The 44th ASEAN economic ministers meetings currently held in Siem Reap,
Cambodia is the first high-level meeting after the debacle at the ASEAN foreign
ministers meeting in Phnom Penh one month ago where the ministers failed to
issue the customary Joint Communiqué over the South China Sea issue, a first
since the meeting started 45 years ago.
The economic ministers meetings
will provide the much-needed platform for ASEAN to show that they are on sight
towards the ASEAN Economic Community (AEC) by the year 2015.
This is especially so since the
target for establishing the AEC is less than two and half years away. ASEAN has
to redouble its efforts to keep pace with the binding commitments made in the
AEC blueprint.
It is now at the mid-point of the
implementation of its AEC blueprint and has to take stock, realign and adopt a
bolder approach to meet all the outstanding, current and future commitments.
More importantly, it will have to
avoid any protectionist stance due to the continuing uncertainty in the global
economy. ASEAN will also have to show its collective leadership in managing the
competing interests of its partners in East Asia over the form and pace of East
Asia-wide trade arrangement.
The Aug. 27-Sept. 1 meetings will
discuss the mid-term review of the implementation of the AEC blueprint and the
AEC scorecard; plans for narrowing the economic development gap among ASEAN
nations to support equitable development; the progress in pursuing the regional
comprehensive economic partnership (RCEP); and the implementation of the
connectivity initiative, among others.
The mid-term review will provide
a critical assessment on where ASEAN is with its economic community efforts.
While there is progress in the
implementation of the regional commitments, the review is likely to highlight
gaps that ASEAN countries will have to address in the areas of removal of
non-tariff barriers; enhancing trade facilitation measures; accelerating services
and investment liberalization; pushing ahead with more transport facilitation
measures; implementing all the roadmaps for the twelve priority integration
sectors; improving the ease of doing business; and addressing the low
utilization of the five free trade agreements of ASEAN with its partners.
While ASEAN has achieved about
67.5 percent of its commitments under the AEC scorecard for the period 2008 to
2011, the remaining areas are also the most difficult ones.
If ASEAN is to accelerate progress
in these remaining areas, it will require collective, bold leadership and
serious commitment to dealing with the different legislative requirements and
domestic issues of ASEAN countries, looking at regulatory limitations that
impede the implementation of intra- and extra ASEAN measures, and fostering
greater coordination among the various agencies at the national level in
implementing regional commitments.
In this regard, the AEC
compliance scorecard could be made more rigorous. The current scorecard fails
to sufficiently capture the state of progress in the implementation of regional
commitments by ASEAN countries.
Second, regular periodic
assessments and in-country surveillance could be undertaken by ASEAN
Integration Monitoring Office (AIMO) to alert countries to any issues and
roadblocks to integration.
Third, the scorecard could be
made publically available for transparency and credibility of ASEAN’s community
building efforts. This will help garner the support of the other stakeholders.
There could be enhanced
engagement of the private sector by ASEAN governments at every stage of the
community building effort. Regular private sector engagement can help to assess
the impact and effectiveness of ASEAN policies and measures being implemented.
Feedback from market participants
will help to tackle impediments to the free flow of goods, services, investment
and capital.
The private sector, on its part,
could be more proactive and each sector could develop their own scorecards
through their respective trade associations to provide inputs into the AEC
scorecard. There is also a necessity for ASEAN to engage the business community
more, including technical committees, senior officials and ministers’ levels.
An issue that ASEAN will have to
address with urgency is equitable development across the region. Here, ASEAN
has to place more emphasis on the Initiative for ASEAN Integration and
development of the sub-regions such as the ASEAN Mekong Basin Development
Cooperation and the ASEAN connectivity initiatives. There must be a coherent
strategy for bringing about equitable development across the ASEAN region.
Two horizontal issues may need to
be addressed here. First is the alignment of sub-regional development
initiatives with the overall AEC initiative. If there is no alignment, there
may be duplication of resources and divergence in policies and goals.
Second is the financing of
sub-regional development initiatives. ASEAN is still dependent on its dialogue
and development partners for integration and connectivity initiatives.
For example, the ASEAN
Infrastructure Fund is expected to only leverage about US$13 billion up to 2020
with the support of the Asian Development Bank when the infrastructure
requirements based on conservative estimates is about $60 billion annually.
ASEAN will have to also embark on
public-private partnership models to fund some of its priority infrastructure
projects. For this, the project proposals have to be attractive and the
governments need to partner the private sector as well as provide the necessary
incentives to defray the project risks involved.
The regional comprehensive
economic partnership will be a key initiative ASEAN has to tackle collectively
in order to stay relevant and attractive to East Asia. This region-wide
agreement will position ASEAN as the pivot of East Asia that will generate
trade and investment growth for the region.
This is a golden opportunity for
ASEAN to show it can effectively lead the process to cobble together a free
trade arrangement, which will include the two dynamos of the region, China and
India.
For this to happen, ASEAN will
have to agree within its membership on the level of ambition desired for the
free trade agreement; the approach to the negotiations; and inclusion of issues
such as government procurement, competition, intellectual property and so
forth. These are not easy issues to reach consensus on, as not all non-ASEAN
partners may want to offer concessions they have made in favor of ASEAN to the
other parties involved.
Indeed, there is a lot for the
meetings in Cambodia to mull over. But what is necessary will be to regain the
lost ground by pushing ahead with the economic community building with greater
urgency and stamping ASEAN’s centrality on regional architecture through its
collective leadership cognizant of the interests of ASEAN’s partners.
Pushpanathan Sundram
The writer is a senior fellow with the Singapore Institute for
International Affairs and the managing director of EAS Strategic Advice
Business & Investment Opportunities
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