JP/7/SAURI7

JP/7/SAURI7

Active citizenry needed for ASEAN Economic Community

M. Sauri Hasibuan
FORTECH Consulting
Jakarta

The ASEAN Business and Investment Summit in Bali has among
others produced a communique supporting the creation of an "ASEAN
Economic Community" (AEC). This is the right time to strengthen
ASEAN, especially given current U.S. arrogance in the region.

In Indonesia and Thailand, Washington is unashamedly using the
International Monetary Fund to push its decade-long bilateral
agenda of dismantling trade and investment barriers to U.S. goods
and investment in the countries of the Association of Southeast
Asian Nations.

The ASEAN Free Trade Area (AFTA), aimed at creating a regional
market benefiting mainly its producers and consumers, has been
rudely pushed aside by an IMF-directed trade and financial
liberalization program promoting the interests principally of
Western transnational corporations and banks.

Washington is using ASEAN's weakness also to promote its
military and political goals. Back in 1998 the U.S. pressed the
Philippines to pass the Visiting Forces Agreement, paving the way
for the reentry of large numbers of U.S. troops into the country.
The Americans were also pushing Thailand, Malaysia and Indonesia
to conduct more joint military exercises with U.S. troops,
allegedly to improve the security capabilities of those
countries.

All this should remind ASEAN policy leaders that there is no
shortcut to creating a solid ASEAN economic regional bloc.
Economic and political disturbances will continue to plague the
region until its members gradually follow the U.S. demands.

Also, different governments have different visions of
responding to AFTA in paving the way for the creation of AEC.
Some like the Philippines and Singapore, where free market views
dominate among trade technocrats, see the reduction of tariffs
regionally as a step toward eventual integration into a global
free trade system.

Others, like Indonesia and to some extent Malaysia, see
preferential regional trade as creating a large, protected
regional market that will stimulate regional industrialization
via import substitution.

Aligning the platforms of ASEAN members should therefore be
accomplished before any other programs are implemented. Indeed,
the proposal for accelerated strategic economic cooperation is
one that should have been floated at least a decade ago, when
Japan, South Korea and ASEAN were enjoying a degree of growth and
prosperity. Walden Bello, a prominent authority on the East Asia
political economy, asserts that one reason that this was not done
was a fear of Washington.

He says that the fault lies on both sides. In the case of
Japan, it was a fear of Washington. The early 1990s were the
years when APEC was being pushed around by the U.S. and Australia
as a trans-Pacific free trade area.

Japan wanted to stop the APEC blueprint, but it did not want
to antagonize Washington by openly endorsing an opposing mode of
regional integration. It wanted to distance itself from anything
that might have been seen as supporting the proposal for an East
Asia Economic Grouping, a vision of a unified economic bloc
involving ASEAN, China, the two Koreas and Japan proposed by
Prime Minister Mahathir of Malaysia.

In forming the AEC, ASEAN member countries should reflect on
the consequences of Japan's failure to carry through the proposal
for the creation of an "Asian Monetary Fund", which would have
pooled together the reserves of the more prosperous countries to
serve as a pool of funds which members whose currencies were
under speculative attack could have access to.

The need for ASEAN to form the AEC is nothing but pragmatic.
Europe has achieved much success and a strong bargaining position
after integrating the markets of countries in Europe.

ASEAN could better achieve its economic and business
objectives if member countries closely integrated their markets
and started listing a priority agenda for the coming year.

China and India have become the primary areas in Asia
attracting investment, chiefly for their sheer size of economic
output and potential markets.

One big integrated market potentially would attract business a
lot easier if free trade mechanisms and tariff reductions were
implemented consistently in Southeast Asia.

ASEAN policy makers must learn from the past that the
formation of the AEC should not remain an elite project in which
the nature, purpose and direction are discussed mainly among
technocratic and the political elite.

The people must be brought into the equation in terms of
mobilizing them to support the arrangement. There is widespread
realization in government, economic and academic circles that
without closer regional ties, most East Asian countries will be
marginalized in a global economy dominated by big blocs such as
the European Union and the North Free Trade Area.

Mobilizing people in support of the AEC project means ensuring
that the institutions involved will allow participation of labor
unions, grassroots organizations, environmental organizations and
other civil society elements in the decision making process.

The days when technocrats, politicians and the industrialized
elite monopolized the process of making decisions when it came to
regional coordination are over. Civil society groups are on the
rise and will increasingly demand to be included in decision
making in this decade.