Wednesday, September 28, 2011

Combatting ASEAN Haze Requires Both Words and Actions

Last week the ASEAN environment ministers met in Bangkok to discuss, among other things, the haze (air pollution) that has become an annual blight on the region.   Malaysian Natural Resources and Environment Minister Douglas Uggah Embas was quoted by Bernama as saying “The meeting accepted Malaysia’s proposal for the ASEAN Secretariat to play a more active role to coordinate monitoring activities, including the ability to decide when certain action is to be activated to reduce hot sports in member countries.”   He added that Singapore had supported the proposal, which was adopted by the ministers.

Now, as regular readers of this blog will know, I am in favor of strengthening the ASEAN institutions.  Assigning responsibility to the ASEAN Secretariat to monitor both the haze and its causes and to determine when actions should be undertaken is a positive development.  In fact, it is preferable to give this responsibility to the Secretariat, which can act in the interests of ASEAN, rather than any one member state.  The fact that the ASEAN Secretariat is based in Jakarta will also help, since Indonesia is largely responsible for the haze problem (with other ASEAN members also contributing with their own emissions).

However, this is only a partial step in the right direction.  Several more steps must be taken in order for ASEAN to deal with the most visible and recurring transboundary issue, an issue that affects all three pillars of ASEAN.

First, Indonesia has yet to ratify the ASEAN Agreement on Transboundary Haze Pollution, despite Indonesia’s previous and reiterated commitment to ratify the agreement this year, some nine years after its initial signing and after all other ASEAN members have ratified it.  In Bangkok, the other nine ASEAN members had to repeat their request that Indonesia ratify the agreement.  It would be detrimental for ASEAN’s credibility for Indonesia’s year as ASEAN chair to end without Indonesian ratification.  Now, some may question whether Indonesian ratification would be of any value if Indonesia does not properly implement the agreement.  Yet by ratifying the agreement, it would then become Indonesia’s credibility  primarily at stake, along with that of ASEAN.

Second,  the authority of the ASEAN Secretariat in this matter needs to be strengthened.  Not only would Indonesian ratification of the Agreement provide this, but so would an explicit commitment by ASEAN’s heads of state.  An ASEAN Summit directive that the ASEAN Secretariat should have a continuing responsibility on transboundary haze issues would also give greater legitimacy to this task.

Finally, the ASEAN leadership needs to give the Secretariat the resources to implement that responsibility properly.  Without additional funds and staff (such as through the secondment of national experts, which is done in the EU), the ASEAN environment ministers’ directive will become an unfunded mandate.  It would be a great responsibility without any power.  The fact that Malaysia and Singapore, two of ASEAN’s wealthier members, have pushed for action (and are most affected by the haze) hopefully will eventually lead to reform of the funding level and allocation formula for the ASEAN Secretariat’s annual budget.

Thus, ASEAN needs to follow up on its stated commitments with actions and follow-up.  Although this will be difficult, failure to address the haze will remind ASEAN’s citizens and the world of the grouping’s failure to deal with a major regional issue.  

Tuesday, September 27, 2011

ASEAN Improvises With Its Institutional Infrastructure to Invest in Its Physical Infrastructure

Over the weekend the ASEAN finance ministers formally established the ASEAN infrastructure fund (AIF).  It eventually will have total funding of US$ 13 billion, with the initial funding of almost US$ 500 million coming from the following sources: Malaysia US$ 150 million, Asian Development Bank (ADB) US$ 150 million, Indonesia US$ 120 million, Singapore US$ 15 million and the Philippines US$ 15 million.  Thailand will contribute after going through domestic law approval procedures.

ASEAN members have committed to lend $4 billion through the AIF until 2020, while the ADB will finance roughly $9 billion. The stated aim is to fund six infrastructure projects each year, to be selected based on their economic and financial rates of return and potential impact on poverty reduction. The AIF will also issue bonds which can be purchased by ASEAN central banks.

The AIF will help channel and support infrastructure projects in ASEAN, which the AEC needs.    Yet development in ASEAN physical infrastructure was not accompanied by development in ASEAN’s institutional infrastructure in this case.

