ASEAN

ASEAN and the Regional Economy 45percentage, those that had been high to begin with remainedrelatively high. It also meant that the ASEAN countries haddifferent tariff rates on trade among themselves. Moreover, thepreferences were applied to negotiated lists of products ratherthan across the board. This led to the spectacle of ASEAN states,in the protectionist spirit of the times, offering concessions onmany products that they did not import. THE ROAD TO ECONOMIC INTEGRATIONAs ASEAN entered the decade of the 1990s, it was becomingclear that it not only had to engage in economic cooperationor go through the motions of trade liberalization; it had tointegrate the regional economy to a substantial extent if itwas to remain competitive in the global marketplace. TheWorld Trade Organization was emerging from the old GeneralAgreement on Tariffs and Trade. The Europeans were creatingthe European Union as the next step in Europe’s integration. TheNorth Americans were concluding their free trade agreement,and in the southern cone of South America a common marketwas being established. Reforms in China and, later, in India wereenergising those economies, presenting ASEAN with formidablecompetition for markets and investments. In Southeast Asia, the realities of globalization and region-alization were making the notion of regional economic inte-gration no longer taboo in ASEAN circles. Indeed, the decisionwas made, formally in 1992, to bring about the ASEAN FreeTrade Area (AFTA). The scheme would help tone up ASEANindustries for global competition, attract investments into theregion, and enable ASEAN to remain a significant actor in theworld economy. Regional economic integration would alsorequire domestic reforms that would move the regional eco-

46 ASEANnomies faster on the road from protectionism to freermarkets. AFTA, through the Common Effective Preferential Tariffscheme, committed ASEAN countries to bringing down tariffson intra-ASEAN trade across the board to 0 to 5 per cent, withlimited exceptions, within 15 years. ASEAN was to advancethis deadline twice, partly in response to the financial crisis,and eventually aim for zero tariffs. AFTA also called for theelimination of quantitative restrictions and other non-tariffbarriers to intra-ASEAN trade. In 1996, the ASEAN IndustrialCooperation scheme (AICO) was set up. In it, companies withproduction in two or more ASEAN countries could trade theirproducts at the AFTA tariff end-rate, currently at zero (withsome exceptions). Recognizing that market integration required more thantariff cutting, ASEAN subsequently agreed on other measuresto integrate the regional market, measures pertaining tocustoms, product standards, transportation, trade in services,and tourism. The effectiveness of free trade areas like AFTA and ofother preferential trading arrangements vitally depends on theability — and willingness — of national customs authorities toadminister them correctly and honestly. Thus, in 1997, ASEANconcluded an agreement that basically formalized the code ofconduct that the regions’ customs authorities had agreed uponin 1983. ASEAN has adopted the GATT Customs ValuationAgreement and the ASEAN Harmonized Tariff Nomenclatures inorder to arrive at a certain level of consistency in the applicationof customs regulations. To expedite customs processing, ASEANhas set up the Green Lane, through which imports from ASEANexclusively pass, and the Single Window, which is intended tohave import documents cleared at one station. It has adopted

ASEAN and the Regional Economy 47the post-clearance audit system, under which shipments can becleared immediately and inspected later. Goods cannot be marketed freely within a regional marketunless they are subject to the same standards and specifications.In 1997, ASEAN designated 20 products for standardization,mostly electronic and electrical equipment. Two years later, itadopted common safety standards for such equipment. ASEANconcluded a framework agreement on mutual recognitionarrangements under which products traded within ASEAN donot have to undergo tests or other conformity assessments inboth the importing and the exporting countries. With a progressively larger portion of the ASEAN economybeing made up of services, the intra-regional liberalizationof the market for services is vital for the integration of theregional economy as a whole. Many services sectors are alsodirectly supportive of the production of and trade in goods. Thequality and effectiveness of certain services are often a factorin investment decisions. In December 1995, ASEAN concludedthe ASEAN Framework Agreement on Services, which was meantto remove most restrictions on intra-regional trade in services,liberalizing such trade beyond the commitments made underthe global General Agreement on Trade in Services. Sincethen, ASEAN has concluded five packages of commitmentsinvolving business services, construction, distribution, education,environmental services, health care, maritime transport,telecommunications and tourism. In addition, two packageshave been worked out for financial services and two for airtransport. Mutual recognition arrangements (MRAs) have beenadopted for engineering and nursing services, followed byMRAs for architecture and surveying services. Transport, almost by definition, is essential to trade ingoods and to most movement of people, the smoother and

48 ASEANthe less expensive the better. ASEAN, therefore, has launcheda programme to inter-connect and in various ways upgradeSoutheast Asia’s highways. The ASEAN energy sector has laidplans for a gas pipeline network. The Singapore-Kunming RailLink (SKRL) is the flagship project of the ASEAN Mekong BasinDevelopment Cooperation, an ASEAN-China programme. TheSKRL project aims to rehabilitate or improve existing rail lineson mainland Southeast Asia and to construct the missing links,largely in Cambodia, and spur lines into Laos and Myanmar.In 1998, ASEAN concluded a framework agreement to allowgoods being traded between two countries to pass in transitthrough a third without hindrance. That same year, ASEANagreed on the mutual recognition of commercial vehicleinspection certificates. It adopted agreements on air cargo in2002 and on multimodal transport in 2005. In 2002, the ASEAN leaders signed a regional tourism agree-ment expressing the intention to facilitate travel within theregion and the entry of international visitors into it, loosenairline restrictions and liberalize other tourism-related services,conserve the environment, preserve the cultural and historicalheritage, and protect women and children against tourism-related exploitation. FALLING SHORT OF INTEGRATIONIn terms of tariff cutting, AFTA has been more or less onschedule, so that today almost all of intra-ASEAN trade is nolonger subject to tariffs. However, many non-tariff barriersremain in place, although the AFTA agreement calls for theirremoval. One important problem is that ASEAN looks togovernments to identify their own non-tariff barriers ratherthan listening to the traders, who actually deal with them. This

ASEAN and the Regional Economy 49self-serving procedure almost ensures that any removal of non-tariff barriers will happen not through region-wide arrange-ments but by unilateral reforms in national trade policies. Inany case, intra-ASEAN trade has remained stuck at the 25 percent level or below in the past few years. Even that level oftrade cannot be attributed to AFTA, since, for various reasons,AFTA tariff rates are invoked in only a very small percentageof intra-ASEAN trade. Much of the trade in manufacturedgoods in the region consists of electronics products, which areduty-free. Nor has AFTA been much of a factor in decidingwhether to invest in ASEAN or not. One exception is AICO.As of 10 April 2007, 150 applications for AICO tariff treatmenthave been approved, most of them in the automotive sector.However, AICO involves only intra-company trade and cannotbe considered as an indication of the success of AFTA as awhole. As noted above, market integration takes more than theremoval of tariffs, and ASEAN has taken steps to address theother requirements of integration. It has adopted certain normsto achieve greater coordination, consistency and efficiency incustoms operations in the region, but the progress of reformin the practices of national customs administrations is quiteuneven. ASEAN has committed itself to product standardiza-tion and has adopted common standards for certain products.It has agreed on some form of mutual recognition arrange-ments for two sectors — cosmetics and electrical and electronicequipment — and is working on a third — pharmaceuticals.However, progress has been extremely slow. Transport is vital for trade and travel, and ASEAN has rightlygiven much importance to it. However, four of the five ASEANcountries on the Mekong Basin, where much of this attentionis concentrated, are the four newer and less economically ad-

50 ASEANvanced members of the association. Three of them are in theUnited Nations’ category of least-developed countries. Thephysical-infrastructure component of ASEAN transportschemes — the rail link, the highway network, the bridges, andthe gas pipelines — is, therefore, highly dependent on grantsand loans from developed countries and financial institutionslike the Asian Development Bank. The China-financed endeav-ours to dredge parts of the Mekong in order to expand itsuse for transport purposes may have negative effects on theecology of the Mekong area. The goods-in-transit frameworkagreement has not been implemented because of continuingdisputes between Malaysia and Singapore over transit routes,although some progress has been achieved. Land transportthrough certain countries on the Southeast Asian mainlandremains prohibitively expensive. The liberalization of passengerair services still depends on unilateral policy decisions orbilateral agreements. In many cases, air services continue tobe restrictive, to the detriment of commerce and tourism,although, with the advent of low-cost carriers, the situationhas improved. Several countries have excluded commerciallyimportant airports from the application of the 2002 air cargoagreement. The annual ASEAN Tourism Forum has been a roaringsuccess since 1981, bringing thousands of buyers and sellersof tourism services together as a collective ASEAN endeavour.However, the ASEAN tourism agreement providing for furthermeasures to encourage tourism in the region has been largelyignored. With respect to services in general, the five packages ofcommitments agreed upon thus far have not resulted in anymeaningful liberalization of the services trade. Most of thecommitments are already in the books of the ASEAN states

