Wednesday, November 28, 2012

Dr. Surin Sums Up "ASEAN’s Challenge" in His Valedictory Briefing

This week Dr. Surin Pitsuwan conducted the last major briefing before the end of his term as ASEAN Secretary General next month.  Dr. Surin repeated calls to strengthen the ASEAN Secretariat and his office, referring to a report that he presented to the ASEAN leadership last year called “ASEAN’s Challenge: Some Reflections and Recommendations on Strengthening the ASEAN Secretariat.”  The subtitle is somewhat of a misnomer, as Dr. Surin’s proposal encompassed all of the ASEAN institutions, not just the ASEAN Secretariat.

Dr. Surin’s report reportedly proposes a comprehensive review of the roles of the ASEAN institutions, including the Secretary General, Deputy Secretaries General, Secretariat, Committee of Permanent Representatives, National Secretariats and Sectoral Ministerial Bodies, establishing a hierarchy of responsibilities for the entities, rules of procedure, as well as mechanisms for resolving disputes among the ASEAN institutions.   The report suggests that roles and relationships are currently blurred, resulting in confusion as to which entity is responsible for which aspect of ASEAN’s governance.  Although I understand that Dr. Surin’s report did not specifically mention the relationship between the ASEAN Chair and the other ASEAN institutions, that relationship also would appear to need rules of procedure and governance to avoid a repeat of the July 2012 impasse at the ASEAN foreign ministers’ meeting.

The report also appears to call for additional capacity for the Permanent Representatives to deal with economic and socio-cultural matters.  This reflects a sentiment among many ASEAN observers that the Permanent Representatives have a focus on political-security matters, limiting their ability to take on other work and preventing a shift in responsibilities from the many intra-ASEAN meetings to the Permanent Representatives.   For example, the Permanent Representatives could take on the role of SEOM in the EDSM and other procedures.  Others have noted that the Permanent Representatives have concentrated on administrative and budgetary matters at the ASEAN Secretariat, perhaps an instance of work filling the void left by an absence of responsibility.   However, I believe that if the Permanent Representatives are assigned economic matters, the ASEAN member states will respond by assigning more economically trained officials to their Jakarta missions. In other words, the ASEAN member states would respond to the needs of the situation.  Also, giving the Permanent Representatives more work would help reduce their current focus on less critical internal administrative and budgetary matters. In any event, although there are Terms of Reference for the Committee of Permanent Representatives, they are rather loosely drafted and could use some clarification.

Dr. Surin’s report also reportedly calls for greater use of Article 20.2 of the ASEAN Charter, which allows the ASEAN Summit to decide how a decision can be made in the absence of consensus.  By extension, this would allow the ASEAN Summit to use majority or supermajority voting to decide matters.   Hence Dr. Surin’s report apparently proposes that voting should be used for routine and operational issues.

With regard to the ASEAN Secretariat, Dr. Surin’s report suggests that the legal division should be strengthened.  For the entire ASEAN Secretariat, salaries and career development should be competitive (e.g., higher compensation), and the ASEAN Secretariat should have formalized regulations to govern staff and finances, Dr. Surin’s report apparently proposes.  According to reports, Dr. Surin also proposed a “Chief-of-Staff” for the Office of the Secretary General, and that all Deputy Secretaries General should be hired on open recruitment and not based on the rotation system as currently happens for two of them.  He also reportedly asked for better information technology, project management, a stronger system for managing donor funds and the possibility of the ASEAN Secretariat establishing commercial entities for training and consultancy services on ASEAN (which might appear controversial but some ASEAN member states such as Singapore have had such government-sponsored consultancy operations).

Although Dr. Surin’s report may appear to involve small stakes, institutional reform is the natural result of ASEAN’s efforts to formalize its operations, as started by the passage of the ASEAN Charter. Even daily operations, as noted previously in this blog, have been affected by the lack of legal and institutional clarity in the ASEAN institutions. Hence Dr. Surin’s report raises issues which, if not addressed properly, will continue to hamstring the ASEAN institutions.  ASEAN leaders should thus seriously consider what Dr. Surin has raised in his report.

