ASEAN towards 2000
ASEAN towards 2000
Besides the landmark security treaty that declares the whole of Southeast Asia a nuclear-weapons-free zone, several other strategic decisions and agreements were made during the meetings of the Association of Southeast Asian Nations (ASEAN) in the Thai capital Bangkok last week.
The combined results of the meetings pave the way for ASEAN to play a much bigger international role in the 21st century.
Clearly the most important outcome was the agreement achieved on accelerated removal of tariff barriers to intra-ASEAN trade. For many goods, the new targets are now earlier than the target date for the advent of the ASEAN Free Trade Area (AFTA), itself already brought forward from 2008 to 2003.
True, the tasks involved in fully realizing the AFTA plan remain formidable and the real difficulties will not show themselves for two or three years time. When the member countries finally get down to practical details, they will find themselves in the real world, in which there is potential for conflict between national and regional interests.
Nevertheless, the political determination shown in moving towards AFTA ahead of the deadline will serve to maintain the momentum of cooperation in the region and will further strengthen the relevance of ASEAN as a regional economic grouping.
Of the next greatest significance was the agreement on the launching, next month, of negotiations on the liberalization of financial services, maritime transport, telecommunications, air transport, tourism, construction and business services within ASEAN. Another strategic agreement relates to the protection of intellectual property rights through, among other things, the establishment of a region-wide patent and trademark system.
Apart from further supplementing and supporting AFTA, these two agreements are important for making the Southeast Asian region more attractive to mid- and high-tech industries. ASEAN's members have either achieved newly-industrialized-country status or are rapidly advancing towards it. That makes it necessary for them to shift more to mid- and high-tech industries, as their labor-intensive enterprises start to lose their competitive advantage to countries with lower labor costs, such as India, Pakistan and Bangladesh.
The fourth important agreement reached relates to the efforts to develop stronger economic links with the three other Southeast Asian countries -- Cambodia, Myanmar and Laos -- with a view to their eventual inclusion in ASEAN. It is too early to be certain that, in the year 2003, AFTA will be a common market of more than 500 million people. Nonetheless, the agreement in Bangkok increases the likelihood that such a huge common market will materialize before 2010.
The decision to help the three potential members early, before they join ASEAN, is not only quite strategic but also makes a lot of common economic sense. Obviously, the three countries should begin adjusting their economies to mesh with those of their dynamic neighbors. They must begin adhering to the principles of the market economy, for example. That process, in turn, requires a lot of institution-building efforts. Assistance from ASEAN's more developed members will, indeed, accelerate the process and will, it is hoped, make the adjustment less painful.
However, Cambodia, Myanmar and Laos should also realize that, although they face tough economic requirements in seeking to join ASEAN, they will gain immediate benefits from their inclusion in the association. We expect that the three nations will soon become more attractive to foreign investors. Foreign businesses interested in establishing enterprises in any one of the three countries will no longer see only the size of the particular national market, but a common market of more than half-a-billion people. A case in point is the European Union. Empirical studies have shown that foreign investment in Sweden, Austria and Finland increased sharply long before they finally joined the European Union early this year.