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.