ASEAN and the Regional Economy 51concerned; many are in fact less than those made in the WTO.Nevertheless, committing them in a regional context locksin the commitments, making them more difficult to repeal.Ironically, this is probably why ASEAN has not achieved muchprogress in regional agreements to integrate the regional marketfor services. FINANCE COOPERATIONASEAN has long recognized the importance of finance as acomponent of economic cooperation. A special committeeof ASEAN central banks (Monetary Authority in the case ofSingapore) was organized as early as 1973. The ASEAN swaparrangement was set up in 1977, an instrument that to thisday remains in effect, in an expanded form in terms both ofparticipation and amounts involved. However, ASEAN finan-cial cooperation gained momentum only in 1997, with theonset of the Asian financial crisis. Although ASEAN had notanticipated the depth or timing of the crisis — practically nobodyelse did — the member-states, in response, took steps to preventa recurrence of a crisis of that magnitude. (The ASEAN financeministers had their first formal meeting in March 1997, fourmonths before the start of the crisis.) They launched a processfor the review and surveillance of the regional and nationaleconomies, a process that soon encompassed China, Japanand Korea. With those three Northeast Asian countries, theyset up a steadily expanding network of bilateral currency swapand repurchase agreements, anchored by Japan, to discouragecurrency speculation and enable the participants to help oneanother in case of liquidity problems. Today, the forums of finance ministers and finance ministryand central bank officials are among the most active of the

52 ASEANASEAN economic mechanisms, meeting three or four times ayear, both among ASEAN member-countries and in the ASEANPlus Three process with China, Japan and Korea. They keepthe regional economy and the national economies under scru-tiny in frequent review and surveillance sessions The ASEANswap arrangement has been enlarged to US$2 billion, with allten ASEAN member-countries participating in it. The networkof bilateral currency swap and repurchase arrangements amongthe ASEAN Plus Three countries has expanded to 16 arrange-ments and a total value of about US$80 billion. The networkis being multilateralized, that is, a swap is to be activatedthrough collective decision, and the earmarked currencies areto be pooled. The portion of the swap outside of InternationalMonetary Fund conditionalities has been raised from 10 to20 per cent. ASEAN Plus Three has also launched the AsianBond Market Initiative, which is meant to channel East Asia’senormous savings and financial reserves into investments inthe region. Several Asian-currency bond issues have beencarried out. How best to coordinate exchange rates is beingexplored, a goal that would bring about greater financialstability and make trade easier in the region. Research projectsand training programmes underpin these endeavours, all ofwhich have the technical support of the Asian DevelopmentBank. The question is being raised as to whether it is now timeto create permanent and dedicated institutions to drive andsupport financial cooperation on an ASEAN Plus Three basis.Such institutions would provide staff support for the review andsurveillance process, the multilateralized swap and repurchasearrangements, the credit guarantee facility for the Asian BondMarket, the proposed exchange rate mechanism, the research,and the training programmes, among other functions.

ASEAN and the Regional Economy 53ECONOMIC LINKS TO THE WORLDASEAN’s links with the outside world were initially economic.Its first move in this direction was the establishment in 1972of the Special Coordinating Committee of ASEAN Nations,(SCCAN) made up of economics officials and headed byIndonesia’s Minister of Trade, Sumitro Djojohadikusumo,to start a dialogue with the European Economic Com-munity. ASEAN had deemed it appropriate to establish arelationship with the world’s most advanced regional asso-ciation. Moreover, ASEAN sought to gain greater access forits exports — at that time, primarily commodities — to theEuropean market. Europe, too, was looked upon as a sourceof development assistance. At the same time, ASEANappreciated its recognition as a regional entity by theEuropean Economic Community. A Joint Study Group wasorganized to make recommendations on ASEAN-EEC economiccooperation. In the case of Japan, the initial ASEAN concern wasover the “indiscriminate expansion” and “accelerated export”of Japan’s synthetic rubber industry in direct competitionwith Southeast Asian, mainly Malaysian, natural rubber. OnJapan’s part, it saw Southeast Asia as an important sourceof raw materials, including fossil fuels, and an exportmarket. Later, the appreciation of the yen in 1985 led Tokyoto encourage Japanese firms to relocate operations to South-east Asia. For this, Japan had to help raise Southeast Asia’spurchasing power, train its people, and build its infrastruc-ture. These considerations drove Japan’s official developmentassistance programme in Southeast Asia, which has come con-sistently to account for 30 per cent of Japan’s global ODA. Meanwhile, the riots that greeted Prime Minister KakueiTanaka’s visit to Bangkok and Jakarta in January 1974 — soon

54 ASEANafter a major global energy crisis — brought home to Japan theneed to develop ASEAN-Japan relations beyond the purely eco-nomic to a comprehensive strategy that would include firmerpolitical ties and cultural and people-to-people relations. This strategy was spelled out in the 1977 Fukuda Doctrine— named for Prime Minister Takeo Fukuda, who enunciated it— a policy invoked thereafter by succeeding Japanese leaders,who generally made it a point to visit ASEAN countries shortlyafter taking office. It is in this context that Japan has underwrit-ten many cultural and people-to-people, as well as economicand development, projects for ASEAN and its member-states. Australia entered the ASEAN Dialogue system in 1974 andNew Zealand in 1975. The United States and Canada followedin 1977. As in the case of Japan, ASEAN’s initial interest inthese relationships was centred on market access, investments,and technical and development assistance. After the ASEANleaders issued their mandate to them as the association’scentral economic forum, the ASEAN Economic Ministers (AEM)became heavily involved in the Dialogues in the light of theirheavily economic content at the time. Thus, the AEM hadmuch say on the Dialogues’ agendas, the assignment ofDialogue coordinator-countries, the projects to be undertakenwith the Dialogue Partners, the composition of the joint co-operation committees to manage the projects, and so on. In the mid-1980s, however, as the Dialogues graduallybroadened to include political and security matters, theASEAN foreign ministries took sole control of the process.Thereupon, the AEM initiated consultations with their counter-parts from ASEAN’s leading economic partners. The economicministers conduct such consultations regularly with China,Japan and Korea, together and separately, and with Australiaand New Zealand together. They meet in varying degrees of

ASEAN and the Regional Economy 55frequency with the European Trade Commissioner, the UnitedStates Trade Representative, and India’s Minister of Commerce.It is in these forums where trade and investment issues areworked out and the principles for free trade areas and economicpartnerships are agreed upon. On the basis of their 2002 Comprehensive Economic Co-operation Agreement, ASEAN and China have concluded anagreement on trade in goods in which they undertook pro-gressively to reduce tariffs on trade between them. They alsoagreed to remove non-tariff barriers to trade, with the modali-ties and timeline to be decided later. At the same time, theyset up a dispute-settlement mechanism for issues arising fromthe CEC agreement. ASEAN and China have recently con-cluded a broad agreement on the liberalization of trade inservices. Similarly, following the conclusion of a ComprehensiveEconomic Cooperation Agreement, ASEAN and South Koreahave set up a dispute-settlement mechanism and, with Thailandopting out, signed an agreement on trade in goods and, later,one on trade in services. India has entered into a Comprehen-sive Economic Partnership Agreement with ASEAN. The twosides are negotiating a free trade area agreement. ASEAN andAustralia and New Zealand concluded a Comprehensive Eco-nomic Partnership Agreement in 2000 providing for theliberalization and facilitation of trade and investments and arenegotiating a free trade agreement. ASEAN and the EuropeanUnion have started negotiations on a free trade area betweenthem. Japan, together with the United States, is ASEAN’s leadingtrading partner. It is among ASEAN’s principal sources ofinvestments, technology and tourism. It is the largest providerof official development assistance to ASEAN as a group and

56 ASEANto its individual members. Japan has concluded “economicpartnership” agreements with Singapore, Malaysia, thePhilippines, Indonesia, Thailand and Brunei Darussalam and, atthe ASEAN-Japan Summit in November 2007, one with ASEANas a group. The United States has entered into a Trade and InvestmentFramework Arrangement (TIFA) with ASEAN as a group afterconcluding TIFAs with some individual ASEAN members. It hasentered into a free-trade agreement with Singapore and startednegotiating one with Malaysia. Negotiations with Thailandhave been suspended partly on account of the political turmoilin that country. The US-ASEAN Business Council, a businessassociation of more than a hundred major American corpora-tions doing business in ASEAN, holds periodic consultationswith the ASEAN economic, finance, transport, energy, telecom-munications and other ministers. It articulates the interestsand requirements of American business in ASEAN and makesrecommendations for ASEAN policy and practice. It has a mod-est programme of trade-related technical assistance for ASEANcountries. It is also the leading ASEAN advocate in the U.S. As recounted in the previous chapter, ASEAN has givenspecial importance to its relations with China, Japan andKorea through the ASEAN Plus Three and ASEAN Plus Oneprocesses. Starting with the first summit meetings in 1997,these processes are heavily economic in content, although theyexert a strong political impact as well. Apart from the high-profile political dimension, the most prominent of the ASEANPlus Three activities have been those of an economic nature— the measures to accelerate regional economic integration andcooperation in finance. ASEAN Plus Three finance cooperation is described above.An ASEAN Plus Three Joint Expert Group has completed a

