TERM PAPER-Towards an ASEAN Economic Community

TOWARDS AN ASEAN ECONOMIC COMMUNITY: PROGRESS and CHALLENGES of the ASEAN Integration Ever Since the formation of the Association of South East Asian Nations (ASEAN) in August 8, 1967, its member countries (Indonesia, Malaysia, Philippines, Singapore, Thailand, Myanmar, Brunei, Cambodia, Laos and Vietnam) have been using the opportunities presented by the “close-ties” fostered within their regional bloc. The bloc’s aim of economic growth has been the rallying point of the formation of

ASEAN, and now the realization of the ASEAN Economic Community (AEC) by 2015, which is less than 1 year from now. This paper is divided into three sections, with the first section focusing on the conception of the ASEAN in 1967. It seeks to analyze the conditions under the ASEAN was created from and the conditions it met as its maturity progresses, until it reached its decision to form the ASEAN Economic Community. The second part deals with discussing the ASEAN Economic Community Blueprint and Scorecard. This part aims to assess the progress ASEAN has made against what it promised in its blueprint. Lastly, the third section provides recommendations on the challenges that ASEAN will face due to integration in and post-2015.

Katrina P. Tarape, Student# 11385421

DVS541M/ Theories of International Relations Dr. Roman Dannug

TOWARDS AN ASEAN ECONOMIC COMMUNITY: PROGRESS and CHALLENGES of the ASEAN Integration

I. INTRODUCTION:

The Association of South East Asian Nations (ASEAN) was formed in 1967 by its five founding members: Indonesia, Malaysia, Philippines, Singapore and Thailand. Against a backdrop of a Cold War and Post-Cold War period, the founding countries sought regional integration to facilitate greater security within the region and amongst its members. The call of regional peace was also adhered to by other Southeast Asian states and followed suit in being an ASEAN member, these countries are: Brunei Darussalam, Cambodia, Lao People’s Democratic Republic (Laos), Myanmar, and Vietnam. What started as a community of peace-loving organization has now evolved into an association of sovereign states projecting economies economies of scale that could rival that of China and India.

The first initiative of regional integration was started in 1977 thru the creation of the Preferential Trading Arrangement. It was then followed by a specific “economic” integration thru 1992

ASEAN Free Trade Area thru trading of goods, supplemented by 1995 ASEAN Framework Agreement on Services and the 1998 ASEAN Investment Area (AIA) (Chia, October 2013). Then in October 2003, the ASEAN members raise their ambition of economic integration by creating a “regional community building” thru the ASEAN Economic Community (AEC) which was first envisioned to be realized in 2020, but was moved to 2015. The members envisioned an, “ ASEAN community established compromising

three pillars of political and security cooperation, economic cooperation, and socio-cultural 1

cooperation”. Furthermore AEC affirms ASEAN’s mantra of regional cooperation, peace and non -

interference to the sovereignty of its member countries. Basically, AEC aims to create a single 2

“community” market for the free flow of good, f oreign oreign investments, human capital, and services. In

assessing the future of AEC and its possibility of full-scale implementation by 2015, ASEAN’s strengths, 1

 Declaration of ASEAN Concord II, Bali, October 7, 2003. Chia, S. Y. (October 2013). The ASEAN Economic Community: Progress, Challenges and Prospects.  Asian

2

evelopment Bank Institute.

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TOWARDS AN ASEAN ECONOMIC COMMUNITY: PROGRESS and CHALLENGES of the ASEAN Integration

weaknesses and challenges needs to be considered. The evaluation should be put side-by-side with the AEC Blueprint finalized in October 2003. In a nutshell ASEAN’s strengths, weaknesses and challenges are

as follows:

 ASEAN Strengths:



Strategic trading route located within a busy hub of trading in Asia Pacific, with easy access to Europe, America, India and China.



Composed of developing economies with promising upward economic trends such as Malaysia, Philippines, Singapore and Indonesia, where the last ASEAN member has recently been accepted into the G20 circle of economically advanced countries.

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Wide-range of products and services to offer ranging from the agricultural, manufacturing to other labor-intensive services.

