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104. Institutional Reforms to Achieve ASEAN Market Integration
- ISEAS–Yusof Ishak Institute
- Chapter
- Additional Information
Institutional Reforms to Achieve ASEAN Market Integration 509 By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville 104. INSTITUTIONAL REFORMS TO ACHIEVE ASEAN MARKET INTEGRATION NARONGCHAI AKRASANEE and JUTAMAS ARUNANONDCHAI Reprinted in abridged form with slight amendment from Narongchai Akrasanee and Jutamas Arunanondchai, “The Minimum Institutional Reform to Make ASEAN Economic Integration a Reality”, Paper prepared for the ASEAN Roundtable 2003 on “Roadmap to an ASEAN Economic Community”, Institute of Southeast Asian Studies, Singapore, on 20–21 August 2003, by permission of the authors and the Institute of Southeast Asian Studies. So far, the ASEAN Dispute Settlement Mechanism has failed to resolve trade disputes due to its inability to enforce agreements. Currently, the ASEAN institution also lacks well-defined regulations to safeguard the interest of producers, investors and consumers. This is likely to become more problematic as economic integration deepens. ASEAN needs an effective jurisdiction process. Moreover, it needs investment regulations, competition and consumer protection rules to provide a transparent framework for conflict resolutions. While trade dispute cases should be resolved through a jurisdiction process, with the help of the AFTA Council, non disputerelated cases should be left to the ASEAN Secretariat. Thus in addition to its role as a facilitator and coordinator for the implementation of ASEAN agreements and plans, the ASEAN Secretariat should be given the power to caution members who fail to implement the necessary reforms. We concentrate on two ASEAN institutions that play a key role in the implementation and coordination of ASEAN agreements, namely the Dispute Settlement Mechanism and the ASEAN Secretariat. We take a look at each of these in turn in this section. There are several reasons why the EU institutional arrangement provides a particularly useful reference for ASEAN in its quest for a successful economic integration: — Firstly, apart from the EU, no other regional trade agreement has tried to achieve as deep an economic integration as what ASEAN is aiming for. — Secondly, unlike ANCERTA and NAFTA where there are obvious economically dominant members in the agreement, 104 AR Ch 104 22/9/03, 1:03 PM 509 510 Narongchai Akrasanee and Jutamas Arunanondchai By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville several countries in ASEAN are of similar sizes and stages of development, e.g. Malaysia, Thailand, Philippines and Indonesia. This characteristic also applies to the EU bloc, with Britain, France and Germany being in the league. While embracing all aspects of the EU institution is politically unfeasible and is unnecessary, a supra-national ASEAN Court is the one thing that the ASEAN economic integration process cannot do without. ASEAN DISPUTE SETTLEMENT MECHANISM It is well known that the WTO Dispute Settlement Mechanism is extremely weak as an enforcement mechanism. The WTO Dispute Settlement Mechanism as modeled in NAFTA and used by ANCERTA is more suitable for a smaller trade bloc. This is because sanctioned retaliation, the ultimate penalty in these agreements, hurts most when the trade bloc is small and trade is concentrated between a few members. As mentioned earlier, the ASEAN Dispute Settlement Mechanism has been unable to uphold formerly ratified agreements. This is partly due to the tendency of the AEM, which has the highest authority on economic matters, to accommodate political interests of member states. This points to the need for a supra-national body who is prepared to exercise jurisprudence over ASEAN and to uphold agreements signed by ASEAN members. In addition, a centralized judicial body has the ability to organize a concerted effort to impose more severe penalty on the country that is found guilty of failing to fulfil its commitment. For example, it could enlist other ASEAN countries to suspend preferential trade arrangement for the nonconformist member. Although, this would not be credible if the cost on the enforcers of imposing such penalty is too high. The supra-national ASEAN court could thus learn from the Court of Justice of the EU. The latter has the authority to ensure that Community law is effectively applied, i.e. it solves disputes involving Member States, EU institutions, businesses and individuals. There are several categories of proceedings under the European Court of Justice, namely: (i) the preliminary ruling procedure; (ii) the proceedings for the failure to fulfil an obligation; (iii) the proceedings for annulment; and (iv) the proceedings for the failure to act. The preliminary ruling is a cooperation between the National Courts and the Court of Justice. If a member state fails to fulfil...