ASEAN and the Regional Economy 57study recommending the conclusion of an East Asia Free TradeArea. On the other hand, upon Japan’s proposal, the East AsiaSummit (EAS) in January 2007 agreed to launch a study on aComprehensive Economic Partnership in East Asia among EASparticipants. IMPERATIVES OF ECONOMIC INTEGRATIONFrom several standpoints, the case for ASEAN economic inte-gration seems evident. An integrated ASEAN economy would bemore attractive to investors than one that is fragmented intosmall national economic regimes, both as a “domestic” marketand as a platform of production for export. An integratedmarket tends to lower production and transaction costs andenhance the efficiency of trade. This should stimulate and attractinvestments and translate itself into jobs and lower prices.The requirements of integration could be used as an argumentin support of domestic reforms. An integrated ASEAN wouldmagnify Southeast Asia’s voice, influence and leverage inglobal economic affairs. Beyond the economic considerations,an economically integrated ASEAN would strengthen theassociation’s political cohesion by giving each member-countrya bigger stake in the region’s progress and prosperity andenlarging their common interests. As a salutary side-effect, thiswould enhance ASEAN’s credentials and capacity to managethe regional processes in the larger area of the Asia-Pacific ofwhich it serves as the hub, but currently simply by default. ASEAN’s governments recognize these benefits of regionaleconomic integration, having largely removed tariffs on intra-ASEAN trade and entered into framework agreements to bringabout effective integration. However, these broad commitmentsare not self-executing. Specific obligations to take action have

58 ASEANto be undertaken. Customs operations have to be reformedin order for trade preferences to work. The painstaking workof harmonizing product standards has to be stepped up.Transportation links have to be strengthened and transport costsreduced. Trade in services has to be liberalized with a view tointegrating the regional economy. One problem is that ASEAN institutions and processes areweak in terms of moving initiatives forward and ensuring com-pliance with commitments. They are weak, because not allASEAN countries have reached the point at which theyidentify to a substantive extent their national and politicalinterests with the welfare and progress of the region as awhole. In some cases, they do not look beyond their currentmarkets to the promise of a regionally integrated economy thatwill benefit all. This is reflected in the fact that most ASEAN gov-ernments do not feel any pressure from their business sectorsto accelerate the pace of regional economic integration. Despite all this, some progress is being made, albeit slowly.The November 2007 ASEAN Summit adopted a blueprint forachieving the ASEAN Economic Community, with clear sche-dules. It remains to be seen, of course, whether the time linesprescribed in the blueprint will be complied with. Meanwhile,China, India and others in the world are not standing still. Thenew ASEAN Charter is supposed to strengthen ASEAN’s insti-tutions and make its processes more effective and expeditious.However, the Charter will be only as good and effective asthe member-states make it in terms of actual implementation.This, in turn, will depend on whether they and their businesscommunities see the regional good as identical to their own.

Chapter 4Working Together forthe Common GoodThere have been in recent years increasing calls upon ASEANto be “people-centred” or “people-oriented”, to take the“people’s” concerns into account, and to consult with the“people’s representatives” in what is often called “civil society”.The implication is that regional security is the domain ofpoliticians, diplomats and generals and that regional economicintegration is the concern only of governments, corporationsand captains of industry. This is somewhat surprising, sincepeople, in very real ways, do benefit from regional securityand would profit from the effective integration of the regionaleconomy. An atmosphere of regional stability and securityallows people to live their lives and pursue their livelihoods inpeace — provided, of course, that the domestic situation is alsolargely free of violence. Regional economic integration would,if done right, attract investments, spur economic growth, gen-erate jobs, and lower costs. If accompanied by national policiesto distribute the benefits of growth equitably, it would benefitthe people at large. The problem is that this linkage betweenregional security and economic integration on the one handand people’s personal welfare on the other is seldom made.Moreover, legitimate governments are expected to reflect the 59

60 ASEANinterests of their people and articulate and advance them ininter-governmental processes. Nevertheless, ASEAN does take cooperative action on mattersthat more directly affect the quality of people’s lives and arepublicly perceived to do so. The most prominent of these havebeen communicable diseases and the environment, togetherwith transnational crime and international terrorism. ASEANcooperation with respect to natural disasters has also gainedprominence, particularly as a consequence of the 2004 tsunamiand the other catastrophes that have visited the region inrecent years. The ASEAN position on human rights has beenthe subject of occasional public attention. COMMUNICABLE DISEASESThe ASEAN response to the 2003 SARS crisis has been hailedas an achievement in regional cooperation against a commonthreat. Preceded by a meeting of the health ministers ofASEAN, China, Japan and Korea, an emergency ASEAN summitmeeting, joined later by China’s Premier and Hong Kong’sChief Executive, issued the mandate for inter-agency coopera-tion — “with real power of enforcement” — in carrying outthe health ministers’ decisions. Those decisions includedthe establishment of a “hotline” network among designatedcontact points, the quick sharing of information, pre-departurescreening, the management of suspected cases in flight, dis-infection of aircraft, coordinated procedures at internationaldeparture and arrival points, and other measures recommendedby the World Health Organization (WHO) for travel from andto countries affected by SARS. Because of such cooperationand the support of the WHO and countries like China andJapan, the SARS epidemic was stopped in its tracks.

Working Together for the Common Good 61 The threat of an outbreak of avian influenza amonghumans is more diffuse. Only a few ASEAN countries havesuffered fatalities from the disease, but the possibility of apandemic hangs over the whole region. This possibility arisesfrom the potential mutation of the avian influenza virusinto a strain that can be transmitted between humans. At thesame time, culling infected poultry inflicts enormouscosts on the families affected or their governments or both.Whether between fowls, between fowls and humans or,potentially, between humans, such infections easily crossnational boundaries. Moreover, the disease requires quickdiagnosis and intensive information sharing. The expensivemedicine needed to counter it has a short shelf life and hasto be administered within 48 hours of the onset of theinfection. Thus, avian influenza has risen to the top of ASEAN’sconcerns. ASEAN bodies dealing with agriculture and health areworking jointly at the ministerial, officials and technical levelsto prevent, control and eradicate the disease, officially calledthe highly pathogenic avian influenza. They are workingtogether with other countries, particularly Australia, China,Japan and Korea, and international organizations, notablythe World Health Organization, the United Nations Food andAgriculture Organization, the World Organization for AnimalHealth and the Asian Development Bank. ASEAN cooperationcovers surveillance, containment, vaccination policy, diag-nostic capability, information sharing, emergency preparedness,and public awareness. ASEAN countries also participate inglobal efforts to prepare for and respond to the possibleoutbreak of a pandemic. Already, Japan has donated vaccines,test kits and protective equipment, which are stockpiled inSingapore for ASEAN use in case of a pandemic outbreak.

62 ASEAN According to UNAIDS, the countries that have the highestnational AIDS infection levels are in Southeast Asia. It is inrecognition of this that two ASEAN Summits have devotedspecial sessions to the HIV/AIDS problem, in November 2001and in January 2007. While ASEAN’s declared commitmentsin countering the HIV/AIDS epidemic entail operationalaction at the national level, ASEAN attention to it furnishes apolitical and institutional framework for mutual support andthe exchange of data and knowledge. It gives regional sanctionto sometimes-difficult national decisions. It provides regionalcoherence to international cooperation on a global problem.Coordinating regional cooperation on HIV/AIDS is the ASEANTask Force on AIDS, which the ASEAN leaders created in1992. ASEAN cooperation with the Northeast Asian countriesin dealing with communicable diseases is prescribed in andguided by the ASEAN Plus Three Emerging Infectious DiseasesProgramme, which was adopted in April 2004 and has Australia’ssupport. THE ENVIRONMENTUnlike the management of infectious diseases, in which theregional interest and the necessity of regional action are clear,the problem of transboundary haze pollution — a case of eventsin one country severely affecting its neighbours — has beena struggle for Indonesia primarily, but also for neighbouringcountries. It has been a concern for ASEAN as a whole andthe world at large. The haze in question arises largely fromfires deliberately set to clear forests for oil palm, rubber orother plantations. Some of it is caused by the burning of peatjust beneath the surface of the soil. The fires are ignited by

Working Together for the Common Good 63a combination of forest clearing and dry conditions duringEl Niño episodes. Much of the burning takes place in thetropical forests of Indonesia. Although ASEAN had addressedhaze episodes in the past, specifically in the 1980s and early1990s, the most severe since ASEAN’s founding took placein 1997–98. That disaster wrought immense damage to theagriculture, tourism and transportation of the neighbouringcountries and to Indonesia’s forests and their ecology, posedhealth problems for their peoples, and affected the globalenvironment. There were and are, of course, no easy or simple solutionsto this huge problem. It involves drawing up the appropriatelaws and policies and enforcing them, navigating the shoalsof clashing and intersecting business and political interests,poverty, tradition, commerce, and the diversification of sourcesof energy as well as environmental considerations. Accordingly, ASEAN has adopted both short-term and long-term measures to deal with all facets of the complex situation.In response to the 1997–98 episode, an ASEAN MinisterialMeeting on Haze was organized, supported by the Haze TechnicalTask Force. It is in this institutional framework that ASEANcountries have pressed Indonesia to try harder in enforcing itsown laws and policies against the burning of forests. Notableamong these policies is that of zero burning, which ASEANadopted as a group. It was also in this framework that ASEAN agreed on theRegional Haze Action Plan, which prescribes action at bothregional and national levels to monitor “hot spots”, preventforest and peat fires, and mitigate their impact. The plan and itsimplementation have had the support of the Asian DevelopmentBank. The ASEAN Specialised Meteorological Centre, a basicallySingapore facility, was strengthened. The locations of fires and

