Page 17 - ASEAN-EU Dialogue 2018: Regional and Inter-Regional Economic Cooperation: Identifying Priorities for ASEAN and the EU

So far as the approaches and experiences of ASEAN and the EU are concerned, there are five
broad parameters on which ASEAN and EU trade liberalisation could be compared.

First is the way trade liberalisation has evolved in both ASEAN and the EU. Trade liberalisation
in ASEAN was experienced at a much later stage than the EU. ASEAN, like in all other fields,
has moved towards greater trade liberalisation- i.e. reducing tariff and non-tariff barriers in a
gradual, progressive fashion. Part of the reason is that ASEAN itself has been evolutionary in
its approach and for ensuring the ASEAN Unity and ASEAN Economic Community, ASEAN
prefers to be at the driver’s seat. Even today a cursory look at the economies of the founding
five members of ASEAN i.e. Indonesia, Malaysia, Singapore (Singapore is one of the four
Asian tiger economies), Thailand, and the Philippines projects a contrast with the new ASEAN
which comprises Cambodia, Laos, and Myanmar.

Of course, in case of Vietnam, another country from the “new ASEAN” region, the situation
is a bit different as Vietnam, today, is rapidly moving towards adoption of increasingly more
liberal trade practices and is no longer clubbed with the CLM (Cambodia, Laos and Myanmar)
countries. This is also because of the fact that Vietnam is one of the Southeast Asian countries
st
involved in the TPP-11 agreement, which is likely to be a 21 Century FTA regime with “gold
standards” meaning that it will have much reduced tariff and non-tariff barriers and enhanced
Phyto-sanitary and labour norms.

In the 1990s, ASEAN’s expansion was completed and then it began to engage dialogue partners
such as Japan, India and China in the regional dialogue mechanism. The 1997 Asian Financial
Crisis made ASEAN to take steps for future risk aversion. Japan with assistance by China
bailed out the countries of the region. FTAs were signed and then Chiang Mai Initiative-a
multilateral currency swap arrangement between ASEAN and its Plus Three (China, Japan and
South Korea) dialogue partners, was also adopted in 2010.

While ASEAN talks of ASEAN Economic Community, the trend has projected that it is the
other regional economies which motivated and facilitated trade liberalisation in the ASEAN
region. Trade liberalisation and market reforms are relatively newer in the ASEAN region,
while EU adopted easy trade policies since the beginning. A major attempt at free trade in
modern Asia could be attributed to the establishment of APEC in 1989 also. Overall consensus
about the Regional economic integration in Asia is that it is not strongly developed compared
with North America and Western Europe, and its recent track record is patchy: increasing
integration is confined pretty much to East Asia (Sally, 2010).

A key difference between ASEAN and EU is that right from the beginning, the EU has been a
champion of globalisation, open trade and trade liberalisation. However, in case of ASEAN,
the pressure on even the key ASEAN economies such as Indonesia and the Philippines were
external. In the 1980s and early 1990s, the major ASEAN economies were put under pressure
by the international agencies- the IMF and the World Bank to open up- by reducing tariff and
non-tariff barriers. This was put as a pre-condition for grant of new loans to the Southeast Asian
economies, so it was more of the international and external pressure that worked on the ASEAN
and its member countries.

In the case of EU, the major economies were themselves leaders in the world trade and
champions of globalisation. The leading economies of the EU with the active support of a much
more institutionalised agreement equipped the EU to create a sort of peer pressure on the other
economies to follow suit.

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