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Who Will Benefit from the ASEAN Economic munity? aec competition

Some civil society organizations are claiming that the community would excessively favor corporate interests.

By Mong Palatino for The Diplomat
May 05, 2015

One of the major projects of the Association of Southeast Asian Nations is the establishment of an ASEAN Economic Community, which aims to integrate Southeast Asia’s diverse economies, a region with 600 million people and a combined gross domestic product of $2.4 trillion. But several civil society organizations are moving to postpone the AEC and calling for a rethinking of its framework, which they claim is biased in favor of corporate interests and the traditional elite.

The AEC is defined by four pillars: Creating a single market and production base, increasing competitiveness, promoting equitable economic development, and further integrating ASEAN into the global economy.

In contrast, ASEAN and the AEC are small enough to consider the interests of all and may also accord short-term flexibility. While this is likely to slow down the establishment of the AEC, advanced member countries — such as Singapore, Malaysia and Thailand — are not restricted to only this framework. All of them have pursued bilateral free trade agreements with their key trading partners. So, for any single country, heightened competition is a part of the globalization process. And there are other frameworks — be they bilateral, regional or multilateral — that can further economic liberalization.

To synergize the region’s markets and production hubs, this would entail the free flow of goods, services, investments, capital, and skilled labor. Proponents argue that if the integration succeeds, the region could become the fourth largest economy in the next few years.
Although the AEC is a regional initiative, it is implemented by national economies. Domestic law and policy is required to do things like cut tariffs, remove non-tariff barriers and liberalize the services sector. This can be difficult because each initiative is not the sole preserve of any one body but involves multiple ministries and other agencies. That some domestic economic actors stand to gain or lose from integration means that the AEC generates proponents and opponents. And this slows down the pace of implementation further.

But for Philippines-based think-tank Ibon Foundation, the current model of the AEC could further impoverish the poor while facilitating the “aggressive foreign corporate takeovers of the region’s resources.

While lessons have been derived from the European Union, the AEC was not developed on the basis of this model. Since ASEAN’s inception, the sovereignty of nation-states and non-interference in domestic matters were key principles guiding the organization. Economic cooperation was sought in areas where it was deemed necessary. This included allowing for economies of scale and multinationals doing business in Southeast Asia, and anchoring production networks that were already developing in the broader Asian region. Economic cooperation was seen as a gradual process, with long-term aspirations, rather than a mechanism in which strict rules apply irrespective of the nature of member economies and changing global conditions.

” It added that overall, the AEC is detrimental to ordinary people because it will lead to an erosion of sovereignty, diminishing access to social services because of a stronger push for liberalization and privatization, greater inequalities between and within ASEAN countries, skewed labor mobility, job insecurity, increased land and other resource grabs, and the undermining of local small-scale farmers.

Ibon Foundation cited the investor-state dispute settlement provision of the AEC as an example of a one-sided protection measure in favor of corporate power, since it gives investors the right to sue government when their profits are in danger.

The research center warned that AEC could worsen the “uneven and inequitable economic growth” in Asia because it continues “old logic of the neoliberal model of development” characterized by “a race to the bottom in lowering labor, environmental and other regulatory standards and taxes, and in changing national laws to create a business-friendly environment.

The International Journal of Epidemiology (IJE), which is the official journal of the International Epidemiological Association, is holding a competition for the best photo essay on the theme of ‘Health and Well-being’ to encourage researchers to use this medium to present a different side of their work.

During the ASEAN People’s Forum recently held in Malaysia, various civil society organizations signed a statement echoing the concerns raised by Ibon Foundation. “The liberalization of the labour market has increased the number of precarious jobs and will continue to adversely impact the rights of workers,” an excerpt from the statement.

The groups rejected ASEAN’s development model for regional integration because it promotes “unequal trade and investment agreements negotiated and agreed to by member states (that) fail to guarantee redistributive, economic, gender, social and environmental justice, or accountability.

ASEAN economic cooperation is a top-down initiative and hence awareness among stakeholders is low and uneven. The association was instituted in 1967 to promote peace and stability. It took another decade for economic cooperation to make the agenda. But economic cooperation has become a form of diplomacy that is often carried out by foreign ministries in consultation with commerce or trade ministries.

As an alternative framework to the AEC, Ibon Foundation proposes that the integration must transform the ASEAN into a region that is “truly people-centered by abandoning the market-led growth strategy and focusing more on people’s concerns such as food sovereignty, climate change, and respect for human and collective rights.

Finally, the AEC should not be seen in isolation from, but rather in conjunction with, the ASEAN Political-Security Community and ASEAN Socio-Cultural Community. A political security community works towards regional peace and stability, while a socio-cultural community encompasses regional cooperation in areas like environmental protection, limiting the spread of contagious diseases, transnational crime and cooperation when responding to natural disasters. It is hoped that, when combined, these initiatives will help to cultivate a sense of regional identity.

“Solidarity, cooperation and complementarity among states should be pursued instead of economic competition,” the group asserted.

And since the AEC is not yet fully implemented, civil society groups are urging for a more comprehensive and democratic consultation with all stakeholders so that negotiations about the proposed regional integration will not be restricted to government parties.

Now is the time for ASEAN countries to come together to strengthen the economic community. The global economy has been in a constant state of flux since the 2008 economic crisis. While the AEC may not deliver on a fully integrated single market and production base for ASEAN stakeholders in 2015, it will help ASEAN members to withstand the next global crisis with confidence.

It is only by building a strong regional bloc with popular public support that ASEAN can successfully advance its agenda in the ongoing talks for greater economic cooperation in the Asia-Pacific such as the China-led Regional Comprehensive Economic Partnership and the US-led Trans-Pacific Partnership Agreement.

Sanchita Basu Das is an ISEAS Fellow and Lead Researcher on economic affairs at the ASEAN Studies Center, ISEAS, Singapore. A version of this article was originally published at the East Asia Forum here.

The AEC concept is an important one, and is needed to boost the region’s economic potential. But to repeat the recommendations made by Ibon Foundation and other civil society groups, this AEC must be reconceptualized to genuinely empower the people.

As the ASEAN Economic Community’s (AEC) December 2015 deadline approaches, most observers feel that the initiative’s deliverables — an integrated production space with free movement of goods, services, and skilled labor — will not be achieved. This may be true. But the AEC should be seen as a work in progress. To simply say it will miss its deadline is to ignore other crucial facts about the AEC’s role and circumstances.

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