First and most obvious, if ASEAN members can come up with more than US$ 300 million for the AIF, with billions more to come, why can’t they come up with additional funding for the ASEAN Secretariat?  Even a small portion of this amount would greatly expand the capabilities of the ASEAN Secretariat to monitor and implement the AEC.

Second, the AIF was incorporated as a limited liability company in Malaysia rather than as a new regional institution.  Although establishment of an ASEAN-level entity would have been preferable, it was more expedient to incorporate the entity in an ASEAN member rather than undergo the lengthy process of ratifying an ASEAN-level agreement among all of the members.  Furthermore, the choice of Malaysia is also judicious, as project financing is usually done under English law and with arbitration clauses, both of which Malaysia has abundant experience with, as a common law country. Finally, by incorporating in an ASEAN member state, the AIF will qualify for the protections of the ASEAN Comprehensive Investment Agreement.

Finally, the ADB will administer the AIF, rather than the ASEAN Secretariat or a new ASEAN-level body.  Again, although it may have been preferable for institution-building to have an ASEAN institution administer the AIF, the ADB has decades of experience in administering infrastructure projects.  It was simply more expedient to have the ADB administer the AIF.

The creation of the AIF once again demonstrates ASEAN’s resourcefulness in dealing with legal and institutional vacuums.  Motivated by expediency, ASEAN used Malaysia to provide the law and the ADB to provide the institution.  To do otherwise would have risked great delays which the AEC cannot afford.

Nevertheless, I hope that ASEAN leaders also invest in the “soft” institutional infrastructure of the AEC, not just the “hard” physical infrastructure.   This will require changing the funding amounts and formula for the ASEAN Secretariat as well as developing regional institutions that can handle the regional needs of ASEAN. 

Monday, September 26, 2011

Yes, I Speak Bahasa ASEAN

Last week Malaysian Minister of Information, Communication and Culture Rais Yatim proposed that Malay (Bahasa) be adopted as an official language within ASEAN. “It’s very good that we try to put Malay language side by side with German, French, Arabic, so that it becomes a lingua franca,” according to a report. 

Now Minister Rais is not proposing that Malay replace English as the official language of ASEAN.  English was adopted because it was the only language which the Southeast Asian countries had some common experience with, although at varying levels of proficiency. 

Bahasa in multiple forms is widely spoken in Brunei, Indonesia, Malaysia, Singapore and southern Thailand, with lesser usage in Indochina and the Philippines.  Encouraging the use of Bahasa would support the socio-cultural pillar of ASEAN and the ASEAN Economic Community as a practical language of commerce.  After all, the EU has multiple official languages, with French and English being the most common working languages of the EU institutions. 

Now, French is used in the EU because it was the traditional language of political diplomacy in Europe, and English is used in the EU because it is the modern language of commerce in Europe. ASEAN, English fulfills both functions, limiting the wider use of Bahasa.

The bigger issues regarding the use of Bahasa are both historical and practical.  The issue of which Bahasa to use, Bahasa Indonesia or Bahasa Melayu, raises both points.  The vocabularies are somewhat different, reflecting the different influences of Dutch and English, respectively.  These language differences still have historical meaning.  This is important in a region with long, proud histories, where Malaysians and Indonesians have had cultural disputes over the origin of batik, rendang and traditional dances.

Another issue, of course, regards resources.  If ASEAN adopts Bahasa as another official language, will the ASEAN members provide the additional funding to support it at the Secretariat and other institutions?  ASEAN won’t need the vast army of translators that the EU institutions use, but Bahasa, in either form, has nuances that require skilled bilingual personnel. 

Finally, adopting another official language could raise questions about whether other languages should be adopted as official ASEAN languages.  Chinese and Thai/Lao are other potential candidates, but with their own practical, political and historical issues.

In short, Minster Rais’s proposal recognizes the vital role of Bahasa in the region.  Following up on it requires further study and addressing these historical and practical issues.  Hopefully the use of Bahasa can help unify ASEAN, not divide its members.  In the meantime we will continue to use English in ASEAN as the primary language.  That is our "Bahasa ASEAN."

Friday, September 23, 2011

The AEC Needs "More ASEAN," Not Less

Yesterday, at the Singapore Global Dialogue, two of ASEAN’s eminent persons spoke on the relative strengths and weaknesses of ASEAN as an institution.  Both sets of analyses perhaps are correct, but not with regard to the ASEAN Economic Community.

