This monograph is published within the context of a wideranging research project entitled, Integration Through Law: The Role of Law and the Rule of Law in ASEAN Integration (ITL), undertaken by the Centre for International Law at the National University of Singapore and directed by J. H. H. Weiler, Michael Ewing-Chow and Tan Hsien-Li.

The Preamble to the ASEAN Charter concludes with a single decision: “We, the Peoples of the Member States of the Association of Southeast Asian Nations … [h]ereby decide to establish, through this Charter, the legal and institutional framework for ASEAN.” For the first time in its history of over four decades, the Legal and the Institutional were brought to the forefront of ASEAN discourse.

The gravitas of the medium, a Charter: the substantive ambition of its content, the creation of three interlocking Communities, and the turn to law and institutions as instruments for realization provide ample justification for this wideranging project, to which this monograph is one contribution, examining ASEAN in a comparative context.

That same substantive and, indeed, political ambition means that any single study, illuminating as it may be, will cover but a fraction of the phenomena. Our modus operandi in this project was to create teams of researchers from Asia and elsewhere who would contribute individual monographs within an overall framework which we had designed. The project framework, involving several thematic clusters within each monograph, is thus determined by the framework and the place of each monograph within it.

As regards the specific content, however, the authors were free, indeed encouraged, to define their own understanding of the problem and their own methodology and reach their own conclusions. The thematic structure of the entire project may be found at the end of this Preface.

The project as a whole, and each monograph within it, display several methodological sensibilities.

A fundamental premise of this book is that the ASEAN member states should give greater priority in the AEC integration process to the development of the single production base over the single market. If the AEC is to have an immediate material effect on the citizens of ASEAN, it would make more sense to build the production base, then attract foreign investors who will hire ASEAN citizens and put funds into the local economy. Given the disparity in economic development and market sizes, giving priority to development of the single market would mean a much longer roll-out process with less economic impact on the region. Conversely, emphasizing development of the single production base will allow ASEAN policymakers to husband scarce political, economic, and human resources on a more achievable, modest goal.

Hence the authors have posited that attracting investors to a single production base in ASEAN requires improved monitoring, administration, and implementation of AEC measures. This is crucial as the AEC moves beyond simply dealing with the traditional border issues of customs and into non-tariff barriers that apply after the goods, investments, capital, and people have crossed the border. Dealing with post-entry issues requires these improvements, which go beyond the current capabilities of the ASEAN Secretariat. These issues are exacerbated because the AEC does not incorporate a customs union; the preferential trading arrangements instead require additional measures which are not necessary in a customs union. Improvements in these aspects of the AEC are even more imperative for formation of a single market, which will involve even greater scrutiny of ASEAN member states' policies with regard to inward flows of goods, investments, capital, and people. Such improvements, in the authors' view, require predictability and clarity in the operations of the ASEAN institutions.

However, the question must be raised whether foreign investors actually value or want predictability and clarity in ASEAN?

In order to appreciate both the progress of ASEAN and the additional work required for the AEC, a brief review of the regional bloc's origins and foundations is necessary.

Back to the origin: the foundations of ASEAN

ASEAN was founded by Indonesia, Malaysia, the Philippines, Singapore, and Thailand in the Bangkok Declaration of August 8, 1967. That ASEAN was established by a simple declaration and that the ASEAN Secretariat was only established in 1976, almost ten years after the establishment of ASEAN, provide the first insight of the informal ASEAN way that was deliberately embraced since its beginning.

The Bangkok Declaration, it should be remembered, was primarily a political document to express the region's solidarity in the aftermath of Indonesia's Konfrontasi with Malaysia, the rise of Suharto in Indonesia, Singapore's separation from Malaysia and the continuing war in Indochina. Furthermore, previous regional efforts in post-World War II Southeast Asia had failed (indeed, the Japanese Greater Co-Prosperity Sphere of World War II was perhaps the only time that all of Southeast Asia was under common de facto control, albeit military control that only lasted four years). The Malphilindo proposal was based largely on ethnic ties in the Malay community and could not overcome the political realities on the ground e.g., Sukarno's determination to “crush Malaysia.” Meanwhile, the Southeast Asia Treaty Organization (SEATO) was immobilized in the Indochina conflict due to a lack of consensus and itself having a lack of political credibility as its operations were driven by the USA and postcolonial powers. With the Cold War overhanging Southeast Asia, economic considerations were of secondary importance in the Bangkok Declaration, listed after other priorities:

