ASEAN may have the will but needs to find the way

ASEAN may have the will but needs to find the way

By Alan Wheatley

SINGAPORE (Reuters): For a summit that had aroused decidedly
low expectations, ASEAN's latest gathering produced two important
home truths: Asia's center of economic gravity is moving rapidly
northward, and Southeast Asia is too weak to do much about it.

The three-day meeting of the 10 leaders of the Association of
Southeast Asian Nations (ASEAN) was dominated by discussion of
how they could embrace their faster-growing neighbors in
Northeast Asia without being overwhelmed by them.

They had ringing words but no convincing answers.

"We all know that alone we are weak if we negotiate with
others outside ASEAN. But together, if we can really be
integrated, we will be strong," Singapore's prime minister, Goh
Chok Tong, told a news conference.

ASEAN's aspirations and limitations came into sharpest focus
over a proposal floated by China's confident premier, Zhu Rongji,
for a free trade area with ASEAN.

On the one hand, some Southeast Asians like Goh realize the
competitive spur of free trade with an increasingly dynamic China
would mean more business and so rising living standards for ASEAN
economies able to rise to the challenge.

Unfortunately, too few of them are able to do so, notably the
four poorer countries that joined ASEAN in the 1990s -- Laos,
Cambodia, Vietnam and Myanmar.

"We need to identify the problems and concerns of the
participants to make sure that such an arrangement should not be
bad for some of the less developed members," Malaysian Prime
Minister Mahathir Mohamad said.

So the East Asian free zone, after an initial enthusiastic
reception, was relegated to a long-term ambition. Thailand's
foreign minister, Surin Pitsuwan, said it might take a decade or
two to see the light of day.

ASEAN leaders set their sights on a second bold goal: forging
a new political group with Japan, China and South Korea, which
took decisive steps of their own in Singapore to put their
blossoming political relations on a regular summit footing.

But this too would not be for tomorrow. "All the leaders
understand that these are just merely ideas for study and if they
are to be implemented it will be over the long term," Goh said.

ASEAN groups Singapore, Malaysia, the Philippines, Thailand,
Brunei and Indonesia plus Myanmar, Laos, Cambodia and Vietnam.

In throwing down the free-trade gauntlet, analyst Carl Thayer
said Zhu is not only capitalizing on ASEAN's disarray but also
filling a vacuum left by Washington's neglect of the region and
its failure to get a new round of global trade talks launched.

"It's a strong China that has patiently picked up on the U.S.
failure to engage with Asia," said Thayer, a regional security
specialist with the Asia-Pacific Center for Security Studies in
Honolulu.

At the back of the ASEAN leaders' minds is a real fear of
being marginalized if they were to throw in their lot with the
Big Three to the North. "There is of course the risk that ASEAN
may be eclipsed," Goh frankly admitted.

Yet that is already happening.

The combined economic weight of Japan, China and South Korea
is more than five times that of ASEAN -- and that is before a
rising China moves up another gear when it joins the World Trade
Organization.

Investors are pouring into China at the expense of ASEAN
countries like the Philippines and Indonesia that are mired in
seemingly intractable political and economic crises.

So what is ASEAN going to do to catch up?

The summit produced worthy plans for road and rail links, e-
commerce initiatives and training institutes to try to bring the
group's disparate membership closer together.

But what Southeast Asian governments really need to do before
they can hope to play in the first division is to free up their
economies and complete their own free trade zone, Goh said.

Yet there was no talk of the sweeping legal and corporate
governance reforms needed to lure back disenchanted investors.

And on the trade front the summit marked a clear setback to
ASEAN's efforts to slash tariffs on 85 percent of goods
categories to below five percent in 2002.

Bowing to political realities, ministers signed an agreement
to give Malaysia a two-year reprieve before it has to cut tariffs
on its struggling car industry. The fear is that other countries
will line up to seek exemptions for their own sensitive sectors.

Writing in the Australian Financial Review, columnist Peter
Hartcher condemned what he said was serious backsliding on trade
by a leaderless grouping lacking economic confidence.

"A Japanese academic once compared ASEAN to a salad in the
affairs of the wider Asia-Pacific: a valuable side dish, although
not essential to sustaining life."

"Today it is starting to smell like a salad that's been left
out in the tropical sun for too long," Hartcher wrote.