ASEAN's international trade in goods

ASEAN's approach to economic cooperation and integration focuses on the need to reduce barriers to intra-regional trade and investment so as to compete more effectively in international markets. What is needed is a more competitive regional economy in the context of an increasingly competitive global one. This makes ASEAN unique compared with economic integration efforts elsewhere, such as in the EU and Latin America, where the focus has been more on increasing intra-regional trade and investment as a percentage of the total.

Figure 3.1 shows that intra-ASEAN trade as a percentage of its total trade has remained fairly constant in the range of one-fifth to one-fourth over the past decade (2001–12), when economic integration programmes began to be implemented in earnest. In contrast, ASEAN's trade with China has almost tripled from 5 per cent to 13 per cent from 2001 to 2012, reflecting in large part the rising participation in regional production networks (particularly in electronics) along with China. China's rising importance has come at the expense of the traditional US and European markets, whose share fell from about one-third to one-fourth, and Japan. Note, however, that ASEAN is still dependent on these traditional OECD markets for the exports of final goods, when intermediate trade is separated from final demand in the trade data (see, for example, ADB 2008).

At the country level, the importance of the ASEAN market varies considerably from economy to economy, as shown in Figures 3.2a and 3.2b. Laos and Myanmar are highly dependent on trade with ASEAN, as has been Brunei (though its importance has been declining since the beginning of the twin crises). Trends in the other economies are mixed. However, it is noteworthy that the ASEAN market share for each member economy tends to be above one-fifth for all economies save Vietnam, whose share has been about 18 per cent over the past few years (having fallen since Vietnam joined the World Trade Organization (WTO) and the normalisation of trade relations between Vietnam and the USA).

In Chapter 3 we explored the internal dimension of ASEAN's collective action capacities in global fora. Our analysis revealed that, as predicted in the theoretical section, member countries' historical experiences have given rise to institutional arrangements that are not very conducive for building common knowledge-based negotiation positions in international fora. In this chapter we change the perspective and examine the external dimension. That is, ASEAN's practices as a negotiator in global fora. In this regard, we investigate how cohesively ASEAN operates in international organizations such as the UN and the WTO. Commensurate with the theoretical concept outlined in Chapter 2, we try to establish the type of cohesion that characterizes ASEAN activities in global fora and ask how ASEAN or individual ASEAN member countries act at different stages of negotiation processes. To what extent are they initiators and agenda-setters, to what extent does ASEAN or its member countries act as norm entrepreneurs, how do they act in voting and how do they comply with decisions?

With the findings of Chapter 3 as a starting point, we expect ASEAN mainly to be operating as a caucus in international forums. Member countries share an essentially skeptical outlook on the external world, distrust still lingers among them despite nearly five decades of cooperation, some regional identity has developed but is still clearly secondary to national identity, power sensitivity still strongly guides the behavior of member states and epistemic capacities are mediocre and distributed inequitably among the membership. As a result, we anticipate that ASEAN member states will frequently defect from collective action: in fact, whenever it suits their national interest.

Phase 1 identifying problems, defining issues and agenda-setting

While ASEAN as a regional organization has been a frequent agenda-setter in the Asia-Pacific region, this is less obvious for its global activities. In global fora its record as initiator, innovator and agenda-setter has been rather ambiguous.

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 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.

It is sometimes seen as paradoxical that Asia – the most populous and economically dynamic region on the planet – is the most lacking in formal intergovernmental structures. There is no regional framework comparable to the African Union, the Organization of American States or the European Union; in the United Nations, the Asia-Pacific Group of fifty-three states rarely adopts common positions on issues and discusses only candidacies for international posts. Such sub-regional groupings that exist within Asia have tended to coalesce around shared national interests rather than shared identity.

In part this is due to the diversity of the continent. Indeed, the very concept of ‘Asia’ derives from a term used in Ancient Greece rather than indigenous political or historic roots. Today, regional cohesion is complicated by the need to accommodate the great power interests of China and India. But the limited nature of regional bodies is also consistent with a general wariness of delegating sovereignty to international organisations. Asian countries, for example, have by far the lowest rate of acceptance of the compulsory jurisdiction of the International Court of Justice (ICJ) and membership of the International Criminal Court (ICC); they are also least likely to have signed conventions such as the International Covenant on Civil and Political Rights (ICCPR) or the International Covenant on Economic, Social and Cultural Rights (ICESCR), or to have joined the World Trade Organization (WTO). Figure 0.1 shows the participation of states in different international institutions.

For most of its history, the Association of Southeast Asian Nations (ASEAN) reflected such wariness. Its foundational document, the Bangkok Declaration, essentially stated a few shared goals and announced an annual meeting of foreign ministers.

In the past decade, however, ASEAN has undergone a transformation from a periodic meeting of ministers to setting ambitious goals of becoming an ‘ASEAN Community’ by 2015. Building on the adoption of a Charter that entered into force in 2008, this seeks to create an Economic Community, a Political-Security Community and a Socio-Cultural Community.

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 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.

First, law, in our view, can only be understood and evaluated when situated in its political and economic context.

Introduction

Booming East Asia has been particularly active in negotiating intraregional and interregional trade and investment agreements during the past decade. With only three PTAs on record by the year 2000, there are now fifty-nine bilateralor plurilateral accords that involve at least one Asian nation as a signatory. At first sight, the increasing intensity of East Asian intraregional economic integration activity appears to have created a high degree of complexity through the overlap of membership and substantive obligations of the agreements concerned – rather than legal clarity, certainty and predictability for businesses.

