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ASEAN Charteritis

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In Brief

The Association of Southeast Asian Nations (ASEAN) recently held its annual summit in Thailand. ASEAN leaders signed an FTA with Australia and New Zealand; promised to achieve an ASEAN Economic Community (AEC) by 2015; and pledged to keep borders open to trade, services and investment. In light of the global economic crisis, they agreed to refrain from erecting new trade barriers and to take “assertive action” against protectionism. ASEAN is also armed with a new “charter”. The ASEAN Charter gives the group a common legal personality; it contains (minor) institutional innovations; and it houses an ASEAN Political-Security Community, an ASEAN Socio-Cultural Community and the afore-mentioned AEC.

What are we to make of the new-look ASEAN? Outsiders have long belittled ASEAN for its internal divisions and lack of integration. ASEAN rhetoricians counter that with its brand-new Charter, its AEC blueprint and new FTAs, ASEAN has reached a watershed. In future it will spur intra-regional integration, be a viable collective force in wider Asian and international relations, and collectively counter common challenges – not least the present global economic crisis.

I remain very sceptical.

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True, ASEAN is better than nothing. It is good for politicians and officials to meet regularly and jaw-jaw against the backdrop of rounds of golf and karaoke. (Singaporeans, predictably, excel at the former but are piss-poor at the latter. Filipinos, equally predictably, top the ASEAN karaoke charts.) In a region historically riven by conflict and violence, that is better than the alternative. If member-governments can agree on modest common denominators, so much the better. Beyond that, I find it difficult to take ASEAN seriously. ASEAN rhetoric and reality have long been at odds; but the gap between the two is widening to the extent that it is hard not to scoff. I’ll say something first about ASEAN reality and then go on to its rhetoric.

ASEAN’s economic core is the ASEAN Free Trade Area (AFTA). Its vaunted economic success is the Common Effective Preferential Tariff (CEPT). Intra-regional tariffs have come down close to zero in the old ASEAN members, with longer transition periods for the poorer new ASEAN members. But the CEPT is mostly a paper exercise: ASEAN countries’ tariffs have been coming down unilaterally in any case; and there has been close to zero take-up of CEPT preferences by firms. ASEAN also has agreements on tackling non-tariff barriers and liberalising services and investment, but these are very weak and have resulted in hardly any net liberalisation. In sum, ASEAN economic integration has been limited to tariff cuts, but it has a pathetic record in tackling intra-regional regulatory barriers. The latter, more than the former, impede regional economic integration – for MNEs with their cross-border manufacturing supply chains, for home-based firms, for agricultural and services suppliers, and for final consumers. Regional integration is pretty much limited to MNE supply chains in slices of global manufacturing. That is a result of unilateral, country-by-country opening to trade and inward investment. Other national barriers remain high; and ASEAN collectively has done hardly anything to bring them down.

Given this context, there will be no true AEC – an integrated market for goods, services, investment and skilled labour — by 2015. Beyond supply-chain integration in a few sectors (mainly in ICT), ASEAN has no “single market” in the European sense or even in the North American sense. Given ASEAN’s track record, it has no prospect of coming close to a single market by 2015, 2020 or even 2025. To talk EU-style Single Market language, as ASEAN does with the AEC, is risible.

What about ASEAN FTAs with third countries? ASEAN now has FTAs on the books with Japan, South Korea, China and Australia-New Zealand. It seems close to concluding one with India and is negotiating with the EU. Again, one should distinguish hype from reality. The reality is that these FTAs are weak-to-very weak. The FTA with Australia-New Zealand is at the less-weak end of the spectrum; the almost-concluded FTA with India is at the other, very weak, trade-featherweight end of the spectrum. The strongest of them take 90 per cent of tariff lines down to zero (more or less), but make very little dent into non-tariff regulatory barriers. They are advertised as WTO-plus, which in some cases is literally true. But, with few exceptions, they are not strong enough to change existing national practice in a liberalising or trade-facilitating direction. Besides, they are complicated by differing rules-of-origin requirements, and by the bilateral FTAs individual ASEAN members have with third countries. All the above is an external reflection of the limits of intra-ASEAN economic integration.

