What’s missing in the ASEAN integration project?

Ofreneo is a trustee of the Action for Economic Reforms, and  professor at the School of Labor and Industrial Relations (SOLAIR) of the University of the Philippines. This article was published in the Opinion Section, Yellow Pad Column of BusinessWorld, February 6, 2006 edition, page S1/5.

The ASEAN (the Association of Southeast Asian Nations) has been on the global economic radar lately. Representing over 500 million people and a gross domestic product (GDP) of over $1 trillion, the ASEAN region is considered one of the fastest-growing economic blocs in the world.

In 2002, China concluded an ASEAN-China Free-Trade framework agreement, which provides for a confidence-building “early harvest” program followed by talks for a full-blown liberalization agreement with the individual ASEAN countries. Not to be outdone, Japan announced in the same year its intention to conclude with each ASEAN member country an “Economic Partnership Agreement” (EPA). South Korea is also negotiating a free-trade agreement with the ASEAN, while the United States, Australia, New Zealand, India, European Union and Russia have all expressed interest for deeper economic ties with the ASEAN.

Within the ASEAN itself, deepening economic integration is the guiding precept. Through the ASEAN Free Trade Agreement-Common Effective Preferential Tariff (AFTA-CEPT), the original ASEAN 6 (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand) have lowered 95 per cent of their tariff lines to 0–5 per cent tariff range, while the ASEAN 4 (Cambodia, Laos, Myanmar and Vietnam) have been on line to meet the 0–5 per cent tariff range since 1997–98. In 2003, in their Bali Summit, the ASEAN Leaders boldly announced that the ASEAN shall be an “ASEAN Economic Community” by 2020 similar to that of the European Union (EU), which is characterized by a single market and the free intra-regional flow of goods, services and investments.

These developments have captured the imagination of global and regional economic observers. And so did the holding of the ASEAN Plus Three Summit in December 2005, where the ASEAN 10 met with the leaders of China, Japan and South Korea regarding the possibility of forming the world’s biggest economic bloc—the East Asian Economic Community (EAEC).  In a way, the EAEC revives the old Co-Prosperity Sphere idea of the Japanese Meiji empire.

However, the ASEAN economic integration initiative, captivating as it is, has a missing element—the social dimension. The AFTA-CEPT and the various priority integration projects (PIPs) have been concluded and implemented in a highly technocratic manner sans consultation, much less information sharing, with the working peoples of the ASEAN region.  The truth is that majority in the ASEAN do not even understand what the ASEAN stands for and what its relevance is to their day-to-day lives.  Unlike the European Union, the ASEAN does not have mechanisms (Social Directive law, European Parliament, European Works Councils, etc.) that  allow workers, farmers, fisherfolk and other segments of society to have a say on ASEAN affairs.

This is the reason why some unions in the region such as the Asia-Pacific Regional Organization of the Union Network International (UNI-Apro) have been campaigning for an ASEAN Social Charter. The Charter seeks to get the commitment of the ASEAN member states to observance of  basic labor  rights (i.e., freedom of association, collective bargaining, non-discrimination at work, non-use of forced labor and elimination of child labor), to strengthen the system of social protection for the disadvantaged and to give ASEAN labor a voice.

One sad reality is that regional integration is leading to a “race to the bottom,” with global and regional capital, taking advantage of liberalized economic borders, readily hopping from one country to another in search of cheaper labor and investment sites, unmindful of the social and labor dislocations such precipitate moves create.

This phenomenon was most painfully and dramatically brought to the fore in l997–98, when speculative capital, herd-like, withdrew from the region, thus triggering the Asian financial panic and the domino-like collapse of banks and businesses. Overnight, millions lost jobs in Indonesia, Malaysia, Philippines and Thailand, while tens of millions saw the value of their lifetime savings halved.

Unfortunately, it seems that the ASEAN officials in Jakarta and their principals in the ASEAN governments have not learned the lessons from the Asian financial crisis. They have not even set up a regulatory framework which would govern the movement of “hot money” and prevent the occurrence of a similar financial catastrophe. Nor have they addressed the weaknesses in the social security system in the ASEAN region, primarily the absence of protective nets for workers, farmers and other sectors displaced or dislocated as a result of regional and global competition.  While the ASEAN Secretariat produces numerous materials on skills and human resources development, there are hardly any on social protection, institutional reforms (such as agrarian reform), growth with equity, broad-based development strategies and role of workers and farmers and their organizations in the economic integration process. The social and labor dimension is glaringly absent.

As it is, the regional integration project has benefited corporations. These giants can invest in a cross-border fashion or go in an out of the various ASEAN countries. They are the ones integrating the region—through their regional and global corporate plans. The electronics and auto producers have transformed some countries as specialized assembly centers and others as export platforms for finished products or components. Outside of the intra-regional trading systems among the sister corporations of transnational firms operating in the ASEAN region, there is very little country-to-country economic complementation.

And yet, the ASEAN seems to be assuming that economic liberalization, through a regional free-trade creates “regional economy.” Despite the vaunted growth of ASEAN, it is difficult to conclude that the region has grown as one integrated economy. In fact, some ASEAN economies are competing head to head in a number of areas such as garments production and fishery. This is why extra-ASEAN trade, meaning trade conducted by the ASEAN countries with the non-ASEAN countries, is much bigger than intra-ASEAN trade.  Moreover, there is so much unevenness in the pattern of development within the individual ASEAN countries and in the region as a whole.

UNI-Apro is correct in stating that the weak and imbalanced integration is due in part to the failure of the ASEAN “to consult with the major stakeholders in society” other than the transnational and big business groups. These stakeholders consist primarily of the trade unions, farmers organizations and civil society groups, which, had they been consulted, could have contributed to the crafting of regional integration programs that are “much more nuanced in favor of calibrated and balanced integration, as the interests of the different sectors, especially the weak and the vulnerable would have been considered or at least debated upon.”

For the Philippines, which hosts the next ASEAN Leaders’ Summit in 2996, the challenge is to make social dimension a priority in the ASEAN integration process. As the International Labor Organization’s  World Commission on the Social Dimension of Globalization  (2004) put it, such dimension should be “based on universally shared values, and respect for human rights and individual dignity; one that is fair, inclusive, democratically governed and provides opportunities and tangible benefits for all countries and people.”

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