64 ASEAN“hot spots” in Southeast Asia as detected by the centre canbe pinpointed daily on ASEAN’s haze Web site (http://www.haze-online.or.id). Some ASEAN countries have earmarked fire-fighting equipment and personnel for deployment in casean ASEAN country afflicted by haze-causing fires requests forassistance. The ASEAN Secretariat and the Indonesian Govern-ment, with the support of other countries and internationalorganizations, have conducted simulation exercises, trainingprograms at the community level, and campaigns to raiseawareness of the zero-burning policy among communities andbusinesses involved in the clearing of forests. With the support of the UN Environment Programme forits drafting, ASEAN concluded the Agreement on Transbound-ary Haze Pollution in June 2002. After the requisite six ratifica-tions, the agreement entered into force in November 2003.(Indonesia and the Philippines have not ratified it.) Underthe agreement, each party commits itself to ensuring that noactivity in its territory harms the environment or human health“beyond its national jurisdiction” and to taking measures toprevent transboundary haze pollution resulting from landor forest fires, monitor such fires, and put them out shouldthey occur. The country where the haze arises is obligated tofurnish information to an affected country that requests it.The agreement also has provisions for mutual assistance andthe establishment of institutions to ensure compliance andimplementation. Because of the complexity and deep roots of the hazeproblem, ASEAN has taken long-term measures to deal withit in addition to its immediate response. Many of thesemeasures are embodied in the Regional Haze Action Plan,its “operationalized” version, and the implementing manualsand protocols. They involve capacity building through train-

Working Together for the Common Good 65ing, simulations and joint exercises, raising awareness of thezero-burning policy among plantation owners and executivesand villagers, mobilizing communities and local governments,public education, and research. In these, ASEAN has the sup-port of the Asian Development Bank, the UN DevelopmentProgramme, the UN Environment Programme, the EuropeanUnion, the United States, and other countries and internationalorganizations. The haze problem is only one, albeit the most prominentone, of ASEAN’s environmental concerns. Southeast Asia isincredibly rich in natural resources and biodiversity. Yet,because of rapid economic growth, weak law enforcement inseveral countries, and in some cases outdated policies and alow level of concern, Southeast Asia’s natural environment isunder severe threat. According to the Third ASEAN State of the EnvironmentReport 2006, forests and woodlands cover 45 per cent of ASEAN’sland area, as against 30.3 per cent of the whole earth. However,the ASEAN region is being deforested at the rate of 1.35 percent a year, the highest among the regions of the world. From1990 to 2005, Southeast Asia suffered an average annual loss of2,700 square kilometers of forest, so that the region’s forestcover has dropped from 55 per cent in 1990 to 45 per cent in2005. ASEAN accounts for 31 per cent of the world’s coral reefarea — and 34 per cent of its mangroves — again, the highestamong the world’s regions. However, no less than 80 per centof ASEAN’s coral reefs is at risk — as against 58 per cent ofthe world’s total — from pollution, overfishing and destructivemethods such as dynamite and cyanide fishing. As many as27,100 plant and animal species are endemic to SoutheastAsia, 20 per cent of the world’s known species. However,seven out of the world’s 25 recognized biodiversity “hot

66 ASEANspots” are also in the region, “hot spots” being biologicallyrich areas that are under the greatest threat of destruction.Southeast Asia still has adequate sources of fresh water, butregional demand is expected to increase by one-third over thenext 20 years. At the same time, many Southeast Asian citiesare plagued by problems of waste disposal and other forms ofurban blight. The measures required to hold back and reverse environ-mental destruction are largely national responsibilities. However,ASEAN has recognized that such measures would gain ineffectiveness if they were pursued also through regionalcooperation. With the support of the German and Koreangovernments, ASEAN has embarked on two programmes forthe conservation and restoration of Southeast Asia’s forestecosystems. It has set up a system of “heritage parks” to pro-mote conservation, preserve the park areas for the enjoymentof people, and raise public consciousness of the need topreserve and protect nature. With financial support fromthe European Union, ASEAN has established a Centre forBiodiversity in the Philippines, which is engaged in formulatingpolicy, developing capacity, promoting public awareness andeducation, and coordinating ASEAN’s collaboration with theinternational community to conserve and promote SoutheastAsia’s biodiversity. Because environmental concerns involve many other areasof human life and endeavour, ASEAN has conducted its co-operation on the regional environment in a comprehensivemanner. Thus, the ASEAN State of the Environment Reports,which have been published every three years since 1997,contain a wealth of data not only on fresh water, coral reefs,forests, and emissions but also on the regional economy,population and other social indicators.

Working Together for the Common Good 67NATURAL DISASTERSMost Southeast Asian countries are prone to natural disasters— typhoons, earthquakes, tsunamis, volcanic eruptions, floods,mudslides, and so on. Some of these disasters occur year afteryear, others in unexpected times. Despite being called “natural”,some are brought about or aggravated by human activity, suchas the deforestation that causes floods and mudslides andthe burning of forests that brings about haze pollution.Others are simply acts of nature, which are impossible toprevent but which, in some cases, can be anticipated and theimpact of which can sometimes be mitigated. Most disasters are within the capacity of individual statesto deal with. If they are of such magnitude as to call forinternational assistance, they often are too big for ASEAN tohandle and require a response from the larger internationalcommunity, in which ASEAN neighbours can and do take part.Nevertheless, a specifically ASEAN response to a disaster in amember-country would be an obvious focus of ASEAN cooperativeaction and a vivid manifestation of regional solidarity. In March 2005, less than three months after the greattsunami ravaged the countries on the rim of the Indian Ocean,the ASEAN Secretary-General, Ong Keng Yong, speaking at aconference in Seoul, lamented, “The earthquake and tsunamidisaster of 26 December 2004 … laid bare our unpreparednessand our weaknesses in collectively addressing such large scalecalamities. The sad thing is we, in fact, have the technologyand resources to deal with such disasters. Unfortunately, wehave not made the best use of these assets.” In fact, as early as 1976, the then-five members of ASEANhad issued their Declaration on Mutual Assistance on NaturalDisasters pledging to improve their channels of communication

68 ASEANwith respect to natural disasters, exchange experts, trainees, infor-mation and documents, disseminate “medical supplies, servicesand relief assistance”, and facilitate it. However, it was not until 2003 that the experts’ group setup shortly after the declaration’s adoption was elevated intothe ASEAN Committee on Disaster Management. Made upof the heads of national agencies dealing with natural disasters,the committee promptly adopted the ASEAN Regional Pro-gramme on Disaster Management for 2004–10 and beganworking on the ASEAN Agreement on Disaster Managementand Emergency Response. The agreement reaffirms the ASEAN countries’ undertakingto render assistance to members afflicted by a natural disasterand commits them jointly and individually to develop “strategiesto identify, prevent and reduce risks” of such disasters. Thestrategies would include “regional standby arrangements” forrelief and rehabilitation, under which members would volun-tarily earmark assets for the purpose. The agreement calls forthe coordination of relief and emergency response operations.Under the agreement, an ASEAN Coordinating Centre forHumanitarian Assistance would be established to facilitatecooperation and coordination, including the consolidationand dissemination of data, administer the regional standbyarrangements, and otherwise support the implementation ofthe agreement. An ASEAN Disaster Management and EmergencyRelief Fund has been set up, to which contributions would, atleast for now, be voluntary. Because it was signed seven months after the great tsunami,on 26 July 2005, the impression set in that the agreementwas a response to that catastrophe. In fact, the ASEAN disastercommittee had begun working on it sometime before then.ASEAN did respond quickly to the tsunami, particularly in

Working Together for the Common Good 69the case of Indonesia, the hardest-hit of the ASEAN members.Eleven days after the tsunami struck, ASEAN convened aninternational summit to deal with the dire situation. Fifteenheads of state or government and fifteen ministers were inattendance, including all ten ASEAN leaders and the PrimeMinisters of China, Japan and South Korea. UN Secretary-GeneralKofi Annan and European Commission President José ManuelBarroso were also on hand. ASEAN assistance was mobilized in the aftermath of theearthquake that struck the Yogyakarta area in Central Java on27 May 2006, killing some 5,000 people. Brunei Darussalam,Malaysia, the Philippines, Singapore and Thailand deployedteams to the area, while Cambodia, Laos and Vietnam sentfood and cash. Requiring ten ratifications, the ASEAN Agreement onDisaster Management and Emergency Response has not yetformally entered into force. However, a number of its provi-sions are already being carried out. Disaster-related specializedtraining is being undertaken, and training institutes are beinglinked. Information is being shared through a dedicated web-site and a communications system. A database has been set upwith data from four countries so far. Technical cooperationis being carried out with respect to earthquakes, flash floods,landslides and river-bank erosion, typhoon preparedness, andan early warning system for haze pollution. Not least, simulation exercises are being conducted. Twomonths after the agreement’s signing, an exercise took place inresponse to a hypothetical earthquake in Selangor, Malaysia.For this, at Malaysia’s request, Brunei Darussalam and Singaporedeployed search-and-rescue teams. The exercise also tested thecapacity of Malaysia’s own agencies to coordinate their response.It was followed by a meeting and a workshop with a view to

