Asian regionalism: How does it compare to Europe s?

Transcription

1 Asian regionalism: How does it compare to Europe s? 21st April, 2009 Author: Giovanni Capannelli, ADB, Manila Among the six Asian leaders (or seven if you include Australia) who attended the London meeting of the Group of Twenty (G20) on April 2 was the chair of the Association of Southeast Asian Nations the first time ASEAN had been accorded this recognition in such a high-profile international forum. It was a telling indication of the increased importance of regional cooperation in Asia. Asia is not yet adopting a common approach to tackling the ongoing global crisis although neither, to be fair, is the more established European Union (EU). But by helping to form a consensus among their members, Asia s regional groupings could help bridge the gap between national policies and global action, enabling them to tackle the global crisis more effectively. This essay compares Asian regionalism with Europe s. It contrasts their differing approaches to regional cooperation and integration and draws lessons for how they could address the global crisis and other common challenges. Models of regionalism A common thread runs through the turbulent histories of Asia and Europe: the immense dynamism and impressive discoveries of their great civilizations have often been directed towards destruction and death. Fortunately, their collective energies are now channeled more constructively not least into closer regional cooperation that entrenches peace and enhances prosperity. Regionalism has progressed much further in Europe than in Asia. The devastation wreaked by two world wars convinced Europeans of the importance of working together to bind their economies and societies together. They realized that by pooling their sovereignty with their neighbors in certain areas they could achieve more than by acting alone. By drafting common rules, promoting close coordination among national authorities, and developing strong regional page 1 / 6

2 institutions that advance economic integration, the EU has generated huge economic gains and sharply narrowed the income gap among member countries. EU governments also cooperate closely in foreign and security policy, as well as in justice and home affairs. The milestones in Europe s economic integration are the creation of a customs union, followed by a single market, and then a common currency. Very broadly speaking, after adopting a common trade policy, European countries agreed to the free movement of goods, labor and services, then progressively liberalized their capital accounts, and more closely coordinated their monetary and exchange-rate policies before introducing the euro in Thus the integration of production and trade preceded and was a precondition for financial and monetary integration. The EU now has an extensive institutional structure and a large regional bureaucracy centered in Brussels, its administrative capital. The European Commission, Council of s, Court of Justice, Parliament and other EU institutions employ more than 60,000 eurocrats, while EU governments very large permanent delegations in Brussels act as strategically important extensions of national ministries and agencies. Regionalism in Asia has developed rather differently. Regional integration has been driven more by markets than by governments. Cooperation among national authorities is more recent and less intimate. It remains focused on economic issues (with some social components) and light on formal institutions. For now, it involves no political ambitions, although ASEAN has an advanced security dialogue with several Asian and non-asian partners. Asia s pragmatic and flexible approach to regionalism is partly dictated by history. Asian countries are little inclined to compromise their independence by pooling sovereignty with their neighbors, not least because several Asian nation states have only recently emerged from colonialism and need first to build their national identities. Disparities in economic development, social structures, and political systems are also much greater in Asia than Europe. Asia s economic integration has been largely driven by the development of increasingly sophisticated production networks that span the region and enable companies to benefit from each country s comparative advantages, through an articulated regional division of labor. As industries have been transferred from advanced economies to developing ones, the production of manufactured goods has been fragmented across the region. This, in turn, has generated a huge expansion of intraregional trade in parts and components. But since Asia s exports of final goods mostly go to the United States and Europe, closer regional connections have gone hand in hand with greater global ties. The catalyst for the recent enhancement of regional cooperation in Asia was the 1997/8 financial crisis. This created a greater awareness of the region s shared interests and vulnerabilities. In particular, it created a greater need for financial cooperation prompting the establishment of the ASEAN+3 Finance s Process and several related structures such as the Chiang Mai Initiative and the Asian Bond Markets Initiative at an earlier stage of integration than in Europe. The emergence of Asian regionalism also reflects the region s disappointment with the way the International Monetary Fund handled the 1997/98 crisis. page 2 / 6

