Tuesday, December 23, 2014

Happy Holidays from the AEC Blog!

As we come to the last days of 2014, the ASEAN Economic Community blogs wishes you and your family a happy holiday season and a wonderful 2015!  I offer everyone my law firm’s holiday card below:


 Next year promises to be eventful for the AEC, as the end of the beginning for formation of the single production base and single market comes for ASEAN.  Also next year, Cambridge University Press will publish books co-authored by Stefano Inama of UNCTAD and myself:



ASEAN has undertaken the complex task of creating a single economic entity for Southeast Asia by 2015 in the form of the ASEAN Economic Community (AEC), but without regulators or supranational institutions, its implementation has been an inconsistent process. Through comparisons with the EU and NAFTA, this book illustrates the shortcomings of the current system, enabling readers to understand both the potential of regional economic development in ASEAN and its foundational and institutional deficiencies. The authors' analysis of trade in goods and services, investment, and dispute resolution in the AEC indicates that without strong regional institutions, strong dispute resolution or a set of norms, full and effective implementation of the AEC is unlikely to result. The book offers clear solutions for the ASEAN institutions to help the AEC reach its full potential. Written by two leading practitioners, this insightful book will interest policymakers, students and researchers.



Rules of Origin in ASEAN is the first in-depth exploration of the complex rules of origin in ASEAN's trade agreements. Written by two leading practitioners, they explain with clarity the existing ASEAN Rules of Origin (RoO) practices and their administration regimes in a comparative context and provide a recommendation for reform. The ASEAN RoOs can be simplified by focusing on value of materials and lowering the regional value content required to qualify as ASEAN-origin. The administration of ASEAN RoOs can be improved by expanding the use of self-certification, moving away from document-based verification to more modern post-entry audit and trade facilitation approaches. This is a timely and important topic which will be insightful to practitioners, policymakers and businesses in understanding how commerce and trade is conducted in Southeast Asia.

Please click on the above links to pre-order.

See you soon in 2015!

Sunday, November 30, 2014

Could SE Asia Again Become a Major US Domestic Political Issue?

November saw developments that could result in Southeast Asia becoming a more prominent issue in domestic U.S. politics in 2015 and 2016.  Southeast Asia normally is not an issue in domestic American politics. Indeed, one could say that the last time Southeast Asia was a major domestic political issue in America was during the Vietnam War forty years ago.

This is because, with a couple of major exceptions, Southeast Asian countries do not have major diasporas in the United States, unlike, say, Australia or even Canada.    The two major exceptions are the Philippines and Vietnam, but Filipino-Americans have tended to focus more on domestic American politics (such as the current immigration debate) and a large (but declining) portion of Vietnamese-Americans are opposed to the current government in Vietnam.  Hence the diaspora politics seen in the Chinese, Japanese and Korean communities in the United States are not as pronounced in the Southeast Asian communities. 

However, the impending takeover of the U.S. Senate and increased majority in the U.S. House of Representatives by the Republican party means increased leverage by the opposition over the last two years of the Obama Administration.  The presidential election in 2016 (along with another Congressional election) and the presumed candidacy of former U.S. Secretary of State Hillary Clinton also means that foreign policy issues may become more prominent over the next two years.  That possibly includes Southeast Asia:

South China Sea – although little understood by the general American public, increased tensions and/or a major incident in the South China Sea could bring this issue to the forefront.  The dispute could even motivate the Vietnamese and Filipino communities to be more active publicly. For example, anti-China protests took place earlier this spring in Vietnamese-American communities when the Chinese oil platform was moved into the South China Sea.    

Myanmar – the Obama Administration has touted the political and economic reform process in Myanmar as a major diplomatic success.  However, stalling or backtracking in that process could attract criticism from both parties.  Senate Republican (and imminent majority) leader Mitch McConnell has historically paid much attention to the U.S. government’s Burma policy, particularly on religious issues.  Former Senator Jim Webb has announced that he will run for the Democratic presidential nomination, and feels that he was not given proper credit by the Obama Administration (and in particular Hillary Clinton) for initiating the rapprochement with the Myanmar regime.  