70 ASEANincorporating the lessons learned into the ASEAN StandbyArrangements and Standard Operating Procedures. A similar exercise was held in September 2006 to simulatethe ASEAN response to possible flooding in Cambodia. A thirdwas scheduled in October 2007 to deal with a hypothetical“structural collapse” in Singapore. For many among the public, ASEAN’s cooperative responseto natural disasters is the litmus test of the efficacy of ASEANcooperation. HUMAN RIGHTSSome people measure ASEAN’s value in terms of human rights.The discourse on human rights in ASEAN frequently featuresthe consideration of the balance and tension between individualand community rights, between rights and obligations, betweenfreedom and order, between self-determination and territorialintegrity. The closest that ASEAN has moved to a commonposition on human rights was in the Joint Communiqué of the1993 ASEAN Ministerial Meeting, which included this carefullycrafted statement: 16. The Foreign Ministers welcomed the international consensus achieved during the World Conference on Human Rights in Vienna, 14–25 June 1993, and reaffirmed ASEAN’s commitment to and respect for human rights and fundamental freedoms as set out in the Vienna Declaration of 25 June 1993. They stressed that human rights are interrelated and indivisible comprising civil, political, economic, social and cultural rights. These rights are of equal importance. They should be addressed in a balanced and integrated manner and protected and promoted with due regard for specific cultural, social,

Working Together for the Common Good 71economic and political circumstances. They emphasizedthat the promotion and protection of human rightsshould not be politicized.17. The Foreign Ministers agreed that ASEAN shouldcoordinate a common approach on human rights andactively participate and contribute to the application,promotion and protection of human rights. They notedthat the UN Charter had placed the question of universalobservance and promotion of human rights withinthe context of international cooperation. They stressedthat development is an inalienable right and that theuse of human rights as a conditionality for economiccooperation and development assistance is detrimentalto international cooperation and could undermine aninternational consensus on human rights. They empha-sized that the protection and promotion of human rightsin the international community should take cognizanceof the principles of respect for national sovereignty,territorial integrity and non-interference in the internalaffairs of states. They were convinced that freedom,progress and national stability are promoted by a balancebetween the rights of the individual and those of thecommunity, through which many individual rights arerealized, as provided for in the Universal Declaration ofHuman Rights.18. The Foreign Ministers reviewed with satisfaction theconsiderable and continuing progress of ASEAN in freeingits peoples from fear and want, enabling them to live indignity. They stressed that the violations of basic humanrights must be redressed and should not be toleratedunder any pretext. They further stressed the importanceof strengthening international cooperation on all aspectsof human rights and that all governments should uphold

72 ASEAN humane standards and respect human dignity. In this regard and in support of the Vienna Declaration and Programme of Action of 25 June 1993, they agreed that ASEAN should also consider the establishment of an appropriate regional mechanism on human rights. This is a balanced statement, the product of consensusamong the then-six ASEAN members. Since the entry of thefour newer members in the late 1990s, the 1993 position hasnot changed. In practice, ASEAN promotes human rights step by step,sector by sector. In June 2004, for example, the ASEAN for-eign ministers signed the Declaration on the Elimination ofViolence Against Women in the ASEAN Region. That docu-ment expresses the ASEAN states’ commitment to “endeavourto fully implement the goals and commitments made re-lated to eliminating violence against women and monitortheir progress”. The measures envisioned include researchand data-gathering, an “integrated” approach to the elim-ination of violence against women, and domestic legisla-tion for that purpose. The commitments, however, arefar from binding, the document being sprinkled withsuch terms as “encourage”, “promote” and “intensify efforts”.There is no evidence that progress in carrying out these inten-tions, general as they are, is being monitored or followedthrough. The problems arising from the increasing numbers of peoplefrom ASEAN countries working or seeking jobs in other ASEANcountries have been a growing ASEAN concern. To addressthem, the ASEAN leaders issued in January 2007 the ASEANDeclaration on the Protection and Promotion of the Rights ofMigrant Workers. The declaration defines the obligations ofboth the sending and the receiving states and outlines areas of

Working Together for the Common Good 73ASEAN cooperation on the subject with a view to developinga legal ASEAN instrument on it. While there is nothing coercive about them, these are publiccommitments that can be invoked in case of egregious violationsof human rights. The problem is that the scope of ASEAN’sconcern with human rights is expanding much too slowly, withdiffering national imperatives hindering faster progress. The aspect of human rights on which ASEAN is firmly unitedhas been the question of labour rights, specifically in termsof its opposition to the use of labour rights in internationaltrade agreements for disguised protectionist purposes. In thislight, ASEAN insists that the subject of labour rights be dealtwith in the International Labour Organization rather than ininternational trade negotiations. BUILDING A REGIONAL IDENTITYIn January 2003, hundreds of young Cambodians set fireto the Thai embassy in Phnom Penh and destroyed Thai-owned business establishments in the Cambodian capital. Theimmediate trigger for the riots was a report in the Cambodianmedia that a popular Thai television actress had claimedthat the famed ruins of Angkor Wat and the land where it islocated rightfully belonged to Thailand, a statement that theactress subsequently denied making. The Prime Ministers of thetwo countries quickly went on the telephone and agreed todefuse the situation, with the Cambodians pledging restitutionfor the damage done. The situation soon calmed down. This sequence of events revealed two things about ASEAN.One was that, because of the close relationships developedamong Southeast Asian leaders, it is possible to manage crisissituations by personal contact before they get out of control.

74 ASEANThe other was that animosities rooted in the past have a wayof igniting popular passions between Southeast Asian nations.This has been manifested in other, occasional flare-ups oftemper between neighbours. Such flare-ups often arise frominadequate understanding or visceral antipathies, which rationaldiscourse and friendly networking among leaders and eliteshave so far managed to transcend and overcome. However,one cannot be sure that the leaders and elites will or can doit every time. ASEAN has contributed significantly to regional peace andstability. However, its political solidarity is not assured. Neitheris the continued compliance with the norms agreed upon forinter-state relations and so far adhered to. ASEAN has recog-nized the need for regional economic integration and has laidthe foundations for it. However, implementation has beenslow and, in some cases, reluctant. ASEAN has cooperated ona number of regional problems requiring regional solutions,but the member-states have to carry out this cooperation moreregularly, expeditiously, and effectively, as well as in goodfaith. The fundamental source of ASEAN’s shortcomings in theserespects has been the insufficient sense of regional identityamong the peoples of Southeast Asia, even among the elites.One might say that people have a sense of regional identityto the extent that they are truly convinced that the regionalwelfare is also in their national or even personal interest, thatgood relations with neighbours are essential for their own —and the nation’s — security and well-being, that the integra-tion of the regional economy would expand their own oppor-tunities for jobs and increased incomes, and that regionalcooperation is necessary in dealing with such problems asthose related to the environment, communicable diseases, and

Working Together for the Common Good 75transnational crime. Unless people have this sense of regionalidentity, a feeling of regional community, they will not haveenough confidence in one another and in regional institutionsand processes to ensure regional peace and stability, genuinelyintegrate the regional economy, and substantially enable regionalcooperation to deal with regional problems. ASEAN’s leaders have long acknowledged this. Their ASEANVision 2020, issued in 1997, aspired for “an ASEAN commun-ity conscious of its ties of history, aware of its cultural herit-age and bound by a common regional identity”. In the 2003Declaration of ASEAN Concord II, they saw the ASEAN Com-munity as “fostering regional identity as well as cultivatingpeople’s awareness of ASEAN”. These aspirations, so necessary for ASEAN’s purposes,cannot, of course, be achieved quickly. They require patient,long-term effort. A keen awareness of one’s ASEAN neighbourshas to be cultivated — their cultures, religions and histories.Mutual understanding and empathy have to be developed.Southeast Asia as a region and ASEAN as an institution haveto be understood and appreciated. People have to be convincedthat, to a significant extent, the peace, stability and progress ofthe region would be of genuine benefit to them. The alternative is not pretty. Mutual prejudices, suspicionsand antipathies could easily rise to the surface, increasing ten-sions between states. The regional economy would continueto be fragmented, stunting the region’s global competitiveness.The region’s capacity to deal regionally with regional problemswould not grow. For all this, education is essential, education of thegeneral public and of the young and those in school. The 1998Hanoi Plan of Action urged ASEAN to “Develop linkages withmass media networks and websites on key areas of ASEAN

