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45. AFTA and the Politics of Regional Economic Co-operation
- ISEAS–Yusof Ishak Institute
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AFTA and the Politics of Regional Economic Co-operation 205 By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville 45. AFTA AND THE POLITICS OF REGIONAL ECONOMIC CO-OPERATION RICHARD STUBBS Reprinted in abridged form from Richard Stubbs, “Signing on to Liberalization: AFTA and the Politics of Regional Economic Cooperation”, Pacific Review 13, no. 2 (2000): 297–318, by permission of the author and Taylor and Francis Limited . THE REDEDICATION TO AFTA’S GOALS There were three levels at which there was cause for concern that AFTA might be derailed. First, at the level of the ASEAN leadership, advocates of the agreement were worried that changes at the top would jeopardize the implementation stage. This fear was highlighted in Thailand when, after the March 1992 elections, the traumatic events of the middle-class revolt of May, and the elections of September, the government of Chuan Leekpai took office and forced a postponement of an AFTA Ministerial Council meeting that was to have taken place in Manila in October 1992. With Anand gone and Chuan’s pro-business government supported by cash-driven politicians back in firm control, Thailand, once AFTA’s sponsor, became much more cautious. Local business interests, which sponsored a number of Chuan’s political supporters; AFTA sceptics; and economic nationalists more generally, began to raise their objections. Concern was also expressed that President Aquino’s successor, Fidel Ramos, would not be able to hold the Philippines to the original 1992 summit agreement. AFTA advocates were troubled by the fact that Ramos had won power with only 23.4 per cent of the popular vote in the May 1992 elections and that, rather like his predecessor, he was widely thought to lack the political will to assert the strong leadership that such a major foreign economic policy initiative as AFTA required. With two of the six summit signatories gone within twelve months, the region’s commitment to AFTA came into question. The second level at which AFTA could be sidetracked was within the bureaucracies of the key economies. While the agreement had been worked out and agreed to at the senior ministerial levels of the ASEAN governments, the responsibility for implementing AFTA lay with those at the directorgeneral level and below. Many of these individuals had strong economic nationalist instincts (Narongchai and Stifel 1992: 40). It was here that what Jusuf Wanandi, an Indonesian commentator, has described as 045 AR Ch 45 22/9/03, 12:48 PM 205 206 Richard Stubbs By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville the ‘vested interests of the bureaucracy’ were able to exert their influence (Business Times [Singapore], 25 April 1992). As the Malaysian minister for international trade and industry, Rafidah Aziz, noted, with more than 45,000 different tariff lines to be considered the economic nationalists and cautious bureaucrats with links to importsubstitution industries, or sympathetic to small firms seeking protection from large foreign corporations, had plenty of opportunities to delay the implementation process (Business Times [Singapore], 26 May 1993; Straits Times [Singapore], 23 August 1993). Finally, of course, there were the industries and industrial sectors that would be put at a disadvantage by AFTA. A steady stream of the AFTA ‘losers’ came forward during 1992 and 1993. Thailand’s petrochemical industry was one of the first to formally petition its government for exclusion from AFTA, citing unfair competition from more established producers in Singapore. Other sectors of the Thai economy, such as electronic parts and components and plastics products — both on the ‘fast track’ — soon followed suit. At least initially the Thai government was very sympathetic (Straits Times [Singapore], 10 December 1992). In the Philippines the textile — a ‘fast track’ product group — apparel, footwear, and iron and steel industries all thought of themselves as being put at a major disadvantage by AFTA. They appealed to their government for protection (Azarcon and Tecson 1995: 43–4). In Malaysia even the finance minister, Anwar Ibrahim, who was very sympathetic to the liberal reformers’ cause, expressed concern that recently privatized companies might need protection from more advanced competitors. In particular, he noted that with Malaysia developing its own car, the Proton Saga, the automobile industry was in need of exemption from AFTA. A similar dispensation was sought for Malaysia’s petrochemical industry. Like its Thai counterpart, it was viewed as being at a major disadvantage in the face of imports from Singapore. And in Indonesia, which was of special...