By Invitation

Hard truths and wishful hopes about the AEC

The newly established Asean Economic Community is three days old. It is no magic silver bullet, but can help maintain cohesion in a region beset by big-power competition.

On Nov 22 last year in Kuala Lumpur, the Asean leaders formally declared that the Asean Community would be established on Dec 31. Of the three pillars of the "community" - political-security, sociocultural and economic - the Asean Economic Community (AEC) is the most important.

The original five Asean members and Brunei have achieved almost all of the tariff cuts envisaged in the AEC's 2015 Blueprint; the four less developed members plan to do so by 2018. Intraregional trade has grown substantially.

But non-tariff barriers and slow liberalisation of services remain serious obstacles to Asean's ambition of creating a single market and production base. The Kuala Lumpur Summit also adopted Asean 2025, a plan for the next decade of Asean integration which aims to address these shortcomings.

Asean nations' joint vision of the future does not lack boldness. The question, as always in Asean, is implementation.


ST ILLUSTRATION: MANNY FRANCISCO

"Community" is perhaps too loaded a term to describe Asean's goals. "Community" connotes supra-nationality. This is not on the agenda, except in very limited dimensions that are unlikely to be stretched. Asean borrowed the term "community" from the European Union at a time when the EU's feet of clay were less evident. Now that the overly ambitious European project has become so obviously entangled in the knots of its own internal contradictions, why should Asean want to go down that road?

Writing about Asean in the Financial Times of Dec 10, David Pilling concluded: "Those looking for a new but faster- growing Europe in the heart of Asia will be disappointed."

But that was never the goal.

The EU is meant to be a post-nationalist construct. Paradoxically, it was inspired by very nationalist fears of a superior nationalism. Germany is larger than any other European state. After Otto von Bismarck unified Germany in the 19th century, the "German Question" led to two World Wars. It resurfaced in 1989 after the respite of Cold War division. A reunited Germany was to be tamed by the "pooling of sovereignties". This was as much a delusion as the communist dream of creating a new "socialist man".

Nationalism cannot be wished away. The instinct to define oneself by distinguishing like from the "other" is an intrinsic and primordial part of human nature. Any political project that denies human nature is bound to eventually fail, just as any attempt to impose one nationalism over another will eventually fail. The rise of racist anti-EU extreme right- wing movements across Europe is one manifestation of the EU's internal contradictions which the deluge of Syrian and other refugees can only exacerbate.

HARNESSING NATIONALISM

There is a superficially misleading parallel with Europe in so far as Asean's origins lie in South-east Asia's need for a regional order to deal with the nationalism of its largest country that attempted under Sukarno to forcefully impose itself on the region through Konfrontasi. This had disastrous consequences for the region and Indonesia itself.

The difference between Sukarno and his successor Suharto is the essential reason that Asean succeeded where earlier regional organisations failed. Suharto was no less a nationalist than Sukarno. But he recognised that size alone would not allow Indonesia to realise the fundamental ambition of any nationalist: preserving autonomy and sovereignty.

Asean did not deny the reality of nationalism or try to supplant it with some delusional higher purpose. In a region whose geopolitical location at the intersection of major power interests puts sovereignty at continual risk, Asean harnessed the nationalisms of its members to a mechanism that could enhance our capacity to retain autonomy and sovereignty by channelling our nationalisms to this end which, whatever our other differences, we all shared.

This is Asean's basic and enduring purpose. What underlies Asean was and remains a consensus on always having a consensus: even if it is only a consensus on goals that we know full well cannot be - or can only be partially - realised.

South-east Asia is a diverse region where visceral issues of race, language and religion will always be major factors in inter-state politics. Better to set aside areas where consensus cannot be reached or just agree only on a form of words than disagree because in a region of endemic great-power competition, who knows where disagreement may lead us?

The AEC and the other community pillars are thus as much instruments as ends in themselves. To adapt a quote from a European democratic socialist of the 19th century, Eduard Bernstein: "The goal, whatever it may be, is nothing … the movement is everything."

