The Foundation of the ASEAN Economic Community: An Institutional and Legal Profile by Stefano Inama, Edmund W. Sim (review)

The book provides a critical review of the current state of institutions and legal instruments of the Association of Southeast Asian Nations (ASEAN) with regards to establishing the ASEAN Economic Community (AEC). The analysis was done by examining existing agreements and institutional arrangements in support of the AEC and comparing them with the North American Free Trade Area (NAFTA) and the European Union (EU), currently the most well-known integration models around the globe. While the EU has well-developed supra-regional institutions tasked to ensure implementation of and compliance with agreements in the regional bloc, and NAFTA has detailed agreements and strong dispute resolution mechanisms and processes that implement the agreements, the authors conclude that ASEAN institutions are not sufficiently developed to implement agreements among member countries. The available legal instruments also fall short of providing the foundations necessary to establish the AEC. As highlighted in the various chapters of the book, these deficiencies make it difficult for ASEAN to achieve its goal of economic integration and thus a single market and production base.

The five chapters of the book are well written and provide an interesting read. Chapter 1 highlights the need to prioritize the goals of economic integration. The authors argue that creating a single market is currently unrealistic, given the economic disparities among the ASEAN members and their reluctance to relinquish some of their sovereignty necessary to administer and regulate a single market. It should therefore not be a priority goal in the near to medium term. On the other hand, creating a single production base is a more feasible goal as the measures to achieve it are less problematic, at least politically. This was shown by the success of the global production networks of the electronics and car manufacturing industries operating in the region, even before economic integration efforts were formalized through government agreements. The authors’ analysis was supported by their detailed examination of the relevant ASEAN agreements in Chapter 3.

Chapter 2 traces the origins of ASEAN by providing a brief overview of the 1967 Bangkok Declaration that established ASEAN and succeeding economic agreements leading to the establishment of the AEC. The review covers the following: (i) ASEAN Charter, which transitioned ASEAN from an informal grouping into a rules-based organization; (ii) ASEAN Trade in Goods (ATIGA) with the ASEAN Free Trade Area (AFTA) as its foundation; (iii) ASEAN Comprehensive Agreement (ACIA) that replaced the Framework Agreement on the ASEAN Investment Area (AIA) and the ASEAN Agreement for the Promotion and Protection of Investment; (iv) ASEAN Framework Agreement on Services (AFAS); and (v) ASEAN Protocol on Enhanced Dispute Settlement Mechanism (EDSM).

The overview could have been enhanced if the shift and progress in diplomatic focus from a group of nations with purely geo-political objectives to a regional economic bloc was presented in the context of market-driven economic integration. Historically, this defined the region and distinguished AEC from the origins of EU and NAFTA. Likewise, as an overview chapter, it failed to emphasize that the ASEAN’s consensus-building approach is both its strength and weakness. This is its strength because the approach works best for a very diverse grouping with different levels of economic development and maturity of democracy. However, this is also its weakness because the approach limits and delays the attainment of ASEAN goals.

Chapter 3 contains the main contribution of the authors to the existing body of literature on AEC. It contains an analysis of the textual details of the ASEAN agreements. By comparing them with the relevant counterpart agreements in the EU and NAFTA, the shortcomings and weaknesses of the legal texts of ASEAN agreements are analysed.

Based on their analysis, the authors conclude that the legal instruments of ASEAN do not match the goals of a single production base, much less a single market. Many of the rules and practices are deficient. As an example...