippines General Security of Military Information Agreement (GSOMIA), which the two governments committed to in late 2021.

A Focus on Economics

The United States and Japan have stepped up economic engagement with the Philippines in the last few years for a number of reasons. The Philippines is one of Southeast Asia's fastest-growing economies and offers opportunities in key industries, including electronics manufacturing, healthcare, and the semiconductor industry. The Philippines already enjoys a strong trade and investment relationship with the United States, with over $18.9 billion in goods and services traded during 2020. The United States is the Philippines' third-largest trading partner and one of its largest investors. Commerce Secretary Gina Raimondo's trip to Manila in early March reflected this. During her trip, she brought a delegation of senior executives from 22 prominent U.S. businesses and nonprofit organizations; the delegates announced more than $1 billion in recently completed and anticipated investments in the country. Meanwhile, Japan has steadily grown its economic engagement with the country and is also one of its top trading partners. It is the second-largest destination for Filipino exports.

The trilateral meeting and subsequent announcements unveiled further investments building on this economic engagement, which also reflect national security concerns around encroaching Chinese investments through its Belt and Road Initiative and digital infrastructure projects. The United States and Japan aim to accelerate investments in the Philippines both through their own public and private sectors and also through the G7's Partnership for Global Infrastructure and Investment (PGII) initiative.

The Marcos government recognizes that the Philippines has security vulnerabilities due to the prevalence of Chinese telecommunications equipment and networks, but there have been few alternatives until now. Both the United States and Japan, particularly the latter, are bullish on Open Radio Access Network (ORAN) technology and see an opportunity in the Philippines. The Marcos government is considering drafting and implementing ORAN regulation to help facilitate its deployment. To provide incentives for this, the United States and Japan are providing funding for ORAN field trials to see if the market will be ready for commercial deployment, as well as funding for an "Open RAN Academy" for capacity building in the telecommunications workforce for skills necessary to test and deploy open network architectures to advance open, interoperable, reliable, and safe internet.

The United States and Japan will also contribute to strengthening the Philippines' role in the semiconductor supply chain, a critical effort by the allies for national security purposes. The United States has already designated the country as a recipient of funding from the CHIPS and Science Act's International Technology Security and Innovation (ITSI) Fund last year; the funding aimed to provide a comprehensive assessment of the Philippines' existing semiconductor ecosystem and regulatory framework, as well as its workforce and infrastructure needs. The Philippines wants to be a bigger player in the supply chain, especially in developing higher-tech chips, but it lacks the personnel and technological capacity. Investments in both the industry and workforce will begin to chip away at these gaps and create the resiliency the three partners are seeking in this critical industry.

Multilateral cooperation was also featured in this summit. The first PGII economic corridor in the Indo-Pacific, joining the Lobito Corridor in Africa and the India-Middle East-Europe Economic Corridor, will be in the Philippines and will connect Subic Bay, Clark, Manila, and Batangas. The Luzon Corridor infrastructure project will include rails, ports modernization, clean energy projects, agribusinesses and cold storage facilities, and civilian port upgrades. Details of specific investments and projects are expected to be announced at the Indo-Pacific Business Forum taking place in Manila next month. These multimodal corridors are meant to demonstrate both the effectiveness of partners pooling their respective financial and expert resources and collaborative efforts to offer high-quality and transparent infrastructure to counter China's Belt and Road Initiative.

Finally, the United States announced the opening of a U.S. International Development Finance Corporation (DFC) office in Manila. The DFC is the United States' development bank and seeks to mobilize private sector financing in markets like the Philippines. The DFC focuses on energy, telecommunications, and healthcare, all areas of importance to the country. The DFC also works closely with the Japan Bank of International Cooperation (JBIC), with which it announced the renewal of a cooperation MOU on the margins of Prime Minister Kishida's visit, ensuring greater efforts for the two to work together to boost investments in the Philippines.

The Strategic Imperative of Economic Security

These steps are all significant in the effort to help the Philippines resist Chinese pressure, and the symbolism of the summit even more so. Those looking for more detailed deliverables on the South China Sea may have been disappointed. But that overlooks a few things. First, the drumbeat of U.S.-Philippines and Japan-Philippines maritime security announcements has been almost constant for two years. Second, more sophisticated U.S.-Philippines-Japan military cooperation probably has to wait for the conclusion of a Reciprocal Access Agreement between Tokyo and Manila, which the two hope to conclude this year. Third, and most important, the much longer list of economic deliverables is key to the strategic relationship, not secondary to it.

The summit also undermines the argument that the United States is not engaging economically in the region and that partners and allies cannot provide viable alternatives to China. By investing in the Philippines' infrastructure, digital economy, critical minerals, semiconductor supply chains, and more, Japan and the United States show that their commitment is deep, abiding, and not just contingent on maritime tensions with China. They also aim to prove that partnering with Tokyo and Washington can deliver public goods to Filipinos and economic growth for the nation. That allows President Marcos to counter those domestic critics who argue that by standing up to China he is sacrificing the potential economic benefits that Beijing could provide. And by helping the Philippines continue its strong economic performance (it is projected to be the first- or second-fastest-growing economy in Asia for at least the next two years) and avoid overreliance on China, Washington and Tokyo will help Manila minimize its exposure to Chinese economic retaliation.

In concluding their historic summit, Biden, Kishida, and Marcos declared the beginning of "a new trilateral chapter between our three nations." It will be a chapter focused on ensuring both national and economic security.

Erin Murphy is a senior fellow for the Asia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Gregory B. Poling is a senior fellow and director for the Southeast Asia Program and the Asia Maritime Transparency Initiative at CSIS.

Programs & Projects