The Asian Development Bank
Institute (ADBI) recently published a study on the ASEAN Economic Community
(AEC), “ASEAN
2030: Toward a Borderless Economic Community,” which is available here. According to the Jakarta Post, the
dean of the ADBI predicted that the AEC could surpass the EU by 2030:
“I think
ASEAN has a very high growth potential. If growth continues [at this rate],
ASEAN countries will catch up with the EU by the end of 2030. It is important
to maintain this growth in the region,” dean of the ADB Institute, Naoyuki
Yoshino, said during a presentation of the study in Jakarta on Friday.
However,
the ADBI stressed that institutional reforms at the national and regional level
needed to be adopted for the AEC to reach its fullest potential. I’ve read through the ADBI study’s proposed ASEAN-level
institutional reforms, and many overlap with ideas presented in this blog and
in my forthcoming book with Stefano Inama, “The Foundation of the ASEAN
Economic Community: An Institutional and Legal Profile”:
- Increasing flexibility in ASEAN decisionmaking by moving away from requiring consensus and adopting majority or supermajority decisionmaking, perhaps with a form of weighted voting based on economic development or geographical size.
- Revising the funding formula for the ASEAN member states to contribute to the ASEAN institutions, based on ability to pay and benefits received and possibly using the ASEAN Development Fund as a mechanism.
- Delegating more authority to the ASEAN institutions, and creating sanctions, feedback and compensating mechanisms that would be operated by the ASEAN institutions.
- Increasing staffing numbers and salary levels for the ASEAN Secretariat and developing an ASEAN civil service. This would include establishment of an ASEAN Academy for training.
- Creating new ASEAN functional institutions to deal with specific issues, including a monetary fund, financial stability dialogue, convergence fund, competitiveness institute, rice, standards, tourism, governance, and competition policy.
- Distributing institutions and functions (e.g., the proposed ASEAN functional institutions) among various member states, not just Indonesia (as ASEAN Secretariat host country).
- Sharing ASEAN responsibilities with the Committee of Permanent Representatives and the national ASEAN secretariats established at the national level.
- Authorizing the ASEAN Secretary General and ASEAN Chair to present an official ASEAN position at the G-20 and other international meetings and organizations.
What
I would add is that the AEC also requires greater buy-in by the private sector,
and not just by the ASEAN member state governments. Augmenting ASEAN institutions, whether
through increasing authority or creating more institutions, will mean greater
interaction between the regulated (the private sector) and the regulators (the
ASEAN institutions). Such an increase in
authority in the ASEAN institutions should be balanced with greater legal
safeguards to protect the expectations and rights of the private sector.
Without such safeguards, whether in the form of improved dispute resolution or
formalized processes for notice and comment on policies, the private sector
will remain skeptical of the AEC process, resulting in reduced trade and investment.
This does not mean that ASEAN needs to adopt EU-style institutions on a
wholesale basis, but it does mean greater development of the rule of law and
the role of law, such as establishing a hierarchy of norms for ASEAN agreements
and agreeing on how ASEAN-level law affects domestic legislation at the
national level.
In
any event, the ADBI report represents a worthy contribution to the study and
analysis of ASEAN, explaining why the status quo in ASEAN cannot continue if
the AEC is to reach its full potential. How
to address this situation is currently under discussion in this blog and
elsewhere, and hopefully this discussion will result in corrective action.
