States have agreed to coordinate policy for a variety of reasons. In the case of international macro-economic policy from 1945 to 1988, policy-makers had a “preference for coordination based around targeting of exchange rates”. Exchange rates were targeted because: 1) exchange rates stability is important in itself; 2) it helps “dampen fads and speculative bubbles in foreign exchange markets”; and 3) it serves as a discipline on the monetary and fiscal policies of the participating countries.

According to Pelkonen, Teräväinen, and Waltari, vertical policy coordination “refers to managing relationships between various levels of government and proceeding from priority-setting to policy implementation”. On the other hand, horizontal policy coordination refers to the “management of interdependent policies across the state administration”. In this study, vertical policy coordination in ASEAN is synonymous with sectoral policy-making (i.e., the policy-making activities of the various sectoral bodies and processes such as the ASEAN Telecommunications and IT Ministers Meeting (TELMIN) and the ASEAN Meeting of Energy Ministers (AMEM)). Horizontal policy coordination refers to the procedures and offices that are established to ensure that the overall goal of community building is served and that there are minimal overlaps or inconsistencies in the output of the various sectoral bodies and processes.

ASEAN has created new institutions to ensure the implementation of horizontal policy coordination as reflected in its new charter.

One such institution is the ASEAN Coordinating Council, composed of ASEAN foreign ministers, which is specifically tasked to “coordinate the implementation of agreements and decisions of the ASEAN Summit” and “coordinate with the ASEAN Community Councils to enhance policy coherence, efficiency and cooperation among them” (Article 8, Section 2). Like other ASEAN bodies, the ASEAN Coordinating Council is supported by the “relevant senior officials”.

Three ASEAN Community Councils (Political-Security, Economic Community, and Socio-Cultural) were also created. These Community Councils are mandated to “coordinate the work of the different sectors under their purview, and on issues which cut across the other Community Councils”, (Article 9) among other responsibilities.

There are two other ASEAN bodies relevant to horizontal policy coordination: the ASEAN Secretariat and the Committee of Permanent Representatives to ASEAN.