A. Finance, Trade, and Industry Group

ASEAN Banking Council (ABC)

ASEAN Chambers of Commerce and Industry (ASEAN-CCI)

ASEAN Confederation of Employers (ACE)

ASEAN Constructors Federation (ACF)

ASEAN Federation of Accountants (AFA)

ASEAN Federation of Forwarders Association (AFFA)

ASEAN Fisheries Federation (AFF)

ASEAN Federation of Furniture Manufacturers Association (AFFMA)

ASEAN Handicraft Promotion and Development Association (AHPADA)

ASEAN Insurance Council (AIC)

ASEAN Music Industry Association (AMIA)

ASEAN Vegetable Oils Club (AVOC)

Federation of ASEAN Shipowners Association (FASA)

B. Engineering Group

ASEAN Federation of Electrical Engineering Contractors (AFFEC)

ASEAN Federation of Engineering Organization (AFEO)

ASEAN Federation of Mining Association (AFMA)

Federation of ASEAN Consulting Engineers (FACE)

Southeast Asia Association of Seismology and Earthquake Engineering (SEASEE)

C. Medical Group

ASEAN Association of Medical Laboratory Technologists (AAMLT)

ASEAN Association of Radiology (AAR)

ASEAN Federation for Psychiatric and Mental Health (AFPMH)

ASEAN Neurosurgical Society (ANS)

ASEAN Orthopaedic Association (AOA)

ASEAN Paediatric Federation (APF)

Medical Association of Southeast Asian Nations (MASEAN)

Rheumatism Association of ASEAN (RAA)

D. Services Group

ASEAN Association for Planning and Housing (AAPH)

ASEAN Association of Maritime Education and Training Institutions (AAMETI)

ASEAN Law Association (ALA)

ASEAN Law Students Association (ALSA)

ASEAN Port Authorities Association (APAA)

ASEAN Valuers Association (AVA)

Federation of ASEAN Economic Association (FAEA)

Federation of ASEAN Public Relations Organization (FAPRO)

Veterans Confederation of ASEAN Countries (VECONAC)

E. Youth, Sports, and Co-operative Group

ASEAN Confederation of Women Organization (ACWO)

ASEAN Co-operative Organization (ACO)

ASEAN Council of Teachers (ACT)

ASEAN Football Federation (AFF)

ASEAN NGOs for the Prevention of Drug and Substance Abuse

ASEAN University Sports Council (AUSC)

Committee for ASEAN Youth Co-operation (CAYC)

Introduction

This chapter traces the evolution of economic co-operation among economies of the Association of Southeast Asian Nations (ASEAN) since the organization started more than twenty-five years ago. Economic co-operation grew from earlier co-operation arrangements with varying rationale, composition, and instrumentalities although there was already recognition of the mutual benefits from co-operation.

In the next section, ASEAN economies are described, using narrow macroeconomic and trade indicators that allow comparison among them. Specifically, a description of the environment under which cooperation grew and expanded over the years is discussed. A picture of the region would undoubtedly best describe the setting for common activities that were eventually pursued.

Section III gives details on the formation and organization of ASEAN from a variety of initiatives. This is not a digression into a historical account of many co-operation attempts from among ASEAN members and non-members but an argument to show that previous foundations (for example, political, social, security) were part of the fabric that fashioned ASEAN economic co-operation. The road to the region's organization has had many fits and starts. In the end, however, the lessons learned from previous arrangements proved invaluable in framing ASEAN's co-operation agenda.

Section IV focuses on the mechanisms for ASEAN economic cooperation. The evolution of the organizational hierarchy is explained from the First to the Fifth Summit. The evolution of the ASEAN Secretariat is likewise explained since, though inter-governmental, it dictated the pace of ASEAN economic co-operation activities. The increasing role of the ASEAN Secretariat, especially in the area of economic co-operation, takes cognizance of the parallel organizational changes at the senior official level. The section ends with an elaboration of the ASEAN Secretariat's specific functions in economic cooperation.

