Coping with Myanmar as ASEAN Chair

ASEAN Community in a Global Community of Nations

Veeramalla Anjaiah, The Jakarta Post, Jakarta | Thu, 11/17/2011 10:37 AM

Since its establishment in 1967, ASEAN has been the cornerstone of Indonesia’s foreign policy. From day one to until now, Indonesia never stopped its efforts in putting forward new initiatives to strengthen the 10-member Association of Southeast Asian Nations (ASEAN).

Among those initiatives, giving a legal entity to the regional grouping in 2008, expansion of East Asia Summit (EAS) and building an ASEAN community by 2015 are the most important ones.

“A strong ASEAN, an ASEAN marked by all the visions that we have in terms of the community, is also in the vital interests of Indonesia,” Foreign Minister Marty Natalegawa said recently.

While assuming the ASEAN Chair for 2011, Indonesia, the home to the world’s largest Muslim population, had set a clear agenda with priority goals — to ensure progress in the implementation of the blueprints for building the ASEAN Community by 2015, based on three main pillars of ASEAN Political-Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community, and to elevate ASEAN’s role in the regional architecture as well as to develop an ASEAN Vision Beyond 2015 in a global community of nations.

In an effort to take ASEAN to new heights, Indonesia unveiled its new baby: the “ASEAN Community in a Global Community of Nations” as its theme for its ASEAN chairmanship in 2011. This raised the eyebrows of experts in not only ASEAN countries but also other countries.

Why ASEAN should assume the role of global game-changer now?

In the realm of 21st century international relations, especially with the rise of China and India, the epicenter of the global economic, political and security gravity has been moving toward East Asia while the world’s lonely super power and the so-called old powers in Europe are on a losing streak, thanks to the mountains of debt, aging population and sky-rocketing unemployment rates.

The fast-changing dynamics of this power shift have made existing challenges, in the words of Foreign Ministry’s director for dialog-partners and inter-regional cooperation Jose Antonio Morato, “complex, multi-faceted and transnational”.

“Now global issues are interdependent and interlinked, as a solution to one affects others,” Jose said.

In order to meet these complex challenges, Indonesia considers that ASEAN, which is aiming to becoming a community four years from now, should not wait until 2015 to engage the global community because the situation is changing very fast.

With its strategic location, abundant natural resources, quality human resources and growing economies, ASEAN has gained strategic weight and drawn the attention of global players. More countries are knocking on the doors of ASEAN either to join the East Asia Summit or to become dialog partners. The US and Japan had appointed their first ever resident ambassadors to ASEAN. So far 55 countries across the globe have appointed their envoys to the regional grouping and this number is growing every month.

All these indicators point toward a newly evolving regional architecture. As a responsible regional power, ASEAN, according to Indonesia, must be in the driving seat. This was also strongly supported by the ASEAN chief executive.

“ASEAN is the fulcrum of the evolving regional architecture. The centrality of the ASEAN is very important,” ASEAN Secretary-General Surin Pitsuwan said during the recent “Moving ASEAN Community Forward into 2015 and Beyond” symposium, jointly organized by the government of Indonesia, Economic Research Institute for ASEAN and East Asia (ERIA) and Harvard University, in Jakarta.

In order to maintain its centrality in the evolving regional architecture, ASEAN should set its agenda now for beyond 2015 and design a roadmap for a global role.

Indonesia put forward a new concept called “dynamic equilibrium” in the region by extending the membership to the U.S. and Russia in the East Asia Summit. For the first time leaders of these two major powers will attend the next week’s East Summit. Earlier also it brought in another Asian powerhouse India, as well as Australia and New Zealand.

Though ASEAN is poised to become a community, single market and production base by 2015, currently member states have been acting individually on global issues at international fora.

The main objective of Indonesia’s ASEAN chairmanship theme is to create a common political platform for member states to deal with global issues. This will boost ASEAN’s stature and bargaining position in international bodies like the United Nations and its related bodies, World Trade Organizations, G20, Asia-Europe Meeting (ASEM), Asia-Pacific Economic Cooperation (APEC), the Organization of the Islamic Conference (OIC) and so on.