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A market of 600 million people characterized by young, middle-class and innovative population.

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Consistent track record of peaceful regional diplomacy amidst settlement of regional disputes, most specifically, territorial disagreements.

 ASEAN Weaknesses:



Indonesia as a possible regional leader might deviate from its ASEAN-centric foreign policy trajectory and focus more on its G20 membership.

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Existing domestic turmoil in each member- states such as Thailand’s corruption case against President Shinawatra, human insecurity within Laos and Cambodia, terrorism and ethnic disputes in Indonesia, Singapore’s aging population, and Philippines’ wide developmental gaps.

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Deficiency in assertive stance over settling the claim of South China sea with an intimidating and aggressive China.

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TOWARDS AN ASEAN ECONOMIC COMMUNITY: PROGRESS and CHALLENGES of the ASEAN Integration

 ASEAN Challenges:

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Addressing territorial dispute in South China Sea of ASEAN claimant countries and China.

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Political instability within member countries, such as Myanmar, and civil unrest brought about by debilitating consequences of poverty in Cambodia and Laos.

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Asserting regional strength to manage better the political vacuum take advantage by US and China.

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Better disaster management/ recovery mechanism since most ASEAN members are vulnerable to shocks of natural disasters such as the tsunami incident in Indonesia and Typhoon Haiyan in the Philippines.

Previous agreements, charters and sub-organizations have been established already to support the its aim of an effective and functioning regional community, integrated not only based on security, but of a deeper and more interdependent economic integration- by 2015 ASEAN wishes to realize this plan thru the Economic Community. This paper argues that the success of the AEC relies mostly on the member countries willingness to tweak its domestic policies to integrate an entire region in planning and managing each owns community. Furthermore, a longer gestation period is necessary for the complete implementation of the single market. It would be impossible for ASEAN to eliminate its tariff barriers completely by 2015 since its members have varying level of economic growth and performance.

This paper is divided into three sections, with the first section focusing on the conception of the ASEAN in 1967. It seeks to analyze the conditions under the ASEAN was created from and the conditions it met as its maturity progresses, until it reached its decision to form the ASEAN Economic Community. The second part deals with discussing the ASEAN Economic Community Blueprint and Scorecard. This part aims to assess the progress ASEAN has made against what it promised in its blueprint. Lastly, the

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TOWARDS AN ASEAN ECONOMIC COMMUNITY: PROGRESS and CHALLENGES of the ASEAN Integration

third section provides recommendations on the challenges that ASEAN will face due to integration in and post-2015.

II. THE “ASEAN WAY”

Conceptualization- Infant ASEAN

ASEAN started with a very modest objective which is to, “ accelerate the economic growth,

social progress and cultural development in the region through joint endeavors in the spirit of equality and partnership”. Unlike the European Union, ASEAN didn’t establish structures that

would function to carry-out economic, cultural and security functions, but made it a point to emphasize diplomacy as its foreign policy across all issues, even in disputes. Its security threat was almost as challenging as EU’S which was wary of a power-

hungry Soviet and a wounded Germany with a high-probability of engaging into another war, both countries cautious of US dominion. Prior and at the time of its conception, political stability as threatened within the region as disputes among its members are emerging and tensions are rising. Malaysia and Philippines relation were strained due to recognizing which state holds legal claim over Sabah. Indonesia just ended its “confrontational” approach against Singapore and Malaysia. Vietnam

and Cambodia though were not yet ASEAN members, faced instability due to the aftermath of the Vietnam War and the bombing in P hnom Penh. Security wasn’t a second-thought but the primary engine that served as an impetus, paving the ASEAN way.

