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ASEAN economic integration has long way to go

A delegate reads documents in front of flags of the Association of Southeast Asian Nations countries. (Bloomberg)
A delegate reads documents in front of flags of the Association of Southeast Asian Nations countries. (Bloomberg)
When ASEAN leaders gathered at a posh hotel in Singapore in 1992, they knew the time had come to get their act together to accelerate the grouping’s economic integration and compete with the rest of the world. They agreed to the establishment of the ASEAN Free Trade Area among the six members after years of foot-dragging.

But the members’ different levels of economic development and progress made this scheme unattractive at first. Nonetheless, the leaders decided to move ahead knowing fully well that forming a single production base for the grouping was the way to go in a globalized economy.

The free trade zone within ASEAN, the leaders envisioned, would take time to materialize so the first time frame was set for 2020. This was later revised to 2010.

As time passed by ― with a new regional environment emerging after the collapse of the Berlin Wall and the relationship between the former Indochina and ASEAN countries was no longer adversarial ― Myanmar, formerly Burma, also wanted to join ASEAN. Under a new peaceful environment came cooperation among all countries in Southeast Asia.

From 1995-1999, ASEAN added four new members, fulfilling the founding fathers’ dream of having all 10 countries under one roof.

In 2007, ASEAN adopted the blueprint of the ASEAN Economic Community, ASEAN Political and Security Community and ASEAN Socio-Cultural Community. These three pillars are key components of the ASEAN Community.

Implementation of blueprint

At the ASEAN Summit in Brunei Darussalam in October 2013, ASEAN leaders expressed satisfaction over the health of ASEAN’s overall economy. Against the weak global economy, ASEAN economic growth last year was 5.6 percent with total direct foreign investments of $108.2 billion coupled with a total volume of trade worth $2.47 trillion.

To sustain such an impressive level of economic growth, continued economic integration is needed.

By the end of September 2013, ASEAN has implemented 279 measures related to AEC or a score card of 79.9 percent. There has been progress in the implementation of the ASEAN Single Window, custom integration and the process of harmonizing standards and conformance procedure.

ASEAN leaders also acknowledged that there are still areas that member countries need to do more in terms of facilitating trade and investment and reducing barriers. Under Brunei’s chairmanship, special effort has been given to financial literacy among the members. In addition, member countries still have to ratify agreements and ensure full compliance in order to accelerate economic integration further. There is also a need for amendments or enactment of domestic laws that would align with the region’s regulations and frameworks.

For the time being, ASEAN members have paid most of their attention to AEC. However, without sufficient progress in the political/security and sociocultural pillars, the economic integration in ASEAN would be further delayed.

Out of 667 actions under the AC road map, 345 of them fall under ASCC. A report on the mid-term review released in October 2013 showed that while overall assessment was positive, there were areas that member countries need further political will, especially those related to social justice and rights.

Some ASEAN members still do not share information on this issue.

The implementation of political and security pillar has been uneven. ASEAN members have done generally well on external relations with the 10 dialogue partners. Now there are 75 ambassadors from non-ASEAN countries and organizations accredited to the Jakarta-based ASEAN Secretariat and 37 ASEAN Committees in third countries.

The U.S., China, Japan and Australia have established their permanent representative offices for ASEAN in Jakarta. India will soon set up a similar mission. Signatories of the Treaty of Amity and Cooperation have increased to 32.

In 2011, ASEAN has been instrumental in bringing in major powers to take part in the leaders-only forum known as East Asia Summit comprising leaders from 18 countries: ASEAN, China, Japan, South Korea, India, Australia, New Zealand, U.S. and Russia.

Truth be told, at least 32 out of 143 action plans as of July 2013 that have not been implemented by ASEAN members belong to the security cooperation that involves conflict management and prevention. Other common security schemes such as peace-keeping and quick response to crisis remain untouched. These are considered sensitive issues as they involve sovereignty and go against the principle of non-interference.

Balancing act

When ASEAN leaders agreed in November 2011 to begin the negotiation on the Regional Comprehensive Economic Cooperation, it was spurred by various economic developments in the region and shifts of relations among major economic powers.

ASEAN realizes that the maintenance of economic growth in ASEAN must be linked to broader economic communities both near and far. The grouping views the Trans-Pacific Partnership ― the U.S.-led trading block ― as a powerful external factor that could dilute the leading role of ASEAN.

As a precautionary measure, ASEAN then proposed the ASEAN-led RCEP to mitigate possible implications from the fast-moving TPP. So far, the RCEP negotiation has gone through two rounds in Bandar Seri Begawan and Brisbane. Representatives from 16 East Asian countries have agreed to the 2015 deadline for the framework’s conclusion. This time frame is pivotal as it would provide further impetus in deepening economic integration within ASEAN.

The main RCEP objective is to achieve a comprehensive, high-quality and mutually beneficial economic partnership among the members. In more ways than one, the RCEP negotiation is very mindful of the TPP and its objectives.

ASEAN leaders also want to make the RCEP a distinctive regional joint effort. Due to the different economic development among member countries, the RCEP will take into consideration provisions on special and differential treatment to least-developed members like Laos, Cambodia, Myanmar and Vietnam. TPP does not have these provisions.

Given the current tension among the three East Asian economic giants ― China, Japan and South Korea ― over their territorial disputes, future RCEP negotiation is in jeopardy. In the past, economic matters were given priority and were immune to political interference. That is no longer true today.

The China-Japan tension over overlapping claims in Diaoyu or Senkaku Island has already caused great concern within the region. ASEAN leaders fear that this longstanding conflict would affect economic integration in broader East Asia. ASEAN has maintained excellent relations with both countries without choosing either side. However, both China and Japan are pressuring individual members of ASEAN to display bias toward them over specific issues such as maritime security cooperation and air defense zone.

By Kavi Chongkittavorn

(Asia News Network)
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