76 ASEANcooperation to disseminate regular and timely informationon ASEAN”. The 2004 Vientiane Action Programme called onASEAN to “Mainstream the promotion of ASEAN awarenessand regional identity in national communications plans andeducational curricula”. The ASEAN Secretariat has been carrying out public-information programmes. ASEAN has presented joint modern-dance performances of the Ramayana. It has conductedpopular-song festivals among member-countries. It has takenout television commercials promoting ASEAN as a singletourist destination. However, these efforts have been sporadicat best. The Secretariat needs immensely more resources tosustain them. The member-states have been doing their part,mainly on the occasion of ASEAN anniversaries and at thetime of their hosting of the ASEAN Summit or the ASEANMinisterial Meeting, mounting exhibits, promoting mediacoverage, and conducting quizzes and art and essay contests.However, such efforts have been uneven and, again, need tobe sustained. Programmes for bringing together the youth of ASEAN areimportant for making friends across the region, raising aware-ness of ASEAN, and cultivating a regional identity. ASEAN hasdone this through youth camps and jamborees. ASEAN youthalso get together on the “Ship for Southeast Asian Youth”,organized and funded by the Japanese Government since 1974,in which 30 young people from each ASEAN country and 40from Japan go on a cruise on the Nippon Maru every year,visiting Southeast Asian and Japanese ports, making friends,forming networks. However, an understanding of Southeast Asia and thecountries in it would be most effectively developed throughformal education at an early age — at the primary and secondary

Working Together for the Common Good 77levels. ASEAN’s leaders and governments have recognizedthis from the beginning. ASEAN’s founding document, theASEAN Declaration of 8 August 1967, laid down as one ofthe association’s seven “aims and purposes” the promotionof Southeast Asian studies. The 1976 Declaration of ASEANConcord called for the “Introduction of the study of ASEAN,its member states and their national languages as part of thecurricula of schools and other institutions of learning in themember states”. Unfortunately, little has been done to carry out these wisemandates. Yet, progress towards ASEAN’s principal purposesdepends greatly on the ability and willingness of the associa-tion and its members to do so.

Chapter 5Relations with the Restof the WorldOne of ASEAN’s strengths is not just its willingness but itsassiduous endeavours to link up with countries and organiza-tions that can contribute to its development and security andto those of its member-states. ASEAN has taken this positiondespite its clear intention, at the time of its founding, to loosenits involvement in the quarrels of the big powers and to avoidbeing an arena for the conflicts of others. At the same time,despite its move to deal with others as a group, ASEAN has beenpragmatic and flexible enough to take into consideration theindividual members’ particular interests in bilateral security andeconomic relations with other countries. On the other hand,ASEAN’s strategic location, resource endowments, economic-growth trajectory, emerging political solidarity, and opennessto the outside world have attracted the interest of the world’smajor powers. THE DIALOGUE SYSTEMFrom the start, ASEAN’s external relations have been drivenby both political and economic motives. The first relationshipthat ASEAN entered into, appropriately enough, was with the 79

80 ASEANEuropean Economic Community (EEC), in 1973, when ASEANand the EEC began to conduct an “informal dialogue”. (Somedate the formalization of the ASEAN-EEC relationship in 1977.)As ASEAN ministers noted then, it was right that the associa-tion should engage in a dialogue with another regional group,the most advanced among the world’s regional associations.To them, a relationship with Brussels also meant an importantmark of international recognition. In practical terms, ASEANused the dialogue with the EEC as a vehicle for seeking accessfor the member-countries’ products to the lucrative Europeanmarket, promoting European investments in ASEAN, andattracting development assistance to the member-states. However,the political benefits of the relationship have also been highin ASEAN’s mind. For its part, the European Union (EU) sees ASEAN as acommercial and strategic link to the fast-rising East Asian region.To reinforce its relationship with the association, the EU sup-ports some ASEAN projects, particularly those having to do withthe environment, energy and regional economic integration.EU and ASEAN ministers meet regularly for discussions oninternational issues and on the relations between the twogroups. Since 1996, the EU member-states and Asian countries,now including all ASEAN member-states, have been meetingat the summit in the Asia Europe Meeting every two years.This relationship is underpinned by the numerous cultural,intellectual and people-to-people exchanges sponsored by theAsia Europe Foundation, which was set up in 1997 and isheadquartered in Singapore. In somewhat of a contrast, the relationship betweenASEAN as a group and Japan started with a specific economicissue — the surge in Japan’s production and export of syn-thetic rubber, which competed directly with Southeast Asia’s

Relations with the Rest of the World 81exports of natural rubber, particularly Malaysia’s. ASEAN firstraised the issue with Japan in 1973, and its foreign ministerstook it up formally with their Japanese counterpart the nextyear. On Japan’s part, soon after the Pacific War, Tokyo hadonce again looked to Southeast Asia as a source of minerals,timber, crude oil, and other raw materials and as a marketfor Japanese manufactured products, this time in peacefulterms. In this light, Japan started to provide developmentassistance to build the required infrastructure in SoutheastAsia and raise the purchasing power of its people. WithASEAN showing signs of long-term viability and growingpolitical influence, Japan felt it increasingly necessary todeal with ASEAN as a group and with Southeast Asia as aregion. After its Prime Minister, Kakuei Tanaka, underwent theunnerving experience of being threatened by anti-Japanesemobs in Bangkok and Jakarta in January 1974, Japan decidedthat it had to put its relationship with ASEAN in a broadercontext so as to strengthen relations with Southeast Asia ina more comprehensive way, generating goodwill as well asmarkets. Those relations would have to encompass the political,social and cultural, as well as the economic. Prime MinisterTakeo Fukuda articulated this decision in the “doctrine” that heenunciated at the end of his tour of ASEAN countries, whichfollowed his summit meeting with their leaders in 1977. He hadbeen the first foreign leader, together with those of Australiaand New Zealand, to hold such a meeting with ASEAN as agroup. The Fukuda Doctrine had three components:• Japan’s commitment to peace and rejection of military power;

82 ASEAN• The consolidation of mutual confidence between Japan and Southeast Asia on the basis of “‘heart-to-heart’ understanding”;• Equal partnership with ASEAN and its member-countries, support for their “efforts to strengthen their solidarity and resilience”, and “mutual understanding” with the nations of Indochina. Evidently, the Japanese intended to dispel any notion ofJapan as a military threat, stress the importance of cultural andpeople-to-people relations with the Southeast Asian countries, andgive assurances of Japan’s support for ASEAN as an associationwhile reaching out to the new regimes in Indochina. Since then,succeeding Japanese Prime Ministers have frequently invokedthe Fukuda Doctrine, basing on it their respective initiativesfor strengthening the overall relationship between ASEAN andJapan. Starting with Fukuda’s 1977 swing around SoutheastAsia, each Prime Minister has made the rounds of the ASEANcountries early in his incumbency. Aside from being those countries’ leading or second tradingpartner, Japan has been by far the region’s primary sourceof official development assistance, whether for its individualmembers or for ASEAN as a group, with the assistance goinginto infrastructure, human resource development, and institu-tional capacity building. It has been at the forefront of countriesextending emergency help to ASEAN nations stricken bydisasters. Japan has been an important source of support forthe development of the Greater Mekong Sub-region, directly orthrough the Asian Development Bank. After the revaluation of the yen pursuant to the PlazaAccord of 1985, Japan began encouraging firms to relocate theiroperations to Southeast Asia, substantially contributing to theregion’s industrialization. Similarly, Tokyo promoted Japanese

Relations with the Rest of the World 83tourism to Southeast Asia as part of its attempt to redress itstrade surpluses with the rest of the world. Following the Asianfinancial crisis of 1997–98, it led regional efforts to recoverfrom the crisis and prevent its recurrence, proposing an AsianMonetary Fund, a move, however, that was rebuffed by theUnited States. Japan has served as the anchor for the networkof bilateral currency swap and repurchase agreements that ismeant to discourage speculation on the region’s currencies. Ithas lent its considerable economic weight to the other measuresto stabilize the regional economy taken under the so-calledChiang Mai Initiative (CMI) of the ASEAN Plus Three process.The CMI will be discussed in further detail below. Established in 1981, the ASEAN Center in the heart of Tokyopromotes ASEAN exports in Japan and Japanese investmentsand tourism in ASEAN. Japan finances the Center to the extentof 90 per cent, with the balance of 10 per cent shared equallyby ASEAN’s member-states. Japan has also been supportingyouth and cultural exchange programmes, including the ASEANCultural Fund, a scholarship programme for ASEAN students,the Friendship Programme for the 21st Century, the Ship forSoutheast Asian Youth, and the Solidarity Fund in the ASEANFoundation. With Europe and Japan recognizing ASEAN’s value andestablishing “dialogues” with it, Australia, seeking to strengthenits links with Asia, followed suit in 1974, and New Zealandin 1975. Chastened by its tragedy in Vietnam but continuingto maintain considerable interests in Asia, the United Statesentered into a Dialogue relationship with ASEAN in 1977. Sodid Canada. Australia was the first individual country to be an ASEANDialogue Partner, the first to discuss economic cooperationprojects as well as trade issues with ASEAN. An ASEAN-Australia