No wonder then that the EU-ASEAN FTA negotiations have been stuck from the start. ASEAN collectively, and indeed ASEAN countries individually except Singapore, are simply not serious about FTAs. Intra-ASEAN divisions have proved intractable; and ASEAN lacks a credible common negotiating machinery. EU negotiators express frustration at the lack of seriousness of their ASEAN counterparts – but we at ECIPE told them that would be the case even before the negotiations started.

Now turn to the ASEAN Charter. Like everything else in ASEAN, it is a paper tiger. It is big on principles and ambitions. Its language is lofty. It codifies existing norms. But it has no real substance. There was talk of a binding dispute-settlement mechanism, but the end-result is the continuation of the “ASEAN way”, i.e. consultation, consensus and non-interference in each other’s internal affairs. There has been much chatter around the Charter of ASEAN emulating the “EU model” in terms of building common institutions and strengthening common policies. This is hilarious. The EU model is almost totally irrelevant to ASEAN. Political, economic, cultural and institutional gaps in southeast Asia are historically larger than they are in Europe; and there is precious little of a common tradition, cultural and otherwise, to draw on for anything more than very shallow integration.

To get real: ASEAN collectively will only work bottom-up if policies and institutions improve in its individual members, particularly the leading ones. As of 2009, Singapore stands out as a strong going concern. Malaysia and Thailand have their internal political quagmires and are treading water on the economic front. They seem to be “blocked societies”. Indonesia is trapped in its post-Suharto complications. The Philippines remains wildly dysfunctional. Brunei does not count. Laos is a static (but charming) backwater. Cambodia is very poor, politically hazardous and institutionally very brittle. Myanmar is a bizarre failed state. Vietnam, exceptionally, fuelled by the animal spirits of its thoroughly admirable people, has been making enormous progress since it embraced the market over two decades ago. But even it is cramped by its political class and repressive institutions. Hence it is pie-in-the-sky to expect a stronger ASEAN while underlying weaknesses and divisions within and between its members persist and even get worse. Any attempt at “top-down” ASEAN integration is for fools, horses and EU federalists.

Now a few words about ASEAN rhetoric to illustrate the chasm between it and ASEAN reality. This relates to cultural differences in using language. Being Sri Lankan-British, I am used to a Western-South Asian common denominator of direct, sometimes adversarial language in the public space. The east-Asian common denominator is different. Words are for papering over cracks, consensus and harmony. True meaning and reality are what lie beneath the surface of language. Granted, as George Orwell said in his most penetrating political essay, most or all political language is fake and meant to deceive. But it is truer of east-Asia than it is in the Western or south-Asian argumentative traditions. East-Asian political language is sterile, largely devoid of content and stupefyingly boring. It is lacking in humour, let alone irony. That is why attempts at joke-making fall flat. This is as true of media, academia and think tanks as it is of political and bureaucratic circles. The dearth of truly “open” societies in southeast Asia or points farther east makes matters worse. Any outsider with a feel for language who has spent sufficient time in the region knows exactly what I mean.

ASEAN language should be seen in this light. Visions, blueprints and charters are largely a rhetorical exercise, meant as political placebos while governments do contrary and contradictory things. There is such a thing as ASEAN “duckspeak”, and ASEAN insiders are “doubleplusgood duckspeakers”. (For the uninitiated, in Orwellian Newspeak a “duckspeaker” is someone whose vocal utterances emerge direct from the larynx without engaging the brain. A public speaker or writer who excels in the genre is a “doubleplusgood duckspeaker”.) For example, while ASEAN leaders pledged not to erect new trade barriers at their last summit, the Indonesian government instructed officials to buy local products, and the Malaysian prime minister said that protection was quite “normal” in an economic downturn. Note that protectionist measures are aimed as much at other ASEAN members as they are at third countries.

So think of ASEAN as any realist would think of the G7 or now the G20. And take comfort in Articles 35-40 of the ASEAN Charter, which provide for an ASEAN Identity (“ASEAN shall promote its common ASEAN identity and a sense of belonging among its peoples in order to achieve its shared destiny, goals and values”), an ASEAN Motto (One Vision, One Identity, One Community), an ASEAN Flag (see Annex 3), an ASEAN Emblem (Annex 4), an ASEAN Day (the eight of August) and an ASEAN Anthem (TBA). All available here.

[The original post, on the European Centre of International Political Economy website, can be found here.]

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