Beyond what Dr. Surin has proposed, there are other administrative reforms that could improve the operations of the ASEAN institutions, particularly for AEC matters.
  • The ASEAN Deputy Secretary General for the AEC, or perhaps one or more of the ASEAN Secretariat division directors who are responsible for the AEC, should have a background in the private sector.  Personal understanding of the issues arising from the private sector’s interactions with the AEC, particularly among the SME community, would help the ASEAN institutions better administer the AEC. 
  • A secured virtual network of officials from ASEAN institutions and ASEAN member states could be established on the Internet, allowing for electronic interchange of data and documentation. With that, the current practice of using unofficial (and unrecognized) Gmail and Yahoo! e-mail for intra-ASEAN communications would end. 
  • Also, the ASEAN member states could temporarily second up and coming officials to serve in the ASEAN Secretariat.  The EU currently operates a similar program.  Not only would this improve the talent pool for the ASEAN Secretariat, it could impart greater understanding of ASEAN within the ASEAN member states. 
  • Recordkeeping in the ASEAN Secretariat should be completely given over to an electronic system, with a larger, full time staff.  For years the ASEAN Secretariat relied solely on a very small group of individuals who administered paper records. When the paper and personnel passed on, so did the institutional memory. This cannot be allowed to continue.   The institutional memory is necessary not only to understand and interpret ASEAN agreements, but to avoid repeating past mistakes or even unnecessarily re-doing past decisions (I am aware of an ASEAN initiative for the automotive industry that actually repeated a virtually similar ASEAN initiative undertaken in the Nineties; this was discovered only after an accidental discovery of the original paperwork in the ASEAN archives).
  • For that matter, the ASEAN Secretariat needs to maintain a database of its former officials so that they can be recalled to service when necessary.  The European Commission does this, yet the ASEAN Secretariat is hard pressed to contact former staff who have only recently departed. 
  • The current practice of limiting the service of ASEAN Secretariat staff (except for clerical staff recruited from Indonesia) should also end.  If ASEAN Secretariat staff wish to make a career with the ASEAN institutions, this should be encouraged, as the human resources are irreplaceable.

Most of the ideas in Dr. Surin’s report and elsewhere are frankly basic and would have been adopted by any ASEAN member state on its own or even fairly large sized corporations.  The fact that they have not yet been adopted by the ASEAN institutions themselves is due largely to lack of funding and political will by the ASEAN member states to support them.  However, the increasingly complex nature of running a 21st Century regional economic bloc dealing with issues of border and post-border market access needs 21st Century ASEAN institutions. 

Finally, thank you, Dr. Surin, for your service to ASEAN.  And good luck to your successor Le Luong Minh, and to the entire ASEAN Secretariat staff who labor in support of a noble and difficult cause.

Wednesday, November 21, 2012

Top Ten Takeaways from the ASEAN Summit

Now that the November 2012 ASEAN Summit and its related meetings are over (as well as the “American” season in Asia, with President Obama returning to the US for Thanksgiving), it is time for a quick assessment of the outcomes (I’ll have more detailed analysis as documents are released). In the style of US talk show host David Letterman, here are the top ten outcomes of the ASEAN Summit (although unlike Letterman, I won’t go in reverse order):

1. Brunei is now ASEAN Chair.  Which of course means that Cambodia is no longer ASEAN Chair. A year of drama mainly driven by Cambodia’s moves in support of China has ended.  Of course, for all the buzz about Cambodia’s turn as ASEAN Chair, here is a quick reminder that it could have been a lot worse: imagine what the ASEAN Summit would have been like if we still had troops massed at Preah Vihear?  Anyway, in all likelihood we will get to revisit all of these issues when Cambodia (and Hun Sen) becomes ASEAN Chair once again in 2022.

2. ASEAN did not implode.  Despite last minute moments of drama with the final statement, fears arising from the July 2012 ASEAN foreign ministers’ meeting that the ASEAN Summit would collapse never really materialized.  Hun Sen stayed true to form and, for the most part, balanced his positions well.  The differences over the South China Sea were bandaged over for now. The question is how long before the next incident that pulls off the bandage?

3. Most US Burma sanctions are now ended.  Most of the major US Burma sanctions against Myanmar have now ended, with the waiver of the US import ban. President Obama even said the word “Myanmar.”  With the additional staff in the US embassy in Yangon, perhaps the sanctions blacklist of Specially Designated Nationals can be trimmed back.

4. Le Luong Minh will take over as ASEAN Secretary General.  Actually, this has been known for months, but the official endorsement was delayed by the July 2012 ASEAN foreign ministers’ meeting imbroglio.  Many thanks to ASEAN Secretary General Surin Pitsuwan and good luck to Le Luong Minh!

5. The RCEP talks were launched.  The grand rationalization of ASEAN’s FTAs with China, India, Japan, Korea and Australia-New Zealand begins.  I don’t expect rapid progress or a broad scope of work, but the effort to harmonize important topics such as rules of origin and investment protections is a positive development.

6. Thailand joined the TPP talks.  I commented on this last week, but it still remains a significant development that a major ASEAN-6 country joined the TPP talks. The key will be whether, unlike the previous US-Thailand FTA talks, the parties can see this through to the end.

7. The ASEAN Agreement on the Movement of Natural Persons was signed.  This will help companies pursuing an ASEAN-wide policy in production and sales. See more here.

8. The US-ASEAN Expanded Economic Engagement initiative started up.  This is not the half-way house to TPP membership for those ASEAN countries not ready to join in the talks, but it does go some ways to showing that the US is committed to non-security ties with regional bloc. And, if Thailand is willing join the TPP, who is to say that Indonesia won’t join after its elections or that the Philippines will conclude that joining the TPP will help improve ties with the US beyond security matters?

