CLMV ASEAN Accession Lessons

This week the Institute of Southeast Asian Studies (ISEAS) published a study on the experience of diplomats from Cambodia, Laos, Myanmar and Vietnam (CLMV) within ASEAN.    The study looks at how these countries integrated (or re-integrated) with the world after trauma and isolation, through the process of joining ASEAN, as well as their interactions with and within the ASEAN institutions.    It posits that, by using the smaller forum of ASEAN, the CLMV countries learned or re-learned how to operate in the world system.

I would agree with this proposition, as one of ASEAN’s major successes has been to bring the heretofore isolated CLMV countries into the world system, even if that process has required more time and resources in some countries rather than others. 

However, the study focused on the experience of the CLMV countries in ASEAN, but not on the converse, e.g., how did the incumbent ASEAN+6 countries view this process?  Not all of the ASEAN+6 countries took a positive view of the CLMV countries’ accession process, as some countries (e.g. Singapore) have cited human resources and capacity concerns as obstacles to ASEAN’s taking on new members (e.g., Timor-Leste), clearly reflecting the lingering effects of the CLMV experience.

To this, I would say that the CLMV experience is illustrative but not indicative of what will happen when Timor-Leste joins ASEAN.

Unlike the CLMV countries, Timor-Leste has existed as an independent country for a far shorter period of time.  That means many institutions had to be created from scratch, relying on the leadership and experience of the Timorese resistance movement and diaspora.  The English language issues cited in the ISEAS study as affecting the CLMV countries do apply to Timor-Leste, which uses Portuguese and Tetum as official languages.

On the other hand, that same Timorese resistance movement developed strong capabilities from dealing with the international community during the years of resistance.   Unlike the CLMV countries at the time of their accession, Timor-Leste has had more experience in dealing with larger international forums, like the g7+ and CPLP (the Portuguese language community of countries). This capacity was most recently demonstrated by Dili’s hosting of the ASEAN People’s Forum. 

The younger generation of Timorese leaders has also made great strides in English language capability as well as substantive aspects of policy and international relations.  I can attest to this from personal experience:  

the 30+ students in my August 2016 “Introduction to ASEAN” class at the Diplomatic Training Institute of Timor-Leste were articulate (in English), knowledgeable and energetic, far exceeding the capabilities of the Timorese officials I interacted with in the early days of independence.  This impression comes both from the classroom experience and their examination papers.

Timor-Leste will present the ASEAN institutions with integration issues, like any new member.  However, in many ways Timorese officials will be better equipped to deal with these issues.  Either way, Timor-Leste is ready to begin the ASEAN accession process.

Japan Supports TPP Membership for ASEAN Members

During this week’s meetings in Laos, Japanese Prime Minister Shinzo Abe offered to support any ASEAN country that wishes to join the Trans Pacific Partnership (TPP), according to the Japan Times:

“The TPP will not divide ASEAN,” Abe said. The importance placed on the TPP by Japan and the U.S. has been interpreted as an effort to counter the regional influence of China, which is not party to the pact. “The TPP was agreed after clearing political hurdles,” Abe said. “Japan will support ASEAN countries wishing to participate in the TPP so that they can bring their plans to fruition.”

This is important for Cambodia, Laos and Myanmar because ASEAN members do not automatically qualify to accede to the TPP.  According to Article 30.4.1:

"1. This Agreement is open to accession by:

(a) any State or separate customs territory that is a member of APEC; and

(b) any other State or separate customs territory as the Parties may agree,

that is prepared to comply with the obligations in this Agreement, subject to such terms and conditions as may be agreed between the State or separate customs territory and the Parties, and following approval in accordance with the applicable legal procedures of each Party and acceding State or separate customs territory (accession candidate)."

Cambodia, Laos and Myanmar are not members of APEC, whereas Indonesia, the Philippines and Thailand are APEC members and satisfy these criteria.  Thus, Mr. Abe’s proposal will need to be supported by the other TPP members to qualify Cambodia, Laos and Myanmar for the TPP.  Given their less developed economies, these countries would probably be in a potential third group of TPP candidates, after countries like Indonesia, the Philippines, Thailand and South Korea who are currently considering joining in the next wave.

In any event, the TPP needs ratification by its existing parties, particularly the U.S.  Without U.S. ratification, the TPP will not come into force, and that will largely depend on domestic political conditions in America.

