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ASEAN Integration PDF
ASEAN Integration PDF
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Perspective
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Asian Perspective 35 (201 1 ), 407-435
Min-hyung Kim
407
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408 Theorizing ASEAN Integration
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Min-hyung Kim 409
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41 0 Theorizing ASEAN Integration
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Min-hyung Kim 41 1
stance, despite its claims to be a single market, the AEC has no plan
to set up a common external tariff against nonmembers, which is es-
sential for a customs union. Moreover, the Bali Concord II reaffirms
the fundamental importance of the principles of noninterference and
consensus in ASEAN cooperation.
What explains this low level of political will for (and hence the
protracted process of) regional integration in Southeast Asia? Before
I present my own explanation, the following section addresses the
shortcomings of extant accounts.
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412 Theorizing ASEAN Integration
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term gains for better future gains (Keohane 1984). Particularly when
assisted by good leadership, these institutions work more effectively
since leaders anticipate problems and induce collaboration among di-
verse stakeholders via effective strategy development and imple-
mentation (Young 1991).
This insight was captured by Walter Mattli, who emphasizes,
among other factors, undisputed regional leadership in deepening the
regional integration process. According to Mattli, successful integra-
tion requires not just demand from market actors but also supply from
political actors - the existence of an undisputed leader among the
group of states seeking closer ties. "Such a state serves as a focal point
in the coordination of rules, regulations, and policies; it may also help
to ease distributional tensions by acting as regional paymaster" (Mat-
tli 1999, 13-14). Germany has played this leadership role for Euro-
pean integration. Mattli contends that the absence of a regional leader
in ASEAN is the main reason for the protracted progress of ASEAN
integration. For the same reason, he is pessimistic about further deep-
ening of integration in Southeast Asia.
Although insightful, Mattli's thesis has several shortcomings.
First, Mattli underscores the preconditions for integration in different
regions. This is problematic because he simply assumes that further
integration will automatically follow if some necessary conditions are
fulfilled. However, this is not the case even in European integration.
Regional integration typically involves redistributional politics and
thus creates winners and losers both domestically and internationally.
Therefore, what is also important is the political will of states to move
integration forward. Second, Mattli measures the success of integration
efforts in terms of the accomplishment of stated goals. However, this
analysis does not provide an explanation of interregional variations in
the scope of these stated goals due to the lack of attention to the pref-
erences of states in different regions. Third, although Mattli empha-
sizes the existence of a regional leader as a supply condition for deeper
integration, he offers no explanation of striking differences between
potential and actual regional leadership (Webber 2003, 129). For ex-
ample, despite its potential to be a regional leader in East Asian inte-
gration, Japan has not played a leadership role. Indonesia under
Suharto was a major player in ASEAN integration, but its role was not
comparable to Germany's in European integration.
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total ASEAN trade of the top five external ASEAN trade partners
(United States, Japan, European Union, China, and South Korea) was
49.9 percent, which was about twice that of intra- ASEAN trade (24.9
percent).
Thus, it is not surprising that contrary to NAFTA, which led to an
increase of 71.5 percent in intra-NAFTA trade between 1995 and
2000, the bold steps toward AFTA increased intra- ASEAN trade only
by 23.08 percent in the same period. In fact, a more recent study
shows that the total amount of ASEAN trade or welfare gains will in-
crease three times greater under an MFN (most favored nation) lib-
eralization of ASEAN trade with the world than under the AFTA plan
(Tan 2004, 947-948). Hence, Narine (2002, 5) asserts that "the trade
of most ASEAN states remains oriented toward the global market,
and this is unlikely to change soon." After all, the real objective of the
formation of FTA was not to stimulate intra- ASEAN trade per se
but to increase their competitiveness and integration with the world
economy.
The AFTA agreement has not led to a significant increase in intra-
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There are some other economic (and domestic) variables that deserve
credit in explaining the protracted ASEAN integration process. To
varying degrees, however, these are also linked (directly or indirectly)
to the issues of sovereignty and domestic regime security. First, it is
worth noting that there is a significant variation among ASEAN mem-
bers in the level of external tariffs against nonmembers, ranging from
0.1 percent for Singapore to 43.2 percent for Thailand. This implies
that Singapore's strategic preferences on common external tariffs for
a common market are hard for other members to match. For instance,
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424 Theorizing ASEAN Integration
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Min-hyung Kim 4 27
ing regional integration. Most important among them was the per-
ception of ASEAN leaders that AFTA and AEC could not only en-
hance their bargaining position in trade negotiations with the major
powers, it could also contribute to sustaining economic growth by at-
tracting more FDI into the region. Given that many authoritarian
leaders in ASEAN still maintain regime legitimacy through output
effects such as economic growth, political stability, and containment
of ethnic or minority tensions (Ferguson 2004, 400-401), 6 positive
expectations about the national benefits of regional integration (Kim
2010, 325) encouraged ASEAN members to agree to move integra-
tion forward.
