Asean at crossroads with borderless regions
June 7, 2008
THE rising tide of economic regionalism has changed the landscape beyond recognition, as reflected by the growing number of regional groupings and increasing array of acronyms. It has become a daunting exercise for analysts to define East Asia, or for that matter Asia-Pacific, with regional borders moving like shifting sands.
Even the names of regions have been changing over the years in terms of both historical and economic geography.
No one nowadays hears the term “Far East???, which was used decades ago with reference to Japan, Korea and China.
“Far East??? was renamed “East Asia??? subsequently. The term “Far East??? is currently confined to a sub-region, now known as the Russian Far East.
The old Far East is now labelled “Northeast Asia???, with Southeast Asia constituting a sub-regional entity of its own, knownas Asean (Association of Southeast Asian Nations). For all intents and purposes, Asean+3, which combines the northeast with the southeast, is increasingly seen as the de facto East Asian Economic Grouping (EAEG).
The borders of East Asia appear to have shifted, with the East Asia Summit (EAS) — also referred to as Asean+6 — com – ing into the picture, to envelop India on the west and Australia and New Zealand on the east. Curiously India, amember of EAS, is not a member of Apec (Asia-Pacific Economic Co-operation), just as Russia, an Apec member, is not a member of EAS.
It is not difficult to imagine the East Asia region expanding westward to include more South Asian nations or northward to include Mongolia and Russia. It is not history but economic geography and geopolitics that will define the East Asia region in the years to come. Although the regional landscape has become increasingly complex, the regional architecture is by no means chaotic. The pattern that has emerged is a confluence of concentric circles of Asean+3, EAS and Apec around Asean.
Asean prides itself as the nodal point of these concentric circles, but the unique position Asean now enjoys is not by design but by default. For one thing, the Northeast Asian subregion has conspicuously remained unorganised, given the distrust that bedevils the relationship of Japan with Korea and China. For another, Asean, being weak and neutral, has become comfortably acceptable to all regional powers.
That the concentric constellations seemingly revolve around Asean does not necessarily mean that Asean is in the dr iver’s seat, as Asean is in no position to call the shots. A huband- spoke relationship, with Asean as the hub and more advanced Northeast Asian economies as spokes, sounds asymmetrical and lopsided.
Seen in such terms, Asean is a chauffeur rather than a driver.
The centre of gravity may shift from Southeast Asia to Northeast Asia within the East Asian nexus, once Japan, China and Korea learn to bury the hatchet and move on. To be sure, Northeast Asia accounts for roughly 90 per cent of the combined gross domestic product of Asean+3. China alone is more than double the size of Asean in terms of population and purchasing power.
All this notwithstanding, regional economic integration in East Asia has been driven mainly by market forces, thanks to domestic reforms and liberalisation undertaken by individual countries. It is important to make a distinction between “re – g ionalisation??? and “regional – ism???. Regionalisation through product fragmentations and production networks, often associated with multinational corporations, is essentially marketdriven, which represents what may be termed as “informal integ ration???.
Northeast Asia seems more comfortable with regional integration through “infor mal??? re – gionalisation than through “for mal??? regionalism, given the current geopolitical impasse.
The fact however remains that regional economic integration cannot be lifted to a higher plane in the absence of economic regionalism. The Northeast Asian nations will move to the centre stage of East Asian economic regionalism at the expense of Asean countries, if history is disallowed to dictate the future.
Unlike the EU, intra-regional trade in East Asia is dominated by intermediate products, components and parts, with goods moving between countries in the region back and forth several times before they are shipped or transshipped to destinations outside the region, at the risk of double, triple or multiple counting as exports and imports.
In other words, trade statistics tend to overstate the importance of East Asia’s intra-regional trade. Be that as it may, the ratio of intra-regional trade is a poor measure of the success of economic regionalism in the East Asian context. East Asia is far more open than any other region, with regional economic integration strengthening its extra-regional linkages through improved competitiveness arising from better allocation of resources, thanks to freer trade flows within the region.
This, however, does not mean that East Asia practices “open regionalism???, a term that has special connotations.
Open regionalism implies that either membership is open to all or that membership privileges are extended to nonmembers as well, which is not the case with East Asia or other regional groupings. The only grouping that comes fairly close to the above definition is Apec where membership is limited but actions are non-discriminatory.
Apec is the only exception, simply because it is not a negotiating body, where concessions if any are voluntary and unilateral.
It is not unthinkable in the years to come that Apec will expand to include more countries.
India has been knocking on the Apec door for a long time with no response. It appears that there are some reservations about India, partly because it is considered part of South Asia, not East Asia, and partly because of the fear that India’s psyche would not fit neatly into the Apec mould.
But, times are changing. India has emerged as a major player, with serious reforms. Apec membershipwould place India in a dynamic league that would lock in the reforms and prevent India from backsliding. What is more, India’s presence would enhance the stature of Apec.
Now that India is an integral part of EAS, it can claim greater legitimacy as a candidate for Apec accession.
It is not difficult to envisage Asean+3 upstaging itself, and it may even evolve into EAEG (East Asian Economic Grouping) with freer channels not only for trade and investment flows but also for financial and monetary co-operation and collaboration. It is very unlikely that EAS or Asean+6 will render Asean+3 redundant, as they have distinctly different roles to play.
Asean has to reinvent itself to remain relevant and stay at centre stage. Asean will have to translate its Charter into actions that will make it not only a legal entity but also borderless in both letter and spirit. Asean will be incomplete if Timor Leste is kept out. Admission of Timor Leste into the Asean fold looks certain: it is a question of when, not whether, as this is a positive-sum proposition.
Now that regionalism and multilateralism are seen to be compatible, one may safely surmise that regionalism is here to stay. It is so firmly placed that it cannot be derailed even by the forces of globalisation. The chances are that region states may eventually replace nation states.
Emeritus Professor Datuk Dr Mohamed Ariff is the executive director of the Malaysian Institute of Economic Research