Wrap-up of the 2016 ASEAN Summit(s)

This week Laos hosted the 2016 ASEAN Summits in Vientiane.  The media will largely focus on the communiqué’s language on the South China Sea/West Philippine Sea.  However, as a result of efforts to downplay the dispute, including those of the new Philippine government, the document was not likely to adopt a more active stance on the issue. This, coupled with the bete noire with the United States over Philippine president Rodrigo Duterte’s choice of words, will cause some observers to view the Vientiane summits as a relative disappointment.  That would overlook some of the achievements announced in Laos in the Chair’s statement:

•  ASEAN Summit -- The timing of the summits themselves reflects the inherent flexibility of ASEAN.  Laos felt that it did not have the infrastructure to hold two major summits in 2016, as is required by the ASEAN Charter.   Hence Laos was permitted to conduct both summits this week, but with the same participants.  This complied with the letter of the law, but it also meant that ASEAN decisions were delayed several months until the Vientiane meetings (with an excellent explanation of why this is the case here).  On the other hand, reducing the administrative burden of hosting the ASEAN Summit will help when smaller countries (e.g., Timor-Leste) serve as Chair, assuming that the 2016 Laos precedent is not followed too often.
• Timor-Leste – The Summit announced that all 3 feasibility studies on the accession have been completed, and that the application is now with the ASEAN Coordinating Council Working Group (ACCWG). That means that the ACCWG is the last formal hurdle before the start of the official accession process.  The Summit also announced that Timor-Leste would participate in more ASEAN meetings for capacity building purposes.  Last year Timor-Leste attended its first ASEAN meeting (on connectivity) but since then has not attended any other meetings (although it was invited to, but did not participate in, the ASEAN Law Ministers meeting last year).
• Development – The third work plan for the Initiative for ASEAN Integration (IAI III) was announced.  The IAI serves as ASEAN’s wish list for projects in the less developed parts of the region, with funding to come from donor countries.  The real question will be how the new Asian Infrastructure Investment Bank will interact with existing donor countries and entities in implementing the IAI as well as the Master Plan on ASEAN Connectivity, which covers the entire region.
• Institutions – The communiqué states that ASEAN has addressed the recommendations of the High Level Task Force on Strengthening the ASEAN Secretariat and Reviewing the ASEAN Organs, noting that most of them are “perpetual” in nature and will require continuing implementation. 

Now the Chair passes to the Philippines, a founding member of ASEAN.  In addition to the usual responsibilities of the Chair, the Philippines also will supervise the celebrations of the 50^th anniversary of ASEAN as well as the selection of the next ASEAN Secretary General (who will come from Brunei as per the national rotation).

Whither Australia in ASEAN?

This week former Australian Prime Minister Paul Keating repeated his proposal that Australia join ASEAN.  According to the Australian Financial Review, “Australia ‘should become a member of ASEAN’, a membership that would ‘help Australia and help ASEAN’.”  Mr. Keating raised this idea previously in 2012.

The Australian Strategic Policy Institute (ASPI) provides thorough analysis of why Australia would never formally request ASEAN membership, here and here. It also discusses the reasons in favor of Australian membership here and here.

I’ll stick to a more legalistic analysis.  Article 6 of the ASEAN Charter sets forth the criteria for membership as follows:

“(a) location in the recognized geographical region of Southeast Asia;

(b) recognition by all ASEAN Member States;

(c) agreement to be bound and to abide by the Charter; and

(d) ability and willingness to carry out the obligations of Membership.”

The second criterion is not at issue, but the others are.

First, Australia is not part of the “recognized geographical region of Southeast Asia.”   Australia is considered to be its own continent, or a part of Oceania.  One of the ASPI articles cited above brushes this aside as Australia is a neighbor of ASEAN, like Papua New Guinea and Timor-Leste, other potential ASEAN members.  However, Timor-Leste is a recognized part of Southeast Asia.  Papua New Guinea is not, due to colonial history and issues related to Irian Jaya.

Second, would Australia agree “to be bound and to abide by the Charter”?  Article 7.2 of Charter states that “The ASEAN Summit shall be the supreme policy-making body of ASEAN.”   ASEAN membership would necessarily mean that Australia would be subject to decisions made by the leaders of ASEAN, who reflect a variety of systems including varying forms of democracy, Communists, a military junta and a monarch.  Would Australians accept this?

Third, would Australia have the “ability and willingness to carry out the obligations of Membership”?  At first glance, this should not be an issue for a developed country such as Australia.  However, agreeing to submit to arbitration (including investor-state dispute settlement (ISDS) under the ASEAN Comprehensive Investment Agreement) is part of the obligations of ASEAN membership. With Australia having a more skeptical view of ISDS, would the country really want to join a regional economic bloc where ISDS is part of the operating system?

Mr. Keating’s remarks seem to be intended to provoke discussion and promote greater Australian interest in ASEAN.  That’s a good thing.  However, these things take on a life of their own, meaning that they should be scrutinized on their substantive merits in addition to their intellectual points.   The ASPI articles and my own analysis indicate that this proposal will not get past the university seminar room.

