ASEAN ECONOMIC COOPERATION

 ASEAN Economic Cooperation
 
Created in 1967 mainly for political and security reasons, ASEAN has matured
over time as an institution moving from cooperation by consensus to integration
by choice. It is today a successful model for regionalism, widely recognized
globally. The first ASEAN Leaders’ Summit in 1976 was a watershed. It
introduced a significant economic agenda that helped drive progressive trade
and investment liberalization. By the early 1990s, the economies of ASEAN’s
five original members (Indonesia, Malaysia, the Philippines, Singapore, and
Thailand) were an integral part of the “East Asian Miracle.” Remarkably, the
group introduced several cooperative initiatives at a time when its membership
considerably expanded with the admission of Cambodia, the Lao People’s
Democratic Republic (Lao PDR), Myanmar, and Viet Nam (together known as
the CLMV countries).
The 1997/98 Asian financial crisis hit ASEAN economies hard. In the crisis
aftermath, the group’s dynamics changed dramatically, both internally and
externally, creating a drive for expanded cooperation and integration with the
PRC, Japan, and the Republic of Korea — through a newly established ASEAN+3
process. Amid huge socio-economic uncertainties, ASEAN pushed its integration
agenda forward with the adoption of Vision 2020 — a major commitment to
regional cohesion.
Further progress toward regional integration was made in 2003 with the
decision to form the ASEAN Community3 and, in 2007, with the adoption
of the ASEAN Charter and the creation of the Committee of Permanent
Representatives. More recently, ASEAN leaders promoted policies aimed
at narrowing development gaps and strengthening the group’s centrality in
the regional architecture for cooperation. Today ASEAN represents a major
economic bloc, home to about 620 million people with a gross domestic product
(GDP) of more than $2.3 trillion — 3.3% of the world total. Importantly, ASEAN
economies are also among the world’s most open, with merchandise exports
over $1.2 trillion — nearly 7% of the global total.
The trend of proliferating free trade agreements (FTAs) with partners around
the world started in the early 2000s. By the end of 2013, ASEAN countries
had signed 40 FTAs, including five ASEAN+1 agreements with key East Asian
partners (Australia/New Zealand, the PRC, India, Japan, and the Republic of
Korea). The Trans-Pacific Partnership (TPP) and Regional Comprehensive
Economic Partnership (RCEP), two of the 29 FTAs currently under negotiation,
have massive economic implications and potentially hold significant benefits for
signatories. This is particularly true for the RCEP, which would also greatly boost
ASEAN’s centrality in expanding Asian regionalism.
As for the AEC, although it is highly unlikely its blueprint will be completed
by 2015, it nonetheless represents one of the most important milestones for
ASEAN economic integration. It is structured on four pillars: (i) a single market
and production base; (ii) a competitive economic region; (iii) equitable economic
development; and (iv) integration into the global economy. Moving beyond the
2015 agenda toward 2030, ASEAN needs to further deepen regional integration
by creating a truly borderless economic community. Otherwise, it will risk losing
its centrality and competitive position vis-à-vis the PRC and India.