Sunday, June 10, 2018

The ASEAN Union Dream; Bilateral Deals Galore

One of the things that has always befuddled me is how anti-globalization types misconstrue the repeated failures of the Doha round to be completed as an indicator of "de-globalization." What these folks often forget is that trade rounds are simply negotiations for achieving, well, more trade. If you use global trade volumes as an indicator of globalization, you will easily see that trade has grown by leaps and bounds during the period in which the Doha round has stalled. By now, who cares about Doha, really? Its success or failure is by no means a barometer of the continued appeal of trade.

Which brings me to the topic at hand. In the wake of Doha's failure, states in the Association of Southeast Asian Nations (ASEAN) are themselves looking at an even-closed economic union modelled to some extent on the EU. It may surprise the legions of Eurosceptics that so many others--Asians, Middle Easterners, etc.--are keen on replicating a model which they consider to be so odious. Go figure. Led by Singaporean PM Lee Hsien Loong, ASEAN ministers are meeting in the fair city of Singapore to discuss a number of things. Aside from further economic integration eventually leading to a common market by 2015, ASEAN is discussing several trade deals perhaps spurred by Doha failure with--hold your breath--Japan, China, South Korea, India, Australia and New Zealand (ANZ). Jagdish Bhagwati would surely get indigestion from looking at this list. From Bloomberg:
Southeast Asian trade ministers are meeting this week to find ways to boost linkages and advance talks with some of their biggest economic partners as they seek to form a European Union-styled community. Officials from the Association of Southeast Asian Nations will hold discussions with their counterparts from Japan, China, South Korea, India, Australia and New Zealand in Singapore starting tomorrow. They met with business leaders today. Southeast Asian nations last year agreed to open up their markets further in a bid to create an economic zone modeled after the EU, without a common currency, by 2015. The group has said that it needs to improve its competitiveness as China and India, the world's two fastest-growing major economies, attract an increasing chunk of global investment. ``To gain our share of investments and jobs, Asean needs to become a well-integrated community,'' Singapore Prime Minister Lee Hsien Loong said today. ``We have to continue strengthening our economic foundations, reducing tariff and non-tariff barriers and simplifying business regulations.'' The 10-member group attracted over $60 billion of foreign direct investment in 2007, Lee said. That's up from about $51 billion the year before. Still, China alone attracted about $83 billion of foreign direct investment last year. ``Foreign investments are critical to all Asean countries because we rely on them to create jobs, to bring in new technology and to open up access to markets around the world,'' Lee said.
Agence-France Presse also has more:
ASEAN has a combined population of about 550 million people. It is a diverse group which ranges from high-tech Singapore to poverty-stricken Myanmar, and the world's most populous Muslim nation, Indonesia...ASEAN is already a free-trade area with 90 percent of goods traded having tariffs between zero and five percent...But officials said the overriding focus would be on efforts to achieve a single market and manufacturing base by 2015 to raise ASEAN's profile in the face of competition from China and India. "To stay in the game, ASEAN must become a strong integrated region," Singapore Prime Minister Lee Hsien Loong said. He warned that, individually, ASEAN states are "only tiny blips on the radar screens of investors."Indonesian Trade Minister Mari Pangestu said ASEAN is likely to focus more on implementing and strengthening its free-trade agreements (FTAs) than on planning for a massive 16-nation pact including its key regional trading partners and covering about half of the global population. But she agreed the FTAs could evolve in the future. "What we are seeing is that ASEAN is at the focal point of all these trade agreements," Pangestu told AFP, noting that all the ASEAN deals with individual countries are similar in structure. "Eventually, when you consolidate the FTAs, it is possible that you could end up with something like that (an Asia-wide FTA)."Regional FTAs could gain fresh momentum after the latest attempt to end a seven-year deadlock in the so-called Doha Round of global trade talks broke down in July because of a dispute between India and the United States over agricultural tariffs.The Asian Development Bank (ADB), in a recent study on Asian regionalism, said "substantial gains could be realised from consolidating the many FTAs into a single, region-wide one" and from adopting practices to guide future regional and sub-regional FTAs.But while Asia is forging ahead with trade linkages, the region has a major task in integrating its financial markets which are now larger, deeper and more sophisticated than they were a decade ago, it said. The region also has to make sure the benefits of economic progress reach a larger number of people, especially the poor, the Manila-based ADB said."Governments need to connect the poor to the thriving regional economy by eliminating labour market barriers, investing in workers' capabilities, and building infrastructure to connect disadvantaged regions with economic centres," said the agency, which aims to reduce poverty. The region was on the right track, however, the ADB said. "We are witnessing the beginnings of a strong, prosperous, outward-looking Asian economic community, regionally integrated yet connected with global markets, and with responsibility and influence to match its economic weight," the ADB said.
The Singapore meetings is also a milestone of sorts for ASEAN as it is the 40th such congregation. For all its foibles, long live ASEAN!

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