9. The ASEAN Human Rights Declaration was signed.  I don’t really cover this issue, but I think the proper way to approach this development is to see this as a work-in-progress.   The impact, if any, of the declaration will be determined by how ASEAN and its citizens will apply the declaration's principles.

10. ASEAN Economic Community delayed by a year to December 31, 2015. This was not really news, and was predictable once it was announced that Malaysia would be ASEAN Chair in 2015.  Having an experienced team at the helm will greatly benefit the AEC.  Now it’s time to get to work!

With that, I wish everyone a Happy American Thanksgiving!  Enjoy your turkey!

Saturday, November 17, 2012

US Allows Most Myanmar Imports

Yesterday the US government lifted the import ban on almost all imports from Myanmar.  The US Treasury Department issued a new general license that allows for imported goods from Myanmar, except for gems and goods from individuals on the Specially Designated Nationals (SDN) blacklist.  

To do this, the Obama administration had to issue a waiver, which is required by  section 3(a) of the Burmese Freedom and Democracy Act of 2003 (BFDA) and implemented by Executive Order 13310 of July 28, 2003.  The import ban imposed by the JADE Act  continues to apply, as does the ban on dealing with individuals on the SDN (seven more companies were added to the list).   Congress seems to be satisfied with the waiver, so it looks to stick so long the Myanmar government continues its reform process.

Anyway, this is a good start to President Obama's ASEAN trip.  Now if he could only get to the other items on my wish list . . . . 

Friday, November 16, 2012

Welcome to the TPP, Thailand

This week the Thai government announced that it would enter into the Trans Pacific Partnership (TPP) FTA talks.  The Thai cabinet voted to support a formal announcement of Thailand’s participation during US President Obama’s visit to Thailand this weekend.

I think this is a positive step forward for US-Thai relations, ameliorating some of the friction left over from the suspended US-Thailand FTA talks (I say “suspended” rather than terminated, because so long as the US-Thailand FTA talks remain suspended, the US-Thailand treaty of amity remains in force; this very important agreement gives US investors better treatment, a key investment advantage for the US in Thailand).   Thailand’s participation will be a strong expression of US commitment to a long-standing ally in the region.

However, nothing about the TPP, which involves a large number of diverse countries, is ever easy. Thailand’s impending participation is no different.

First, the participation of Thailand may introduce into the TPP talks perhaps the trading partner with the most internal angst about the TPP, other than the US itself. The Thai constitution requires consultations with parliament and public hearings before the government can negotiate and conclude an FTA.  This is a legacy of the suspended US-Thailand FTA talks.  Thailand has a large number of FTA opponents in the NGO community, as well as in the opposition parties, and they will be vocal this time as well.  The Thai business community, which has been reacting with “Thai anxiety” to the ASEAN Economic Community, will also be split on its merits.  Expect a new cottage industry in TPP workshops in Thailand soon.

Second, Thailand’s participation means that four of the ASEAN-6, plus Vietnam, will be TPP negotiating parties.  This will put pressure on the remaining ASEAN-6 members Indonesia and the Philippines to join the TPP talks.  Yet both countries have great difficulties with the depth and breadth of the TPP’s scope.  Both countries would benefit from the economic and regulatory rigors the TPP would offer, but domestic interests in both countries will be against entering the talks.  The impending election season in Indonesia makes it that much more difficult for the country.

Third, Thailand’s participation may complicate the politics involved in ASEAN’s Regional Comprehensive Economic Partnership (RCEP) talks, if not the mechanics. I say the latter because the intended scope of the RCEP and existing scope of the TPP talks will be rather different.  RCEP will likely be more modest but achievable, especially when compared with the TPP.  Hence mechanically it will be quite possible for the soon-to-be five ASEAN members in the TPP talks to participate in the RCEP talks as well, and eventually (!) they can be unified under APEC.  Politically, this may be a different matter, particularly since the RCEP talks involve China, Korea, Japan and India, who are not part of the TPP and currently not interested in the TPP either.  This may change if and when Japan joins the TPP talks; the current Japanese government supports joining the talks (as does the opposition) but Japan is now headed for an election and anything could result.

Finally, for the US, the addition of Thailand into the TPP talks brings with it all of the issues that arose during the US-Thailand FTA talks.  Expect automobiles, intellectual property and agriculture to be major issues, with automobiles being most prominent (due to Thailand’s large auto industry) and a newish issue for the TPP.  The intensity of opposition and concern in the US may be a good thing, as it could force the Obama administration to work with Congress to get Trade Promotion Authority (TPA).  Without TPA, the TPP’s implementing legislation could suffer from the death of a thousand amendments in Congress.

All in all, Thailand joining the TPP talks is a good thing, but the move brings with it more considerations and complications.  Just wait until Japan shows up. Then we’ll have a real barnburner.