The ASEAN Economies

The countries that banded together in contemporary Asian history spanned from New Zealand to the Republic of Korea, from Thailand to Pakistan, though only the ASEAN grouping metamorphosed in substance and character in the last twenty-five years. From an original membership of five states, it expanded to seven in 1995 and is likely to increase to ten before the end of the century. From a plethora of ad hoc co-operation activities, it took bolder steps towards a more cohesive cooperation framework. From separate and individualized markets, it now plots a direction towards one single market.

27th Meeting of the ASEAN Economic Ministers, 7-9 September 1995, Bandar Seri Begawan: A compilation of speeches and joint press statements of meetings and sessions.

28th ASEAN Ministerial Meeting and Post Ministerial Conferences with Dialogue Partners, and Second ASEAN Regional Forum, 29 July to 3 August 1995, Bandar Seri Begawan: A compilation of statements, speeches, and joint communiques of meetings and sessions.

AFTA Reader Volume I: A specialized publication on latest developments on AFTA. The first issue of the publication provides answers to basic questions on the CEPT for AFTA and the Products and Programmes of Tariff Reduction under the CEPT scheme. It also includes the basic documents, CEPT Agreement, the Interpretative Notes, the Operational Procedures, and the Rules of Origin.

AFTA Reader Volume II: The second issue of this specialized publication on latest developments on AFTA focuses on more detailed analysis of the CEPT Product Lists and the trade values involved in the CEPT products.

AFTA Reader Volume III: A specialized publication on latest developments on AFTA. The third volume of the publication focuses on the decision of the 26th ASEAN Economic Ministers (AEM) Meeting held in September 1994 in Thailand, namely, the new time frame in the acceleration of tariff reduction. It also includes among others: harmonization of tariff nomenclature, customs valuation and procedures, and co-operation in services.

Annual Report of the 1994/1995 ASEAN Standing Committee: Progress report on political and security co-operation, economic co-operation, functional co-operation, and external relations.

ASEAN Economic Info View, vol. 2, no. 3/4, September/December 1995: A quarterly publication that provides an update on the implementation and developments of AFTA as well as other economic activities.

ASEAN Macroeconomic Outlook 1995: This is the second publication arising from the ASEAN Macroeconomic Outlook project of the ASEAN Secretariat. The publication presents results of the country researchers’ discussions on their individual country predictions for 1995-96, which turn out to be both insightful and provoking. Tables and figures augment the text.

ASEAN Plan of Action on Culture and Information, October 1994: This publication provides background and basic information concerning the ASEAN Plan of Action on Culture and Information for the period 1994-97. It includes the Joint Declaration of the Third Conference of the ASEAN Ministers Responsible for Information, Global Thrusts and Priorities of COCI for 1994-97.

Introduction

Many ASEAN activities related to economic co-operation during the first two decades of the organization's existence were implicitly dedicated to building confidence and increasing familiarity. Still, there were many instances of co-operation throughout the period. Though no less important, these were mainly symbolic in character as they were part and parcel of the familiarization context. Over the years, ASEAN economic co-operation can be considered evolutionary and consistent with the region's culture. Absent were legal intricacies to ASEAN agreements, specific details to co-operation activities, and voluminous annexes.

Once confidence was built within ASEAN governments and mutual trust generated, the pace of economic co-operation accelerated, the substance deepened, and coverage widened. The bold initiatives that ASEAN took in the last three years would have encountered scepticism if foundations were not concretized earlier. Although external factors played critical roles in the dramatic turning points in economic cooperation, the experience of working together for more than two decades facilitated ASEAN solidarity.

The previous chapter reviewed and assessed in detail ASEAN economic co-operation since its founding. Even though initial attempts to forge closer relations among ASEAN countries fumbled around numerous arrangements, an underlying agenda was to accelerate economic growth through a more secure and stable environment in the region. Even in the midst of initial animosities between some countries, collective interests eventually prevailed towards ASEAN as it is today.

