Fighting irrelevance: an economic community ‘with ASEAN characteristics’¹

1 I owe this phrase to Michael Plummer (2006).

Abstract

Contrary to expectations at the time, the financial crises of 1997–98 may have strengthened ASEAN. The backlash against a perceived unsympathetic Western response put ASEAN at center stage in new regional cooperative arrangements. Moreover, the rivalry between China and Japan for regional leadership has led them both to seek to negotiate regional partnerships with ASEAN as a whole. ASEAN, however, faces new challenges – particularly from rapid economic growth in China and India, and from the proliferation of preferential trade agreements (PTAs). ASEAN has made only slow progress in economic cooperation, which has fallen further behind schedule. The private sector makes little use of ASEAN's preferential arrangements because they afford little advantage over most-favored-nation tariffs. ASEAN has failed to address ‘deeper integration’ issues – the removal of ‘beyond border’ barriers to trade. Some of the bilateral PTAs that ASEAN countries have negotiated with extra-regional partners go further in removing barriers than ASEAN's own arrangements. ASEAN members continue to eschew binding commitments. Liberalization under ASEAN's auspices has not been sufficiently significant to encourage business groups to invest substantial resources in lobbying for deeper integration.

Keywords:

• ASEAN
• trade liberalization
• integration

Acknowledgements

The author is grateful to Miwa Hirono and Jikon Lai for research assistance, to the Australian Research Council for financial support under grant DP0453077, and to Etel Solingen, Richard Stubbs, two anonymous reviewers and the editors of this special issue for comments on an earlier draft.

Notes

^a Excludes Thailand, which refused to sign after Korea excluded rice and 200 other agricultural products from the agreement.

^b Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand).

^c Trans-Pacific Strategic Economic Partnership Agreement.

*John Ravenhill is Professor in the Department of International Relations, Research School of Pacific and Asian Studies, Australian National University.

1 I owe this phrase to Michael Plummer (2006).

2 In AFTA, members are required to assign tariff lines to one of four lists: the Inclusion List, the Temporary Exclusion List, the ‘Highly Sensitive’ List and the ‘General Exception’ List. For the six original signatories of AFTA, close to 99 percent of tariff lines are on the Inclusion List; for Cambodia, Laos and Myanmar, the figure is only 72 percent; for Vietnam, which has made impressive progress in trade liberalization, the figure is 97 percent.

3 The Information Technology Agreement (ITA) provides for duty-free import of most IT components and products. Indonesia, Malaysia, the Philippines, Singapore and Thailand are parties to the ITA. In 2005, electrical machinery constituted 29 percent of total intra-ASEAN trade, fuel oils a further 20 percent and machinery (a category that includes household appliances, machine tools and office machinery) 16 percent (ASEAN n.d.).

4 For a detailed comparison, see Lloyd and Smith (2004: Table 4.1).

5 For a comparison of the agreements entered into by East Asian countries, and an assessment of their consequences, see Ravenhill (2008).

6 A summary of the report appeared in the McKinsey Quarterly (see Schwarz and Villinger 2004).

7 Whereas the ratio of the highest (Singapore) to lowest (Laos) per capita income in ASEAN measured in purchasing power parity terms is more than 15:1, the equivalent ratios for NAFTA (United States: Mexico) and the European Union (Luxembourg: Romania) are approximately 4:1 and 7:1 respectively. If Singapore is excluded as an outlier, however, the ratio between the next highest per capita income, Malaysia, and Laos is 5:1. When the measure is overall size of the economy, however, the European Union is now the most diverse grouping, with a ratio of more than 500 to 1 between Germany, the largest, and Malta, the smallest economy. Data from World Bank (n.d.).

8 For the problems that this has caused for regional cooperation efforts, see Hamilton-Hart (2003). An assessment of ASEAN's capacity-building programs found that training programs often attracted ‘poor participation’ in part because ‘recipient countries did not always find such training programs relevant to their needs’ (Habito, Aldaba and Templo 2004: xii).

9 The priority sectors are: wood-based products and automotive, rubber-based products and textiles/apparel, agriculture-based products and fisheries, electronics, IT linkages and health care, and air travel and tourism.

10 Nesadurai (2003) notes that although some clarification of AFTA's rules did result from interstate disputes over its implementation, this often came at the expense of a downward revision of original targets.

11 In interviews conducted in July 2007, officials from the ASEAN Secretariat spoke of the frequent indifference of private sector actors to seminars that the Secretariat had organized.