An APEC Trade Agenda?: The Political Economy of a Free Trade Area of the Asia-Pacific

8. ASEAN Perspective on Promoting Regional and Global Freer Trade

190 Chia Siow Yue and Hadi Soesastro 8 ASEAN Perspective on Promoting Regional and Global Freer Trade Chia Siow Yue and Hadi Soesastro I. INTRODUCTION ASEAN provides a “reality check” for regionalism in East Asia and the wider Asia-Pacific region. It can suggest the kind of regional cooperation that can be promoted and the extent to which regional integration can be deepened. Two points need to be made at the outset. The first is that the ASEAN region consists of a diverse set of countries, some of which have gained independence and sovereignty only within the previous generation. There are major gaps in their economic capabilities, and some have begun to open up economic and political systems only in the last decade. And yet, they have come together and committed themselves to the creation of an ASEAN Community. The second is that ASEAN has been engaged in efforts to promote cooperation and community building with other nations in the wider regional context of East Asia and the Asia-Pacific region, both bilaterally through regular exchanges with Dialogue Partners and regionally in the ASEAN Plus Three (APT), the ASEAN Regional Forum (ARF), the 08 FTAAP Ch 8 6/7/07, 10:14 AM 190 ASEAN Perspective on Promoting Regional and Global Freer Trade 191 Asia Pacific Economic Cooperation (APEC) process, and even interregionally with Europe through the Asia Europe Meeting (ASEM) and Latin America through the Forum for EastAsia Latin America Cooperation (FEALAC). These interactions have an impact on ASEAN cooperation, and have also resulted in dynamic developments in the wider region. I.1. ASEAN Style of Regionalism In Asia, ASEAN is the first attempt at regional community building. ASEAN is an ongoing experiment in community building. It began in 1967 as a regional cooperation arrangement to promote welfare and peace in Southeast Asia. In that sense, it was based on some vision of regional order and regional community. Building this regional community began with some modesty. The regional arrangement sought to promote cooperation in the economic and social fields. This was understandable. The region had just opened up a new page in its history. Having gained independence and having experienced continued internal turmoil for about two decades, and more importantly, having ended political animosities, the five original members of ASEAN embarked on the path of community building by taking steps to learn more about each other and to learn to live together in harmony and peace. It took these countries almost a decade to bring their leaders together for the first Summit meeting. That happened in 1976 in Bali. From then on, several concrete cooperation programmes were introduced. They included the ASEAN Industrial Projects (AIP), the ASEAN Preferential Trading Arrangement (PTA), ASEAN Industrial Joint Venture (AIJV), and ASEAN Industrial Cooperation (AICO), to name some of the more important programmes. ASEAN members began to learn how to cooperate and work together to achieve some common objectives. They were prepared to pool their resources, but they were unprepared to share their markets. Therefore, there were continuing tensions between “resource pooling” and “market sharing” in implementing and upgrading the cooperation programmes. As a result, not much progress was achieved in the field of economic cooperation. ASEAN’s founding fathers did not envision the economic integration of the region. In their view, that was a remote possibility, perhaps even an impossibility. However, gradually regional economies became more integrated. It was the remarkable economic growth of regional countries 08 FTAAP Ch 8 6/7/07, 10:14 AM 191 192 Chia Siow Yue and Hadi Soesastro and gradual economic reform and opening up that greatly increased their economic interactions. This was not a direct result of ASEAN economic cooperation programmes. Rather, the region saw the working of “marketdriven ” integration. This market-driven integration was not independent of developments in the political field and the intensification of ASEAN external relations. As the region turned into an ocean of stability and peace, thanks to the establishment of the regional forum, national governments were able to concentrate on national economic development. In the two decades until the middle of the 1990s, the region was growing at an average rate of 7 per cent or more. This made the region even more attractive for trade relations with and investment from other parts of the world. The wave of Japanese foreign direct investment (FDI) following the Plaza Accord in 1985 further deepened the development of regional production...