Introduction

When a co-operation agreement between the European Community (EC) and ASEAN was signed for the first time in 1980, the relationship between the two regional groupings was asymmetrical in nature. The EC was positioned as a donor at one end while ASEAN was positioned as a recipient at the other end, though the treatment accorded to ASEAN was and remains far less preferential than the one extended to the African, Caribbean, and Pacific (ACP) countries of the Lome Convention. Both regions have witnessed dramatic changes in the subsequent years. The EC, which in the meantime had been transformed into the European Union (EU), today is hardly recognizable compared to what it was in the early 1980s. Southeast Asia of the 1990s has also experienced changes such as the creation of the ASEAN Free Trade Area (AFTA), which was considered a taboo in the early part of the 1980s. Malaysia, Singapore, and Thailand are now included in what the Organization for Economic Co-operation and Development (OECD) classifies as Dynamic Asian Economies (DAEs) or a group of semi-developed economies. Of no less importance are changes in the global economic environment which, on balance, interact in favour of world-wide integration in contrast to the disintegration of the early 1980s.

Considering the dramatic changes within the EU, ASEAN, and the rest of the world in the second half of the 1980s and the first half of the 1990s, a new look at EU-ASEAN relationship appears to be needed. Possible elements of such a reformed relationship will be discussed in the last section of this chapter.

As a prelude, a discussion is needed about how the EU and ASEAN have changed in the last ten years or so. At the risk of being speculative, possible covergence and divergence of interests between the two regions in the coming years will be explored in order to identify areas where co-operation is more likely to be productive.

Early Stage of Catching-Up

A casual look at the structure of international economic relations is enough to discover the strong association between the level of economic development and the magnitude of external transactions across market economies.