ASEAN Economic Co-operation and Challenges

1. Background

1 Chapter 1 Background INTRODUCTION Since its formation in 1967, the Association of Southeast Asian Nations (ASEAN) has changed from security and political concerns to the more economic. It started with a preferential trade arrangement (PTA) in 1977, graduating to a free trade area aimed for completion by 2002 which did not quite happen. Currently the concept has been modified somewhat to an ASEAN Economic Community with a single market in mind. ASEAN enlarged once in 1984 with Brunei joining Indonesia, Malaysia, the Philippines, Singapore and Thailand as ASEAN-6. It has faced greater and more profound widening and deepening issues since it took in Vietnam, Cambodia, Laos and Myanmar in the new millennium with ASEAN-10, i.e., a total of ten countries are now members of ASEAN. If ASEAN continues to muddle through at its own pace and time as it has for almost four decades, it may be marginalized. This is because a new regionalism has occurred including ASEAN Plus Three with China, Japan and Korea since the Asian crisis. Paradoxically, the geographical value of Southeast Asia has gained ascendancy as Japan, China, the United States and India have individually approached ASEAN for some free trade arrangements (FTAs). The challenge and dilemma for ASEAN is to get itself in shape to take advantage these offers. It has to take the 2 ASEAN Eco no mic Co -o peratio n and Challeng es evolving new regionalism in its stride. Drifting along as it continues to muddle through the changing geo-economics and geo-politics, is not an alternative. The most crucial ingredient, that is ASEAN leadership, seems to be missing. Individual ASEAN states are in various stages of their own political and economic transition. The “ASEAN Way” lacks deep political commitment to push for economic integration, unlike the experience in the European Union. The prospects of ASEAN remain ambiguous and ambivalent. Perversely, it may take another crisis or external threat for the ASEAN resolve to be glued together again. GENESIS, ORIGINS, AND DEVELOPMENT The brief existence of the Association of Southeast Asia (ASA) started in 1959 was to deal with territorial and political disputes. It was not as ambitious or full-blown as the Southeast Asian Treaty Organisation (SEATO) formed in 1954 to mimic the North Atlantic Treaty Organisation (NATO). These and a few others like Malphilindo may be deemed as predecessors of ASEAN which was set up on 8 August 1967 with security and political concerns. When the United States left the region after the Vietnam War and the British withdrew its military bases east of Suez, including that in Singapore, leaving a Five-Power Defence Arrangement involving the UK, Australia, New Zealand, Malaysia and Singapore, no other explicit political-military-security alliance remained. Newlyindependent ASEAN states had yet to build up their own defence forces. It was an external threat of communism and the “domino theory” which led Thailand to canvass for the conception of ASEAN. The five original member countries, namely, Indonesia, Malaysia, the Philippines, Singapore, and Thailand were joined by Brunei on 8 January 1984, making ASEAN-6. Vietnam joined 1. Backg ro und 3 on 28 July 1995, Laos and Myanmar on 23 July 1997, and Cambodia on 30 April 1999. The ASEAN region currently has a population of about 500 million, a total area of 4.5 million square kilometers, a combined gross domestic product of US$737 billion and a total trade of US$720 billion. ASEAN is thus a formidable group of developing economies with a heterogeneous range of natural resources, capabilities and market size. Uneven development and effective management of the wide ASEAN spectrum in some co-ordinated regional way, constitute a challenge. As officially framed, the 1967 ASEAN Declaration has five aims and purposes, the first two being: 1. To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of Southeast Asian nations. 2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter. In 1995, the ASEAN Heads of States and Government reaffirmed that “cooperative peace and shared prosperity shall be the fundamental goals of ASEAN”. FUNDAMENTAL PRINCIPLES The fundamental principles of ASEAN are enshrined in...