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.