In addition, ASEAN states' need to expand domestic (as opposed
to foreign) capital through regionalization had a significant impact
on their strategic preference shift. Domestic capital plays a critical
role both as a source of economic growth and as a key mediator in
elite business relations in core ASEAN states (Nesadurai 2003, 1 16-
124). ASEAN's decision to privilege ASEAN investors in the ASEAN
Investment Area (AIA), which was proposed by Malaysia and sup-
ported by Indonesia; Singapore's Regionalization 2000 policy; and
Thailand's firm commitment to AFTA all were intended to nurture
emerging domestic capital and make it globally competitive through
regionalization rather than through globalization.
Finally, pressure from the ASEAN business community as well as
from liberal reformers in core ASEAN states (i.e., Indonesia,
Malaysia, Thailand, and the Philippines) to hasten the process of re-
gional economic cooperation in recent years also affected the shift in
ASEAN's strategic preferences on regional integration. Despite its
marginal effect on the increase of intraregional trade (e.g., from about
20 percent to 25 percent between 1992 and 2002), AFTA has indeed
influenced corporate decisionmaking, business operations, and firms'
regional production strategies in Southeast Asia. Recognizing that dif-
ferences in business regulations, varying product standards, and
weaknesses in customs clearance prevent regional businesses from
taking advantage of AFTA tariff preferences, domestic businesses in
regionally integrated, export manufacturing sectors - e.g., electrical,
electronics, telecommunications equipment, and food manufacturing
- have increasingly pushed for a seamless integrated regional market
(Stubbs 2000, 308-312; Nesadurai 2006, 23-24). ASEAN ruling
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428 Theorizing ASEAN Integration
Conclusion
This study has sought to theorize ASEAN integration not just in its
own regional context but by locating it within a larger context of the
global political economy. In the absence of a theory of ASEAN inte-
gration in the literature, it has called for a theoretical framework that
takes into account both the structure of economic interdependence
and the domestic politics of ASEAN members. However, it is impor-
tant to emphasize that what has been attempted here is only a begin-
ning of theorizing ASEAN integration in an international political
economy perspective. Further research will have to be conducted to
fully examine the specific process by which domestic politics shapes
the strategic preferences of individual ASEAN states. Greater atten-
tion also needs to be paid to the mechanisms by which external shocks
or changes in the structure of global and regional political economy
generate pressures for a shift in ASEAN members' strategic prefer-
ences on regional integration. I conclude below with SPT's predic-
tions about the future of ASEAN integration as well as the theory and
policy implications of research findings.
It is still unclear whether ASEAN is ready to take the necessary
operational steps for deeper integration. In fact, the increasingly in-
dependent recourse by ASEAN members (in particular, Singapore
and Thailand) to bilateral trade arrangements with external states (e.g.,
Japan, Australia, South Korea, and the United States) in recent years
seems to illustrate their weak political will for, as well as discontent
with, the progress of ASEAN integration. In addition, the ASEAN+3
mechanism whereby ASEAN sought to expand regional economic
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Min-hyung Kim 429
cooperation with the major Northeast Asian states (China, Japan, and
South Korea) has actually slowed ASEAN integration by skewing re-
gional trade and investment away from Southeast Asia and especially
toward China.7
Nevertheless, ASEAN states have shared the need for further in-
tegration at least in principle and in framework agreements. More-
over, they have recently delineated clearer goals for a unified market
and agreed to delegate some degree of policy authority to a regional
institution by adopting more rules-based systems as well as strength-
ening enforcement mechanisms to ensure the implementation of
agreements (Yoshimatsu 2006, 127; Ong 2008).
It should be stressed, however, that ASEAN members are unlikely
to surrender national sovereignty for a "fortress Southeast Asia" in
the near future. ASEAN's upholding of the ASEAN Way of decision-
making and a minimum level of institutionalization at the moment in-
dicate that a strong political will to move beyond a free trade area is
still missing in Southeast Asia. Hence, unless there are remarkable
developments in factors that affect the underlying preferences of
ASEAN members (e.g., a significant increase in intra-ASEAN trade
and investment, a much stronger pressure from domestic businesses
for deeper integration, external shocks that threaten the region's eco-
nomic growth, or a domestic leadership change that allows liberal
coalitions to aggressively pursue integration agendas), ASEAN inte-
gration will not progress as rapidly and substantially as many ASEAN
leaders claim.
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430 Theorizing ASEAN Integration
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Notes
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432 Theorizing ASEAN Integration
References
Acharya, Amitav. 1997. "Ideas, Identity, and Institution Building: From ASEAN
Way to Asia Pacific Way." Pacific Review , vol. 10, no. 3, pp. 319-346.
7, at www.aseansec.org.
ASEAN Statistical Yearbook. 2005, 2006. Jaka
ASEAN Statistics. Available at www.aseansec.org.
Beeson, Mark. 2005. Rethinking Regionalism: Europe and East Asia in Com-
parative Historical Perspective." Journal of European Public Policy , vol. 12,
no. 6, pp. 969-985.
Bowles, Paul. 1997. "ASEAN, AFTA, and the New Regionalism. Pacific Af-
fairs , vol. 70, no. 2, pp. 219-233.
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