Jusuf Wanandi of the Center for Strategic and International Studies in Jakarta blamed the ASEAN member states for ASEAN’s relative weakness.  “The ASEAN Charter says the Secretary-General has to do this, do that, but they don’t allow him to do it, and they don’t give him the money to do it,” Bapak Jusuf is quoted in today’s Straits Times.  

Frequent readers of this blog will know that I completely agree.  The ASEAN Charter assigns responsibilities to the Secretary-General but without authority, and the funding formula (and amount) for the ASEAN Secretariat is woeful.  Condominiums in Singapore are sold for amounts higher than the ASEAN Secretariat’s annual budget. 

However, Bapak Jusuf went on to criticize the Committee of Permanent Representatives (CPR) from ASEAN member states, who are based in Jakarta.  This is another feature of the ASEAN Charter.  Bapak Jusuf said that “They make a point to deal with every issue and micromanage the Secretariat.”  

On this point, I would disagree.  Without the presence of the CPR, the ASEAN members will be loathe to assign more powers to the ASEAN Secretariat.  The CPR corresponds to the role of the EU Council of Ministers, and provide a necessary oversight role much as its EU counterpart does.  In fact, increased interaction between the Secretariat and the CPR builds up the institutional capacities of both.  Perhaps in politico-security matters “micromanaging” may create inaction, but in economic matters some regulatory cohesion is necessary, requiring some “micromanaging.”  Although the blame, such as it may be, for the relative weakness of ASEAN may lie at the national level, the creation of the CPR is an instance where “more ASEAN” is better for ASEAN, particularly on the daily administration of economic matters. 

Kishore Mahbubani of the Lee Kuan Yew School of Public Policy (a sister school of NUS Law School, where I teach) countered that he thought ASEAN’s weakness allowed it to manage differences. “ASEAN, I can assure you, has played an enormous role, and has been very strong and powerful because it is weak.  Because it is weak, everybody trusts it,” Dr. Mahbubani is quoted in the Straits Times.

Again, I agree and disagree.  Dr. Mahbubani is correct in terms of the political-security situation in Asia.  ASEAN sits between the great powers of China and America, and the medium powers of India, Japan, etc., and as such its relative weakness allows the grouping to serve a useful role in intra-Asia disputes.  Furthermore, since ASEAN reached its current membership, ASEAN members have not engaged in war against each other, the Thai-Cambodian border dispute of Preah Vihear perhaps being the limited exception that proves the rule. 

However, the relative weakness of ASEAN with regard to its own institutions, e.g., the ASEAN Secretariat, hampers its efforts to create the ASEAN Economic Community.  Again, “more ASEAN” is better, because a single market without consistent  and effective regulation will not be attractive to investors, and that requires “more ASEAN.”   Now, how much “more ASEAN” is acceptable to ASEAN national leaders is a matter for ASEAN’s members to decide. 

Thus, like the EU, ASEAN faces a continuing debate on whether to increase the role of regional institutions.  Unlike the EU, where the question of “more Europe” has reached an existential level with regard to the Euro, ASEAN is not at a crisis point.  Bapak Jusuf and Dr. Mahbubani are right to raise these issues now, before we get to that crisis point.  However, the debate must also cover ASEAN as an economic entity, not just a political entity.  

Thursday, September 22, 2011

ASEAN's Energy Infrastructure Needs Both Physical and Institutional Development

I first visited Indonesia in 1994, and in my then-law firm’s Jakarta office in Bank Indonesia (it was an advisor to the government) was one of my first impressions of a unified ASEAN market: a huge map illustrating what was to become the Trans-ASEAN Gas Pipeline Infrastructure Project (TAGP), a natural gas pipeline network connecting the whole of ASEAN.  This week’s ASEAN Energy Ministers meeting in Brunei celebrated the progress made in intra-ASEAN distribution in natural gas and electricity, as well as cooperation programs in energy conservation, nuclear power and alternative energy sources.  Energy has a primary importance in the development of the AEC.