ASEAN, under the chairmanship of Indonesia, is also mulling a Strategic Partnership agreement, an early-harvest document, with the United Nations in Bali next week.

As a peace-loving nation, Indonesia has proposed a regional conflict resolution mechanism. It won kudos from the United Nations for playing an honest broker’s role in the recent spat between Thailand and Cambodia. There is also a plan to establish the ASEAN Institute for Peace and Reconciliation.

In order to address the on going South China Sea dispute, in which China claims the whole area while ASEAN members like, Brunei, the Philippines and Vietnam have claims on certain parts of the resource rich sea area, Indonesia convinced China to have a code of conduct among the claimants. As a result all the claimants signed the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea and the recent guidelines to honor the agreement.

All these Indonesia’s peace efforts won the praise from none other than U.S. Secretary of State Hillary Clinton.

“Within ASEAN, Indonesia has also played a leading role, Indonesia has initiated efforts to resolve the Thai-Cambodia border dispute, facilitated discussion on South China Sea issues, and supported genuine reform in Burma (also known as Myanmar),” Hillary told the Strategic Review journal, a Jakarta-based publication, in an interview.

With this background Indonesia unveiled the theme of “ASEAN Community in a Global Community of Nations” during its chairmanship. Though this goal will be achieved in 2022, preparations will begin now. There will be a declaration at the 19th ASEAN Summit, which will be known as the Bali Concord III, in Bali next week.

The main strategic objectives of the theme will be to advance ASEAN’s common interests and concerns at the global level, have a greater role as part of solutions to common challenges, and establish ASEAN as a reliable regional player in the global community of nations.

But it will not be an easy task to pool together such diverse ASEAN countries and to have a common perspective on global issues. If they put side their national interests for the sake of ASEAN unity, the organization will certainly progress and prosper.

In the words of ERIA chief economist Fukunari Kimura, the vision for ASEAN beyond 2015 must be to create “a dynamic, resilient, competitive, and sustainable regional economy, a globally connected, influential, important and engaged ASEAN and a thriving, equitable, and harmonious regional community”.

But the question is how to realize this vision and put ASEAN Community in a Global Community of Nations. Indonesia. Unity, cooperation, people’s participation and broad-mindedness among ASEAN members are the keys for ASEAN’s success. ASEAN’s largest economy, democracy and populous nation, must continuously provide an intellectual leadership to ASEAN whether it chairs ASEAN or not in the coming years.

Assessing Myanmar’s ASEAN chairmanship

Bambang Hartadi Nugroho, Jakarta | Thu, 11/17/2011 8:29 AM

Myanmar’s formal request to chair ASEAN in 2014 has sparked debate in the media. The government of Myanmar says it is now ready to take the opportunity to lead the organization, after passing up the opportunity to do so in 2006.

At that time, Myanmar said it needed to focus on managing domestic affairs, although it was widely believed that the decision was a result of a peer pressure from fellow ASEAN members and the rest of the international community.

Now that Myanmar submitted an official proposal to lead the organization, it is interesting to follow arguments that have arisen surrounding the issue. Many scholars and government officials have indicated a tendency to support Myanmar’s willingness to take the opportunity to chair ASEAN, believing that giving it this opportunity will serve as an incentive to continue and improve political reforms there.

Indonesian Foreign Minister Marty Natalegawa, acting as a representative of the current ASEAN chair, recently visited Myanmar to assess the country’s readiness to chair ASEAN. Apparently, the minister was quite impressed with the progress made by the present Myanmar government, and said the ongoing political reform in Myanmar was “irreversible”.

 Conversely, civil society groups and the ASEAN Inter-Parliamentary Myanmar Caucus (AIPMC) called for the postponement of Myanmar’s plea, doubting the government’s seriousness in its proposed transition to democracy.

Article 31, paragraph 1 of the ASEAN Charter reaffirms the traditional principle of alphabetical order in deciding the rotation for ASEAN chairmanship, stating that “The chairmanship of ASEAN shall rotate annually based on the alphabetical order of the English names of member states.”

