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71. EU-ASEAN Relationship
- ISEAS–Yusof Ishak Institute
- Chapter
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354 Djisman S. Simandjuntak By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville 71. EU-ASEAN RELATIONSHIP DJISMAN S. SIMANDJUNTAK Reprinted in abridged form from Djisman S. Simandjuntak, “EU-ASEAN Relationship: Trends and Issues”, in ASEAN and the New Asia: Issues and Trends, edited by Chia Siow Yue and Marcello Pacini (Singapore: Institute of Southeast Asian Studies, 1997), pp. 92–117, by permission of the author and the publisher. FORCES OF ‘COMPLEXIFICATION’ Regional integration or co-operation is not an end in itself. A preferential reduction of barriers to trade was originally designed as a fall-back position when in the early part of the twentieth century Europe was unable to push along progress in non-discriminatory liberalization, and unilateral liberalization was avoided for reasons related to freeriding . Had unilateral liberalization and multilateral liberalization worked effectively, regional integration would have lost much of its relevance. Co-operation of a functional type would also have replaced preferential trading arrangement as the core of regional integration. The 1980s and 1990s may be recorded in history as a golden period of liberalization. Since the announcement of Margaret Thatcher’s ‘big bang’ in the mid-1970s governments in nearly all corners of the globe have followed the basic policy direction in favour of greater openness. Crossborder barriers to the flows of goods, services , capital, and people were reduced, though the reasons vary from one country to another. Any time a major deregulation is announced in one country, other countries are affected and forced to come up with deregulation programmes of their own. This policy convergence across countries must have had a favourable effect on the completion of the Uruguay Round which in turn resulted in another major cut of trade barriers and, thereby, makes necessary a reassessment of regional integration. With lower barriers as a pull factor, international economic exchanges benefit further from technology changes that serve as a push factor or tail wind. Tradeability of goods and services increases as progress in transportation technologies allows a faster movement at affordable costs. A plethora of services which in the past were hardly 071 AR Ch 71 22/9/03, 12:55 PM 354 EU-ASEAN Relationship 355 By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville tradeable can now be produced in one location to be marketed all over the world using information and telecommunication technology. Given an increasing diversity of manufactured products, large amount of resources devoted to research and development , and shortened life cycle, firms are increasingly forced to engage in global sourcing and distribution. In other words, technology change is a major force in global integration. It makes borders, national and regional alike, more and more permeable. Freer cross-border flows of goods, services , and factors cannot be uncoupled from domestic competition (Anderson, Bannister, and Neary 1995). The experience of the EU itself tells very clearly that integration is subject to a kind of law of escalation. Completion of customs union makes a common market an urgency. The escalation continues until an agreement is reached on the establishment of an economic union. A similar process occurs globally. As border protection is reduced, attention is drawn to domestic competition which in one way or another can distort international competition. With a view to minimizing such distorting effects, convergence in domestic policies is sought. International economic talks and negotiations have ventured into ‘behind-border protection’. Given the complexity of issue linkages and the sensitivity associated with domestic issues being addressed bilaterally, regionally, or multilaterally, negotiations on ‘behind-border protection’ are likely to proceed more slowly than negotiations on border protection. The agenda on ‘behind-border protection ’ has yet to be drawn. However, priority seems to have been attached to a number of issues, as one can gather from the heated debates on social clause between developed and developing countries in the final days of negotiations in the Uruguay Round. The North American Free Trade Agreement (NAFTA) has also gone beyond the traditional form of free trade in that it integrates some provisions on domestic policies. Labour rights constitute an important element of what one may call ‘complexification ’ in international economic relationship. EU-ASEAN relationship, too, is faced with this controversial issue. Those who are in favour of linking trade and investment issues with those of labour rights implicitly argue that developing countries have seized larger market shares in the developed countries in an unfair way by providing workers sub-standard treatment...