Which makes the remarks of the Indonesian Coordinating Minister for the Economy Hatta Rajasa rather unfortunate.  Testifying before the Indonesian parliament, Minister Rajasa stated that “The gas supply to Singapore is too much ... Exports to Singapore should stop.”  He also indicated that he had asked Energy Minister Darwin Zahedy Saleh (the same Indonesian minister who attended the ASEAN Energy Ministers meeting) to set up a legal team to renegotiate all gas sales contracts with Singapore.  This proposal would appear to contradict ASEAN’s regional policy for greater energy interdependence.

Now, all regional groupings have inconsistencies between national policies and regional policy, particularly in energy.  In the EU, the onset of winter brings out disputes among its members regarding gas prices and supply pipelines connecting the EU members with its major supplier, Russia.  So this is nothing new.

Furthermore, Minister Rajasa did not state that Indonesia would unilaterally cut Singapore off.   Rather, Indonesia would seek to revise its contractual obligations so that more of its gas would be committed to domestic use.   This recognizes the sanctity of Indonesia’s supply contracts, which contain penalties for non-compliance and allow for arbitration to settle disputes.  But contracts can be revised.

Singapore, being dependent on its neighbors for gas and water, is used to these issues of pricing and supply being raised.  The energy market also understands that Minister Rajasa had to address domestic concerns with his comments.  Despite the headlines, alarm bells were not set off. 

Nevertheless, it is somewhat jarring to have discordant messages coming from ASEAN chair Indonesia.  It also demonstrates once again that nation-centric priorities will always find ways to express themselves at the national level.  Without continued strengthening of the ASEAN institutions at the ministerial and senior official level, national priorities could overwhelm the overall ASEAN interest.  The physical infrastructure of ASEAN, such as the TAGP, must thus be matched with institutional and legal infrastructure as well.

Wednesday, September 21, 2011

Is ASEAN the English Premier League or the Big 12?

Recent events in U.S. collegiate (university) sports reminded me of a post I wrote last year for the late OpinionAsia website comparing ASEAN to a professional soccer (football) league.  For those not familiar with U.S. collegiate sports, suffice it to say that several university conferences (Big 12, Big East) have been hit with sudden defections to more competitive conferences (SEC, Pac-12) for economic reasons.   So, for the benefit of our American readers, I am reposting my OpinionAsia post (hint: replace "league" with "conference" and "English Premier League" with Big 10, SEC, ACC or Pac-12, depending on your preference).

Can ASEAN Become a Premier League?

Observers of the Association of South East Asian Nations (ASEAN) and its regional integration process often grasp for analytical analogues.  Is ASEAN a developing supranational entity, like the EU?  Or is it only a loose grouping?  ASEAN is definitely not a proto-state, but it has progressed beyond an informal grouping, thanks to the recent introduction of the ASEAN Charter. 

Although the Charter formalizes the rules and structure of ASEAN, it stops far short of the supranational aspirations of the EU’s Treaty of Rome.  The Charter provides ASEAN with legal personality but not with legal authority over its members. The ASEAN Secretary General has ministerial rank but can neither impose sanctions on members who do not comply with ASEAN measures, nor provide benefits to members who comply with ASEAN measures.  The Charter also does not provide any means for ASEAN nationals to invoke dispute resolution regarding ASEAN measures that affect them.

Rather, ASEAN can be likened conceptually to a league of sports teams which have decided to cooperate and institute common rules for operation and cooperation.  The Charter provides the newly formalized fundamental principles of the sport, with the various subsidiary agreements providing the more detailed rules for contests.  In this analogy, the ASEAN Secretary General operates the league office, organizing meetings and coordinating activities, but without the mandate to compel compliance among the members.  In this “league,” the team “players” (ASEAN nationals) have no ability to invoke league rules or to seek relief when rules are breached; that remains entirely the province of each team’s management (the ASEAN governments).

If ASEAN can be compared with a sports league, then its purpose is to promote its own popularity among potential “fans” (investors).   Standardized and improved rules and operation encourage more investment in ASEAN, and not in competitors such as China, Japan and the EU.    Similarly, better play and exciting matches encourage fans to watch the sports league in person or via television or the internet.

The difficulties in such an operation, where sovereignty remains with the teams’ management (ASEAN governments) and not with a “league office”, are both external and internal in nature. 