Trans Pacific Partnership (TPP)  – we are coming to the end of 2014 with neither a completed TPP deal nor the Trade Promotion Authority needed to finalize and pass such a deal.  Nevertheless, we could be seeing the endgame for the TPP negotiations, which will start the major political debate on the trade agreement.  Even non-trade issues related to the four Southeast Asian countries signed up to TPP could come up, such as the implementation of sharia law in Brunei.

Finally there remain the ever-present U.S. concerns about China, which can overflow to Southeast Asia.  Many in Washington are convinced that the Regional Comprehensive Economic Partnership (RCEP) is a Chinese ploy against the TPP (even though RCEP was largely proposed by the Japanese).  Earlier this year I sat through a U.S. government trade hearing on pipe from Malaysia, Thailand and Vietnam, listening to a U.S. congressman protesting about unfair trade from China (and claiming undue Chinese influence on the three countries, even though that same week Vietnamese workers were rioting against Chinese-owned companies due to the Chinese oil platform in the South China Sea).

In any event, foreign policy usually takes a backseat to domestic political concerns in the United States, unless there is a major crisis abroad.  I would expect this to remain the case in 2015 and 2016.  Nevertheless, at a time where Asia means more to the United States, events in Southeast Asia could inject the region into domestic American politics.

Thursday, November 13, 2014

Malaysia's Vital Role as 2015 ASEAN Chair

Today in Naypyidaw Myanmar concluded its second and last ASEAN Summit as ASEAN Chair. With that, the figurative gavel associated with the ASEAN Chair was handed to the 2015 ASEAN Chair, Malaysia.  Although Malaysia does not formally take over as ASEAN Chair until the end of the year, in reality Malaysia has been acting in an ASEAN leadership role this year, and likely beyond next year, particularly with regard to the ASEAN Economic Community (AEC).  This is all for the better for the AEC.

As discussed previously, the major accomplishment of Myanmar as ASEAN Chair is that it was allowed to serve as ASEAN Chair, and that the ASEAN Summits and various associated meetings took place this year without difficulty.  The position of ASEAN Chair served as a carrot for Myanmar to undertake its economic and political reforms, and the ASEAN Summits allowed the Myanmar government to display its willingness to continue those reforms.  The real question for Myanmar is how next year’s elections will play out, e.g., whether a new Myanmar government will be established that can fully implement these reforms.

However, to use an old American aphorism, Myanmar is not (yet) able to “walk and chew gum at the same time.”  Although it should be complimented being able to “walk” (e.g., serve as ASEAN Chair), years of economic isolation left Myanmar ill-prepared to take on the AEC-related tasks, particularly in the run-up to the AEC’s December 31, 2015, implementation date. 

Fortunately ASEAN’s leadership had foreseen this possibility and allowed Laos and Malaysia to swap their terms as ASEAN Chair.  Malaysia, as a founding member of ASEAN and an active trading nation, is much more experienced and capable of handling the AEC issues.  Furthermore, in the Razak brothers, Malaysia’s public and private sectors have leadership devoted to ASEAN and the AEC.  Prime Minister Najib Razak wants to establish a diplomatic and political legacy, while Nazir Razak wants to create a fully functioning AEC in which his CIMB Bank thrives. 

Thus, we have seen Malaysia pushing for reforms of the ASEAN institutions as leader of the High Level Task Force on institutional reform, with Prime Minister Najib Razak openly calling for changes to ASEAN’s organizational and financial structures.  Meanwhile, Nazir Razak has been calling for similar changes to support the AEC as both a single market and a single production base. 

Indeed, because of the rotation of the ASEAN Chair, Malaysia could continue to have a continuing role beyond 2015.  Laos, despite being an enthusiastic supporter of the AEC, has limited resources and capabilities; hence its own role in AEC development in 2016 could and should be augmented by Malaysia serving as an unofficial holdover role (and when the Philippines, the 2017 ASEAN Chair, may be preoccupied with its own elections to take on early responsibilities).

The coming year therefore promises to see Malaysia continuing its work, only with the added formal position as ASEAN Chair.  It is vital for the AEC’s success that Malaysia fully follow through and deliver actual institutional reforms.  December 31, 2015, is only the end of the first stage of the AEC, and such reforms are necessary to deliver on the AEC’s full promise.