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IDEAS: AEC has made progress, but much further to go

Kuala Lumpur, 12 December 2018- IDEAS has launched a new project titled the ASEAN Prosperity Initiative (API). The project is designed to highlight issues and raise questions over the development of ASEAN and its role in supporting the prosperity of its Member States and their citizens. IDEAS has today published the first two reports under the API: the ASEAN Integration Report and the EU-ASEAN Free Trade Agreement Report.

The reports were launched at a public event in Singapore on 11th December in partnership with the Rajaratnam School of International Studies and the Asian Trade Centre. Speaking at the event Associate Professor Simon Tay, Chairman of the Singapore Institute for International Affairs, commented that  “I cannot but be impressed…by the way IDEAS has gathered key information and presented it in ways that can be accessed by non-experts…”

During a panel discussion on ASEAN Integration there was recognition of the issues highlighted in the report. There was also discussion on the importance of educating the citizens of ASEAN  on trade and the importance of understanding each other’s countries. The panel consisted Dr Chia Siow Yue, Senior Fellow, Singapore Institute for International Affairs, Deborah Elms, Executive Director, Asian Trade Centre, Tang Siew Mun, Head of ASEAN Study Centre, ISEAS-Yusoff Ishak Institute and moderated by Jayant Menon, Lead Economist for ADB and IDEAS Senior Fellow.

The ASEAN Integration Report aims to track progress with the implementation of the ASEAN Economic Community Blueprint 2025, which includes a range of measures to deepen integration between ASEAN Member States. The report notes that significant achievements have been made in progressing ASEAN integration but finds that in most areas implementation of the AEC Blueprint is behind schedule. The report is based on publicly available information, and therefore represents a lower bound of what has been achieved. Nonetheless, there remains no evidence of significant progress in a number of areas. The report concludes that this slow progress can be attributed to three sets of issues:

  • Institutional challenges: The ASEAN Secretariat, by design, is constrained in its ability to drive implementation and the mechanisms to manage implementation at a national level vary in effectiveness. The consensus-based approach to decision making in ASEAN inevitably results in slower progress. Ultimately, these institutional limitations are a feature of ASEAN’s design and there is little appetite to change.
  • Economic challenges: Different levels of economic development present challenges for ASEAN integration including Member States’ differing priorities and capacity to implement change. This diversity can also motivate protectionist policies in some Member States, which can act as a barrier to further integration.
  • Political challenges: Progress with ASEAN integration depends on the willing participation of all Member States and is therefore subject to political factors in each Member State. Perceptions about ASEAN and its role vary across Member States and ASEAN can be a “distant” concept for many citizens across Member States. As a result, issues pertaining to ASEAN and ASEAN economic integration do not feature heavily in national politics.

The report concludes that ongoing determined efforts will be needed to address these challenges and achieve the benefits of economic integration.

The EU-ASEAN FTA report examines the potential benefits of challenges to securing a region-to-region FTA between the EU and ASEAN. The report concludes that there are significant benefits to securing such a deal, including increasing trade and investment, creating opportunities for firms to participate in procurement and the broader geopolitical significance of sending a positive signal on the importance of free trade at a time of global uncertainty. The report also recognises that there are number of challenges to securing a deal, these include the EU’s high demands for reform, which present difficulties for ASEAN and the challenge of co-ordinating a common position across ASEAN Member States. Specific stumbling blocks include the EU’s policy on palm oil which poses a major challenge to this strategic industry in Indonesia and Malaysia.

In light of these concerns, the report concludes that the EU should continue to pursue bilateral deals with individual Member States to expedite progress. However, in particular given the geopolitical significance, a region-to-region agreement should remain the long term goal.

IDEAS will publish further reports under the API in 2019, which will consider the key issues relating to ASEAN’s prosperity.

The reports can be accessed here and here. The full analysis of the AEC Blueprint 2025 implementation can be accessed at of the event can be viewed here.

2018-12-21T11:49:42+00:00 12th December 2018|Media Statements|Comments Off on IDEAS: AEC has made progress, but much further to go