In external matters, ASEAN has been able to act in a united manner. In multilateral fora, ASEAN members coordinate, with the relevant ASEAN member representing the rest. For example, Indonesia speaks for ASEAN at the G-20.  In free trade agreement (FTA) negotiations, the ASEAN members coordinate as a group.  This occurred with the various FTAs that ASEAN negotiated and concluded with China, Korea, India, Japan and Australia/New Zealand.  Using the sports league analogy, this coordination effort resembles the negotiations between television networks and sports leagues for broadcast rights.

However, when the coordination among ASEAN members does not meet the expectations of others, this arrangement can break down. This occurred in the EU-ASEAN FTA talks, which the EU abandoned in favor of bilateral negotiations with individual ASEAN members such as Singapore.  The EU cited insufficient institutional development in ASEAN as necessitating the shift.  Again, resorting to the sports league analogy, this is akin to individual teams breaking away from the league committees and striking their own deals with television networks.

In internal matters, the lack of authority to enforce sanctions or provide rewards limits the efficiency of ASEAN. Rather than use the existing ASEAN dispute resolution procedures, ASEAN members use more established alternative fora.  Trade disputes between Malaysia and Singapore, and between Thailand and the Philippines, went to the WTO instead.  Territorial disputes between Malaysia and Singapore, and between Indonesia and Malaysia, went to the International Court of Justice instead.  Applying our sports league analogy, such occurrences are akin to teams resorting to court litigation rather than league procedures to resolve a dispute.

Also, the limited role of ASEAN nationals in the operation of ASEAN institutions can result in frustration.  This year’s open criticism of the ASEAN-China FTA by industries in Indonesia, Malaysia and the Philippines was caused in large part by ASEAN’s failure to engage the private sector during the negotiations and implementation of the agreement.    

Investors also often express frustration that they cannot directly invoke dispute resolution and must depend on their national governments to do so.  Often the national governments will decline to pursue dispute resolution due to other diplomatic or political reasons.   Again, under our sports league analogy, this would be akin to players having to rely solely on their team management to resolve salary and rules disputes.  Yet both in ASEAN and our sports analogy, disaffected participants have recourse: the players can go to another league with better pay and working conditions (and the fans can watch another league), and investors can abandon ASEAN for more attractive venues.

Despite all of these difficulties, there is every sign that the ASEAN institutions understand their limitations and are attempting to work around them. ASEAN Secretary General Surin Pitsuwan has made strenuous efforts to expand the moral and suasive authority of his office, filling the gaps left between the Charter and his legal authority.  He and the ASEAN Secretariat have also increased outreach efforts to the private sector and increase their involvement. 

These efforts should be encouraged and supported. However, the ASEAN member states should go further and consider sharing or releasing some sovereign authority to the Secretariat and other ASEAN institutions.  The ASEAN member states should also consider allowing ASEAN nationals to invoke dispute resolution and have more involvement in the operations of ASEAN institutions, particularly with regard to economic integration. 

The real-world experience of the sports leagues is instructive.  In the most successful leagues, such as the English Premier League, the league offices began with little or no authority and the players had little or no bargaining rights.  Yet the teams learned that assigning authority for negotiating to the league offices increased the payments from the television networks.   A stronger league office with disciplinary powers over both teams and players also improved the quality of play.  With better working conditions and play, better players joined the leagues.  Better players and quality of play led to more fans.

Throughout the evolution of the sports leagues, the teams have retained their ultimate sovereignty. They can always leave to join another league or negotiate their own marketing and broadcast rights. Some do.  However, in successful leagues,  teams understand that by sharing and pooling their sovereignty, the league becomes more attractive to players and fans.  If ASEAN can learn and apply similar lessons, it too can be successful in its competition for foreign investment and trade.

Friday, September 16, 2011

Haze and Euro Show Limits of, and Needs for, Regionalism

During visits to Penang and KL, and at home in Singapore, the haze (air pollution) blocked out the sky on some days.  Although the haze so far has not worsened to the point that it would affect the staging of next week’s Singapore F1 race, continuing and worsening haze would affect ASEAN’s economic competitiveness in the long run.  Air pollution, after all, deters many foreign investors from setting up in major cities in China.

The haze is the most visible sign of the limits of ASEAN regionalism.  Indeed, the visible haze can be compared with the (in)visible Euro-related economic calamity currently afflicting EU regionalism.