Apologies for not posting recently.  I have been very busy advising Timor-Leste on its ASEAN accession and on a feasibility study on the Trans-Pacific Partnership for the Thai Ministry of Commerce. Also, frankly, there have not been very many AEC developments to discuss recently. Hopefully this will change soon.

Happy 49th ASEAN Day!

Today is ASEAN Day, the 49th anniversary of the founding of ASEAN on August 8, 1967 with the signing of the Bangkok Declaration by Indonesia, Malaysia, the Philippines, Singapore and Thailand.  These founding members were later joined by Brunei (1984), Vietnam (1995), Laos (1997), Myanmar (1997) and Cambodia (1999).

In celebration of ASEAN Day, today’s AEC Blog entry forgoes the usual commentary and instead provides the lyrics and tune of the ASEAN Anthem:

Raise our flag high, sky high 
Embrace the pride in our heart 
ASEAN we are bonded as one 
Look-in out to the world. 
For peace, our goal from the very start 
And prosperity to last. 
We dare to dream we care to share. 
Together for ASEAN 
we dare to dream, 
we care to share for it's the way of ASEAN.

Brexit's Effects on ASEAN

Yesterday the British people voted to leave in the EU, e.g., "Brexit".  UK Independence Party leader Nigel Farage called this the "Independence Day" for the UK from the EU.  

By happenstance, today is also the premiere of "Independence Day: Resurgence," the sequel to the disaster movie "Independence Day."  In the sequel, the aliens destroy London and Singapore with a megaweapon. 

The Brexit referendum is the legal equivalent of that megaweapon.   Read more at my earlier post. 

We are now in for 2+ years of negotiations on separation treaties and free trade agreements for the UK, EU and their trading partners.   More work for lawyers and consultants, but bad news overall.

ASEAN Minimum Wage May Raise Compensation and Institutional Issues

This week Indonesian Vice President Jusuf Kalla proposed an ASEAN minimum wage for workers.  According to the Jakarta Post, Kalla made the proposal during a World Economic Forum meeting on ASEAN in KL:

Vice President Jusuf Kalla introduced the idea amid concerns over a lack of protection for nationals of ASEAN member states.   "Vietnam very much supports what I have said about the need for ASEAN countries to protect their citizens from exploitation," Kalla said on Thursday as quoted by Antara news agency.

He said other ASEAN member countries had expressed interest in pushing for a minimum wage for workers in the region. Kalla said manpower ministers from ASEAN member countries would meet shortly to discuss the issue. "We are in agreement. Cambodia has also agreed," he asserted. 

Kalla added that the government did not want large multinational companies in ASEAN countries to compete for the lowest wages. "Competition is good, and so far we have not lost out due to low wages because the raw material is the same, the factories too," Kalla said. 

I am not going to debate here whether government-mandated minimum wages are economically beneficial to workers, consumers or employers.  However, the Indonesian proposal does raise some ASEAN-specific issues which I’d like to discuss.

First, would we have an ASEAN region-wide minimum wage, or would there be allowances for the less-developed countries of Cambodia, Laos, Myanmar and Vietnam (CLMV)?  Kalla’s comments indicate support from Cambodia and Vietnam, who presumably would want such allowances.

Second, would the scope of the minimum wage only cover wages, or would benefits such as retirement, severance, medical, leave, etc., also be covered?  In other words, is the term “minimum wage” to be taken literally or will it cover all aspects of worker compensation?  Will there be different wage scales for different sectors?

Third, who would be covered?  All workers in an ASEAN country, including guest workers?  Or only ASEAN nationals?  What about ASEAN nationals who are in another ASEAN country but on an undocumented basis?  Or who are working in a special economic zone?

Fourth, how the workers ensure that their rights to a minimum wage are protected?  Would they go to an ASEAN institution (not likely) or an ASEAN member state’s government (much more likely)? Could they go to dispute resolution or to administrative means?    Who would investigate?  What sanctions would be imposed on the employer? Would the workers be entitled to receive back wages? 

Fifth, even if the enforcement process will be necessarily nation-based instead of region-based, how will the ASEAN national agencies or courts interpret and apply the ASEAN minimum wage documentation? Will they look at the negotiating history, statements by government officials and the like? 

All of this leads to my final question, what legal form will the ASEAN minimum wage take?  Will it be the usual ASEAN declaration of an aspirational nature, which might mean that the minimum wage would be fully or partially unenforceable?  Or will it have more legal weight, which would make it more effective but will require more legal and institutional infrastructure?

In previous posts, I have called labor mobility the “third rail of ASEAN” which politicians will touch only at their peril. The ASEAN minimum wage proposal does not touch this third rail, but it raises similar issues with similar potential controversies: it’s not touching the third rail, but it is close enough to hear the electricity humming down the line.