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The ASEAN way, for the lack of a better term, is characterized by peace, mutual cooperation and respect. Specifically, the ASEAN way’s fundamental principles as stated in the 1976 Treaty of Amity and 3

Cooperation in Southeast Asia  are as follows:

1. Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations; 2. The right of every State to lead its national existence free from external interference, subversion or coercion; 3. Non-interference in the internal affairs of one another; 4. Settlement of differences or disputes by peaceful manner; 5. Renunciation of the threat or use of force; and 6. Effective cooperation among themselves. To foster reconciliation among Philippines, Indonesia and Malaysia, heavy emphasis is placed on “being non-critical” and avoiding making any criticisms on a co -ASEAN’s domestic policies. Second,

pressure was placed on each member to take note of its own domestic turmoil and make significant efforts to subdue any unrest, this includes making sure that economic growth is at a steady upward trend. This was difficult for Indonesia since civil unrests were threatening to destabilize the Sukarno regime during the 1970s and massive protests during the 1997 financial crisis which hit Indonesia severely. However, Philippines faced significant economic growth that would rival Korea and Taiwan combined.4  Third, to make sure that non-interference of state affairs was assured, agreements were mostly non-binding. Though initial cooperation was secured since approval or non-approval didn’t entail any strings attached, sustaining cooperation all throughout was difficult since no repercussions or disincentives were established to deter any non-compliance. Non-ASEAN members like China that was a signatory to the code of conduct in conducting claims over South China Sea wasn’t deterred to assert

and be aggressive in its stance that it legally holds control over the entire sea. Lastly, no structural

3

 Retrieved from: http://www.asean.org/asean/about-asean/overview  Speech delivered by Sec. Cesar Purisima in the IISS Fullerton Lecture on The Philippines and ASEAN: The Road to 2015 and Beyond. 7 February 2014. 4

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arbiter was in placed to settle disputes, “soft power or diplomacy” was always the way settlement

should be. Thru these principles, among all regional and international organizations, ASEAN became known as most respectful of a nation’s sovereignty.

In line with its “modest” mindset, structures such as rules and regulations, and sub-

organizations were still established based on the observance of individuality of its members. This means that setting up structures were quite slow since unanimous decision to agreements should be reached, though this is not explicitly stated in any of ASEAN’s charters. Moreover, decisions were made not my heads of states but by each member’s foreign ministers who are collectively called as the ASEAN

Ministerial Meeting (AMM). Responsibilities of the AMM was formulating policies, reviewing policy proposals, monitoring and supervising ASEAN sub-organizations, and organizing ASEAN partnerships with other regional/ international organizations and countries. Additional to the AMM, was the Standing Committee in-charge of overseeing day-to-day administrative tasks and lower-level policy formulation and review.

Part of ASEAN’s continuous coordination was thru summits conducted within the country that

hold the current chairmanship post. Less than a decade lapsed since the foundation of ASEAN, the first summit was help in Bali, Indonesia in 1976, with a goal of exp anding ASEAN’s capability to overcome regional and domestic challenges. The first summit birthed the Treaty of Amity and Cooperation in Southeast Asia. It’s a rather concise treaty that aims to highlight (and legitimize) the use of non -coercive

measures in settling disputes and conducting relations among ASEAN members. Important principles are:



Principle on AMITY:

Article 3- In pursuance of the purpose of this Treaty the High Contracting Parties shall endeavour to develop and strengthen the traditional, cultural and historical ties of  friendship, good neighbourliness and cooperation which bind them together and shall  fulfill in good faith the obligations assumed under this Treaty. In order to promote closer Page | 6

TOWARDS AN ASEAN ECONOMIC COMMUNITY: PROGRESS and CHALLENGES of the ASEAN Integration

understanding among them, the High Contracting Parties shall encourage and facilitate contact and intercourse among their peoples. 

Principle on COOPERATION, specifically, in terms of economic cooperation:

Article 6-  The High Contracting Parties shall collaborate for the acceleration of the economic growth in the region in order to strengthen the foundation for a prosperous and peaceful community of nations in Southeast Asia. To this end, they shall promote the greater utilization of their agriculture and industries, the expansion of their trade and the improvement of their economic infrastructure for the mutual benefit of their peoples. In this regard, they shall continue to explore all avenues for close and beneficial cooperation with other States as well as international and regional ~organisations outside the region. 