Therefore, according to this rule, Myanmar should not become ASEAN Chair until 2016. This imperative, nonetheless, has never really been applied in the strictest manner. There have been several cases when members have requested to take the role earlier due to certain considerations, including this year’s Indonesian chairmanship.

Myanmar clearly also has its own reasons for requesting an earlier turn. One thing that might come to mind is the fact that 2014 is only one year before the implementation of the ASEAN Community in 2015, and Myanmar may want to take the opportunity to improve its political standing in the international arena.

Leading the organization in the vital stage of realizing this long-desired vision would undoubtedly be a prestigious position for any member. Looking at it from this point of view, Myanmar may want to prove it can also contribute something to the organization it joined in 1997.

Some promising developments have in fact taken place in Myanmar since the November 2010 elections. The new Myanmar administration under President Thein Sein was reported to have released around 200 political prisoners last month, an indication of its seriousness in implementing political reform. It also issued a new regulation giving workers the right to form associations and to strike.

However, despite the good news, roughly 2,000 political prisoners remain in jail in Myanmar, including key opposition actors. In addition to that, tension and conflicts involving several ethnic minorities also persist in the country.

In this regard, before granting Myanmar’s wish for an earlier chairmanship turn, ASEAN needs to take careful consideration, particularly because 2014 is a crucial year for the grouping in realizing the ASEAN Community by 2015.

Externally, ASEAN needs to consider the reaction from its dialogue partners toward the possibility, particularly the United States and the European Union, which have consistently pushed both ASEAN and Myanmar for political reform with respect to human rights. Internally, ASEAN must seriously consider whether Myanmar’s leadership in 2014 will disrupt its path toward the idea of a people-centered community.

A significant shift has been made by the Obama administration in its Myanmar policy. Unlike in the past, the US now has been more open and has been showing a softer approach toward the military junta.

US coordinator for policy on Myanmar Derek Mitchell, after his visit to the country last September, noted that there were indeed some encouraging signs toward political reform, but remained concerned about the political prisoners who were yet to be released.

Similarly, UN rights envoy Tomas Ojeo Quintana in August also underlined that there were still many serious human rights violations in Myanmar.

Both Mitchell’s and Quintana’s claims are reasonable, and may determine what kind of policy response will be issued by the US government. ASEAN, therefore, should be aware if its decision to endorse Myanmar’s proposal will trigger a strong reaction from the US and other dialogue partners as such moves have in the past.

Should they object and boycott Myanmar’s chairmanship, the continuity of ASEAN-initiated regional cooperation, such as the ARF and the EAS, would be put at risk. This, in turn, would also jeopardize ASEAN’s plan to “strengthen ASEAN centrality in regional cooperation and community-building” as laid out in the APSC blueprint.

Internally, it is also important to consider Myanmar’s commitment to put ASEAN’s vision to become a people-centered community into real action and policies. One among other aspects of this vision is the engagement between ASEAN and civil society, which can be represented by the ASEAN Civil Society Conference (ACSC).

During previous executions of ACSC, the Myanmar government has indicated strong objections toward civil society’s participation in the interface meeting between CSOs and the ASEAN leaders at the
Summit, both by rejecting the Myanmar CSO delegate and replacing it with a government-appointed representative.

With those matters at hand, ASEAN needs to undertake some serious considerations before the decision can be made at the 19th ASEAN Summit in Bali. In fact, it is difficult to make a good and objective assessment of Myanmar’s readiness to lead the organization in 2014, particularly because it has only been one year since the country began the political transition process. It would be wise, therefore, not to rush into the country’s chairmanship.

It would be better, both for ASEAN and for Myanmar, to give the Myanmar government and people time to focus on domestic political developments and to develop its capacity to lead a people-centered ASEAN.

In 2016, when Myanmar’s political transition and leadership capacity have achieved a higher and more stable level, there should be no more doubt for ASEAN to present the Myanmar people with their rightful opportunity to chair and lead the organization.

Difficulties in leading the Asia Pacific

Simon Tay, Singapore | Wed, 11/16/2011 8:38 AM

Leaders from Asia will soon be hosted by US President Barack Obama for the Asia Pacific Economic Cooperation (APEC) Summit in Hawaii. The gathering comes on the heels of the G20 Cannes meeting, preoccupied with the eurozone crisis. The East Asian Summit will soon follow, convened by ASEAN and including, for the first time, Russia and the USA.