1. 3. To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields;

2. 4. To provide assistance to each other in the form of training and research facilities in the educational, professional, technical and administrative spheres;

Introduction

In the previous chapters we presented and discussed the characteristics of the 175 ASEAN external instruments, including international agreements, memoranda of understanding, plans of action and declarations, covering the fields of economic, security, political and socio-cultural co-operation, put into place since the early 1990s and, particularly, between 2000 and 2012. Along the way, we uncovered four seemingly paradoxical characteristics of these external instruments taken as a whole. First, Southeast Asian states frequently use ‘ASEAN’ as a label or a frame in the context of external agreements, thereby promoting ASEAN identity and its ‘centrality’ in a number of regional initiatives. Yet ASEAN as a regional organisation is rarely a genuine protagonist in the sense of a legal party, especially when policy-makers perceive the issues as significant (diplomatically and/or economically) and the chosen instrument is legally binding. Second, while the legal potential in ASEAN external relations exists and was formally affirmedby the ASEAN Charter, with the notable exception of the economic instruments, the external instruments actually put to the task are predominantly non-legally binding. Third, the ASEAN Charter and ASEAN external instruments emphasise the centrality of ASEAN as an important vehicle to promote and stabilise the regional order preferred by the member states. Yet, substantially, ASEAN external instruments are ‘multidirectional’, promoting an open regionalism by no means confined to ASEAN itself which may undermine the very centrality of ASEAN. Fourth, half of ASEAN external instruments are economic in nature and are designed to offer economic benefits. Their immediate commercial benefits, however, are limited as a result of ASEAN collectivity and the plurilateral mode of contracting: the inclusiveness of these agreements decreases the lowest common denominator of commonly agreed commitments and discourages deeper individual commitments due to free-rider problems in the plurilateral negotiation setting.

Examining ASEAN's behavior in international forums from different angles leads us to the question of what we can conclude in general terms for regional organizations of the Global South and in more specific terms for ASEAN? At a theoretical level we have added a new explanatory approach to the literature on international negotiations, which has thus far been strongly dominated by neo-functionalist and rational choice approaches. In a constructivist reinterpretation of the neo-functionalist externalization thesis, we argued that more than material institutional factors such as functional specificity, heterogeneity and centralization, it is cognitive factors such as the world views – shaped by historical experiences – of decision-makers that have a major bearing on the cohesiveness of regional organizations. The more these cognitive factors are entrenched in the collective memory of a region's elites the more they tend to impact on the normative underpinnings of a regional organization and the latter's organizational structure. The more new experiences reproduce these historical experiences the more they strengthen ideational path dependencies, thereby externalizing the regional organization's intra-regional ideational dispositions regarding interactions with third states and in international organizations.

Even though we have to be careful in drawing farreaching generalizations from a single case study, our examination of ASEAN's behavior and cohesion in international organizations has brought to the fore more considerable evidence for our theoretical argument. These insights are mainly based on diachronic in-case comparisons. We can, most importantly, marshal abundant evidence that the world views determining the behavior of foreign policy elites in ASEAN member countries have not changed much over time. They may have temporarily fluctuated somewhat depending on contextual conditions, but overall they have remained the same. Power sensitivity, lingering distrust of partners and fear of Great Powers inside and outside the wider East Asian perimeter continue to fuel a proclivity for sovereignty-based cooperation norms. As a result, the national interest still dominates the behavior of member states towards each other as well as towards third parties.

Historically, ASEAN had little provision for monitoring obligations – arguably because there was little interest in compliance at all. Writing in 1998, the former Secretary-General of ASEAN stated that ASEAN ‘is not and was not meant to be a supranational entity acting independently of its members. It has no regional parliament or council of ministers with law-making powers, no power of enforcement, no judicial system.’ This was consistent with the view that ASEAN was intended to be a kind of social rather than a legal community.

Over time this changed, with the adoption of various agreements that included reporting obligations. The signing of the ASEAN Charter in 2007 signalled a paradigm shift. As Tommy Koh and others argued, the purpose of the Charter was to make ASEAN a more rules-based organisation: ‘The “ASEAN Way” of relying on networking, consultation, mutual accommodation and consensus will not be done away with. It will be supplemented by a new culture of adherence to rules.’ This point was emphasised also in the Report of the Eminent Persons Group, which explicitly linked rule adherence to legal personality. Whether the ‘ASEAN Way’, epitomised by musjawarah (consultation) and mufukat (consensus), is compatible with a rules-based organisation will be a key challenge to the organisation in years to come.

