ASEAN Enlargement: Impacts & Implications

1. ASEAN Enlargement: An Introductory Overview

ASEAN Enlargement: An Introductory Overview 1© 2001 Institute of Southeast Asian Studies, Singapore 1 1 ASEAN Enlargement: An Introductory Overview CAROLYN L. GATES and MYA THAN Initiating the long-awaited ASEAN enlargement process, Vietnam became the first of the four remaining mainland Southeast Asian countries to enter the Association of Southeast Asian Nations (ASEAN) in July 1995. Two years later, ASEAN admitted the Lao People’s Democratic Republic (Lao PDR or Laos) and Myanmar as full members of the regional organization. At that time, it postponed the entry of Cambodia because of contested changes in its government — notably, the ouster of First Prime Minister Prince Norodom Ranariddh by Second Prime Minister Hun Sen — and the outbreak of factional violence as a result. After the restoration of a legal government and a semblance of political stability, Cambodia was admitted to the organization on 30 April 1999. ASEAN’s historic decision to incorporate the new members was a paradigm shift in Southeast Asian affairs, although the door to membership had been (at least nominally) open for all countries in Southeast Asia from ASEAN’s inception. Indeed, during the period before the end of the Indochina War in 1975, Cambodia, Laos, and South Vietnam had attended some ASEAN Ministerial Meetings (AMM) as observers. More recently, ASEAN’s enlargement was endorsed by the heads of state of the ASEAN countries in the Bangkok Declaration of 1995: “ASEAN shall work towards the speedy realization of an ASEAN comprising all Southeast Asian countries as it enters the 21st century.” Because the new members have very different systems and levels of economic, political and institutional development than the ASEAN-6 ISEAS DOCUMENT DELIVERY SERVICE. No reproduction without permission of the publisher: Institute of Southeast Asian Studies, 30 Heng Mui Keng Terrace, SINGAPORE 119614. FAX: (65)7756259; TEL: (65) 8702447; E-MAIL: publish@iseas.edu.sg 2 Carolyn L. Gates and Mya Than© 2001 Institute of Southeast Asian Studies, Singapore (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand), their integration into ASEAN may have significant political and economic impacts and implications for both sides. The political implications of an enlarged ASEAN involve regional stability and security concerns as well as international relations. As members of the ASEAN Regional Forum (ARF), the new members are expected to play a positive role in regional and international political and security affairs. At the outset, the most important economic shift for the new members is their accession to the ASEAN Free Trade Area (AFTA). Soon after the new members joined ASEAN, they became subject to the Common Effective Preferential Tariff (CEPT) scheme, the key instrument to pace and sequence tariff reductions to achieve AFTA. In addition to the effects of adjusting to AFTA, the new members have experienced external shocks from the East Asian financial and economic crisis. At the time that Laos and Myanmar were accepted as new ASEAN members, the currency crisis had just struck Thailand and was about to spread to Indonesia and beyond. Contagion and its effects, which have touched all ASEAN members to one extent or another, were transmitted to the new members primarily through the extensive trade and investment links they have forged with the ASEAN-6 economies. The ASEAN-6 has clearly recognized the potential strategic advantages and political and economic benefits of expanding the organization to the whole of Southeast Asia. Thus, an enlarged ASEAN can increase its diplomatic and economic weight in the international community. Secondly, it is likely to beef up ASEAN’s strategic credibility, enabling it to address regional issues more effectively. Thirdly, ASEAN’s market size will increase by 38 per cent (in terms of population) with the entry of the four new members, which can expand regional economies of scale. Fourthly, the regional division of labour is likely to intensify, which may stimulate greater productive specialization and efficiency, potentially reduce inflation pressures, and affect Southeast Asian migration patterns. While the ASEAN-6 keenly appreciates the advantages of broadening the organization, it also fears the development of a dual-track system that could breed greater divisions and ignite latent animosities between the “haves” — the richer, more developed and older members of ASEAN — and the “have nots”, the newer members. With the emergence of the East Asian crisis from the second half of 1997, this previously simple equation has become complicated, as the growth path and political evolution of some of the older ASEAN members have been interrupted; and some like Indonesia and perhaps Malaysia are experiencing discontinuous change. Nevertheless, on...