What can this season of international summits do about the looming global downturn? Can Asia and the USA, sans Europeans, cooperate to tackle worsening economic conditions? Can Asia find ways to continue growth?

Expect no cure alls. Policy options have narrowed since the first coordinated efforts at end 2008 to pump in money and loosen credit. Those policies have run their course, with mixed results and increased political wash back.

In America, joblessness and inequalities run high and the Occupy Wall Street phenomenon shows the restive mood.

Asia suffers problems of overheating with inflation and mounting bad debts from loose credit. While relatively well, the region will be impacted by the European crisis and poor American prospects.

At the APEC Summit, a centerpiece will be the Trans-Pacific Partnership (TPP). This aims to reinvigorate trade and economic cooperation and, while only nine countries are involved, American participation has renewed energy and ambition. Japan wants to join future TPP negotiations and the TPP aims to include most other economies.

Not all about the TPP has however been positive. Some parties have resisted American initiatives to integrate more deeply and align regulations. Others outside the negotiations, especially China, have been critical of the effort.

A full agreement will not be ready. Instead, leaders are expected to sign off on a more limited declaration or framework text, with further negotiations to come.

Nevertheless, the TPP can be counted as an achievement, buttressing Obama’s promise to be a “Pacific President”.

Yet beyond Hawaii, the future focus for American leadership in Asia is uncertain. Come early 2012, President Obama faces the long and quite uncertain election trail.

Attention will necessarily shift, given erosions in his approval ratings. This APEC and the following East Asia Summit may prove something of a high point in President Obama’s efforts to engage Asia.

American domestic politics is raising issues that run counter to positive engagement. Free trade and closer ties with Asia will be an increasingly hard agenda to push with so many still jobless at home. The recent Senate bill naming China as a currency manipulator shows up this sentiment.

Although the bill is unlikely to pass, the accusations have spread to a number of presidential candidates. Leading republican contender Mitt Romney has, for instance, called for the US to clamp down on China, blaming the mainland for millions of lost jobs.

Positions on Asia and especially China are intertwining with domestic, electoral politics. Prepare for a bumpy ride. This is especially as Beijing seems unlikely to smooth things over. There is a growing confidence and assertiveness among the Chinese people and some of the political elite.

Beijing seems keen instead of finding its own place, driving the Asian economy while asserting first rights in disputes like the South China Sea.

Combined with an impending change in leadership, while moderates talk about working with the USA, few would gain from ceding ground to Washington, DC. Some might indeed gamble on sounding hawkish in the name of nationalism.

The USA can no longer lead on its own and neither can China. Yet prospects of a joint US-China leadership – once proposed as a G2 – looks like hopeless idealism. With leadership contests in both capitals, things may in fact soon get worse.

Other Asians thus face something of a tension at the coming Summits. They gravitate to China as just about the only remaining hope for continuing economic growth, while looking quite anxiously to the USA for strategic assurance.

Leaders may make grand statements but they can neither address the questions about global problems nor settle on the leadership to address such problems.

Diplomacy will dictate that the American and Chinese leaders will be photographed, smiling with their counterparts across the region, and shaking hands.

They would do well to do so while they can. Coming events will soon test their smiles and handshakes quite severely.

The writer is a chairman of the Singapore Institute of International Affairs and author of Asia Alone: The Dangerous Post Crisis Divide from America.

Thursday, November 17, 2011

Coping with Myanmar as ASEAN Chair

To the disappointment of many (including this author), ASEAN leaders have decided to let Myanmar become ASEAN chair in 2014.  Most critics disagree with “rewarding” the Myanmar regime for its reform efforts since the installation of an elected government.  I share some of those concerns, but as the focus of this blog is on the ASEAN Economic Community (AEC), I am much more concerned about the ability of a government which has relatively limited experience in international trade and finance matters to serve as ASEAN chair going into the final preparation year before the AEC takes effect in 2015. 

