ASEAN Further Enhances the EDSM

Hi folks!

I am back temporarily to let you know that my new article, "ASEAN Further Enhances Its Dispute Settlement Mechanism" has just been published by the Indonesian Journal of International and Comparative Law.  You can find it at https://www.ijil.org/

Here's the abstract for the article:

In 2019, ASEAN completed a further “enhancement” of the Enhance Dispute Settlement Mechanism (EDSM). On their face, the 2019 revisions do indeed “enhance” the EDSM by eliminating structural problems such as impractical timelines and by bolstering previously underdeveloped systems such as appellate procedures, creation of arbitration panels and rules of conduct for panelists. This will help give the revised EDSM more credibility. 

Ultimately, however, whether the updated EDSM will be viewed as more credible, thereby strengthening the AEC, will depend on factors beyond its remit. Cultural and political factors in ASEAN will determine to what extent the updated EDSM is used by the ASEAN Member States. Moreover, the relative decline of alternative dispute forums, in particular the WTO, may make the updated EDSM more attractive to ASEAN Member States. Either way, the 2019 revisions in the EDSM are both welcome and timely reinforcements to the legal and policy foundations of the AEC.

Please keep safe and healthy during this difficult time!

Best Regards,

Ed

Status of this Blog

For various professional and personal reasons, I have not been updating this blog.  I am maintaining it to support academic research on ASEAN.  If you wish to contact me about ASEAN issues, please email me at sim@appletonluff.com.

Wishing you all the best,

Ed

Wrap-up of the 31st ASEAN Summit

In today’s post, I provide a wrap-up on last week’s ASEAN Summit.  Given the focus of this blog, I will not analyze issues (such as the South China Sea) which have been well covered elsewhere. Instead, I review some institutional developments:

New ASEAN Secretary-General – Lim Jock Hoi of Brunei was named the next ASEAN Secretary-General. Lim will serve during the 2018-2022 term (this post is rotated among the ASEAN countries based on alphabetical order, so the next Secretary General will be from Cambodia).   This is a positive development for the AEC, as Lim has deep experience in trade and investment issues, having served as Brunei’s chief negotiator during the Trans Pacific Partnership talks.  By my reckoning, Lim has the most experience in regional economic integration of any Secretary General.

ASEAN-Hong Kong FTA (AHKFTA) – ASEAN and Hong Kong signed their FTA.  With ratification not expected to be an issue, the AHKFTA will take effect before the completion of the Regional Comprehensive Economic Partnership (RCEP) talks (which have again missed a self-imposed deadline for completion).  The real value-added for the AHKFTA is in investment and services, as virtually all goods coming out of Hong Kong have China-origin and thus already qualify for the ASEAN-China FTA.  Rather, the AHKFTA will give Hong Kong companies better access and protection for investments and services, meaning that Chinese companies can use Hong Kong for their investment vehicles rather than an ASEAN country or China itself.  This may mean some small market share loss in investments for Singapore, particularly in the Philippines and perhaps northern Vietnam (due to distance and stronger links) but overall both ASEAN and Hong Kong will benefit from the FTA.

Timor-Leste – The Minister of Foreign Affairs and Cooperation Aurelio Guterres was in Manila representing Timor-Leste instead of the Timorese president.  However, this was not a downgrading by ASEAN but instead resulted from internal protocol issues in Timor-Leste (and Guterres, whom I know from the Diplomatic Institute and the National University of Timor-Leste, represented the country well). The ASEAN Summit did not issue any finding on Timor-Leste’s application to join ASEAN, referring the matter to the working group that meets on December 5 in Bali. Hopefully the Bali meeting will be the end of the beginning for the Timorese accession to ASEAN.

I will update this post as more documentation comes out. 

Happy 50th ASEAN Day!

Today is ASEAN Day, the 50th 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.

Philippines Suggests that Turkey and Mongolia Can Join ASEAN

This week Philippine President Rodrigo Duterte said that the leaders of Turkey and Mongolia had approached him about joining ASEAN.  Duterte said that they made the request to him, as the Philippines is currently ASEAN Chair, and that he was happy to “sponsor” their membership applications.

The difficulty with this request is that neither country is part of Southeast Asia, which was noted by Myanmar’s Aung San Suu Kyi.  President Duterte responded,

“They are. I would say that they are. Turkey, it seems to be ambivalent to whether to be a bridge sa (to) Europe and Asia or being an Asian. Wala silang klaro diyan (There is nothing definite there.) There has always been an ambivalent view. Sometimes they say that they are part of Asia, sometimes they say that they are the bridge of Asia to Europe.”

However, a “definite” concept of Southeast Asia underpins the membership criteria for ASEAN.  Article 6.2(a) of the ASEAN Charter states that new members must have a “location in the recognised geographical region of Southeast Asia.”  Neither Turkey nor Mongolia could objectively be considered part of Southeast Asia. 

Blurring the “recognised” area of Southeast Asia, furthermore, would result in difficulties regarding Papua New Guinea and the Indonesian province of Irian Jaya.  