Principle on SETTLEMENT OF TERRITORIAL DISPUTES:

Article 13- The High Contracting Parties shall have the determination and good faith to  prevent disputes from arising. In case disputes on matters directly affecting them should arise, especially disputes likely to disturb regional peace and harmony, they shall refrain  from the threat or use of force and shall at all times settle such disputes among themselves through friendly negotiations. Aside from this treaty, two other mechanisms were also put in place; these are the Declaration of ASEAN Concord (DAC) and ASEAN Secretariat. The former stipulates the meeting of “heads of governments” as the highest body of ASEAN, while the latter deals wi th the daily administrative tasks of

handling the ASEAN as a regional organization. Following the first summit, successive meetings were convened to establish other ASEAN ministers for “ human development” concerns such as labour, health,

education, information, energy, science and technology and the environment. Furthermore, the ASEAN Economic Ministers Meeting (AEMM) was given the supreme authority to decide on economic-related plans for the region. The AEMM’s independence was prioritized to deter politica l and social pressures to

influence the decision of the ministers, making sure that economic plans for the ASEAN considers and integrates the corporate identity of each state, minus its political and social bias. Part of AEMM’s initiative for greater eco nomic integration was the creation of the Preferential

Tariff Agreement, and agreement on ASEAN Industrial Projects, which involves the private sectors as the region’s partners. Second milestone for AEM was the creation of the ASEAN Free Trade Area in the

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summit held in Singapore in 1992. AFTA reinforces the member states’ initiative to cooperate with one another in trade, to discover potential markets and to maximize the region’s growing economies of

scale. It also outlines liberalization on trade policies, with preferential treatment towards ASEAN members to expand investments and production in trade and other opportunities. The summits were a reflection of ASEAN’s recognition of the need for greater cooperation since challenges faced by ASEAN

are becoming more diverse in nature and in difficulty of finding a solution. Regional institutions were put in place every summit, with conscious effort to make sure that these institutions won’t undermine the member states’ sovereignty of deciding for their own. Due to this, it can be assumed that ASEAN

member states were not ready, if not, not willing, to accede to a supranational power and pattern an entirety of their domestic and foreign policies based on the agreements made on every summit. The reluctance of the ASEAN states to surrender a portion of their national identity to a regional entity slowed down ASEAN’s progress since “binding agreements and institutions” can’t be put in place due to fear of encroachment of state’s sovereignty. Furthermore, ASEAN’s progress was heavily compared to EU, who at that time were making significant progress in “integrating with one another”, while ASEAN was still “loosely connected” with one another- where connections are usually reconnected every

summit.  ASEAN Institutionalization- Weathering the Financial Crisis

What started out as a localized financial and currency problems of Thailand in June 1997 became a massive virus that infected the entire of Asia, with negative shocks felt in Europe and America. The region was devastated mostly Indonesia where the financial crisis has led to the country’s worst political and social unrest. ASEAN, post-crisis had to revisit its foundation and provide a mechanism that would allow them to have lesser dependence on extra-regional organizations, such as the International Monetary Fund (IMF), through cuts and conditions drove Indonesia’s economy and political state further

back. Aside from the financial crisis, ASEAN was also shaken by rapid globalization that left majority of

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TOWARDS AN ASEAN ECONOMIC COMMUNITY: PROGRESS and CHALLENGES of the ASEAN Integration

its members lef t behind. Its economies of scale were being overshadowed by China’s rise to power in terms of trading. Post-Asian crisis was ablaze with serious threats to the economy of ASEAN which brought them back to the drawing table and make ASEAN competitive once again. In the years of 1997, 1998 and 2002, ASEAN made significant agreements that would lead to the creation of a “regional community ”, with member states heavily integrated with one another. The 1997 Summit in Malaysia conceptualize the ASEAN Vision 2020. The main vision of ASEAN thru their Vision 2020 is an “ outward-looking ASEAN playing a pivotal role in the international fora, and

advancing ASEAN's common interests. We envision ASEAN having an intensified relationship with its Dialogue Partners and other regional organisations based on equal partnership and mutual respect ”. It sees ASEAN as a  Zone of Peace, Freedom and Neutrality , which harnesses its human and natural resources as main contributors for the region’s prosperity and develo pment. Success in terms of this is

