Rule of law key to building an ASEAN Community by 2015

Author: Imelda Deinla, ANU

ASEAN is on its path to establishing an ASEAN Community by 2015, where the ASEAN Economic Community (AEC) will be its flagship initiative to regional integration.

The AEC Blueprint spells out the aims of ASEAN’s economic integration: the creation of a single market and production base characterised by free movement of goods, services, capital and skilled labour, and the identification of twelve priority integration sectors. At a minimum, it will require a certain degree of political integration that involves the building of common institutions, laws and rules to facilitate enforcement of agreements among member states.

Establishing the rule of law in the context of regional integration has been widely acknowledged as a goal and mechanism of integration. At least in the EU, the rule of law is regarded as the key driver of integration, particularly in its early years of removing barriers to trade. There is a fundamental difference, however, between the EU and ASEAN perception of the function of rule of law. Where the EU has readily consented to limiting and pooling their sovereignties, ASEAN has remained steadfast in its non-interference of members’ sovereignties. The EU started from the adoption of formal rules and formal adjudication processes to deepen economic integration, and progressed to the development of shared laws and principles that transformed the function of the rule of law from a narrow instrumentalist conception of facilitating the market, to one that regulates the European market. This transformation provided transparent decision making, holding decision makers to account, and re-iterates protection of human rights. On the other hand, ASEAN has eschewed the use of supranational autonomous institutions and the minimal use, where possible, of formal and legally binding instruments. Instead, it has pursued a different pathway to the rule of law using soft laws and other informal processes and mechanisms with no attendant or negligible loss of sovereign control.

While the functions of the rule of law in the EU and ASEAN are quite distinct, we see convergence between ASEAN and the EU in the increasing use of soft, informal and voluntary mechanisms to develop stable and predictable bodies of laws and regulations in the economic sector, albeit with different motivations for doing so. In the past few years, ASEAN has embarked on rapid institution building that seeks to facilitate cooperation, coordination and delegation of functions between regional and state organs. While a WTO-like dispute resolution mechanism was adopted to facilitate enforcement, the ASEAN Dispute Settlement Mechanism remains unused; instead the ASEAN Secretariat performs a coordinating and monitoring function using the AEC Scorecard. In the absence of judicial enforcement of member states to remove trade barriers, ASEAN has turned to trade facilitation measures such as standard setting, harmonization and mutual recognition arrangements. Informal rule-making that involves cross-border policy coordination and standard setting is progressively being used. This produces non-legally binding but normative output and involves the participation of non-traditional international law actors such as experts, industry groups, international organisations and domestic agencies. Since integration began in the late 90s informal rule-making has become the primary mechanism in trade facilitation initiatives in ASEAN.

ASEAN has so far demonstrated its potential to achieve incremental integration using this soft approach. Its intra-regional trade has attained 25 per cent of total trade, intra-ASEAN investment is at 23 per cent, with increasingly diversified trade partners, and aims to remove almost all tariffs for all member countries by 2015. ASEAN’s informal mechanisms are also showing the potential of developing common rules and standards that could be directly applied to member countries. This would satisfy the minimalist conception of the rule of law that involves the establishment of general, stable and predictable legal regimes and level playing field for economic actors. For example, the work of the ASEAN Consultative Committee on Standards and Quality (ACCSQ) and its Working Groups have shown the possibility of developing a body of ASEAN economic rules and standards directly enforced in member countries, and broadening the engagement of ASEAN with non-state actors. The relative success of the ACCSQ also demonstrated that development of common rules and policies can be achieved despite national differences, by being underpinned by international standards and the collaboration of stakeholders from the public and private sectors. It also underscores the importance of the leadership role and institutional capacity of member states.

There is still much to be desired in terms of participation, transparency and accountability as components of the rule of law. ASEAN’s informal mechanisms offer limited non-state participation, operate in an almost invisible manner and do not contain accountability or feedback mechanisms. There is no regulatory framework through which these mechanisms operate that would constrain excesses or remedy negative impacts. As ASEAN works toward its goal in building an ASEAN Community by 2015, it needs to pay particular attention to these elements as the dynamics of integration create more complexities and generate more expectations from the ground.

Imelda Deinla is a Postdoctoral Fellow at RegNet, College of Asia and the Pacific, Australian National University.

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