By comparison, Timor-Leste is recognised as geographically part of Southeast Asia, meaning that it easily satisfies Article 6.2(a).

Thus, although the ASEAN Charter can be amended by the ASEAN Summit (which was done, for example, by changing the order of the ASEAN Chair terms), it is difficult to imagine ASEAN leaders agreeing to Turkey and Mongolia joining the grouping.

This is not the first time countries far removed from Southeast Asia have been suggested for membership in ASEAN.  Sri Lanka (at the beginning of ASEAN), Fiji, and most recently Australia have been mooted as potential members.  However, these proposals did not go very far.  The prospects for Turkey and Mongolia look similarly dim, meaning similar outcomes of either politely ignoring the proposal, or clarifying (diverting) them into the ASEAN Regional Forum or free trade agreement talks with ASEAN.

The episode demonstrates, once again, why ASEAN needs the rules and rules-based order established by the ASEAN Charter.  Without the Charter, this discussion of membership would be governed by the politics and diplomacy of the moment, rather than legal and institutional foundations.

ASEAN-X Risks Diluting RCEP

This week the Philippines proposed an alteration to the negotiating paradigm of the Regional Comprehensive Economic Partnership (RCEP), in an effort to relieve the logjam currently affecting the RCEP free trade agreement (FTA) talks involving 16 countries, ASEAN plus India, China, Japan, Korea, Australia and New Zealand.  The difficulty is that the Philippine proposal may add more complications to what is already a complex set of trade talks and increases the likelihood that those talks will result in a weaker FTA.

The Philippine proposal basically calls for the RCEP parties to apply “variable geometry” to the RCEP commitments.  Variable geometry, in FTA terms, allows parties to apply trade liberalization commitments on an asymetrical basis, e.g., not all FTA parties implementing their commitments at the same time or to the same extent.

In ASEAN, this is known as “ASEAN-X,” provided in Article 21.2 of the ASEAN Charter. A subset of ASEAN members can proceed with faster economic integration, with the understanding that other ASEAN members can later join the subset when they are ready. In this way, the integration process can continue and achieve the same end result, albeit at varying speeds. 

Thus, ASEAN-X is a useful tool to promote economic integration. The problem comes when not all parties share the understanding that the non-participating ASEAN members will eventually join the subset. As I explained in previously, this can happen when there are multiple subsets of ASEAN countries, or subsets which result from fundamentally incompatible policies. 

This is difficult enough in the ASEAN context, where at least there are regional institutions and processes in ASEAN to move the process along, however slowly.  Application of the ASEAN-X formula to the RCEP process could be even more problematic.  The RCEP talks have stalled because China, Japan, India, and Korea have no FTAs among them, whereas ASEAN has FTAs with those countries.  As a result, the RCEP talks have had difficulties “squaring the circle,” both among the three northeast Asian countries and, for all countries involved, in negotiating with India.  Application of the ASEAN-X formula could thus result in multiple subsets of RCEP being created for these countries.

That of course, undermines one of the fundamental objectives of the RCEP, which was to streamline the trading and investment relationships among the RCEP partners.  Furthermore, if the variable geometries are baked into the RCEP agreement, it will be more difficult for the RCEP parties, operating without established institutions and processes, to move the outliers into the main body of the RCEP commitments.

If applied to the RCEP talks, therefore, ASEAN-X and variable geometry could end the negotiating impasse.  But doing so carries the risk of diluting what already promises to be a relatively weak product from the RCEP talks. 

VP Mike Pence Reaffirms U.S.-ASEAN Ties

This week U.S. Vice President Mike Pence visited the ASEAN Secretariat, becoming the highest-ranking U.S. official to have visited ASEAN headquarters.   Pictured below is Vice President Pence meeting with ASEAN Secretary-General Le Luong Minh.

Vice President Pence also met with the permanent representatives of the ASEAN member states and members of the Young Southeast Asia Leaders Initiative, a U.S.-sponsored people-to-people initiative.

The Pence visit should be viewed as a positive diplomatic development.

First, the Trump administration’s gesture of engaging with ASEAN as an institution should be much appreciated by ASEAN.  President Obama visited Indonesia twice but never made an appearance at the ASEAN Secretariat.

Second, Vice President Pence announced that in November President Trump would attend both the APEC Summit in Vietnam and the East Asia Summit (EAS) in Manila.  President Trump’s participation in both meetings was not a given; President Obama missed 2 APEC summits and 3 EAS meetings during his presidency. 

Third, when combined with the ASEAN Foreign Ministers’ meeting scheduled for May 4 with U.S. Secretary of State Rex Tillerson, these moves signal renewed attention to Southeast Asia as a region.

For the United States, a little goes a long way in ASEAN.  Moves such as the Pence visit matter in the region’s diplomatic circles; previous U.S. absences from Asian regional meetings such as APEC and EAS were frequently criticized.  Moreover, U.S. support of ASEAN economic integration initiatives such as the ASEAN Single Window promises a big return for a small investment.  A fully functioning ASEAN Economic Community – one that operates both as a single market and a single production base – represents a great opportunity for American business.

