ASEAN economic integration<\/p>\n
The photocopying machines at the secretariats of the ASEAN
\ngovernment and business summit meetings in Bali must have been
\noperating at full speed, given the large number of documents,
\nagreements and speeches on free trade, economic integration and
\ninvestment liberalization produced over the past four days.<\/p>\n
Most notable was the new pact adopted on Tuesday to develop a
\nfull-fledged ASEAN Economic Community in 2020. But whether all
\nthis flurry of activities will really lead to much freer trade
\nand more economic integration in ASEAN and Asia in general, as
\nthe government and business leaders from the 10 ASEAN countries,
\nChina, Japan, India and South Korea currently meeting in Bali,
\nhave wanted, remains to be seen.<\/p>\n
After all, 36-year-old ASEAN has, notoriously, been known for
\nits "NATO" record (no action, talk only). Just witness how, more
\nthan 11 years after the gradual phasing-in of the ASEAN Free
\nTrade Area (AFTA) in 1992, intra-ASEAN trade remains very small,
\nat only around 25 percent of its total foreign trade, due to
\nnumerous nontariff barriers, different product standards and
\nprocedural red tape.<\/p>\n
Past experience has taught us to welcome with qualifications
\nthe outcomes of the Bali summit meetings, and several more
\nprogressive members might still be disappointed at the results,
\nimpatient at the long timetable (2020 deadline).<\/p>\n
It is nevertheless encouraging to observe several conditions
\nand factors that would likely make the new agreements on free
\ntrade and economic integration, which the ASEAN leaders signed in
\nBali on Tuesday, more promising and politically more feasible.<\/p>\n
First of all, the new set of measures adopted in Bali is based
\non the right priority. It will directly attack the main problems
\naffecting AFTA and investment in the region -- nontariff
\nbarriers, customs procedures, licensing red tape, different
\nproduct standards. Yet more encouraging are the clear timetables
\nset for each measure.<\/p>\n
The renewed commitments and their timetables also seem to be
\nmore politically acceptable and feasible. ASEAN countries have
\njust recovered from the 1997 economic crisis and terrorist
\nattacks, and especially Indonesia, the current chair of ASEAN,
\nhas emerged from its political and economic crisis to regain
\nstronger self-confidence to compete regionally and globally.
\nMost important, though, is the increasing realization among ASEAN
\nleaders that their regional grouping would be rendered irrelevant
\nin the current process of economic globalization if the
\norganization did not contribute to accelerating the development
\nof a single market and finally the integration of ASEAN
\neconomies.<\/p>\n
Fragmented markets in ASEAN countries are simply not
\nattractive to foreign investors, as evidenced by the steep
\ndecline of foreign direct investment flow to ASEAN last year to
\nas low as only one-third of the total sum gained in 1997.
\nThe leaders' commitment to accelerate integration in 11 key
\neconomic sectors 10 years ahead of the final goal of the economic
\ncommunity will help regain foreign investor confidence in the
\nregion.<\/p>\n
Moreover, ASEAN leaders are certainly afraid that without any
\nsignificant progress in Bali their regional grouping may lose its
\nrelevance. In fact, several members, so fed up with the
\ndisappointing pace of the economic integration process in the
\nregion, have broken ranks with ASEAN and pursue separate free
\ntrade arrangements with other countries.<\/p>\n
Free trade in goods alone will never be able to enhance
\neconomic integration. Even free trade in both goods and services
\nis not sufficient. It should still be supported by a liberalized
\ninvestment climate because trade and investment are inseparable.
\nIt is these principles that are integrated into the ASEAN
\nEconomic Community concept.<\/p>\n
Free trade in goods and services and a liberalized investment
\nclimate will enhance specialization and economies of scale based
\non local competitive advantages and this in turn will make ASEAN
\ncountries more attractive for investors to establish regional
\nproduction networks.<\/p>\n
ASEAN leaders have also been increasingly aware that an
\nintegrated ASEAN economy will have a much stronger bargaining
\nposition vis-a-vis other major trading partners in Asia and the
\nUnited States, Europe and China. Fragmented ASEAN markets will
\ninstead render ASEAN free trade area agreements with China,
\nJapan, India and South Korea rather meaningless.<\/p>\n
All these conditions, in addition to the ASEAN leaders'
\ndecisions to establish a legal unit in charge of monitoring and
\nenforcing all the framework agreements and to set up an
\nindependent dispute-settlement mechanism, will hopefully provide
\nenough fuel to push forward the ASEAN economic integration
\nprocess.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asean-economic-integration-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}