After 50, ASEAN’s To-Do List is Far from Easy

BANGKOK, Aug 21 (Reporting ASEAN) – An ASEAN-wide work permit. Redoing the currency basket of ASEAN states. Giving national treatment to ASEAN investors. Beefing up ASEAN-based security venues. Getting ASEAN states to comply with its own agreements.

These might seem ambitious or even fanciful thinking at present. But these concrete steps are among many that have emerged in discussions around ASEAN’s 50^th anniversary this year, looking into how ASEAN can strengthen its internal core and build more resilience.

This would help make ASEAN more of a middle power that can survive better in today’s uncertain environment where multilateralism and globalization/free trade – which have been crucial to ASEAN’s economic growth and regional stability – seem to have been thrown into reverse gear.

“The new normal in East Asia now is uncertainty,” as Jusuf Wanandi of the Jakarta-based Center for Strategic and Institute Studies (CSIS) Foundation puts it.

In economic linkages, Jose Isidro Camacho, vice chairman of Credit-Suisse Asia-Pacific and a former Philippine secretary for energy and finance, says it is time for “the concept of an ASEAN citizenship” where ASEAN countries give favored status to fellow ASEAN entities. There should be a clear distinction between a person, company or investor being ASEAN or non-ASEAN, he told the ‘ASEAN at 50: The Way Forward’ conference in Manila in early August.

In geopolitical terms, an internally stronger ASEAN is one that is able to maintain its “strategic autonomy”, Aileen Baviera of the University of the Philippines’ Asian Center points out. ASEAN has to be “innovative” in designing mechanisms that “keep the big powers engaged but also as is ASEAN’s tradition. . . to maintain the region as a neutral ground and as a region that is most concerned with maintaining the strategic autonomy of Southeast Asia itself”.

STRONGER CORE

However one calls it, strengthening its political and economic core must rank high in ASEAN’s to-do list if it is to mature into a more solid community after 50.

Interesting ideas for strengthening ASEAN range from creating more visible signs of being of ASEAN, to unlocking barriers to real integration, to pushing regionalism at the highest political levels of presidents and prime ministers.

While ASEAN has advantages to keep its growth momentum going, it needs to actually implement some – including politically sensitive – aspects of the ASEAN Economic Community (AEC) it has been weak on. ASEAN likes to say it has made great strides in the opening up of trade – but in truth, most tariff reductions to almost zero were already in place before AEC was launched.

Camacho proposes a much more radical push to the integration of the other aspects of the ASEAN economic project – services, labor, capital – which the business sector has been largely unimpressed by.

“It is about time that each member country commit to adapt the concept of an ASEAN citizenship that will have a favored status in our respective jurisdictions. This should allow an ASEAN neighbor to be distinguished from a non-ASEAN person, on nationality issues in the areas like foreign ownership limits, or labour, or professional services and many others,” he said.

Camacho added: “Unless we are prepared to formally incorporate these in our respective laws and regulations, ASEAN will be merely describing our geographic proximity instead of our political, our social, cultural and economic tradition.”

While AEC aims to allow the freer flow of goods, services, capital and skilled labor, business people say progress has been paltry in the integration of services in air transport, health care, tourism, logistics. ASEAN ownership of up to 70% in the service sector was to have been accomplished in 2010, Camacho adds.

ASEAN finance ministers agreed on a road map for a more integrated capital market in 2009 – one that was to cover harmonized capital-market standards, consistent tax regimes, stock market linkages – but “very little has been accomplished”, he said.

TESTING ASEAN’S RESOLVE

Ideally, ASEAN should be able to give national treatment to ASEAN investments, but there is no real initiative on this, he said. Some countries have put in even more restrictions, including on foreign labor, after the AEC was set up.

But how about an ASEAN-wide work permit? Former Thai energy minister Narongchai Akrasanee says this will help ASEAN address its members’ supply and demand needs.

As it is, though, the ASEAN Community’s skills mobility mechanism only covers a limited set of skilled professions. None of the sectors where mutual recognition agreements were discussed since the early nineties, except for tourism, allow for automatic recognition of credentials in another ASEAN country, an Asian Development Bank study found.

What if ASEAN gave “much more substance” to its economic community by working to become a customs union after tariffs are all but eliminated, asked University of Tokyo Masahiro Kawai. As it this, ASEAN countries remain challenged by non-tariff barriers though officials regularly say trade is open because tariffs are almost at zero.

“We haven’t finished our homework on traditional barriers,” Mari Pangestu, co-chair of the Jakarta-based CSIS and former Indonesian trade minister, said at the Manila conference.

