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.