the narrowing of development gaps among the ASEAN members, which is apparent, especially when one looks at Indonesia and Singapore against Cambodia, Laos, Vietnam and the Philippines. The Hanoi Plan of Action during the Sixth ASEAN Summit in 1998 it’s the first in a series of steps designed to realize the ASEAN Vision 2020: “an ASEAN as a concert of Southeast Asian Nations, outward

looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.” It’s a 6-year plan with accompanying review and monitoring in between implementation. The provisions within the plan of actions were designed to: 1. Strengthen macroeconomic and financial cooperation; 2. Enhance greater economic cooperation; 3. Promote Science and Technology Development and Develop Information Technology Infrastructure; 4. Promote Social Development and address the social impact of the financial and economic crisis; 5. Promote human resource development; 6. Protect the environment and promote sustainable development; 7. Strengthen regional peace and stability; 8. Enhance ASEAN’s role as an effective force for peace, justice

and moderation in the Asia-Pacific and in the world; 9. Promote ASEAN awareness and its stand in the

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international community; and, 10. Improve ASEAN’s structures and mechanisms . Ever since its conception, the Hanoi Plan of Action is the most detailed and assertive ASEAN agreement that showcased the region’s desire to innovate from its “sovereignty-respecting” stance, to a more

internationally-competitive regional power. The 2003 Declaration of ASEAN Concord II or Bali Concord II, served as the seed for the creation of the ASEAN Economic Community by 2020 (later amended to 2015). It declares the interdependence of the ASEAN economies which would ensure collective prosperity and development for the region. The integration would establish a highly-competitive ASEAN region which allows free flow of goods and services to realize the reduction of poverty and its dimensions by 2015. Achievement of this need to rely on heavy liberalization measures that needs the entire ASEAN states full cooperation. Specific sectors, as well as policies need to be enhanced, which would involve, “human resources development and capacity building; recognition of educational qualifications; closer consultation on macroeconomic and financial  policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating industries across the region to  promote regional sourcing; and enhancing private sector involvement.” 

The AEC is among the three communities that ASEAN wishes to adopt by 2015. The other two communities are the ASEAN Security Community which reinforces the regions dilemma of security and stability thru peaceful means of dispute settlement, the ASEAN Socio-cultural Community which is concerned with raising the standard of living of the disadvantaged ASEAN member as well as the ASEAN individuals. However, among this three the most challenging and received far more attention is the implementation of the AEC. Critics argue that there’s little time left for each ASEAN members to prepare

its economy to integrate with one another. There is a disproportionate incentive for ASEAN which means that members which are already experiencing a higher level of trade openness and optimistic economic growth would less likely feel the need to integrate with the lesser performing ASEAN states.

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III. ASEAN Integration  ASEAN Economic Community Blueprint

Full implementation of the AEC was initially proposed to happen by 2020 however, ASEAN leaders declared that the plans to integrate be accelerated to 2015. The out-ward-looking attitude ASEAN wants to project entails an AEC plan that pictures: 1. a single market and production base; 2. a highly competitive economic region; 3. a region of equitable economic development; and, 4. a region  fully-integrated into the global community. The figure below shows a conceptual framework of the AEC blueprints with its corresponding indicators:5 1. Single Market and Production Base

Areas of implementation for the single market involves 7 factors, which are:  free flow of goods, free flow of services, free  flow of investment, free flow of capital, free flow of skilled labour,  priority integration sectors, and  food, agriculture and forestry. The ASEAN Trade in Goods Agreement

(ATIGA) has been

established to cope up with the

5

 ASEAN Community Progress Monitoring System 2012. Association of Southeast Asian Nation 2013. Retrieved from http://www.asean.org/images/2013/resources/statistics/statistical_publication/ACPMS%202012%20PDF%20VERSI ON%20-%20061013.pdf 