Both calamities result largely from man-made actions and inactions at the national level.  In ASEAN, that would be the burn-clearing of forests in Indonesia, although other ASEAN nations share the blame for not controlling their own emissions.   In the EU, that would be currently be Greece, the profligate PIGS (Portugal, Ireland, Greece and Spain) EU member currently under the spotlight, although the other EU members share responsibility for the fiscal mess by allowing borderline cases to join the Euro in the first place and not enforcing proper fiscal oversight afterwards.

Both calamities also could be remedied largely by actions at the national level.   Current ASEAN chair Indonesia has to lead any solution of the haze, both by finally ratifying the ASEAN Agreement on Transboundary Haze Pollution (it is the only holdout) and by better administration of forestry and fire prevention efforts on the ground.  In the EU, Germany has to lead any solution of the Euro crisis, as it is the largest economy.

Although in both situations regional institutions have an important role, ultimately it will be decisions made at the national level in Indonesia and Germany that affect how these regional problems are resolved. Unfortunately both Indonesia and Germany have been hampered by domestic political factors that prevent them from freely responding to the situation.  Increased political autonomy at the local level both encourages vested interests in Indonesia to fight ratification of the haze agreement and prevents more effective haze prevention.  Tensions within the ruling coalition prevent the German government from advocating a more comprehensive approach to the Euro-zone problems.

Thus, the haze and the Euro problem demonstrate the current limits of regionalism. The ASEAN and EU institutions, by themselves, cannot resolve these regional problems.  National governments still matter.

On the other hand, that does not mean that the existing regional institutions in ASEAN and the EU are irrelevant.  Without the peer pressure of its fellow ASEAN members, Indonesia would have even less incentive to curb the brush-clearing.  Without the EU institutions, Greece and the other PIGS would be tempted to go it alone by leaving the Euro and drag the rest of Europe into the economic toilet. 

Regionalism thus helps national governments more fully appreciate their role in dealing with regional issues.  Without the regional institutions, no one would speak for the regional interest. In fact, as I have argued before, these regional institutions need more authority to speak for the regional interest, if not to act for the regional interest. 

What is needed, therefore, is for the responsible parties in ASEAN and the EU to take charge of the situation and act for the regional interest. 

That means that the Indonesian government has to ratify the ASEAN haze agreement and improve haze prevention, despite the political costs.  If ratification is not done during its year as ASEAN chair, after its repeated public commitments to do so, the credibility of both ASEAN and Indonesia will suffer.

That means that Germany has to commit to saving the Euro, despite the political costs.   If Germany cannot muster sufficient courage to do so, the credibility of both the EU and Germany will suffer.  Such failure would also far-reaching ramifications for the global economy. 

Hopefully both regional leaders will shoulder their burdens. Otherwise, their respective regions will feel the negative consequences.

Tuesday, September 13, 2011

Learning from the Failure of SEATO

Amid last week’s commemorations of the September 11, 2001, attacks on New York City and Washington DC (including the Flight 93 crash) came a much more obscure anniversary on September 8: the founding of the Southeast Asia Treaty Organization (SEATO) in 1954.   

I had heard of SEATO before I had heard of ASEAN.  As a boy, my dad the political science professor (a Malaysian, he had studied Southeast Asia at Yale and wrote his Fordham PhD thesis on Chinese foreign policy in Africa) would read back issues of Far Eastern Economic Review (FEER), Asiaweek, and the New York Times, and occasionally would use an article to teach me something about his work.*  One evening he explained that SEATO was a U.S. creation that had attempted to impose a NATO-style defense organization in Southeast Asia, and that it had ultimately failed in 1977.  But, he added, it had been “replaced” by something called the Association of South East Asian Nations, or ASEAN.

At least that’s what I remembered.  In reality, of course, SEATO and ASEAN were very different organizations with very different aims.  SEATO was a mutual defense pact whereas ASEAN is a regional grouping with security, economic and social aspects.  But there are a few historical lessons that can be taken away from this forgotten footnote in Southeast Asian history.