Two obstacles remain. The first is capacity, including the comparatively few resources available to ASEAN in general, and the unfunded mandates created in certain regimes in particular. Writing in 2011, Azmi Mat Akhir optimistically argued that the challenge confronting ASEAN was the need to coordinate the increasingly complex and multi-sectoral activities being undertaken in ASEAN's name. The mandate of the Secretariat, for example, has increased – but only slightly. In the 1976 Agreement establishing the Secretariat, the Secretary-General was given limited responsibilities to ‘ascertain facts or seek clarifications for the purpose of reporting to the Standing Committee for its consideration’ and ‘harmonise, facilitate and monitor progress in the implementation of all approved ASEAN activities’.

ASEAN Community Building comprises the ASEAN Economic Community (AEC), complemented by the ASEAN Political-Security Community (APSC) and the ASEAN Socio- Cultural Community (ASCC).

Rationale and process towards the AEC

At the November 2002 ASEAN Summit it was decided to move on to the next stage of regional economic integration. According to Severino the term AEC was coined by then Singapore Prime Minister Goh Chok Tong to evoke the idea of the EEC, as he and a few other ASEAN leaders were deeply concerned over the weakened ability of ASEAN countries to attract FDI in the aftermath of the AFC as well as the rise of China and India as competing destinations for investment. For ASEAN to meet these challenges it had to deepen economic integration to persuade investors that ASEAN was serious about regional economic integration and clear about its objective. Specifically, investors had to be persuaded that ASEAN, when integrated, would have a prospective domestic market that could compete with China. The AEC would have almost half of China's population and would equal China's GDP size.

The Bali Summit in 2003 issued the Declaration of ASEAN Concord II to create the AEC. The AEC is based on the 1997 ASEAN Vision 2020, calling for a stable, prosperous and highly competitive ASEAN economic region in which there is free flow of goods, services, investment and a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities in the year 2020. This was to be achieved by transforming ASEAN into a single market and production base, as a more dynamic and stronger segment of the global supply chain. For this ASEAN would set up new mechanisms and measures to strengthen the implementation of its existing economic initiatives (including AFTA, negotiations on AFAS, and AIA); facilitate movement of business persons, skilled labour and talents; and ensure expeditious and legally binding resolution of any economic disputes.

This book provides a critical overview of the legal and institutional foundations of the ASEAN Economic Community (AEC), an ambitious plan to create a single economic entity in Southeast Asia. If successful, the AEC would create a tremendous production base and market that would rival nation-states such as China and India.

The difficulty for the AEC is that, unlike nation-states, ASEAN does not have sufficiently developed legal and institutional foundations. This deficiency goes back to the founding of ASEAN as first and foremost a political grouping during the Cold War, with economic considerations being of secondary importance. Although competition since the end of the Cold War has spurred economic cooperation in Southeast Asia, the continuing emphasis on political and diplomatic matters has limited such cooperation.

ASEAN has maintained an informal decision making process based on consensus among its member states and ASEAN member states have not delegated any power to supranational entities for economic matters.

The introduction of the ASEAN Charter in 2007, intended to implement greater emphasis on rules in ASEAN's operations, has helped in a somewhat limited fashion. Furthermore, with regard to economic matters, the ASEAN Charter also prioritizes the creation of a single market and a single production base, even though the latter is more achievable politically and would more quickly generate benefits for the general population.

In this book the AEC, ATIGA, and other relevant ASEAN legal instruments are analytically examined to conclude that the AEC legal texts do not provide the tools, nor the juridical arsenal to establish the single production base and a fortiori, the single market.

ASEAN has undertaken the complex task of creating a single economic entity but without a single regulator. The ASEAN Secretariat has very limited powers, with almost all decisions still being made by the ASEAN member states themselves. Nor have the ASEAN member states used dispute resolution to enforce the terms of the AEC agreements and commitments. In many cases ASEAN member states prefer to use non-ASEAN legal norms and forums to resolve their disputes.

ASEAN economic cooperation in the pre-AFTA period, 1977–91

Prior to the late 1980s, consideration of deep regional economic integration remained taboo and the focus was on economic cooperation. This period was characterised by preoccupation with commodity trade problems, the ASEAN Preferential Trading Arrangement (PTA) and industrial cooperation schemes. Akrasanee (2000 : 36–7) notes:

Initial obstacles and subsequent rationale

ASEAN's preference for regional economic cooperation rather than deep integration in the 1970 s and 1980 s reflects the reluctance of some ASEAN countries to undertake trade and investment liberalisation owing to the pursuit of industrial policies of import substitution and picking winners. However, as the limitations of import substitution became increasingly apparent, more countries favoured an export oriented development strategy with greater acceptance of trade and investment liberalisation unilaterally and under ASEAN.

