ASEAN needs to move faster, bolder
ASEAN needs to move faster, bolder
ASEAN's existing decision-making procedure and institutional setup may not be able to cope with the coming economic tests, writes Supachai Panitchpakdi.
SINGAPORE: In ASEAN, good political relations built painstakingly through the decades have created a stable atmosphere for individual member economies to thrive. Although in much of ASEAN's history economic cooperation was more token than substantive, peace and stability throughout the region has provided the basis for economic growth.
Indeed, economic cooperation as such was not needed as each member was doing well out of its own potential and its open trade with third countries or regions. What clearly emerges out of past decades of political cooperation is a unified sense of belonging to ASEAN not only as a region but as an identity that comes strongly to the fore in the international arena.
Yet objective comment on ASEAN's progress is needed so that we may know ourselves better. The self-criticism below should be seen as a well-meaning constructive comment to guide ASEAN into its next decade.
First, the process of consensus-building which might have been necessary at initial group-forming stage, involves time- consuming, even redundant rituals. During a period when the degree of globalization and trade and investment liberalization was insignificant, ASEAN countries had the luxury to grow up together slowly.
It was only in its third decade that ASEAN could agree to a semblance of a partial free trade arrangement. However the next decade and the new millennium will see ASEAN besieged by all kinds of international economic issues that will need our unified stance and firm response.
While multi-lateralism seems to be gaining ground with the establishment of the World Trade Organization (WTO), we should not be ignoring the possibility of "aggressive bilateralism", sometimes cloaked in the guise of a strategic trade policy that is being discussed in some countries.
At the same time, ASEAN should realize that our speed in making further headway will now be measured against the speed of other economic groupings that are mushrooming all around the world. To move relatively in slower gear can only mean being left behind in the present highly competitive world.
Apart from being competitive in trade in commodities, the services sector is a vast area that lies outside the coverage of AFTA. This latter sector is relatively highly protected in ASEAN, as it is in most developing economies.
As major countries try to push for more liberalization in the services sector where they have the biggest existing advantages, ASEAN must not waste time in writing framework agreements after framework agreements before we operationally move ahead with our own liberalization.
Pressure will be forthcoming not just from the WTO, which must seek to fulfill the promises of the Uruguay Round (UR), but from within APEC itself where countries such as the U.S. and Australia insist on UR-plus results. The coverage of ASEAN's economic cooperation must be widened to include intellectual property rights protection, liberalization of the services sector, enhancement of mobility of labor and capital.
The need to move ASEAN away from a ritual-based to a more substance-based process is reflected in the challenge to make a two-tier ASEAN work, with original members moving in the normal or faster track while new members move in a lower track because they are economies at the transitional stage.
ASEAN must do its best, within a limited time frame that should not extend beyond a decade, to facilitate our new members' economic development process to narrow the existing gap.
We may have to embark upon programs not seen before in the region such as an intra-ASEAN Generalized Scheme of Preference, human resource development programs on a grand scale, huge infrastructural investments and an ASEAN-Indochina Fund.
All these require special, additional endeavors based upon the realization of the urgency of the multiple assignments at hand that cannot wait for "patient" and time-consuming traditional ways. We need a consensus to work together even without a consensus. The future viability of ASEAN rests upon our genuine understanding of this paradigm shift.
Second, in the decades to come, ASEAN must find the right balance between substantive economic modes of operations and political and diplomatic approaches. Economic issues need to be placed high on ASEAN agenda and should be resolved through economic rationale and not diluted or delayed for political reasons.
In the coming decades, economic debates will dominate international relations and will get more complex as economic objectives multiply while policy instruments remain limited. Complicated negotiations on the liberalization of the financial sector, investment flows through the WTO and APEC's own liberalization agenda still await ASEAN's final and united stance.
It is imperative that ASEAN move ahead as early as possible with our own consideration of these complex issues so that our own differences can be resolved as much as possible.
The lack of balance between political and economic issues is evident when ASEAN's international economic role is compared with its active international political role.
For example, while ASEAN is clearly the common denominator in both the ASEAN Regional Forum (ARF) and APEC, its political clout in the case of ARF is still visible but its economic weight in APEC is just nominal.
The concept of East Asian Economic Caucus (EAEC) which may appear attractive in an economic light, forging regular exchanges on economic issues between countries in the same region, looks rather threatening and divisive when seen through the political lens. It seems that EAEC can only shed its political baggage by (i) adopting an agenda that contains more economic development topics rather than trade, and (ii) allowing Australia and New Zealand to join in the discussion at an early stage.
Third, after three decades of cooperation, this is a defining moment to determine in clear and unequivocal terms the future evolution of ASEAN.
It might be far-fetched and unrealistic to look at a highly advanced economic union as a role model for ASEAN. But it should be worthwhile and useful to nurture a vision of ASEAN as a region with the opportunities for deepening economic integration.
Considering that the accelerated and comprehensive development of APEC is not completely unrealistic, it could very well surpass ASEAN's, leaving the latter as an insignificant faction within the emerging Pacific economic "community".
In the past, ASEAN has tacitly avoided adopting any unified stance as a group vis-a-vis all sorts of proposals and commitments to transform APEC. It is now a fact that aside from biannually giving priority to a site for APEC Ministerial and Leaders Meetings, ASEAN has lost its original influence on APEC's destiny, for better or for worse.
The ambiguity of ASEAN's role in APEC may be interpreted as contradictory to the proclaimed effort to map out an action agenda for ASEAN 2020 with the theme of "Partnership in Dynamic Development".
The institutionalization process of ASEAN must now be thought through. We are beginning to be saddled with similar problems as the European Union, for instance how to create a combined market that is large enough for more profitable economies of scale.
In the case of the EU, it is a question of being competitive against mega-firms from the U.S. and Japan while for ASEAN China's mega-economy would provide a major competitive challenge.
If ASEAN remains a loosely tied group of fragmented markets as is the case now, its trade and investment competitiveness would rapidly deteriorate in relation to emerging economies. The institutionalization of ASEAN does not have to be as far-reaching as the supranational concept of EU but we can derive certain arrangements from the EU to fit in with the ASEAN framework.
As an example, the role of the ASEAN Secretariat which is now subservient to ministerial meetings may have to be modified. The secretariat may have to be strengthened with a view to a more significant policy-making and evaluating role. If any visionary action agenda is ever going to be made pragmatic and operational, there is a real need for an influential and effective arm in the secretariat.
If we are to proceed along the principle of open regionalism as accepted by the grouping, we have to prepare ourselves for openness in most if not all sectors including trade in goods and services, finance and human resources. To make progress along this line, ASEAN cannot wait for decisions to be made annually at ministerial or leader meetings. They must be backed up fully by the secretariat's pursuance of all policies at all times.
If we are to maintain the open regionalism principle, we should also prepare ourselves to accommodate requests from countries such as Australia and New Zealand which, although not our next-door neighbors, are becoming so closely involved with our economies as to constitute one and the same region in practice.
These are challenges that may defy ASEAN's traditional ways of thinking and acting. But the historical inevitability of the growing-up-together process demands the modification and elevation of ASEAN's legacy.
The writer is a former Deputy Prime Minister, is MP and Chairman of the House Economics Committee, Thailand.