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Bumpy road lies ahead for Asean economic integration

Bumpy road lies ahead for Asean economic integration
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First Published: Sun, Apr 04 2010. 10 17 PM IST
Updated: Sun, Apr 04 2010. 10 17 PM IST
Singapore: Flaws in Association of Southeast Asian Nations’ (Asean) economic integration plans are being exposed as some members struggle to adapt to a massive free-trade deal with China, and the US and European Union (EU) opt to pursue pacts with individual states.
Grand plans for the establishment of an Asean Economic Community (AEC) by 2015 are likely to be a key topic when Asean leaders hold their annual summit next week in Vietnam’s capital Hanoi.
But wide development gaps within the region, entrenched domestic interests and the perennial distraction of Myanmar’s failure to embrace democracy continue to weigh down the group’s activities and global ties, analysts say.
The integration concept goes beyond freeing up trade—it also includes physical connectivity through better rail and air links and the unhampered movement of people and capital in the 10-member bloc.
But soon after a giant free-trade agreement (FTA) between Asean and China went into effect this year, the region’s biggest member, Indonesia, under pressure from domestic industries, said it wanted some of the terms renegotiated.
EU had also ditched earlier plans to negotiate an FTA collectively with Asean, and instead launched separate talks with individual countries—an option also favoured by the US.
Hank Lim, a senior research fellow with the Singapore Institute of International Affairs, said the main reason EU and the US do not want to negotiate a regional pact is the group’s vastly differing levels of economic development.
“It is impossible to negotiate a high-quality FTA with the Asean 10 collectively,” Lim said.
Alongside Indonesia and Vietnam, Asean’s eclectic membership also includes Singapore, whose $35,000 (Rs15.78 lakh) per capita income and gleaming skyscrapers are a stark contrast to poverty-ridden Laos and largely agricultural Cambodia.
Other member countries are Brunei, Malaysia, the Philippines, Thailand and Myanmar.
Diplomatic sources also admit that negotiating individual trade deals will allow Western countries to avoid the awkwardness involved in doing deals with a group that has international pariah Myanmar in its ranks.
Former Asean secretary general Rodolfo Severino said that tearing down tariff barriers on intra-Asean trade is on track, at least on paper.
But he said in an opinion piece published in Singapore’s Straits Times newspaper last week that there are other things that need to be done for integration to be broad-based and effective.
These include the “building of transportation and telecommunications infrastructure and the dismantling of the political, economic and technical obstacles to the efficient flow of goods, services, people and ideas across the region”.
He expressed hope that the leaders meeting in Vietnam “will give impetus” to the integration process.
Ernest Bower, a Southeast Asia specialist with the Center for Strategic and International Studies in Washington, said Asean’s target of establishing an economic community by 2015 is a “stretch goal”.
“Indonesia’s well documented anxieties over the impact of the China-Asean FTA expose the limitations of the regional approach to economic integration, namely entering into less well defined regional agreements that allow countries to opt in or out,” Bower said.
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First Published: Sun, Apr 04 2010. 10 17 PM IST