JP/7/PUSPA

Working towards cooperation between ASEAN, East Asia

S. Pushpanathan Head, External Relations ASEAN Secretariat Jakarta

Cooperation between the Association of Southeast Asian Nations (ASEAN) and countries of East Asia was formally launched with the Joint Statement on East Asia Cooperation in 1999, even though the first meeting of the leaders of ASEAN and the "plus three" countries China, Japan and South Korea was initiated in 1997.

Since then, cooperation has sprung up in a number of fronts -- in the fields of economy, science and technology, health, environment, agriculture and culture.

The ASEAN+3 cooperation has been substantive in the monetary and finance sector and the reason for this is obvious. The purpose is to put in place safety valves to ensure economic and financial stability so that the region continues to grow and prosper.

A regional financing arrangement, the Chiang Mai Initiative, was initiated in 2000 and now comprises an expanded ASEAN swap arrangement of US$1 billion and 13 bilateral swap arrangements amounting to $32.5 billion.

The ASEAN+3 countries are also looking at an Asian Bond Market Initiative. Under the initiative, India has offered to invest $1 billion in an Asian Bond Fund.

Political and security cooperation has been slow since the focus of ASEAN+3 countries has been on economic cooperation. However, the changing global situation and the rise of terrorism and other transnational crimes has increased the need for political and security engagement in East Asia.

The consequence of the terror threat, especially on foreign direct investment and tourism, and on the social and moral fabric of society is receiving increased attention from the ASEAN+3 Summit.

The ASEAN+3 process is still in an early phase. ASEAN is now integrating itself economically and narrowing the development gaps within and between its members. It is striving for a creation of a single market with its vision for an ASEAN Economic Community by 2020.

ASEAN is also taking steps to ensure that it stays competitive in a knowledge based global economy, as well as working towards establishing economic links with its key trading partners such as Japan, the European Union, the U.S. and potential economic powerhouses such as China and India. This seems all the more important after the failure of World Trade Organization talks in Cancun.

One fundamental question is how ASEAN member countries will function in an East Asia setting of 13 countries. Unlike the ASEAN+3 cooperation process where the initiative is with ASEAN and the process is driven by ASEAN, in an East Asia setting, China and Japan may be at the wheel.

This is especially so if ASEAN countries are not closely integrated and do not bridge their development gaps sufficiently to catch up with their northeast Asian partners. Additionally, traditional rivalries between China and Japan could affect the cooperation process since the ASEAN countries separately will not be fully able to play the buffer role with South Korea, as they have been in the ASEAN+3 Cooperation Process.

Also, there is the lingering question of whether ASEAN would be subsumed under the greater East Asia framework where the rules of the game could be entirely different from the "ASEAN Way".

Then, there is the quandary as to whether East Asia cooperation will pose a challenge to ASEAN's philosophy of being outward oriented -- so far a key for its economic success and the magnet for attracting major global players to ASEAN.

Given the importance of strengthening ASEAN+3, ASEAN will have to carefully consider the many questions and challenges as it moves towards greater East Asia cooperation. A strategy will have to be developed to ensure that ASEAN make strides towards achieving its goals of an ASEAN Economic Community and in forging economic links with as many potential economic partners as possible while embracing East Asia cooperation.

Such a strategy should include the following aspects. First, ASEAN will have to focus on expediting its economic integration not only in trade, investments and services but also in removing non-tariff barriers to trade.

Second, it will have to sharpen its economic competitiveness through integration of key economic sectors.

Third, it will have to harmonize its investment regimes to ensure that investors can invest in any part of ASEAN and enjoy similar privileges.

Fourth, ASEAN will have to strive to create a peaceful and harmonious region that can safeguard foreign direct investments and provide a gateway for investments to grow and investors to reap benefits. One key to this goal will be ASEAN's Treaty of Amity and Cooperation which will be acceded to by China and India at the Bali Summit. ASEAN should strive to gain the accession of the other two "plus three" countries of Japan and South Korea, as well as the U.S. to bolster the strategic balance in the region.

At the same time, ASEAN should work closely with the major global players in stamping out terrorism and other transnational crimes to clear the misperception that Southeast Asia is a hotbed for terrorists.

ASEAN is heading in the right direction with the conclusion of a number of cooperation pacts with China, Russia, the U.S and the EU in combating terrorism and transnational crimes. A joint declaration with India was also signed at the Bali Summit.

Fifth, ASEAN must continue to strive to stay outward looking by engaging the other key trading partners. In terms of economic linkages, ASEAN should continue to strengthen its comprehensive economic partnership with Australia and New Zealand, work towards the realization of Trans-regional EU-ASEAN trade initiative as well as the Regional Trade and Investment Framework Agreement with the U.S.

It will also have to embrace India, which was set to conclude a far-reaching comprehensive economic partnership framework with ASEAN in Bali. That could well set the stage for a free trade agreement within a decade.

Finally, ASEAN-East Asia cooperation should first follow up on the long-term steps recommended by the East Asia Study Group.

These measures would be the building blocks toward full East Asia cooperation.

As for the long-term actions dealing with an East Asia Free Trade Area (EFTA), and an East Asia Summit, these ideas, while powerful, will have to take into consideration the current dynamics in the relations and the situation in the two divides of East Asia.

ASEAN and the "plus three" countries will have also to study carefully the future convening of the ASEAN+3 Summit. While it may be worthwhile to consider holding such summits once in three to five years, to keep the long-term vision of an East Asia Summit alive and to work towards the goal, it will be important to convene the ASEAN+3 summits in between to consolidate cooperation and to develop the comfort levels needed for further East Asia cooperation.

The article reflects the writer's personal views.