Asean's failure to reach a consensus over a text on the South China Sea under Cambodia's chairmanship in 2012 was a serious aberration. But it was due more to the ineptitude of the chair than a fundamental change of principle. And even Cambodia has since recognised its mistake and become more accommodating.

BIG POWERS' NEW EQUILIBRIUM WITH ASEAN

Substance cannot be entirely disregarded. The AEC, in particular, has significance beyond the other two pillars. The original geopolitical context of Asean was the Cold War. This was dangerous but essentially simple in structure. Today's geopolitical context is far more complex.

China and the United States are searching for a new equilibrium between themselves and Asean. Conflict between the US and China is not inevitable. I think it very unlikely. But competition for influence is growing stronger.

Every Asean member wants the best possible relationship with both. All seek a balance that will enable them to avoid invidious choices and preserve maximum autonomy. In this respect, Asean's original and continuing purpose is more important than ever.

But the many Asean-China projects, the connectivity infrastructure envisaged under President Xi Jinping's vision of "One Belt, One Road" and burgeoning trade ties are binding south-west China and South-east Asia into one economic space. The 11 dams that China has built or plans to in the Mekong's headwaters potentially give Beijing leverage over half of Asean.

These developments are catalysing powerful centrifugal forces that are pulling Asean away from its preferred balance with potentially profound political and strategic consequences. The economic logic of Asean-China economic cooperation will not be derailed by tensions over the South China Sea and has been welcomed by all Asean members, even the claimant states. China is an important economic partner and we would be foolish not to do so. Nor will the "new normal" of slower Chinese growth deflect this trajectory.

Some observers see a contradiction between the US-led Trans-Pacific Partnership (TPP) and a Chinese-led Regional Comprehensive Economic Partnership (RCEP) that could divide Asean and East Asia. This is an exaggeration. All the Asean members of the TPP as well as Australia, New Zealand and Japan are also in the RCEP. Some have bilateral FTAs with both the US and China. Beijing's attitude towards the TPP is no longer entirely negative.

But the non-TPP members of Asean could certainly be economically hurt if the TPP, as is likely, reorients regional supply chains as multinational companies adjust investment patterns to take advantage of its provisions. The centrifugal forces drawing parts of South-east Asia away from balance could be enhanced.

Indonesia, Thailand and the Philippines have said they want to join the TPP. It will not be easy for them to meet TPP standards.

The AEC is not a magical silver bullet. But to the extent Asean 2025 is implemented and the AEC continues to move towards its goal of a common market and production platform, all the economic, political and geopolitical challenges can at least be mitigated and balanced, and a minimal level of Asean cohesion maintained.

The main influence over the future of the AEC will be the domestic politics of key Asean members. Integration is never politically easy, no matter how compelling the economic or strategic logic.

Myanmar, Thailand and Malaysia are on the cusp of systemic political changes. The Philippines will have presidential elections this year. There is already a degree of buyer's remorse in these countries as well as in Laos and Cambodia over the commitments they have made to the AEC. Even in trade-dependent Singapore some opposition quarters have attempted, fortunately without success, to link our free trade commitments to disquiet over foreign labour.

No Asean member has sufficiently explained Asean's importance to its electorate. All of us need to do more if the next phase of economic integration under the AEC is to receive the domestic support it needs to move forward.

But the main factor is Indonesia.

I do not doubt that President Joko Widodo wants the best for his country and people. But post-Suharto Indonesia has yet to reach a stable internal equilibrium and he has to reckon with an Indonesian system that is today highly populist, with uneven governance standards and a policymaking process that often lacks coherence. There is a risk that a neo-Sukarnoist nationalism may overwhelm President Joko's best efforts and intentions.

But we are not yet at a stage where any of this is inevitable. Indonesia and Asean as a whole have a track record of adaptability and we need not assume failure so long as we all understand what is at stake is nothing less than the autonomy to determine our own future.

  • Bilhari Kausikan, a former permanent secretary in the Ministry of Foreign Affairs, is now ambassador-at-large.
  • Click here to read more stories on the Asean Economic Community.
A version of this article appeared in the print edition of The Straits Times on January 02, 2016, with the headline 'Hard truths and wishful hopes about the AEC'. Print Edition | Subscribe