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changing business environment by providing a synergy of tradable goods and services. Coverage of the ATIGA document includes business services, professional services, construction, distribution, education, environmental services, healthcare, maritime services, telecommunication and tourism. Internal committees as well as outsource support have been formed to study on liberalization mechanisms that benefit and/or harm both public and private sectors in the liberalization of trades of goods and services. 2. Highly Competitive Economic Region

This focuses in providing safety nets as well as enabling mechanisms to protect the industries and various sectors that would engage in free flow of trades and services. It includes: competition policy, consumer protection, strengthening Intellectual Property Rights, and Infrastructure Development. ASEAN wants to make sure that not only competition laws are established domestically; such laws need to be synced so as to avoid overlapping of authority. Individuals are also prot ected by establishing “regional consumer protection laws” to make sure that steady demand of ASEAN trades and services will not be

hampered due to unfair practices by corporations wanting to take advantage of the liberalized policies. 3. Equitable Economic Development

ASEAN adheres that there are varying levels of economic performance for each of its members, which is why part of the blueprint of ASEAN is to assure that states as well as individuals’ development

gaps are narrowed, and ultimately eliminated. This can be done through promotion of Small and medium-sized enterprises (SMEs). Through SMEs, lesser-equipped individuals can have a source of income for their own development. It establishes a “curriculum” for entrepreneurship to be utilized by

ASEAN countries, regardless of their “economic path”. 4. Global Economy Integration

As part of its outward-looking mindset, ASEAN has tapped countries and regional blocs for partnerships, establishing “free trade agreements” to gain foothold in trading. Count ries that have been

sought are Japan, South Korea, New Zealand, China and India. Economic integration with these countries

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will start on trading in goods, since preferential export partners will always be co-ASEAN members. It is therefore a challenge for ASEAN countries to innovate their products so as to make sure that it can really stand a chance with non-ASEAN competitors who have equipped themselves already with “technology-based” innovations to make their supply of goods more attractive.  ASEAN Scorecard According to ASEAN’s

scorecard published in 2011, it has already made

considerable

achievements on all 4 plans of integration. Though

equipping

ASEAN to be a highlycompetitive region, as well as establishing a single

market 

still

needs some work to be done to cope up, a 100% completion for Equitable Economic Development and Global Integration  has been achieved already.6 Though it’s not explicit whether AEC had made the ASEAN countries’ economy grow positively,

but substantial statistics have suggest that the region has been making progress lately. By year 2011, ASEAN’s  purchasing power has doubled already from $ 2882 in 2000, to $ 5581. This can be seen more

6

 ASEAN Economic Community Scorecard. Retrieved from: www.aseansec.org/wp- 

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precisely in Brunei Darussalam, Indonesia, Philippines, Malaysia, Singapore and Thailand, amidst each countries on-going domestic turmoil.7

Figure 1: Progress Report based ON GDP

In terms of growth in trade in goods and services has doubled  as well, from US$ 260.9 billion in 2004, to US$ 598.2 billion in 2011. Industries that have benefitted the most from this upsurge of trade are the Computer, Communications and Information services. This upward trend of ASEAN collectively is very evident even during the 2007 US Financial crisis. In addition, credit rating companies, whether regional local or foreign have given positive, if not increased credit rating for ASEAN countries, which would enable them to raise their chances of getting higher monetary assistance to fund heavy-investment sectors such as manufacturing to aid the region’s competitiveness. Moreover, Foreign Direct Investment has increased due to a positive forecast of ASEAN with a fourfold increase from US$ 21.81 billion in 2000 to US$ 114.08 billion in 2011. 8

7

Statistics to Track Progress: ASEAN Integration inched up to 2015. Retrieved from: http://www.asean.org/images/2013/resources/statistics/statistical_publication/ACPMS%202012%20PDF%20VERS ION%20-%20061013.pdf  8 Ibid.