84 ASEANForum manages the projects, which are quite concrete andpragmatic and come in phases covering several years each.Australia has a clear interest in close relations with ASEAN,which Canberra sees as an avenue for its engagement withSoutheast Asia, an additional platform for its ties with EastAsia, and the hub of East Asian and Asia-Pacific regionalism. New Zealand’s Prime Minister met with ASEAN’s heads ofgovernment on the occasion of the second ASEAN Summit inKuala Lumpur in 1977, together with those of Australia andJapan. Although it is a small country with a relatively smalleconomy, New Zealand exploits its strengths — specifically, inalternative sources of energy and in forestry — in its develop-ment cooperation with ASEAN. Wellington has been activein supporting capacity building in the newer members ofASEAN. By virtue of its extensive trade, investment and tourismlinks with ASEAN’s member-countries and of its economic heft,military power and political influence, the United States is oneof ASEAN’s indispensable Dialogue Partners. Its ties with theU.S. provide ASEAN with broader strategic options beyond EastAsia. The U.S. has always been a prominent participant in thePost-Ministerial Conferences and the ASEAN Regional Forum.Exchanges of views on security and strategic issues betweenASEAN and the U.S. — leaders, ministers, officials, academics— are extremely valuable. Contrary to perceptions shaped by the mass media,Washington’s ties with Southeast Asia as a region and ASEANas a regional entity have intensified under the George W. Bushadministration, particularly in support of ASEAN’s economicintegration. President Bush met with the leaders of the ASEANmembers of APEC on the occasion of the APEC Economic LeadersMeetings in Los Cabos, Mexico, in 2002, and at subsequent

Relations with the Rest of the World 85such meetings. The Joint Vision Statement on the ASEAN-U.S.Enhanced Partnership, which was issued in Washington and inall ASEAN capitals in 2005, followed by a Plan of Action, setthe direction of ASEAN-U.S. relations in the future. The ASEANCooperation Programme, initiated in 2002, places ASEAN-U.S.development cooperation within a coherent framework, whichencompasses the ASEAN-U.S. Technical Assistance and TrainingFacility. A regional aid office has been set up in Bangkok. AnASEAN liaison officer has been assigned to the U.S. embassy inJakarta, and the future appointment of a U.S. ambassador toASEAN has been announced. Specialists from the U.S. haveworked in the ASEAN Secretariat. ASEAN senior officials havemet with their U.S. counterparts in Washington and beenreceived at Cabinet level in the U.S. capital. With a membership of more than a hundred of the U.S.leading corporations, the US-ASEAN Business Council has beenthe primary advocate of strong U.S. links with ASEAN and art-iculates American business interests in Southeast Asia, includ-ing contacts with the economic, finance, transport and otherASEAN ministerial bodies. Canada was one of ASEAN’s first six Dialogue Partners,being at that time one of the few developed, market economies.However, trade and investment flows between ASEAN andCanada have been rather thin. Based on the ASEAN-CanadaEconomic Agreement, development cooperation focused onforestry, human resource development, fisheries, energy, agricul-ture, transportation and communications. Active cooperation wasinterrupted in 1997 on account of Canada’s refusal to have anydealings with Myanmar and to extend assistance to BruneiDarussalam and Singapore. It was resumed in 2004. The United Nations Development Programme became anASEAN Dialogue Partner in 1977, but it is a special case, being

86 ASEANthe only international agency in the Dialogue system. Itoccasionally takes part in limited segments of ASEAN’s Post-Ministerial Conferences. With ASEAN assuming the status ofUN observer in December 2006, consideration is being givento conferring Dialogue Partner status on the UN itself. Although strategic considerations were never far fromtheir minds, the ASEAN countries, before the 1990s, used theDialogues as a venue for gaining access for their products,which were at the time mostly commodities, to developed-country markets, protecting those products from syntheticcompetition or releases from strategic stockpiles, encouraginginvestments in ASEAN countries, and drawing developmentassistance to them. Thus, for about a decade and a half, theDialogue system was limited to the ASEAN countries’ majortrading partners and sources of investments and developmentaid, that is, the developed world — Australia, Canada, theEuropean Community, Japan, New Zealand and the UnitedStates — plus the UNDP. It was not until 1991 that ASEANadded a new Dialogue Partner — South Korea, which was tech-nically a developing country but had become highly industrial-ised and acquired many of the characteristics of a developedeconomy. ASEAN also used the Dialogue process to gaininternational support for its diplomatic positions, such as onthe Cambodian situation of the 1980s and on the Indochineseasylum-seekers. For their part, the Dialogue Partners have been driven mostlyby political as well as economic motives in their relations withASEAN. They use ASEAN mainly to strengthen their presencein the region, to maintain a voice in developments there, and,on the part of those from outside the region, as an additionalpolitical and economic link to East Asia as a whole. For theDialogue Partners, ASEAN has served the useful purpose of

Relations with the Rest of the World 87giving a regional, political dimension to their relations withSoutheast Asia, which is strategically and economically importantto them. Thus, for both ASEAN and the Dialogue Partners,the Dialogue system has a mixture of political and economiccomponents, the proportions of which have varied with eachASEAN country, with each Dialogue Partner, and from time totime. Having sought a Dialogue Partnership with ASEAN as earlyas 1982, South Korea became an ASEAN Dialogue Partner in1991. Since then, Seoul has been crisp and business-like inits approach to development cooperation with ASEAN, whichhas included economic and technical assistance, especially forthe newer ASEAN members, environmental protection, andyouth and cultural exchanges. It was, under President Kim DaeJung, at the forefront of the development of the ASEAN PlusThree process. As the political element in the Dialogues grew in the 1990s,ASEAN considered it useful to bring China, India and Russiainto the Dialogue system. The three countries were deemed tohave important strategic roles to play in East Asia. Moreover,their economies were surging, albeit at different paces andin different ways. They became ASEAN Dialogue Partners in1996. Since their collaboration on the Cambodian conflict in the1980s and its eventual political settlement, the relationshipbetween ASEAN and China has been the fastest to developamong the ASEAN Dialogue Partnerships. Even before Chinaformally entered the Dialogue system in 1996, the ASEAN-China relationship had started to grow rapidly, with joint com-mittees on trade and economic cooperation and on science andtechnology being set up in 1994 and a regular political consulta-tive forum of senior foreign ministry officials being launched

88 ASEANin 1995. China was a founding participant in the ASEANRegional Forum and was the first Dialogue Partner to accedeto the Treaty of Amity and Cooperation in Southeast Asia. Onthe jurisdictional disputes that China has with four ASEANmembers in the South China Sea, Beijing, faced with deter-mined ASEAN solidarity on the issue, altered its posture fromits insistence on dealing with the ASEAN claimants individuallyto discussing the matter with ASEAN as a group. The processresulted in the 2002 Declaration on the Conduct of Parties inthe South China Sea, an informal code of conduct committingall parties not to resort to force, exercise self-restraint, andrefrain from moving into unoccupied land features in the SouthChina Sea. With the death of Mao Zedong in 1976 and the rout ofthe radical Maoist faction in the Chinese leadership, Beijing,under Deng Xiaoping’s leadership, reformed China’s economyand opened it to the world. Aside from resulting in thateconomy’s spectacular growth, China’s economic reformseventually opened new opportunities for its Southeast Asianneighbours. ASEAN and China have reinforced market forcesby entering into agreements that provide policy frameworksfor their rapidly growing trade and investment links. Thecentrepiece is the ASEAN-China Framework Agreement onComprehensive Economic Cooperation, signed in 2002. Pur-suant to this, agreements on trade in goods, trade in services,and a dispute-settlement mechanism have been concluded, withthe investment component still being negotiated. Besidesliberalizing and promoting trade and investments between themand laying down agreed rules for them, these policy frame-works send signals to ASEAN and China’s officials and businesspeople affirming the importance of their countries to eachother and strengthen the political ties between them. China

Relations with the Rest of the World 89also organizes an annual China-ASEAN EXPO in Nanning, theChinese provincial capital closest to Southeast Asia. China hasagreed to set up an ASEAN-China Centre for Trade, Investmentsand Tourism similar to the long-standing such center inTokyo. India almost became an ASEAN Dialogue Partner as early as1980. It would have been the first developing country to do so.However, ASEAN and India found themselves on opposite sidesof the Cambodian conflict in the 1980s, and the DialoguePartnership was held in abeyance. After the settlement of theCambodian problem, and with India undertaking reforms in itseconomy and opening it up, India finally entered the ASEANDialogue system in 1996, together with China and Russia, andstarted participating in the ASEAN Regional Forum. ASEAN’s interest in India arises from the strategic role thatNew Delhi plays in Asian and global affairs. For countries likeSingapore and Malaysia, India also represents a rapidly grow-ing market and a potential investment destination. Within theframework of the Dialogue relationship, ASEAN and India havebeen cooperating largely on the basis of India’s strengths in thebiological sciences, information technology, pharmaceuticals,small and medium enterprises, and human resource develop-ment in general. In 2002, on the occasion of the ASEAN Summit in PhnomPenh, the ASEAN leaders met with India’s Prime Minister fortheir first summit. The ASEAN-India summit has been heldannually ever since. Pursuant to the 2003 Framework Agree-ment on Comprehensive Economic Cooperation, ASEAN andIndia are negotiating a free trade area agreement. After the Russian Federation’s emergence from the break-up of the Soviet Union and following the settlement of theCambodian problem, ASEAN and Moscow began to look at

