Friday, September 14, 2012

ASEAN Economic Community in 2015? In a Way, It's Already Here

This week the Wall Street Journal reported what many ASEAN observers have suspected: that the 2015 target date for implementing the ASEAN Economic Community (AEC) will be interpreted to be the end of 2015, rather than the beginning of 2015:

Asean officials say an official launch date has never been specified, and the trade group has in any case been working towards the launch of the Asean Economic Community, or AEC, through a series of tariff cuts. “There was never an agreed, exact date to ‘when’ in 2015 we should all work towards—should it be 1st of January? Mid-year? Or year-end 2015,” Mr. Surin said after meeting regional energy ministers in Cambodia.  Asean’s economic ministers, he said, agreed on Dec. 31.

This was to have been expected for a couple of reasons.   

First, ASEAN has adjusted its internal deadlines both forwards and backwards. The original implementation date for the AEC was 2020, not 2015.  Similarly, deadlines for other AEC implementing items like the ASEAN Single Window have come and gone.
Second, an additional year is useful because it will allow the ASEAN Chair in 2015, Malaysia, to have full authority during the critical period.  This would follow the turns of several smaller countries as ASEAN Chair (Cambodia-2012, Brunei-2013, Myanmar-2014) which have varying levels of experience and capability in economic matters.  Having founding member Malaysia, a well-experienced trading nation, as ASEAN Chair in 2015 will help.

Finally, one has to be reminded that the AEC will not be implemented suddenly on any particular date, but over a period of time. In fact, one could say that the AEC already exists, in the form of a single production base – but only for the (mainly Japanese-owned) automotive and electronics firms already operating on a regional basis within ASEAN.  Expanding the AEC beyond that base is ASEAN’s work project through 2015 and beyond. Thus, 2015 should be viewed as only the first deadline for the AEC, not the final deadline.