Another obstacle to deep economic integration in ASEAN at the time was the diversity in size, resource endowment, level of economic development, technological capability and openness of trade and investment regimes among ASEAN countries that led to differing perceptions of benefits and costs of economic integration. It was perceived that the more competitive ASEAN economies would gain more. There is also the political economy dimension of trade and investment liberalisation within each country. The winners include consumers (the silent majority) who enjoy lower prices and wider range of goods and services; farmers, businesses and workers in expanding export sectors; and foreign investors able to have right of establishment and a level playing field.

Introduction

In Chapter 2, we explored the substantive content of ASEAN external agreements, particularly in respect of regulatory cooperation. This chapter turns to the institutional aspects of ASEAN's external trade agreements, and explores the different models which ASEAN might use to conclude such agreements. It highlights existing and possible prospective trends in ASEAN's ‘external relations law’ and the institutional provisions of ASEAN's external trade agreements.

Thus far, ASEAN member states have concluded their external trade agreements as plurilateral member state agreements. ASEAN, a separate international legal person, is not a party even where ASEAN's Secretariat has been conferred responsibilities in some of the agreements. The question is how these obligations that the parties to the agreement have sought to impose upon ASEAN can be enforced. Should ASEAN be a party to ASEAN's external trade agreements, whether a sole party or a party together with its member states?

The other question is whether ASEAN external trade agreements, which appear to be used as a tool to enhance ASEAN regional integration, are appropriately structured to achieve this end. There are two aspects to this question. First, the use of the ASEAN minus X formula, which may need to be moderated, perhaps even supplemented or replaced by other alternative approaches to conclusion of agreements, in order for the application of the formula not to be counterproductive. Secondly, how the rights and obligations in the agreement should be structured. Should rights and obligations set out in ASEAN's external trade agreements be limited to apply only between the ASEAN member states and the dialogue partner(s), or should they be extended to apply between the ASEAN member states (and, where relevant, ASEAN) as well? Should ASEAN member states (and, where relevant, ASEAN) collectively enter into external trade agreements, rather than be separate and individual parties to such agreements?

Notwithstanding the current approach of member states concluding ASEAN external trade agreements on a plurilateral basis, other models of conclusion have been used for ASEAN external agreements dealing with other economic matters and for external agreements of other international organisations that are free trade areas or customs unions.

Introduction

In this chapter we turn to the substantive category of ASEAN agreements that does not derive directly from one of the three pillars of ASEAN: ‘partnership and co-operation’ agreements. To some extent, this is a residual category as it covers agreements that do not fit easily into the other three categories, or that cover more than one of the ASEAN pillars. Nevertheless, this does not lessen their importance in assessing ASEAN as an international actor. In fact, some of the key features of ASEAN's external relations become evident here. The chapter will start with a general overview of ASEAN's partnership and co-operation agreements, followed by the three hallmarks of ASEAN's external-relations practice which they reveal. These are, first, the role of ASEAN as a regional architect; second, the externalisation of the ‘ASEAN Way’ by relying heavily on ‘soft’ legal instruments; and third, the existence and use of an ASEAN legal personality in ASEAN's relations with other international organisations.

Overview of the category

The concepts of co-operation and partnership are at the heart of the Charter's vision of ASEAN's external relations. Article 41(1) of the Charter gives ASEAN a mandate to ‘develop friendly relations and mutually beneficial dialogue, cooperation and partnerships with countries and sub-regional, regional and international organisations and institutions’. Article 44 of the Charter also institutionalised the pre-existing ASEAN practice of granting different types of partnership status to third countries, including dialogue partner and sectoral dialogue partner. In terms of absolute numbers, partnership and co-operation instruments represent the second-largest substantive category after economic instruments. There are more than twice as many ASEAN partnership and co-operation instruments (sixty-one) than political-security and socio-cultural instruments combined. These instruments are especially important as a basis for relations with ASEAN's dialogue partners and in particular with its six key partners (China, the EU, Korea, the USA, Australia and Japan). With regard to the USA, Australia and Japan, partnership and co-operation instruments approximately equal economic instruments in number.