In any event, the ASEAN leadership has spoken.  The question is how everyone else, in particular the critics of the Myanmar regime, should react. 

First, those concerned about the development of ASEAN’s three pillars of regional cooperation (political-security, economic and socio-cultural) should not allow disappointment to overwhelm their support for the regional bloc.  At some point Myanmar was going to become ASEAN chair, if not in 2014, then in 2016 as per the alphabetical rotation system (the 2014 bid arose because Myanmar invoked its having deferred its previous spot in the rotation).  The West, in particular the United States, needs a fully developed ASEAN to stabilize the region politically and economically.  By and large, the West has understood this and avoided counterproductive outbursts regarding ASEAN’s decision.

As a result of ASEAN’s decision, the West needs to adjust its Burma sanctions accordingly.  Aid intended to assist ASEAN with economic integration should be allowed to support Myanmar’s participation both in the AEC and the greater world economy.    This is important because much of the ASEAN Secretariat’s functions are supported by aid from the West; continued blocks on applying that aid to help Myanmar cope with economic integration will drag down AEC formation, particularly with Myanmar as ASEAN chair.  Furthermore, sanctions which are in some cases overbroadly written should be trimmed back to allow the business community to explore appropriate economic opportunities in Myanmar.  That doesn’t mean that all sanctions should be dropped, only that those sanctions which are counterproductive either to the regional goal of ASEAN economic integration or the national goal of improving the lot of the Burmese people should be dialed back.

ASEAN, for its part, needs to take measures to ensure that having Myanmar as ASEAN chair does not adversely impact regional integration.  Now more than ever, it is imperative that the next ASEAN Secretary-General have some economics background, for Myanmar as ASEAN chair is not going to provide economic leadership during 2014.   ASEAN countries will have to step up their leadership roles within the grouping to make up for this capacity deficit.  The ASEAN Secretariat also needs institutional strengthening to help the Secretary General and chairs.   Finally, ASEAN needs to maintain scrutiny on reforms in Myanmar and be prepared to delay Myanmar’s chairmanship term to 2016 or later if necessary; this will require having Indonesia or another member serve as mentor/backup chair.

Finally, critics of the Myanmar regime’s politics and treatment of ethnic and religious minorities will be disappointed with this decision.  However, they should also understand that the ASEAN chair decision has handed them another arena for pressuring the Myanmar regime.  For example, the debate on whether the U.S. president should attend an East Asia Summit in Naypidaw in 2014 will provide additional opportunities for discussing the plight of the Burmese people.  Furthermore, although the reform efforts in Myanmar are not optimal, they should still be met by appropriate steps; allowing aid to support Myanmar’s economic integration would be such a step.

Thus, the decision on Myanmar as ASEAN chair has closed, yet opened up another set of problems and opportunities for the region.  This requires that ASEAN redouble its efforts on regional integration, and ensure that having Myanmar as ASEAN chair does not serve as a permanent distraction or millstone around those efforts.  Similarly, ASEAN leaders need to recognize that the concerns of the West need to be met by holding Myanmar under continued scrutiny.   Finally, the Myanmar regime should continue its political and economic reforms to ensure that the country fully participates in the regional and world community.

Thursday, November 10, 2011

Taking Incremental Steps Towards the AEC

In today’s post, we examine recent incremental steps taken by ASEAN to realize the ASEAN Economic Community.  Considered separately, each step may not seem like much. However, taken as a whole, they evidence active foundation-building at various levels in ASEAN.

Statistics --  ASEAN announced the formation of an ASEAN Community Statistical Committee (ACSS) composed of chief statisticians and heads of government statistical offices. This may be perhaps the most prosaic yet most important development.  Without accurate and meaningful statistical data, policymakers and economic actors in ASEAN cannot conduct proper analyses and make appropriate decisions.  Current economic data collection is difficult in certain ASEAN members and certain sectors, even for the ASEAN Secretariat.  Statistics have even been a diplomatic issue between ASEAN members in the past, such as regarding bilateral trade between Singapore and Indonesia.   Hence formation of the ACSS is a big step towards economic integration.