To deepen financial integration, Kawai suggested that ASEAN work to have a more stable intra-ASEAN exchange rate, by basing this on a basket of currencies that gives predominant weight to the currencies of ASEAN countries and that of Japan, Korea and China, rather than those of non-Asian ones.

Hastening the conclusion of the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) is another major way that ASEAN can maintain and protect the open economic environment it has thrived in for decades, and prevent over-reliance on any one economy.

Thus far, it has been five years and 19 meetings since the start of negotiations around what would be the world’s largest free-trade bloc, which groups ASEAN with the six countries it has free-trade accords with – China, India, Japan, South Korea, Australia, and New Zealand.

The target for completion is supposed to be this year or by the November ASEAN summit – but few are holding their breath.

Differences remain on the degree of trade liberalization, and trade and investment rules. A newspaper advertisement by Thailand’s Department of Trade Negotiations in August said the RCEP members’ offer on tariff reductions did not reach ASEAN’s goal of 92% of all goods. It added: “Many countries are concerned that asking new (trade) offers could potentially put them at a disadvantage.”

RCEP is projected to boost East Asia’s growth potential, create a bigger market and lift incomes by 2 to 9%. “Without RCEP, you’re going to end up a world of bilaterals, which is dangerous because you are small, compared to the big. If you’re ASEAN, you have more bargaining position,” reminded Pangestu.

How is economics related to the political weight of ASEAN?

“The benefits of RCEP are not just confined to the economic – it’s also in the political and security area,” Pangestu said. “If RCEP can be used to make sure that ASEAN’s central role is maintained, then there’s an important political and security benefit versus all the regional tensions and managing relations that we have with the big powers like China, Japan and India, and also those outside the region, such as the US and Europe.”

In the area of ASEAN’s centrality as the fulcrum of political dialogue, experts have suggested strengthening one or all of these forums – the ASEAN Regional Forum (ARF), the East Asia Summit, and the ASEAN Defence Ministers’ Meeting-Plus (ADMM-Plus).

While the ARF and ADMM Plus did not have high ambitions for security cooperation, they are now facing challenges from ASEAN’s difficulty in shaping the agenda given that it is being pushed or pulled one way or another by the bigger powers.

They remain key venues for discussing security matters – for instance, North Korea is part of ARF, and ADMM-Plus has seen 18 member countries hold combined military exercises, including around maritime security and terrorism. The ADMM-Plus has “in a way removed the psychological barrier to talk abut or to work together on defense issues,” added former Indonesian foreign minister Hassan Wirajuda.

But the 27-nation ARF is now 23 years old, grappling with how to go beyond confidence-building for years and took a decade to agree on a conservative work plan on preventive diplomacy.

“The historical achievement of these institutions has been their ability to convene and regularize political dialogue and consultation between ASEAN member states and the world’s great and regional powers,” See Seng Tan of the S Rajaratnam School of International Studies wrote in the ‘Contemporary Southeast Asia’ journal in August.

“However, the post-Cold War strategic compact that enabled this exceptional development has considerably weakened in the face of growing rivalry among the Great Powers, which has led to pressures on ASEAN member countries to take sides and fomented disunity within ASEAN itself,” he added.

The 16-country East Asia Summit has been around for 12 years, but did not develop much political weight due to reasons ranging from the suspicion or disinterest of some powers, lack of capacity to set the agenda or to implement decisions.

WALKING THE TALK

ASEAN’s economic and political relevance are key to making sure that the world continues to find ASEAN-based forums useful. Much of this strength depends not only on how ASEAN manages the flexing of muscles by external powers in today’s contested environment, but on how much importance it gives to itself – and how far its leadership commits to it.

“The next generation of leaders should also be strong politically because for them to adopt to an ASEAN integration program, there would have to be certain give-ups, certain surrenders, certain compromises, in order to achieve the kind of integration that we would like to see some day,” said Filipino businessman Manuel Pangilinan of the leading telecommunications firm Philippine Long Distance Telephone Inc. “But if we address the matter of integration purely from a country perspective, we will never get there,” he said at the Manila conference.

“Leadership in ASEAN from now on needs to be more regionally oriented rather than nationally oriented,” added Suchit Bunbongkarn of the Institute of Security and International Studies (ISIS) Thailand.

Said Camacho: “We (must) focus on execution (of ASEAN’s deliverables). We spend too much time talking.”

(*Johanna Son, a Bangkok-based journalist who has followed regional affairs for more than two decades, is editor/manager of the Reporting ASEAN (www.reportingasean.net) media program.)

A shorter version of this article was published in The Myanmar Times: https://www.mmtimes.com/news/asean-do-list-far-easy.html

(END/Reporting ASEAN)