At the centre of what has been labelled the East Asian ‘noodle bowl’, ASEAN internal economic integration has steadily progressed since the conclusion of the ASEAN FTA (AFTA) in 1992 and is now geared towards the achievement of the ASEAN Economic Community (AEC) by 2016.

The second layer of regional obligations was created by the conclusion of plurilateral PTAs between ASEAN member states and six of ASEAN's dialogue partners, notably China (entry into force 2005), Korea (2007), Japan (2008) and India (2010), as well as Australia and New Zealand (2010). Due to their plurilateral character, these ASEAN + 1 PTAs also bind ASEAN member states inter se.

Adding a third layer of regional integration, ASEAN's six external PTA partners have concluded, or are in the process of negotiating, separate and parallel PTAs with up to seven individual ASEAN member states. Furthermore, these countries have – outside the realm of ASEAN member states’ involvement – concluded PTAs among each other – the latest incidence of which is the announcement of trilateral negotiations between China, Korea and Japan. At the same time, all of the actors mentioned above have been actively engaged in the negotiation of PTAs with other Asian and non-Asian economies.

Introduction

In this chapter we present an inventory and typology of ASEAN's external agreements, which will then form the basis of our analysis of ASEAN treaty-making practice in the following chapters. Our analysis is based on the inventories and tables which are included in the appendices and is founded on the type of instrument used and their legal quality, the parties to the instruments, and their content. A few initial comments on each of these are in order.

First, as to the type of instrument, we have included in our dataset not only legally binding international agreements (such as treaties) but also other instruments: memoranda of understanding (MoUs), action plans and declarations concluded between, or issued jointly by, ASEAN on the one side and a third state, group of states or international organisation on the other. Thus we exclude unilateral ASEAN instruments. The instruments vary widely in terms of length and significance, as well as legal quality. Our classification is based on the indicators of legal quality developed by Davinia Aziz for the purpose of analysing the typology of internal ASEAN instruments. Since a large number of ASEAN external instruments fall into the category of non-legally binding (102 out of a total of 175 instruments) inclusion of the latter will present a fuller picture of ASEAN external relations, will put the binding agreements into their broader institutional context, and will allow us to make an assessment as to whether legally binding commitments are preferred for different subject matters or for relations with different parties, and whether that choice alters over time. An analysis of the legal quality of ASEAN external instruments is presented in section 2 below.

Second, we have categorised the instruments in terms of content. We distinguish between (i) political and security, (ii) economic, (iii) social and cultural and (iv) partnership and co-operation instruments.

This book addresses a topic that in the proliferating literature on the Association of Southeast Asian Nations (ASEAN) has so far been almost entirely neglected. While ASEAN's practices in intra-regional cooperation are well covered and some information exists about ASEAN's agency in international forums of the East Asian and Asia-Pacific region, hardly anything is known about ASEAN as an actor and negotiator in global forums such as the United Nations, the World Trade Organization (WTO), the International Monetary Fund (IMF) or the climate change and non-proliferation regimes. Available information is unsystematic, scattered and often anecdotal.

In this study, we argue that in global forums regional cohesion has to contend with four major constraints: first, the ASEAN Way as the grouping's repository of shared cooperation norms and, second, as a direct outflow of the former, ASEAN's organizational structure. Neither ASEAN's value system nor its internal structure is conducive to collective action in the global political arena. Both are legacies of a “cognitive prior” shaped by centuries of conflict, threats, instability and political uncertainties that have deeply engrained distrust, suspicion and ill-feelings towards the external world in the minds of decision-makers and major parts of the public. These legacies are reflected in the strong emphasis of the ASEAN Way on sovereignty norms. The seemingly cosmopolitan liberal norms ASEAN adopted with the Bali Concord II of 2003 and elevated to quasi-constitutional status in the ASEAN Charter enacted in 2008 may have eased external normative pressures on ASEAN, but have done little to overcome ASEAN's cohesiveness dilemma. On the contrary, they have, and this is our third major point, exacerbated the association's collective action problems by creating a value base that is contradictory below the surface of rhetorical unity. Fourth and finally, we argue that Southern regional organizations such as ASEAN also grapple with an uneven institutional playing field.

Agreement between the EFTA states and Singapore (adopted 26 June 2002, entered into force 1 January 2003)

Agreement establishing the ASEAN–Australia, New Zealand Free Trade Area (adopted 27 February 2009, entered into force 1 January 2010)

Agreement on Comprehensive Economic Partnership among Japan and Member States of the ASEAN (adopted 26 March 2008, entered into force 1 December 2008)

Agreement on Dispute Settlement Mechanism under the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the member countries of the ASEAN and the Republic of Korea (adopted 13 December 2005, entered into force 1 July 2006)

Agreement on Dispute Settlement Mechanism of the Framework Agreement on Comprehensive Economic Cooperation between the ASEAN and the People's Republic of China (adopted 29 November 2004, entered into force 1 January 2005)

Agreement on Dispute Settlement Mechanism under the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the ASEAN (adopted 13 August 2009)

Agreement on Investment under the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Republic of Korea and the member countries of the ASEAN (adopted 2 June 2009, entered into force 1 September 2010)

Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Cooperation between the ASEAN and the People's Republic of China (adopted 29 November 2004, entered into force 1 January 2005)

Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Republic of Korea and the member countries of the ASEAN (adopted 24 August 2006, entered into force 1 June 2007)

Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation between the ASEAN and the Republic of India (adopted 13 August 2009, entered into force 1 January 2010)

Agreement on Trade in Services of the Framework Agreement on Comprehensive Economic Cooperation between the ASEAN and the People's Republic of China (adopted 14 January 2007, entered into force 1 July 2007)