Panel Report – Diffusion and the Future of EU-ASEAN Economic Relations

Panel Report – Diffusion and the Future of EU-ASEAN Economic Relations

The fourth panel of IFAIR’s Online Workshop EU-ASEAN Perspectives was dedicated to the promotion of regional economic integration. It dealt with the guiding questions of whether the EU could serve as a model of economic integration for the ASEAN Economic Community, and how the EU and ASEAN could act individually or jointly to further regional integration in Southeast Asia. Dr. Thomas Gambke, Member of German Parliament, shared his views on the most pressing issues in EU-ASEAN economic cooperation.

The EU’s agenda of exporting economic integration

The EU is generally seen as the world’s most advanced economic integration project and it explicitly engages in the promotion of integration elsewhere on the globe. But what capabilities does the EU have to export its model to other regions? And is it desirable for places such as Southeast Asia, who have developed a very unique way of economic cooperation, to embrace European-style integration as a model? What can the Southeast Asian states, which are in the process of constructing an ASEAN Economic Community (AEC) by 2015, learn from the European experience?

These and other questions were addressed by Boonwara Sumano, PhD student at the School of Politics and International Relations of Queen Mary University of London, and Serena Garelli, consultant in the private sector with expertise in EU-ASEAN trade relations, at the concluding panel of IFAIR’s Online Workshop EU-ASEAN Perspectives. Their joint presentation was followed by an in-depth discussion among the workshop participants. The panel, which was chaired by Steffen Murau, head of IFAIR’s EU/Europe division, concluded with remarks by Thomas Gambke, Member of German Parliament and Chairman of the Parliamentary Friendship Group for Relations with the ASEAN States.

Power in trade, power through trade

At the beginning of the panel, Serena Garelli related the EU’s policy of promoting economic integration in Southeast Asia to its principal objectives in foreign economic policy. The Commission’s strategy, in her view, is best seen as a pursuit of both ‘power in trade’ and ‘power through trade’. In contrast to the idea of ‘power in trade’, which defines the search for market access and competitiveness, the concept of ‘power through trade’ encompasses a comprehensive policy that also seeks to create an international framework beyond the EU’s borders whose rules are favorable to its economic activities. The attempt to negotiate deep and comprehensive FTAs with ASEAN members, including provisions for product standards and intellectual property rights as well as public procurement, competitions rules and sustainable development, have to be seen against this backdrop.

Garelli stressed that, apart from the EU’s active efforts to promote regional integration such as political dialogue, development cooperation and free trade agreements, there are also instances of un-intended policy diffusion heading from the EU to ASEAN, such as when other regions draw lessons from the European experience or mimic its institutions. Despite these various channels of diffusion, ASEAN’s economic agenda is unlikely to be identical with the EU mode of cooperation because when norms and rules are adopted, they are always adapted to a constitutive local context – an argument that resonated well with the main idea of the workshop, namely that perceptions matter in the interregional relations of ASEAN and the EU.

No regionalism without regionalization

The ensuing account by Boonwara Sumano of how ASEAN deals with the EU’s integration model made use of the diffusion concept outlined by Garelli. Rather than drawing lessons from the EU’s historical integration experience, Sumano argued, the ASEAN states had for the most part simply mimicked the EU’s institutional set-up for the sake of gaining credibility on the international stage. The outcomes of this mimicking process vary greatly depending on the structural conditions in individual economic sectors. For example, ASEAN Mutual Recognition Arrangements (MRAs), the main instruments of ASEAN’s attempt to liberalize the intra-regional movement of professionals and skilled workers, have been rather successful in the architectural services sector, while the MRA negotiation for surveying services sector – which has not been privatized, let alone liberalized, in some member states – merely resulted in a framework agreement to negotiate a real MRA in the future.

In Sumano’s view, the biggest shortcoming of mimicking the EU integration process is that, in ASEAN, regionalization (the intra-regional flow of goods, services, capital, people and ideas) has not caught up with regionalism (the top-down process of constructing a regional community through official agreements and high-level officials meetings), as is reflected in the consistently low level of intra-ASEAN trade since the introduction of ASEAN Free Trade Agreement (AFTA). As long as this lacuna exists, mimicking will always lead to an ‘implementation gap’, where ASEAN’s commitments to integration remain largely declaratory and are not reflected in actual practice. To remedy this situation, Sumano suggested that the ASEAN states should look more to the early phase in European integration and promote regionalization and functional cooperation, based for example on the model of the European Coal and Steel Community.

Erasmus goes Southeast Asia?

Sumano’s proposal that the EU could engage in ASEAN’s endeavor to increase the level of regionalization by supporting infrastructure projects, such as rail networks and sea-crossing bridges that will enhance connectivity in Southeast Asia, sparked a lively debate among the workshop participants. The particular value of such an approach from a perception-based perspective, as was pointed out, is that it could lead to a more fundamental transformation of identities in both regions and increase the common ground for cooperation in economic and other issues. While academic exchange programs between the EU and ASEAN following the Erasmus model were identified as a potential avenue for EU assistance, several discussants raised their concerns with respect to their practical use, given the unequal educational opportunities especially in the poorer Southeast Asian countries.

In light of such structural problems, capacity-building seems of utmost importance in promoting regional integration. This is also true for the regional level, where the ASEAN Secretariat is understaffed and underfunded, and consequentially unable to perform beyond its basic administrative tasks. It seemed to be a consensual view that the EU should support capacity-building. However, one participant pointed out that the ASEAN member states themselves might not be very supportive of such initiatives to strengthen the Secretariat for fear that the supranational arrangement will become more of a challenge to their national authority.

What the EU can offer

These more tangible issues of how the EU can help ASEAN integrate were contrasted by discussions on a more fundamental level about whether, and in what areas, the EU should be considered a model for ASEAN at all. Apart from the obvious difference in the level of socio-economic development, it became clear from the statements that the poor performance of the EU in course of the financial and economic crisis should provide the ASEAN states with important lessons for their own AEC project. While the Common Market in goods, services and labor was identified as a model to draw on, the participants were much more skeptical with respect to financial and monetary integration in the short term.

Insights from Parliament

Reacting to the arguments outlined by Garelli and Sumano, Dr. Thomas Gambke, Member of German Parliament and political patron of IFAIR’s project, shared insights from his ASEAN-related parliamentary work. The overarching objective of economic relations between the two regions, in his view, should be to create an equal-level playing field for all actors so that true competition can take place. Thus, creating fair rules for trade between highly divergent economies is vital. To support this process, national action – e. g. tax policies – must take into account the added value their own industries can bring into the interregional economic relations.

Gambke concluded by restating his support for IFAIR’s Impact Group EU-ASEAN Perspectives because it fosters the exchange of ideas between young minds from Europe and Southeast Asia and contributes to friendly and peaceful relations between the two regions in the future.

by Sumano Boonwara, Serena Garelli and Kilian Spandler

Read the reports of the other panels and find additional information on the workshop on the >> [Impact Group website].