Thus, the Pence visit and its accompanying initiatives are a welcome signal that America’s relationship with ASEAN remains a vital part of U.S. foreign policy.

AEC 2025 Consolidated Strategic Action Plan

This week ASEAN published the “AEC 2025 Consolidated Strategic Action Plan (CSAP).” The plan lays out both the specific steps associated with implementing the Asean Economic Community (AEC) 2025 Blueprint, along with the anticipated timeframe. 

ASEAN stated that the CSAP “allows for more structured tracking and reporting of the implementation progress of the AEC Blueprint 2025. The AEC 2025 CSAP also facilitates stakeholder feedback to ASEAN economic integration priorities in the succeeding years, as it will be reviewed and updated periodically over the 10-year period.”

The CSAP is indeed a positive step forward, as the AEC Blueprint 2025 was necessarily aspirational in nature.   The CSAP is more practical and has more specified tasks, although much of the CSAP is aspirational as well.

Yet the CSAP does not indicate how the “tracking and reporting of the implementation progress” will be done.  ASEAN has only done two AEC Scorecards, and the most recent scoring, which was not in the form of a scorecard, was limited only to a review of “key deliverables” for 2015.  Since that time, there has been no detailed reporting, on a country-specific and program-specific basis, provided by ASEAN. Hopefully the CSAP will allow for this in the future, as the lack of monitoring and compliance mechanisms is a deficiency in ASEAN’s institutional structure.

How Does Trump's America View ASEAN?

How does America view ASEAN in the new Trump era?  After two weeks, there is one big news item and some smaller ones.

First, the big talking point is the South China Sea/West Philippine Sea dispute.  Comments by Trump administration figures regarding the maritime dispute have been much discussed in the media, particularly in the U.S.-China context.  Yet the comments go beyond that. They remind all players in the region that the dispute is an international dispute with multiple parties involved, which cannot be resolved on a bilateral basis only between China and the Philippines, for example.  If the new U.S. administration can maintain the narrative on this basis, and avoid the on-the-ground escalations with China which have plagued previous new U.S. administrations in their early days (e.g., Taiwan in the Clinton administration or the Hainan island incident in the Bush 43 administration), so much the better for a peaceful management of the situation.

Second, less publicized was last week’s formation of a bipartisan ASEAN caucus in the U.S. Congress.  This comes after more than two years of effort in Washington, and is a positive development. As I discussed in a previous post, perhaps the biggest gain is the creation of another link with ASEAN countries for whom bilateral relations are strained at the moment, such as the Philippines. 

Third, a recent poll by YouGov published in the New York Times illustrates that country’s fall in reputation in the U.S. since 2014.  Polls taken in 2014 and 2017 surveyed Americans’ perceptions of other countries as allies or enemies of the United States, further breaking down perceptions based on party preferences; I post some selected data here (green shading means positive, red shading means negative):

This poll should be viewed as an indication of both familiarity and popularity.  The former explains why European countries are the highest ranked, given that most Americans originated in Europe, and Europe is closer geographically.  The latter is affected by historical memory; Afghanistan, Iraq, Russia and Pakistan fall near the bottom of the rankings, and North Korea is consistently ranked as the worst enemy.

For ASEAN countries, the poll shows mixed results.  The Philippines went from being the highest ranked Asian country in 2014 (9^th) to falling to 41^st place in 2017.  This reflects the constant negative media coverage of the Duterte administration since it came to power.  On the other hand, this ranking is consistent with rankings for the other ASEAN countries and is still higher than the other seven ranked members (the poll itself is distorted by not including Brunei and Singapore, although it did include sparsely-populated Greenland, which was ranked 10th in 2014 and 23^rd in 2017!).

For the other ASEAN countries, the polls show their relative lack of impression on the American public. The rankings show relatively little movement from 2014 to 2017, which was the case for most Asian countries (the above chart shows Japan, South Korea, China and North Korea for reference).  Furthermore, it is hard to discern the links between favorability and recent developments in the region.  For example, Myanmar went through a transition to a democratic government led by the popular Aung San Suu Kyi, yet the poll says that it fell in rankings from 102^nd in 2014 to 117^th in 2017, and ranked lower than Cambodia.    Vietnam, which has a large diaspora in the U.S., ranked lower than Thailand, Malaysia, and Indonesia, which do not, probably because of lingering sentiments from the Vietnam War (which ended more than 40 years ago).

The foregoing indicates that ASEAN members will need to be resourceful in the coming years, given their diplomatic and political situations.  The ASEAN congressional caucus is a useful forum for ASEAN members, but other tools and means should be pursued.   ASEAN members need to expand American perceptions of ASEAN beyond the South China Sea and media reports, and increase economic and cultural ties. For example, the Trump administration has signaled that it may pursue bilateral free trade agreements with Malaysia and Thailand. This opportunity comes because of the demise of the Trans Pacific Partnership (TPP), and should be pursued by all sides.

In other words, ASEAN faces a significantly different relationship with the United States. Rather than simply throwing up their collective hands in frustration (or worse) its members need to engage and work with the United States to build upon that relationship.

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.