90 ASEANeach other with interest. Despite its diminished size, Russiahas remained a power to reckon with in world affairs. It is anuclear-weapon state that is a permanent member of the UnitedNations Security Council. An important factor in the MiddleEast, Russia is a member of the Quartet that is nudging theIsrael-Palestine peace process along. It takes part in the Six-PartyTalks on the nuclear problem in North Korea. Russia considersitself as an Asian power, with a robust military presence, notablyof its Navy. It is in partnership with China and four CentralAsian states in the Shanghai Cooperation Organization, whichhas conducted joint military exercises. It has been admitted tothe Asian Cooperation Dialogue, a loose forum of nations in aregion stretching from Central Asia to East Asia. Russia has enormous energy resources, from which it hasconsiderably bolstered its financial power as a result of soaringenergy prices. It has made significant advances in certainsectors of science and technology. Nevertheless, ASEAN doesnot consider its relations with Russia substantive enough tomerit Moscow’s inclusion in the East Asia Summit. It was forits strategic importance that Russia became an ASEAN DialoguePartner in 1996 and was a founding participant in the ASEANRegional Forum. THE POST-MINISTERIAL CONFERENCESFor more than 25 years, the dialogues have been consolidatedin gatherings at the ministerial level. The ASEAN foreign min-isters invited their Japanese counterpart to meet with themon the occasion of the 1978 ASEAN Ministerial Meeting todiscuss ways of following through on the decisions at theASEAN-Japan Summit of 1977. The next year, the United States,Australia, New Zealand and the European Community expressed

Relations with the Rest of the World 91their interest in also meeting with ASEAN, particularly in thelight of Vietnam’s incursion into Cambodia and the continuingproblem of Indochinese asylum-seekers. Such meetings, includ-ing Canada and, later, the four additional Dialogue Partners,have been convened annually since then. They have beentaking place immediately after the annual ASEAN MinisterialMeetings; hence, they are called the Post-Ministerial Conferences.In these conferences, ASEAN engages its Dialogue Partners,together and individually, in discussions of global and regionalissues and initiatives for regional cooperation. At the “workinglunch” among ASEAN and its ten Dialogue Partners in August2007, for example, they discussed the situation on the Koreanpeninsula and the threat of climate change. In addition, forumsand joint committees are convened between ASEAN officialsand those of each Dialogue Partner for more detailed dis-cussions of the issues and for decisions on specific cooperativeprojects and other activities. In recent years, “comprehensivepartnership agreements” have been adopted with three- tofive-year plans of action to set the direction of most DialoguePartnerships. FREE TRADE AREAS AND ECONOMIC PARTNERSHIPSASEAN has been at various stages of negotiating and con-cluding free trade area (FTA) or “comprehensive economicpartnership” (CEP) arrangements with China, South Korea, India,Japan, and Australia and New Zealand. These arrangements areexpressly intended to reduce or remove obstacles to trade andinvestments and facilitate them. In some cases, they includetechnical assistance for the ASEAN parties that need them. Justas or even more importantly, the FTA or CEP arrangements

92 ASEANare politically considered as hallmarks of close relations withASEAN. Of these, the arrangement with China is the most ad-vanced. In accordance with the 2002 ASEAN-China Frame-work Agreement on Comprehensive Economic Cooperation,agreements on trade in goods and on a dispute-settlementmechanism were concluded in 2004 and a framework agreementon trade in services was signed in 2007. As of this writing,the investments component is still under negotiation. Similarly,pursuant to a 2005 comprehensive agreement, ASEAN andSouth Korea concluded the trade-in-goods component in 2006(minus Thailand on account of continuing disputes over agri-cultural trade) and established a dispute-settlement mechanism.An agreement on services was signed in 2007, with the invest-ments component to follow. ASEAN and India are still strugglingin their own negotiations, primarily over the pace of tariffreductions and India’s reluctance to free up trade in agriculture.ASEAN’s negotiations with Australia and New Zealand togetherhave been taking the longest time but are also the mostcomprehensive, prominently including technical assistanceand capacity building, which are to some extent already beingcarried out. In November 2007, ASEAN and Japan concluded negotia-tions on a Comprehensive Economic Partnership Agreement,scheduled for signing in 2008. In the meantime, Japan hadbeen concluding “economic partnership” agreements withindividual ASEAN countries — so far, with Singapore, Malaysia,the Philippines, Indonesia, Thailand and Brunei Darussalam.ASEAN and the United States have entered into a broad Tradeand Investment Framework Arrangement, in the context ofwhich the U.S. would negotiate free-trade agreements withindividual ASEAN members. The U.S. has concluded such an

Relations with the Rest of the World 93agreement with Singapore and has started negotiating one withMalaysia. Similar negotiations with Thailand are in abeyance.ASEAN and the European Union have started negotiationson a free-trade agreement, with the EU insisting that only acomprehensive agreement including services and investmentsmakes sense and ASEAN preferring initially to negotiate onlyon trade in goods. Aside from easing trade and investment flows between theparties, the negotiation, conclusion and implementation of free-trade or comprehensive-partnership agreements serve to clarifyeconomic issues between them. They can be used as platformsfor the launch of domestic reforms that would be necessary notonly by virtue of the demands of the agreements themselvesbut also for the overall competitiveness of the economies con-cerned. They highlight for the business community of one partythe opportunities offered by the other. Not least, a free-tradeor comprehensive-partnership agreement sends a signal of theimportance in which the two parties hold their overall relation-ship with each other. THE ASEAN REGIONAL FORUMBy the early 1990s, the political importance of the Dialoguesintensified as a result of the altered configuration of the strategicsituation following the end of the Cold War, the reforms inChina, and, in Southeast Asia, the settlement of the Cambodianproblem. Accordingly, at the ASEAN Summit of January 1992,its leaders directed ASEAN to “intensify its external dialoguesin political and security matters by using the ASEAN PostMinisterial Conferences”. Senior officials of ASEAN and itsDialogue Partners met in Singapore in May 1993 to discuss howto carry out this mandate. With Vietnam not yet an ASEAN

94 ASEANmember and China and Russia not yet in the Dialogue system,it soon became quite clear that regional security could not befruitfully discussed without their participation. Accordingly, after an informal meeting among ministers inJuly 1993, ASEAN invited not only its Dialogue Partners butalso others to a gathering called the ASEAN Regional Forum(ARF) on the occasion of the annual ASEAN Ministerial Meetingin Bangkok in mid-1994. The others were China and Russia,categorized in ASEAN’s usual creative and pragmatic way as“consultative partners”; Papua New Guinea, an observer inASEAN since 1976; and Laos and Vietnam, at the time ASEANobservers on the way to membership. Together with Myanmar, India took part in the ARF min-isterial meeting for the first time in 1996, the year of its entryinto the ASEAN Dialogue system. A year earlier, Cambodiahad joined the ARF, having become, like Myanmar, an ASEANobserver on the way to full membership. Mongolia wasadmitted into the forum in 1999, North Korea in 2000, Pakistanin 2004, Timor-Leste in 2005, Bangladesh in 2006, and SriLanka in 2007, increasing ARF participation to 27 as of mid-2007. Inevitably, with the entry of four countries from SouthAsia, the ARF’s “footprint” is bound to expand beyond theAsia-Pacific. The ARF is discussed more extensively in Chapter 2. TREATY OF AMITY AND COOPERATIONAt the first ASEAN Summit in February 1976, the ASEAN leaderssigned the Treaty of Amity and Cooperation in Southeast Asia,which embodies Southeast Asia’s commitment to its normsfor inter-state relations — the rejection of the use or threat offorce, the peaceful settlement of inter-state disputes, and non-

Relations with the Rest of the World 95interference in others’ internal affairs. Subsequent ASEAN mem-bers had to sign on to the treaty. After the signatories amendedthe treaty in 1987 to allow non-regional states to accede to it,Papua New Guinea did so in 1989, China and India in 2003,Japan and Pakistan in July 2004, South Korea and Russia inNovember 2004, New Zealand and Mongolia in July 2005,Australia in December 2005, France and East Timor in January2007, and Sri Lanka and Bangladesh in August 2007. By doingso, these countries adopted the ASEAN norms for inter-staterelations. The European Union has reached a decision to be aparty to the treaty, with ASEAN sorting out the legal questionssurrounding the accession by a non-state party. The UnitedKingdom has expressed an interest in acceding to the treaty. ASEAN PLUS THREEBy the early 1990s, it had become evident to ASEAN that thetimes were calling for a heightened relationship with its neigh-bours in the north — China, Japan and South Korea. China’seconomy was continuing its extraordinary surge. Korea’s wasmaintaining its dynamic industrial expansion. Japan remainedeager to play its role as Asia’s economic leader. At the sametime, the East Asian economy was becoming more integratedin terms of trade and investment flows, so that today intra-regional trade, as a percentage of total East Asian trade, is ata higher level than that of the North American Free TradeAgreement and approaching that in the European Union.Moreover, promoting East Asian contacts would help managethe tensions and potential conflicts in the relations among thethree Northeast Asian powers. Malaysia’s Prime Minister, Dr. Mahathir Mohamad, gavevoice to his recognition of this when he proposed an East Asia