ASEAN economic co-operation originally covered traditional sectors. Short of being commodity-specific, core areas were later covered (that is. industry and trade). Eventually, other supportive areas were also included (for example, finance, minerals, energy, transport, communications, and tourism).

The solutions and approaches taken by ASEAN to forge economic co-operation were equally traditional. In agricultural or industrial production, for example, efforts were concentrated on increased output within ASEAN as early industrial schemes relied on production allocation. Technological exchanges also emphasized mutual benefits from sharing experiences as did other related schemes such as swap arrangements, food security, and so forth.

From the review, some weak spots in ASEAN economic co-operation emerged. In the core areas, products not produced in ASEAN received liberal concessions while there was reluctance to freer trade among those the members produce.

Introduction

This chapter proposes to undertake a review and assessment of economic co-operation in a number of specific areas. While there is no direct causality that can be attributed to the dynamic economic performance of the ASEAN economies to economic co-operation in the last twenty-five years, it cannot be denied that the relative peace and stability in the region, and the increasing interactions among ASEAN states (officials, businesses, citizens) greatly enhanced the process and character of growth.

There is a large body of literature that reviews and assesses ASEAN economic co-operation at various stages.1 Both official and unofficial assessments were made by, among others, external (non- ASEAN) scholars who have followed the regional co-operation. Rather than provide details of economic co-operation (for example, specific agreements, dates and topics of meetings, and so forth), this chapter presents the transitions and transformations in economic co-operation that took place over two decades. The assessments made are in terms of their totalities and broad significance. Thus, there may be differences in the manner in which some details are highlighted. As earlier described, the machineries and modalities for co-operation in the past were dramatically changed following agreements at the Fourth ASEAN Summit in Singapore in 1992.

ASEAN officials reviewed and assessed co-operation efforts in the past twenty-five years as part of the dissolution process of the five economic committees and in preparation for a transition. A careful reading of these official (but unpublished) reviews indicate several salient points. For one, significant accomplishments were made in various areas. These range from regular ministerial meetings and dialogues to specific agreements (for example, coverage of tariff concessions, ASEAN Industrial Joint Ventures (ALIV) approvals, quantities of food security reserves, creation of ad hoc committees, and so forth). Another is the completion of many collaborative studies and understandings among all ASEAN states collectively or a sub-group of them (the 6-x principle). These range from simple declarations to concrete policy directives (for example, the use of ASEAN currencies for the settlement of trade payments, brand-to-brand complementation, the Singapore-Johor-Riau agreements, and so forth). Also, ASEAN solidarity was exhibited in various external fora, ranging from the ratification of international conventions to trade negotiations.

AAA ASEAN International Airports Association

AABC ASEAN-Australia Business Council

AAECP ASEAN-Australia Economic Co-operation Programme

ABA ASEAN Bankers Association

ABC ASEAN Banking Council

ACBC ASEAN-Canada Business Council

ACCSQ ASEAN Consultative Committee for Standards and Quality

ACTS ASEAN Cargo Transport Study

ACTT ASEAN Crises Team for Tourism

ADB Asian Development Bank

AEEMTRC ASEAN-EC Energy Management Training and Research Centre

AEM ASEAN Economic Ministers

AEM-MITI AEM-Ministry of International Trade and Industry (Japan)

AEMEC ASEAN Economic Ministers on Energy Co-operation

AEMM ASEAN-EC/EU Ministerial Meeting

AERR ASEAN Emergency Rice Reserve

AFC ASEAN Finance Corporation

AFF ASEAN Fisheries Federation

AFHB ASEAN Food Handling Bureau

AFSRB ASEAN Food Security Reserve Board

AFTA ASEAN Free Trade Area

AIA ASEAN Investment Area

AIBC ASEAN-India Business Council

AIC ASEAN Industrial Complementation

AICO ASEAN Industrial Co-operation (scheme)