Common Visa -- ASEAN announced that it was studying a common tourist visa for the region.  A common tourist visa essentially amounts to an ASEAN Single Window for tourists (just as freedom of movement for ASEAN nationals would require a similar effort).  This will require significant upgrades to the intergovernmental operating system in ASEAN.   As I’ve discussed before, operational linkages for the region, such as the ASEAN Single Window for goods, are inconsistently implemented. Yet improving the intra-ASEAN flow of people and goods will bring major benefits to the region, particularly as it eyes a soccer World Cup bid.     Perhaps the region’s latent soccer-mania is the necessary motivation for improvements.

Education --  the ASEAN University Network has started discussing the harmonization of academic calendars; Thailand, the Philippines and Myanmar start their academic years in June while most ASEAN universities start their years in September.  An academic credit transfer system and increased use of English should also help students move around the region and learn more about their fellow ASEAN citizens.   This level of cooperation is noteworthy, particularly given the great disparity among academic institutions that would normally cause jealousies and resentments. 

Legal – ASEAN law ministers met and signed off on the Terms of Reference and the Rules of Procedure of the Advisory Panel to advise ASEAN Member States on matters relating to the adoption and implementation of the UNCITRAL Model Law on International Commercial Arbitration.  Harmonization of commercial arbitration will encourage further trade with ASEAN members with less-developed judicial systems and reduce the costs and burdens of dispute resolution.   Progress on a Treaty on the Abolishment of the requirement for Legalisation of Foreign Public Documents among ASEAN Member States, examining modalities for harmonization of ASEAN trade laws, the progressive liberalization of trade in legal services in ASEAN, and proposals for a model law on maritime security and uniform laws on legalization of documents were also discussed by the ASEAN law ministers.  Progress on all of these issues would be welcomed by the business community.

All in all, ASEAN took many incremental steps in forwarding the AEC, particularly during the run-up to the APEC Hawaii meeting and the East Asia Summit in Bali. Continued scrutiny and advocacy will be required to ensure that they lead to real progress.  

Tuesday, November 8, 2011

Patience Required for America's Positive Outreach to ASEAN

Last week the U.S.  moved forward with two steps for engaging with ASEAN, with the U.S. Congress finally passing legislation to implement the Asia Pacific Economic Cooperation (APEC) Business Travel Card, and U.S. business and policy leaders issuing a framework for future U.S. relations with ASEAN.   Both developments should be welcomed, even though the former required more than a decade to get passed and the latter may take even longer.

The APEC business travel card was first implemented in 1997, with 18 APEC members  now fully applying the card.  The card allows businesspeople access to expedited travel lanes, without the need for country-specific visas. The card represents more than just shorter immigration lines for businesspeople. Rather, it represents a basic commitment to reduce regulatory barriers to trade and investment, in this case, immigration.    That’s positive.   What’s negative is that it required more than a decade to get the travel card adopted and implemented by the U.S.

Unfortunately, the card is only the latest example of the slow motion of U.S. trade and investment policy at the moment.  This was also demonstrated by the 4+ years needed to get the Korea-U.S. free trade agreement through Congress earlier this year. 

It was with that sanguine view of domestic U.S. politics that the U.S.-ASEAN Strategy Commission at the Center for Strategic and International Studies (CSIS) issued a set of proposals for advancing U.S. policy in southeast Asia.  The Commission recommended several measures, including the negotiation of a U.S.-ASEAN free trade agreement (FTA) and a presidential or vice-presidential level business promotion campaign through the region.  The report acknowledged that the current U.S. Burma sanctions prevented any immediate start to FTA talks, but that a U.S.-ASEAN FTA should be established as a long-term goal.

Given the state of U.S. trade politics, “long-term” is an understatement.  Besides Burma policy, divisions between the Democrats and Republicans mean that any trade initiative will not make any meaningful progress until after the 2012 elections, and perhaps only with one party taking over both the White House and Congress.  That’s possible, particularly if President Obama’s re-election campaign fails and the Republicans re-take the Senate as expected (when the Democrats had both Congress and the White House in 2009-2011, TPA and other trade issues were not a priority).  In all likelihood only then would Congress delegate “trade promotion authority” (TPA) to the President to negotiate a comprehensive FTA; the lack of TPA affects the Trans Pacific Partnership (TPP) negotiations, although the Obama administration states that it can overcome this legislative hurdle. 