3 Asia does not yet have a single market in goods and services, although bilateral and subregional trade agreements have multiplied in recent years. This is in part driven by the stalling of the World Trade Organization s Doha Round, but also by the proliferation of preferential trade agreements around the world. Even so, Asia s regionalism remains outward-oriented focused on supporting market relationships rather than supplanting them and on sustaining its openness to global markets. Asia lacks strong regional institutions and a bureaucratic body to serve the region. Unlike in Europe, regional treaties tend to be short and focused on codifying informal interactions among members rather than introducing a complex set of binding rules, and related sanctions. Asia s few regional institutions are small and lean, with a limited mandate from national authorities to manage external shocks, internalize regional spillovers, and provide effective regional public goods. Whereas European regionalism is dominated by the EU, Asian regionalism is based on many overlapping subregional organizations that cooperate to varying degrees in different areas and provide a solid backbone to connect markets and people. The criteria for admission to the EU are quite clear democracy, a market economy, and the transposition into national law of EU laws and regulations (the acquis communautaire). Compliance with these rules can be monitored fairly objectively. Candidate countries must also be approved by a consensus of existing EU member states. In the case of Asian regional bodies, however, it is difficult to identify an unambiguous set of rules governing membership issues, as they are generally based on ad hoc decisions by political leaders. Important regional players such as the People s Republic of China (PRC), India, and Japan have yet to start a concrete dialogue on formulating a vision, shared goals and roadmap for regional cooperation in Asia. But the creation of the East Asia Summit (EAS) in 2005 which brings together the 10 members of ASEAN, plus the PRC, Japan, and the Republic of Korea (which together make up ASEAN+3), as well as Australia, India, and New Zealand could eventually provide a forum for such an impetus. While the EAS has no plans for now to create an Asian Commission and emerge as the Asian counterpart to the EU, EAS, ASEAN+3 or ASEAN could help Asia to act together and speak with a single voice. Facing the future Europe and Asia both face the huge challenge of articulating a response to the ongoing economic crisis. Although its ultimate impact on regional cooperation and integration is still unclear, it could give a new impetus to Asian regionalism, as the 1997/8 crisis did. In fact, history shows that major steps to enhance regionalism are usually taken as a reaction to shocks while the Second World War prompted the creation of the European Coal and Steel Community in 1951, the ASEAN+3 Finance s Meeting was established in response to the crisis of 1997/98. And while a global crisis requires a global response, closer regional cooperation can be useful to enhance the effectiveness of global action. For instance, European countries need to harmonize their approaches to financial regulation and supervision, while Asian ones should start a dialogue in areas such as exchange rates and fiscal policy that they have neglected up to now. In so doing, both Asian and European regionalism could provide a stepping stone to solving the global crisis. page 3 / 6

4 The two regions can also learn from each other. Europe would do well to emulate the flexibility of Asia s production structures and labor markets, its emphasis on investment in productivity-enhancing research and development (R&D), and its concept of open regionalism, which minimizes discrimination against non-members. Asia could adopt some of the EU s governance principles. These include: (i) deciding some issues by qualified majority voting and others by consensus; (ii) giving additional weight to small countries and minorities in decision-making, so as to make regionalism more inclusive; (iii) the subsidiarity principle, whereby decisions are taken at the lowest sensible level of government; (iv) the open method of coordination, which allows member countries to agree on initiatives for intergovernmental cooperation without legal constraints; and (v) mutual surveillance through peer review and peer pressure, to ensure that members respect commitments before resorting to sanctions. Asia could also take inspiration from Europe s pro-activeness in creating common institutions. Although trying to establish strong regional institutions that involve the pooling of members national sovereignty would be premature, much could be done to enhance Asia s institutional capabilities for economic cooperation. As the ongoing crisis is reshaping the global financial architecture, enhancing Asia s economic dialogue and cooperation is an important step to shape and raise its profile in global institutions. The EU is often presented as the integration model for other regional groupings, in Asia and elsewhere. But while regions can learn from others experiences, their needs and circumstances vary. Asia must find its own path to greater cooperation and integration. This requires visionaries, people with great ideas who as Jean Monnet, Robert Schumann, and Altiero Spinelli did in Europe can influence opinion makers, inspire national leaders, and eventually enable the region to speak with a more prominent common voice in global forums. Dr Giovanni Capannelli is a Senior Economist with the Asian Development Bank s Office of Regional Economic Integration and lecturer on the political economy of Asia-Europe relations at the Ateneo de Manila University. The ideas expressed in this article are exclusively the author s and do not necessarily reflect the views or policies of the Asian Development Bank, its Board of Directors, or the governments they represent. Asian and European representatives attending the G20 London Summit Country/Gr oup ASEAN Australia Represent ative, Title Abhisit Vejjajiva, Chair (*) Kevin Rudd, APEC ASEAN ASEAN+3 ASEM EAS EU (**) page 4 / 6

5 China, People s Rep. European Commissio n European Council France Germany India Indonesia Italy Japan Korea, Republic of Netherland s (****) Hu Jintao, Manuel Barroso, Mirek Topolanek, (***) Nicolas Sarkozy, Angela Merkel, Chancellor Manmohan Singh, Susilo Bambang Yudhoyono, Sivlio Berlusconi, Taro Aso, Myung-Bak Lee, Jan Meter Balkenend e, Spain (****)Jose L. R.Z apatero, United Kingdom Gordon Brown, page 5 / 6

6 Powered by TCPDF ( APEC = Asia-Pacific Economic Cooperation. ASEAN = Association of Southeast Asian Nations. It includes Brunei Darussalam, Cambodia, Lao PDR, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. ASEAN+3 includes the 10 ASEAN members plus the People s Republic of China, Japan, and the Republic of Korea. ASEM = Asia-Europe Meeting. EAS = East Asia Summit. It includes ASEAN+3 members plus Australia, India, and New Zealand. EU = European Union. It includes Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Rumania, Spain, Slovak Republic, Slovenia, Sweden, and United Kingdom. (*) Abhisit Vejjajiva is the of Thailand, but was invited to attend the G20 London Summit in his capacity as Chair of ASEAN. (**) Cambodia, Lao PDR, and Myanmar are members of ASEAN but not of APEC. (***) Mirek Topolanek is the of the Czech Republic, but was invited to attend the G20 London Summit in his capacity as of the European Council. (****) The country is not a recognized G20 member. Article from the : URL to article: /2009/04/21/asian-regionalism-how-does-it-compare-to-euro pes/ page 6 / 6