AIFM ASEAN Institute of Forest Management

AIJSCC ASEAN-India Joint Sectoral Co-operation Committee

AIJV ASEAN Industrial Joint Venture

AIP ASEAN Industrial Projects

AJBC ASEAN-Japan Business Council

AMAF ASEAN Ministers of Agriculture and Forestry

AMBDC ASEAN-Mekong Basin Development Co-operation

AMG Alliance for Mutual Growth

AMM ASEAN Ministerial Meeting

ANZBC ASEAN-New Zealand Business Council

ANZCER Australia-New Zealand Closer Economic Relations

ANZCERTA Australia-New Zealand Closer Economic Relations Trade Agreement

ANZECP ASEAN-New Zealand Economic Co-operation Programme

ANZUK Australia-New Zealand-United Kingdom

APAA ASEAN Ports Authorities Association

APEC Asia-Pacific Economic Co-operation

ASA Association of Southeast Asia

ASC ASEAN Standing Committee

ASCOPE ASEAN Council on Petroleum

ASEAN Association of Southeast Asian Nations

ASEAN-CCI ASEAN Chambers of Commerce and Industry

ASOMM ASEAN Senior Officials Meeting on Minerals

ASPAC Asian and Pacific Council

BBC Brand-to-Brand Complementation

BEC Bureau of Economic Co-operation

C&I Criteria and Indicators

CCS Co-ordinating Committee on Services

CEPT Common Effective Preferential Tariff

CITES Convention on International Trade in Endangered Species

COFAB Committee on Finance and Banking

COFAF Committee on Food, Agriculture, and Forestry

COIME Committee on Industry, Minerals, and Energy

COTT Committee on Trade and Tourism

EAEC East Asia Economic Caucus

EAGA East ASEAN Growth Area

EC European Community

ECO Economic Co-operation Organization

EEZ(s) Exclusive Economic Zone(s)

EFTA European Free Trade Association

EIP Environmental Improvement Project

EMS Express Mail Service

EU European Union

FASA Federation of ASEAN Shipowners’ Association

FASC Federation of ASEAN Shippers’ Council

FDI foreign direct investment

G-14 Group of Fourteen

GATS General Agreement on Trade in Services

GATT General Agreement on Tariffs and Trade

GDP gross domestic product

Overall Assessment

ASEAN economic co-operation, by all accounts, stands at a crossroads. It underwent a long transition period of accumulation, both process and substance, that became the basis for subsequent transformation. The period was marked with varied degrees of commitment and coverage, from half-hearted measures to dramatic initiatives, from exemptions and exclusions to full participation, from selected and narrow scope to broad coverage.

Chapter 2 has traced ASEAN economic co-operation along several fronts and each of the six areas reviewed had underlying directions. For example, co-operation in trade aimed to push vigorous intra-ASEAN transactions; in transport, communications, and tourism, co-operation aimed to connect ASEAN; in finance and in banking, co-operation aimed to integrate financial sectors closer.

Many of the early co-operation schemes hardly made inroads into the lofty aims espoused in each sector or area. As a collective group, ASEAN experienced early fumbles in economic co-operation. From trade to industrial development, agriculture to minerals, ASEAN cooperation was characterized by fits and starts. Despite the number of economic co-operation meetings, the outputs generated were not that normally expected from a regional group. Yet, they became important strands of confidence that each of the ASEAN states had strewn towards a regional network. The numerous meetings attended by ASEAN member countries served to continue the process of building trust and familiarity, consensus building, and internalizing a regional perspective among ASEAN officials.

Whether turning the corner in ASEAN economic co-operation was long in coming or not depends on the time frame to be reckoned from the start of regional efforts. The organization began with the First ASEAN Ministerial Meeting and was marked by the signing of the ASEAN Declaration in 1967. Although this was followed by subsequent ministerial meetings, multilateral agreements, other political and organizational arrangements, the First ASEAN Economic Ministers Meeting did not take place until November 1975. Four months later, in March 1976, the Second AEM Meeting was held in Kuala Lumpur. In a seeming effort to keep pace with changing global economic developments as these affect ASEAN, three AEM meetings were held in 1979 and 1982, and four in 1987. In many of the interim and subsequent years (after 1987), at least two AEM meetings were held every year. This trend reflected the intensification of member countries’ collective interest in finalizing mechanisms to promote economic cooperation.