Nevertheless, the CSIS recommendations correctly postulate that the TPP is an imperfect substitute for a U.S.-ASEAN FTA.  The TPP is the potential basis for a Free Trade Area of the Asia Pacific, but as a result, the TPP talks are being conducted with one eye towards China, complicating matters.  U.S.-ASEAN FTA talks, on the other hand, can focus exclusively on issues related directly to southeast Asia and the United States.

That does not mean that U.S.-ASEAN FTA talks would be uneventful. Besides Burma sanctions, the broad agenda for any U.S. FTA negotiations (going beyond the scope of FTAs that ASEAN has with China, Japan, Korea, Australia, India and New Zealand) would be controversial within ASEAN.  Thailand and Malaysia would have to revisit issues that derailed their own bilateral FTA talks with the U.S., and Indonesia and the Philippines would have to face serious market access issues in their own countries.  These issues, along with the less-developed nature of the ASEAN institutions, stalled the EU-ASEAN FTA talks, forcing the EU into bilateral FTA negotiations while maintaining the eventual goal of an ASEAN-level FTA.  In all likelihood, the U.S. may have to pursue a similar approach.

Both developments are positive and should cheer U.S. supporters of the region.  They are reminders that the United States remains committed to Asia Pacific and ASEAN in particular, even if one must be very, very patient. 

Friday, October 28, 2011

Injecting Business Acumen into ASEAN's Leadership

Yesterday CIMB Bank head Nazir Razak, the chief organizer of the ASEAN Business Club (ABC) and supporter of the CIMB Asean Research Institute (CARI),* proposed that the next ASEAN Secretary-General come from the corporate sector in order to support development of the ASEAN Economic Community.  According to the Bernama news service, ASEAN needs “someone who can really shake things up.”   Although Datuk Seri Nazir’s proposal has almost no chance of being adopted in its entirety, it is exactly the kind of input that the business community needs to contribute to ASEAN and it needs to be adopted in some form. 

ASEAN Secretary-General Surin Pitsuwan’s term ends at the end of next year.  Being a former Thai Deputy Prime Minister and Foreign Minister, Dr. Surin has instilled greater political and diplomatic prestige to the position, and by extension, to the ASEAN Secretariat.  Dr. Surin has succeeded in his immediate and primary task, the full implementation of the ASEAN Charter.

The current crucial task is to implement the AEC fully within the region by 2015. Datuk Seri Nazir correctly identifies the need to have the next ASEAN Secretary-General be someone who understands the corporate community.   A Secretary-General with direct corporate experience will have greater appreciation of the aspirations and frustrations of the ASEAN business community, especially the lack of development in ASEAN’s institutions.  There is no shortage of ministers and former ministers with business experience in Indonesia, Malaysia, the Philippines, Singapore and Thailand who are well-qualified to serve as ASEAN Secretary-General.

Unfortunately, Article 11.1 of the Charter requires that the next ASEAN Secretary-General must come from Vietnam, the country next in alphabetical order after Thailand.  Because Vietnam is relatively new to international commerce, it has not developed the pool of ministerial level candidates who also have business experience.  Fortunately, Vietnam is both an eager supporter of globalization and of ASEAN, so I remain confident that it will put forward a suitable candidate experienced from Vietnam’s WTO accession negotiations and implementation, if Vietnam correctly understands that ASEAN’s current great task is economic integration, and not necessarily resolving the South China Sea/Spratly Islands dispute.    Such a candidate will be able to appreciate the business community’s needs, even if she or he does not have first-hand corporate experience.

Nevertheless, ASEAN can still follow through on Datuk Seri Nazir’s proposal by selecting one of the Deputy Secretary Generals from the corporate community.  There are 4 Deputy Secretary Generals, 2 of which are chosen competitively and 2 of which are chosen through the alphabetical rotation system.   The current Deputy Secretary General for the AEC,  S. Pushpanathan, is a veteran of the ASEAN Secretariat and has done admirably.  However, he and the ASEAN Secretariat would benefit from the input of corporate experience.