As the survey of ASEAN practice demonstrates, monitoring has been undertaken in a variety of forms and, implicitly, for a variety of purposes. This chapter seeks to elucidate those purposes and offer a tentative evaluation of the suitability of the monitoring mechanisms that have been established. Chapter 3 will then offer a more general survey of structures and processes available.

As indicated in the Introduction, monitoring is often understood as the gathering of information on compliance with or implementation of certain obligations. The survey of ASEAN practice is consistent with this, for example AMRO's role in ensuring compliance with the CMIM agreement, or the AMM's role in monitoring implementation of the peace agreement in Aceh. But limiting analysis to these categories would not encompass the various occasions in which nominal monitoring takes place without meaningful efforts to link the mechanism in question to substantive or formal compliance.

As outlined in the Introduction, this chapter distinguishes between five discrete purposes for which monitoring appears to have been undertaken in the ASEAN context. The first two are the familiar categories of compliance sensu stricto, in the sense of substantive compliance with an obligation, and implementation, in the sense of formal compliance with an obligation. In addition, however, the ASEAN experience suggests three additional categories of analysis: interpretation, meaning that monitoring clarifies or provides an authoritative interpretation of an obligation; facilitation, denoting the purpose as being supportive of parties’ efforts to comply with an obligation; and symbolism, a final category in which there is no clear purpose for an intentionally weak mechanism beyond suggesting that an obligation is important enough for compliance to be desirable.

Compliance Sensu Stricto

Mechanisms to evaluate substantive compliance may be formal or informal: the defining characteristic is that monitoring is explicitly linked to the evaluation of success in achieving a specified outcome. This presumes, among other things, that the outcome is in fact specified.

This monograph is published within the context of a wide-ranging research project entitled, Integration Through Law: The Role of Law and the Rule of Law in ASEAN Integration (ITL), undertaken by the Centre for International Law at the National University of Singapore and directed by J. H. H. Weiler, Michael Ewing-Chow and Tan Hsien-Li.

The Preamble to the ASEAN Charter concludes with a single decision: “We, the Peoples of the Member States of the Association of Southeast Asian Nations … [h]ereby decide to establish, through this Charter, the legal and institutional framework for ASEAN.” For the first time in its history of over four decades, the Legal and the Institutional were brought to the forefront of ASEAN discourse.

The gravitas of the medium, a Charter: the substantive ambition of its content, the creation of three interlocking Communities, and the turn to law and institutions as instruments for realization provide ample justification for this wide-ranging project, to which this monograph is one contribution, examining ASEAN in a comparative context.

That same substantive and, indeed, political ambition means that any single study, illuminating as it may be, will cover but a fraction of the phenomena. Our modus operandi in this project was to create teams of researchers from Asia and elsewhere who would contribute individual monographs within an overall framework which we had designed. The project framework, involving several thematic clusters within each monograph, is thus determined by the framework and the place of each monograph within it.

As regards the specific content, however, the authors were free, indeed encouraged, to define their own understanding of the problem and their own methodology and reach their own conclusions. The thematic structure of the entire project may be found at the end of this Preface.

The project as a whole, and each monograph within it, display several methodological sensibilities.

First, law, in our view, can only be understood and evaluated when situated in its political and economic context. Thus, the first studies in the overall project design are intended to provide the political, economic, cultural and historical context against which one must understand ASEAN and are written by specialists in these respective disciplines.

Introduction

As noted in our opening introduction, achieving a clear view of what this research yields is possible only if the different models of agreements and their implications are traced through all stages of the treaty-making to treaty-breaking succession, from,

In Chapter 2, the characteristics of substantive regulatory and trade policies most likely to be raised in future ASEAN external agreements were examined. It also demarcated the terrain of the subject matter into its hard and soft law aspects. Chapter 3 set out the detailed existing and possible future forms of agreement for ASEAN and its members and the impact of these on aspects of treaty-making, including who could be the parties to the agreement and undertake obligations under the agreement, how the agreement could be negotiated, and how the agreement could enter into force. Chapter 4 followed with a consideration of the implications of these different agreements for dispute settlement aspects. With the different forms of agreements in mind, this chapter will go on to take the substantive policies and the dispute settlement issues in turn through the treaty-making and treaty-breaking process.

Substantive regulatory and trade provisions

This section places the policies raised in Chapter 2 in the context of treaty-making, implementation and breaking. Two perspectives are adopted. The first looks at the hard law subject areas and considers what those provisions suggest for ASEAN in the treaty process.