The Economic Integration of ASEAN
In theory, regional economic integration refers to a gradual development starting with the formation of a free trade agreement among member states and resulting either in the stage of an economic union or in the final stage of a political union (Cohn, 2005). Actions towards ASEAN economic integration is not new, in fact, the 10-member Association of Southeast Asian Nations was established in 1967 and has contributed greatly to regional harmony and prosperity in both economic and political spheres, therefore ASEAN’s economic integration can be best explained in three (3) major aspects. First, the economic interdependency of ASEAN members through building a recognized ASEAN community and the creation of ASEAN Free Trade Area (AFTA). Secondly, the entrance of the Dialogue Partners (DPs), such as Australia, European Union, United States, as well as big markets and investors like China, South Korea, Japan and India. Lastly, the implementation of effective and quality rules, regulations, and laws.
ASEAN has set a goal of closer cohesion and economic integration through building a recognized ASEAN community through adopting in 1997 its Vision 2020. The ASEAN economies became more diversified in their production structures and more complementary to each other. In 2015, the ASEAN Economic Community (AEC) was established as an additional initiative from the ASEAN Free Trade Area (AFTA) which aims for further economic integration that is crucial to integrate the 10-member countries as a single market and production base, with investments, services, free movement of goods, skilled labor, and flow of capital among its key underpinnings. The formation of the AFTA was significant because it represented a collective response on the part of developing countries to the new challenge of the global economy in the 1990s. It also embodied the effort of an existing regional organization to adjust in the post-Cold War international environment, thus further linked the ties among the member states which indicated that ASEAN states were able to overcome their economic differences, despite huge gaps in their economic development levels.
Nevertheless, the regional community is still aiming for more by extending its initiatives into ASEAN Economic Community Blueprint 2025 which strives to build a regional community that has the ability to compete with other blocs across the globe and would help facilitate the utilization of the ASEAN Trade in Goods Agreement which cuts transaction costs. However, these economic goals won’t be achieved successfully without the political support of each state’s leaders. Having said, the gradual implementation of economic integration goals depends largely on the preferences of political leaders in each state. Having said, in 2003, ASEAN leaders agreed to build-on the momentum and progress it gained in AFTA and other efforts to broaden and deepen regional cooperation. Once realized, ASEAN will be characterized by free movement of goods, services, and investments as well as freer flow of capital and skills, envisions ASEAN as a single market and production base, a highly competitive region, with equitable economic development which is sometimes coined “open regionalism”.
Secondly, ASEAN’s collective activities in its external relations, though it may appear in its outlook to be far from the economic integration, it has the grounds to be such in its nature. Most cooperation activities are conducted in diverse bilateral (i.e. one Dialogue Partner–ASEAN) initiatives, but there are also broader ASEAN-led multilateral frameworks including the ASEAN Regional Forum. ASEAN always sets its integration projects as core subjects for cooperation and persuades neighbors to accommodate the collective interests of the Association. It applies the notion of ‘‘ASEAN centrality’’ which means an ASEAN-led regional framework in (Ho, 2012).
As mentioned in the first argument, state political elites are key factors in the progress of regional integration. And it can be seen that Southeast Asian leaders have the unique efforts to engage collectively with their major neighbors. For instance, a common agenda for joint cooperation with each of the major players revolves around ASEAN’s intra-regional matters. ASEAN community building is not only considered a shared objective, but also as a means to strengthen bilateral relations between ASEAN and its DPs. In other words, ASEAN members collectively engage with major external partners within institutional frameworks in such a way that ASEAN community building constitutes the core agenda for interactions with the externals.
Another major collective practice one can observe, as stated by Ki-Hyun (2018) in his research, is that ASEAN elites constantly make ambitious pledges and plans for regional integration, despite huge development gaps and variances in institutional features across member countries. Australia has one of the oldest cooperation partnerships with ASEAN, established through the ASEAN–Australia Economic Cooperation Program in 1974 with the aim of assisting ASEAN Economic Community (AEC) projects. As for the EU, ASEAN is one of the main target regions for realizing its goal of becoming a model for regional economic integration. Thus, the EU has highlighted its ‘‘natural partnership’’ in which it can transfer its unique experience of regional community building to ASEAN. Likewise, the USA has also integrated its development cooperation projects into the grand program schemes. Based on the Joint Vision Statement on the ASEAN–US Enhanced Partnership issued in 2005, the USA- ASEAN developed program for technical and institutional support related to the enhancement of economic integration.
Another initiative of ASEAN that is gathering momentum is the so-called ASEAN+3 framework of East Asian cooperation, which involves China, Japan and the Republic of Korea. Leaders of the ASEAN+3 countries declared in a joint statement on their common commitment to develop cooperation in economic, financial, political and transnational fields. And just recently, in the last ASEAN summit, the leaders proposed a plan for the entrance of India as major key player in the new economic market led by ASEAN.
Lastly, implementation of effective and quality rules, regulations, and laws, which promote higher level of transparency and predictability plays a significant role in the strengthening of regional economic integration and are, in fact, key in promoting growth, investment, innovation, and the functioning of markets and society as a whole. With harmonized trade and investment laws, ASEAN, as a rules-based organization will be strengthened and become more interesting as a single investment destination. Regional labor markets are becoming increasingly integrated as more guaranteed protection of workers is institutionalized since labor flows to, from, and within ASEAN countries are significant, for instance, the organization signed the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers on January 2007.
As discussed in ASEAN-OECD Good Regulatory Practice Network, Good Regulatory Practice (GRP), generally referred to as ‘processes, systems, tools and methods for improving the quality of regulations’, holds importance to the overall development agenda and regional integration objectives of the region, and is starting to gain traction among ASEAN Member States (AMS). The application of GRP allows policymakers to maintain a stable and enabling regulatory environment that promotes economic openness and entrepreneurship, while, at the same time, limiting, and even eliminating, unnecessary administrative burden for businesses of all sizes which are amplified in the context of regional integration.
To conclude, the success of economic integration of ASEAN lies in the programs and initiatives that it has, the presence of external economies, and the laws and rules that it follows. The very process of integrating the ASEAN economy, aimed primarily at productive efficiency, easier and less costly commerce, increased investments and the generation of jobs, serves to strengthen the fabric of peace by raising the stake of each ASEAN member in the prosperity of all. And in the middle of all the uncertainties in the global economic environment, ASEAN remains firm of multilateralism, and continues to deepen its economic integration agenda, both within and outside the region. The goals for economic integration of the region allowed other major economies to proceed with activities aimed for a more economically integrated ASEAN.
References:
Benjamin Ho, ‘‘ASEAN centrality: A year of big power transition,’’ East Asia Forum (online journal), 6 March 2012, http://www.eastasiaforum.org/2012/03/06/asean-centrality-a-year-of-bigpower-transitions/ (accessed 30 October 2015)
Cohn, Theodore H (2005), Global political economy: theory and practice, New York: Pearson Education, Inc.
Ki-Hyun Bae (2018). Seeing ASEAN as a platform for spreading liberalism. International Journal 2018, Vol. 73(1) 33–48
OECD (n.d.), ‘ASEAN-OECD Good Regulatory Practice Network: About Good Regulatory Practice’, retrieved from (accessed 21st March 2019): <http://www.oecd.org/gov/regulatory-policy/grpn.htm>.