Several changes have taken place in the area of ASEAN economic cooperation during the brief interim between the completion of this draft and its publication. ASEAN expanded its membership to include Laos and Myanmar on 23 July 1997. The macroeconomic profile of ASEAN's nine member countries is shown in Table 8.1. The ASEAN Heads of Government meet formally every three years, and in between on an informal basis. The first informal ASEAN Summit was held in Jakarta on 30 November 1996. At the informal Summit the Leaders requested the ministers to develop an ASEAN Vision towards 2020 and the possibility of ASEAN co-operation on the facilitation of goods in transit. The ASEAN Secretariat now has two Deputy Secretary- Generals, one responsible for economic co-operation and the other for other areas of co-operation.

AFTA

The year 1997 marks the fifth year of the implementation of the CEPT scheme for AFTA. Although member countries are only halfway to the deadline of 2003 for realizing AFTA, nearly 42,253 tariff lines (about 90.6 per cent of all tariff lines in ASEAN) have already been included in the CEPT scheme. Average tariff rates for products in the Inclusion List have now fallen to 6.38 per cent from 12.76 per cent in 1993. With the participation of Laos and Myanmar, the Inclusion List under the CEPT scheme will increase from 42,253 to about 45,119 tariff lines, or about 81 per cent of the total tariff lines in ASEAN.

Progress has also been achieved in other areas of implementing AFTA. Firstly, member countries have agreed to issue one legal enactment in 1997 which would cover the whole period of tariff reduction. The previous practice of issuing legislation at the beginning of each year to enact tariff reduction mandated by the CEPT scheme prevented some exporters from immediately enjoying the lower tariffs when the legal enactments were delayed.

Secondly, a great deal of progress was made in eliminating nontariff barriers in the past year. ASEAN removed all customs surcharges on CEPT products at the end of 1996.

Introduction

The official ASEAN machinery is supplemented by a network of regional non-governmental organizations (NGOs) that help promote the objectives of ASEAN co-operation. These networks are the mechanisms for national private sector organizations to link with their ASEAN counterparts to assist their governments in pursuing ASEAN goals and objectives. The network of regional NGOs forms a cluster of transnational linkages that increase the centrality of ASEAN and provides the infrastructure for better communications and enhanced cooperation in various fields.

In a broad sense, NGOs are organizations formed by the business sector and by professional and other non-profit associations. In the ASEAN context, NGOs include (a) the ASEAN-CCI, serving as the official link between ASEAN governments and the private sector engaged in commerce and industry; and (b) other private organizations that help promote ASEAN objectives in the social, cultural, economic, and scientific fields. ASEAN provides for a system of official affiliation of NGOs in the region to bring their activities closer to the workings of ASEAN structures and to promote ASEAN objectives (see Box 4.1).

ASEAN Chambers of Commerce and Industry (ASEAN-CCI)

The ASEAN-CCI, formed in April 1972, is the largest and most significant private sector organization in the region. Being the official channel between the private sector and ASEAN governments, its founding represents member countries’ recognition that regional economic co-operation can only succeed through the active participation of the private sector. On the other hand, it also reflects the positive response of the business community to the political initiatives of ASEAN leaders in promoting regional co-operation.

The initial ASEAN-CCI organization was composed of five national chambers, namely, that of the original five member countries (that is, the Kamar Dagang Dan Industri Indonesia [KADIN], the National Chamber of Commerce and Industry of Malaysia [NCCIM], the Philippine Chamber of Commerce and Industry [PCCI], the Singapore Federation of Chambers of Commerce and Industry [SFCCI], and the Joint Standing Committee on Commerce, Industry and Banking [JSCCIB] of Thailand). The National Chamber of Commerce and Industry of Negara Brunei Darussalam (NCCI-NBD) and the Chamber of Commerce and Industry of Vietnam (CCIV) became the sixth and seventh national chambers when Brunei Darussalam and Vietnam joined ASEAN.