First, despite its name, SEATO never really was by or for Southeast Asia. It members were Australia, France, New Zealand, Pakistan, the Philippines, Thailand, the United Kingdom, and the United States.  Only the Philippines and Thailand were part of Southeast Asia, with the colonial powers of France and the United Kingdom still holding much territory in the region.  Yet when their colonies became independent, they were either unable (in the case of the former French colonies because of the Geneva Accords) or unwilling (in the case of the former British colonies) to join the organization.   After the French and British left the region, they had no interest in actively supporting SEATO.  Neither Indonesia nor  North Vietnam were part of SEATO, as they were ostensibly part of the security “problem” SEATO was meant to deal with. 

Second, SEATO also operated by consensus, yet that consensus also failed the organization.  The U.S. was never able to get the entire grouping to intervene in the Vietnam War despite the fact that SEATO was intended by the U.S. to deal with such matters, mainly due to objections from the French and British governments.  This demonstrates both the limits of pure consensus in international organizations, as well as the fact that the “ASEAN way of consensus” actually existed before ASEAN itself. 

Third, SEATO actually managed to achieve more in social and economic issues.  Efforts intended to win the “hearts and minds” of Southeast Asians improved the human infrastructure in the region. 

SEATO thus serves as an example of how importing Western style regional institutions wholesale into Southeast Asia is ill-advised, a partial explanation of why ASEAN wants to have a regional structure which learns from the European experience, but does not completely copy the European institutions.  Yet ASEAN also needs to learn the negative lessons from SEATO.  ASEAN institutions need bottom-up support from the peoples of the region, unlike SEATO which was imposed by the colonial masters from the top.   Consensus can work (and does work) in ASEAN, but there will be limits.  ASEAN also cannot be a purely politico-security entity, which the ASEAN leadership acknowledges by having the economic and socio-cultural pillars of the grouping. 

NATO, the EC, and even ASEAN itself are products of the Cold War to varying degrees. With the Cold War over, regional institutions have to keep reinventing themselves to remain relevant.  SEATO shows that failure to adapt will result in regional institutions being tossed into the dustbin of history.

*Thanks to Dad and to all the great “Asia hands” in the media, diplomatic corps, military, aid agencies and elsewhere.  We owe y’all a debt for your lessons and experience.

Friday, September 9, 2011

ASEAN Needs a Comprehensive Strategic Export Control Policy

Export controls at first blush would appear to have not much relevance to the AEC, being a security issue rather than an economic issue.  After all, export controls are primarily aimed at preventing the proliferation of weapons of mass destruction (WMDs), which are consistent with ASEAN’s Treaty on the Southeast Asia Nuclear Weapon-Free Zone  and Declaration for a Zone of Peace, Freedom and Neutrality (Zopfan).  Both agreements evidence ASEAN members’ commitment to prevent the spread of WMDs into the region.  

Yet the inconsistent and incomplete coverage of export controls in ASEAN actually has an adverse economic impact on the region.   Many high-tech and value-added industries operate in the West in compliance with the stronger export controls there.  The absence of comprehensive export controls discourages certain investments into ASEAN by these industries.

Nevertheless, export controls remain a ticklish issue which is handled at the national level in ASEAN.  Singapore and Malaysia have enacted comprehensive strategic export control laws, and Thailand has indicated that it would like do so as well one day.  The other ASEAN members have varying stances on the issue.

Perhaps this reflects a sentiment that export controls are largely driven by the West, particularly the United States.  Indeed the U.S. has the most comprehensive and actively enforced export control laws, with severe penalties for non-compliance.  Some critics say the U.S. export control laws are too active and comprehensive, discouraging the export of items which do not have proliferation risks.   That is one reason the U.S. is actively discussing the reform of its export control laws.

But other ASEAN trading partners have export control laws, such as Japan and the EU.  The regional and bilateral FTAs signed (or anticipated to be signed) by ASEAN and its members with these partners allow for export controls.   They are also consistent with ASEAN members’ obligations under the UN Charter.

In short, export controls are here to stay.  Failure to introduce effective compliance mechanisms within ASEAN will continue to discourage foreign investment in the region, particularly in those high-tech and value-added industries which frequently encounter export control issues.   Furthermore, if export controls are to be reformed and rolled out, it would be better for ASEAN to discuss these issues as a group, rather than individually.

ASEAN members say that they are looking for post-2015 issues for the AEC.  Well, this should be an area of follow-up, both at the national level and the regional level.   Effective export control compliance is good for ASEAN’s security and economy.