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Figure 2: Foreign Direct Investment Flow

Besides progress measured thru income growth, in terms of improved living conditions, though some states still belong to the Bottom Billion group and are stuck along and below the poverty line, the population of these individuals has declined from 45% to 16% in Cambodia Laos, Myanmar and Vietnam.9

Figure 3: ASEAN Poverty Incidence

9

Statistics to Track Progress: ASEAN Integration inched up to 2015. Retrieved from: http://www.asean.org/images/2013/resources/statistics/statistical_publication/ACPMS%202012%20PDF%20VERS ION%20-%20061013.pdf 

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Lastly, the same countries of Cambodia Laos, Myanmar and Vietnam had made substantial progress in terms achieving improvement in Human Development, closing developmental gaps with much more developed ASEAN members from 25% gap to 23%. 10

Figure 4 Progress on Human Development

IV. CHALLENGES TO 2015 ASEAN ECONOMIC COMMUNITY 2015

ASEAN has weathered from its early birth pains up to the ASIAN financial and economic crisis, yet there are still issues which the regional bloc needs to address which, if neglected, would run counter to its “regional-community building” in 2015. With less   than a year left, ASEAN has to sort out the

technicalities of the liberalization of trade policies, settle regional leadership, establish unity among ASEAN members with diverse political backgrounds, and project an assertive stance over regional and international disputes.

10

Statistics to Track Progress: ASEAN Integration inched up to 2015. Retrieved from: http://www.asean.org/images/2013/resources/statistics/statistical_publication/ACPMS%202012%20PDF%20VERS ION%20-%20061013.pdf 

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At the onset of ASEAN’s conceptualization of the Political, Social and Economic Community,

ASEAN has already considered the competing policies, legal and political structures of each member states that will hinder the realization of the integrated community. In terms of a liberalized trade policy, ASEAN members though are not vocal about it, remains reluctant with the benefits they could get from integrating with co- ASEAN countries. This isn’t just in terms w ith the level of economic pe rformance that each country has, but with the nature of the economy itself. For countries that are already “open” to trade, there’s no problem anymore with trading with fellow “open-trade economies” since they have

the same policies in place in terms of trade barriers; however, for closed or semi-closed markets, they need to revise their trading policies to keep up with their fellow ASEAN countries. Technical working groups should be placed more in these countries since they will be the most vulnerable in terms of experiencing external shocks from a liberalized market.

Besides an environment that is conducive for free trade, quality and variety in trading has to be secured as well. More or less, ASEAN countries have the same land terrain and environment conditions that yield similar crops. Intense competition will persist among ASEAN countries in terms of attracting export-partners to buy their supplies. Countries that will fail to innovate and come up with other goods for trade incurs sacrifices to compete. Deflated price would of course attract buyers; however with deflated price one must ask whether the quality of the product is still the same. Customs policies need to be set-up to make sure that none of these will happen. Improper trading among ASEAN countries might lead to tensions, severing each other’s ties.

ASEAN has already entered into agreements of peace and cooperation with China over the South China Sea, however it still remains unimaginable that ASEAN could stand up to an obviously larger China. Even if we have US and Japan to aid us, a formal or even a cold war is unthinkable since it will counter ASEANs principle of utilizing “soft power” amidst settling territorial dispute. It is valid to ask

though if a regional organization such as ASEAN could exist and be significant without engaging in direct Page | 17

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conflict with a state, or another regional organization. Will ASEAN’s absence of a “NATO-like” army be the region’s deterrent why it can’t be aggressive in pushing for w hat its members wants?

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BIBLIOGRAPHY:

 ASEAN Community Progress Monitoring System 2012. Association of Southeast Asian Nation 2013. Retrieved from http://www.asean.org/images/2013/resources/statistics/statistical_publication/ACPMS%202012%20PDF %20VERSION%20-%20061013.pdf  ASEAN Economic Community Scorecard. Retrieved from: www.aseansec.org/wp-content/uploads/2013/07/AECScorecard.pdf 

Chia, S. Y. (October 2013). The ASEAN Economic Community: Progress, Challenges and Prospects.  Asian evelopment Bank Institute. Statistics to Track Progress: ASEAN Integration inched up to 2015. Retrieved from: http://www.asean.org/images/2013/resources/statistics/statistical_publication/ACPMS%202012%20PDF  %20VERSION%20-%20061013.pdf  http://www.asean.org/asean/about-asean/overview

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