Thursday, December 31, 2015

December 31, 2015: Time to Celebrate, Then Get Back to Work, ASEAN

At the stroke of midnight tonight, the ASEAN Economic Community (AEC) comes into being.   There will be no fireworks or concerts tonight devoted to the AEC, unlike the formation of the single market in the EU in 1992 (and definitely not a song like the Kinks’ Down All the Days (to 1992)).    Aside from a few ASEANcrats in Jakarta and elsewhere in Southeast Asia, probably not many people will directly celebrate tonight’s milestone.

Tonight does not mark the end of economic integration in Southeast Asia, nor even the beginning of the end.  Rather, December 31, 2015, represents the end of the beginning of economic integration in ASEAN, a long, often times slow, process. 

Intra-ASEAN duties have been eliminated on virtually all goods through the ASEAN Trade in Goods Agreement (ATIGA), and investment rules have been established through the ASEAN Comprehensive Investment Agreement (ACIA).   This represents significant progress since the early days of ASEAN economic efforts in the 1970s.  In some ways, we already have had an AEC for several years, and tonight only represents its formal recognition.

Granted, implementation of ATIGA, ACIA and other ASEAN agreements has been inconsistent.  Liberalization of trade in services through the ASEAN Framework Agreement on Services (AFAS) will not be completed by the 2015 timeframe.  By any measure, many AEC measures have not been completed as well.  Coupled with other perceived deficiencies in regional cooperation in Southeast Asia (haze, migration, South China Sea/West Philippine Sea, etc.), it is easy to discount ASEAN as an organization.

Yet focusing solely on the negative in ASEAN overlooks the positive achievements of the organization.  The fact remains that ASEAN is the most successful regional organization in the developing world.  No two members of ASEAN have engaged in outright hostilities, despite the long history of conflict in the region: even during the Preah Vihear dispute, ASEAN helped with its resolution.  ASEAN has helped Myanmar return to the global scene.  ASEAN helped with the birth of Timor-Leste (and possibly is part of its future as well).    Finally, ASEAN has provided economic deliverables from ATIGA, ACIA and (albeit incompletely) AFAS, as well as the ASEAN FTAs with Australia-New Zealand, China, India, Japan and Korea.

ASEAN has therefore achieved much, but as the deficiencies indicate, it could achieve so much more.  That is where the ASEAN institutions and/or the ASEAN processes need strengthening and improvement.  Without some relaxation of national sovereignty concerns that will allow for such augmentation of the ASEAN institutions and/or processes, ASEAN will find it increasingly difficult to deal with regional issues of economic integration (whose further progress will require dealing with issues within national economies, not just at the national borders), security, the environment, health and other issues.

Thus, ASEAN, born in the 20th Century, needs to update itself for the 21st Century; the status quo is insufficient to deal with today’s issues.  That is not to say that ASEAN must follow the EU model of strong regional institutions or the NAFTA model of robust processes.  A grouping of relatively young nations with varying legal and political systems will necessarily have to find its own direction.  That process will appear slow and inconsistent, particularly to Western observers, but it will and must take place. Otherwise, ASEAN risks becoming as irrelevant as its predecessors became.

Tonight ASEAN should celebrate both its achievements and its potential.  It and the generations of leaders in the ASEAN governments and institutions who worked on its formation and operations deserve this.  Then the next morning, it will be time to get back to work, for there is much to be done.