In any event, Datuk Seri Nazir’s proposal is exactly the type of provocative proposal that the ABC and CARI should put forth.  Full development of the AEC requires active and constructive input from the ASEAN business community, and I hope that the ABC and CARI will continue to provide such input.

*CARI has republished some of my AEC blog articles. This article, as is the case for all of my articles, represents my personal opinion and not that of CARI or any other direct or indirect affiliation of mine.

Tuesday, October 18, 2011

ASEAN Economic Ministers Lay Down a Marker for FTA Negotiations

ASEAN Economic Ministers at their informal retreat in Kuala Lumpur last weekend prepared a draft framework of general principles regarding ASEAN’s future participation in free trade agreement (FTA) talks, including a broader free trade agreement of the Asia-Pacific.  According to Kyodo News, the “ASEAN Framework for a Comprehensive Regional Economic Partnership” commits ASEAN to pursuing FTAs that include general principles such as differential treatment for Cambodia, Laos, Myanmar and Vietnam (CLMV countries), transparency, economic and technical cooperation, trade and investment facilitation, and consistency with the group’s plans for the ASEAN Economic Community (AEC). 

The importance of this draft framework lies more in its timing rather than its substance, other than the requirement of differential treatment for CLMV countries (which is embodied throughout ASEAN’s economic agreements).  The other general principles are positive and should be incorporated as best practices in any FTA. 

Rather, the announcement of the draft framework represents a marker thrown down by ASEAN to remind its trading partners of the regional bloc’s importance.

For the United States, the draft framework indicates that ASEAN does not view the Trans Pacific Partnership (TPP) as a substitute for a broader US-ASEAN FTA.  Progress in the TPP talks, perhaps even the announcement of an agreement in principle, is quite possible by the November 2011 APEC summit in Hawaii.  Yet the TPP only involves four ASEAN members (Brunei, Malaysia, Singapore and Vietnam) and issues particularly relevant to Vietnam (state-owned enterprises, textiles) have been quite difficult.  The draft ASEAN framework serves to remind the United States that ASEAN has alternatives, and that the grouping wants to be considered as a whole (even if US Burma sanctions would prevent this).

For the EU, the draft framework is a reminder that ASEAN does not consider EU-ASEAN FTA talks to be ended, merely suspended.  The EU suspended talks in favor of bilateral FTA negotiations with Singapore, Malaysia and Indonesia, with the EU claiming that a lack of institutional development in ASEAN and the EU’s own Burma sanctions prevented negotiations on a bloc-to-bloc basis.  With the EU and Singapore expected to announce successful FTA talks any time, the ASEAN framework reminds the EU that the other ASEAN members still want a broader agreement, but perhaps with a scope narrower than the EU would like but which would be more consistent with ASEAN’s existing FTAs with Australia, New Zealand, China, India, Japan and Korea.

For those other Asia-Pacific partners, the draft framework indicates that ASEAN wants to remain at the center of any discussions of a FTA of the Asia Pacific.  ASEAN sources indicated that the framework would be the group’s preferred initial focus of future FTA discussions in the Asia Pacific, rather than the joint China-Japan FTA study program presented to the ASEAN Economic Ministers meeting in Manado in August 2011.

For India, the draft framework demonstrates that ASEAN is not satisfied with the status quo in the ASEAN-India FTA (AIFTA). AIFTA currently only covers trade in goods (and even then in an incomplete way, as there remain gaps such as on product-specific rules of origin).  Last week ASEAN and India engaged in another round of AIFTA talks regarding trade in services, which has proven difficult to resolve, despite the fact that the other ASEAN-level FTAs have included at least goods and services and in some cases, investment.

Thus, the ASEAN Economic Ministers are using the draft framework as indicator of how the group will address future developments in its FTA efforts with trading partners.  The framework expresses a willingness to negotiate but on terms that are acceptable to the entire grouping, and in a manner consistent with ASEAN’s current program to implement the AEC.   Whether ASEAN’s trading partners will heed the different messages conveyed by the FTA framework remains to be seen in the weeks