Transcript IDEAs-RIS Workshop Challenges to Asian Regionalism: An

IDEAs-RIS Workshop
Challenges to Asian Regionalism:
An ASEAN Perspective
Suthiphand CHIRATHIVAT
Chulalongkorn University
5-6 November 2009
New Delhi, India
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Changing Asia in Regional and
Global Dynamics: Economic Outlook
• Asia’s economic outlook seems bright,
with developing Asia’s estimated growth at
3.9% in 2009 and 6.8% in 2010.
• Asia leads recovery, despite the global
economic downtown.
• China and India are leading region’s
economic recovery
• Putting Asia into a “unique position”, but
for how long?
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Co-movement of GDP Growth in the Asia, US, and EU
Current and Forecast by IMF
%
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
-2.00
-4.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
-6.00
-8.00
-10.00
-12.00
China
Malaysia
United States
Source: CEIC
Indonesia
Philippines
world
Japan
Singapore
EU
Korea
Thailand
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Changing Asia in Regional and Global
Dynamics: Crisis is Redrawing the Map
of Asia’s Global Economic Influence
• A multi-polar economy less reliant on the US
consumers will be a more stable economy
(Zoellick)
• Crisis has accelerated a shift from west to east
• Major emerging economies like China and India
take the lead and are becoming real partners
• Would the world now start to “rebalance towards
Asia”?
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Changing Asia in Regional and
Global Dynamics: Asia’s Role in the
Global Economy
• Asia’s “Seat at the Table” of G-20
• Growing recognition in the core economic
discussion and governance like, the World
Bank, WTO and the IMF
• US dollar under scrutiny with an increasing
weight of Asian currencies
• Crisis might happen again and Asia is still
part of the global imbalances (Bernanke) 5
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Global imbalances remain, but shifting
7
• Strong Foreign Reserves in Asia as
compared to other developing
countries
• Reserve Pooling is a sound
suggested option
• The question is how to implement
it
8
Changing Asia in Regional and
Global Dynamics: New Emphasis on
Regional Strategy
• Crisis proved Asia not “decoupled”
• Debate on export-led growth model
• More focus on regional final demand
rather than solely on regional production
networks
• Potential rise in per capita income in all
emerging Asian economies
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Drop In World Trade volume of goods and
services
%
15.0
10.0
5.0
0.0
-5.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009 2010e
-10.0
-15.0
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Moving into Asian Regionalism:
At the Beginning
• East Asia,for long, an “Empty Box”
• Preferences of multilateralism
• ASEAN  AFTA, the only RTA in
operation
• Increasing cooperation and integration
since the Asian financial crisis of 1997-98
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Moving into Asian Regionalism:
AFTA
• AFTA 1992 to 2010 (2015 for CMLV)
– At first, “conditional MFN” and partial tariff
cutting
– Agree to go to zero (Bali II)
– Each nation’s sensitive lists
• Net effects: each bilateral trade flows
faces a different tariff structure
12
Moving into Asian Regionalism:
ASEAN Economic Community
• AEC Blueprint (2009-2015)
• AEC based on single market and productive
base
• Also aims for competitive economic region,
equitable economic development and integration
into the global economy
• Roadmap for an ASEAN Economic Community
• Implementation, hardest part (AEC Scorecard)
13
Moving into Asian Regionalism:
ASEAN-China FTA
• Signed in November 2004
• Nation-specific sensitive lists & conditional
MFN, so de facto 10 bilaterals
• Tariff cutting started mostly mid 2005 to
zero by Jan 1st, 2010 for 90% of Products
• From goods to investment and services
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Moving into Asian Regionalism:
ASEAN-Japan FTA
• Japan-Singapore was signed in 2002
– Different agreement to AFTA and ACFTA, reads like
European & US FTAs, more structured
• Japan-Malaysia signed Dec 2005
• Soon with Indonesia, Thailand, the Philippines,
Vietnam and Brunei
• In parallel, AJFTA with ASEAN as a whole from
2008
• Tariff cutting, to zero by 2012
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Moving into Asian Regionalism:
ASEAN-ANZ FTA
• Similar to Japan-ASEAN FTA, much
structured an broadened
• In parallel with bilaterals, like ThailandAWZ, starting in 2005.
• Tariff cutting starting in 2009 to zero in
2015
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Moving into Asian Regionalism:
Latest initiatives of AKFTA, AIFTA
• Similar to AC FTA, but more political
difficulties, started later
• De facto 10 bilaterals in 2008 (AKFTA)
• Tariff cutting to start in 2010 (AIFTA)
• Investment agreement concluded for
AKFTA, to include services as well
• More negotiations needed for ASEANIndia investment and services agreements
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Moving into Asian Regionalism:
BIMSTEC, GMS, BIMP-EAGA
• BIMSTEC is aiming at links of countries in
South and Southeast Asia
– Still negotiations on FTA
– More cooperation on agriculture, fishery,
tourism, human resources, etc.
• GMS and BIMP-EAGA are sub-regional
cooperation
– Infrastructure development
– Role of ADB, ASEAN (IAI)
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Moving into Asian Regionalism:
Country-to-Country Bilaterals
• ASEAN individual countries have
additional bilateral FTAs
• Singapore, the most advanced stage
• Malaysia, Thailand considered as medium
high
• Indonesia, the Philippines and Vietnam, at
a moderate level
• Others, not significant
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Defining Asian Regionalism:
Some Conceptual Issues
• Asian “Noodle Bowl” (“Spaghetti Bowl” a la
Bhagwati)
• Managing the Noodle Bowl: The Fragility
of East Asian Regionalism (Baldwin
(2006))
• Triggers & dominos
• Where all these leading to?
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Defining Asian Regionalism:
Likely Outcomes
• ASEAN+1, with 6 major partners
• Ad hoc nature of ACFTA, but will get done (192
billions US$ in 2008, from 60 billions US$ in
2002)
• Japan, bilaterals, with big ASEANs, will get done
• AJ FTA looks like opportunity for largesse, but
basically, more GSP like
• ASEAN-ANZ FTA, also, will get done
• Finally, AK FTA and AI FTA look promising as
well (ASEAN-India trade, 50 billions US$ in
2010, then 70 billions US$ in 2012)
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Defining Asian Regionalism:
System Fragility
Baldwin argues
• East Asia’s collective action problem
• Asymmetric dependence makes matters worse
– ASEAN more dependent on the “conveyer belts” than
are China and Japan
• If a few “conveyer belts” break down, whole
factory suffers
– Competitiveness of Japanese firms in US market
depends on intra-regional trade
– Ditto Korean & Chinese firms
– Indian & ANZ firms?
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Defining Asian Regionalism:
Emerging Issues
• RTAs, by nature, discriminatory
• Rules of origin, tools for protection
• Overlapping RTAs, difficult adjustment for
business
• In the case of AFTA, utilization rates are
low
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Institutionalizing Asian
Regionalism: Needs for Broader
Regional Cooperation
• Market dynamics and increasing role of
East Asia
• Consolidation of various initiatives
• Immediate concern, overlapping FTAs
• Institutionalizing possibilities, tremendous,
but also to be realistic.
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Institutionalizing Asian
Regionalism: EAFTA Phase I
• Leaders put EAFTA on the economic
cooperation agenda during the 10th
ASEAM+3 Summit
• EAFTA process to process within
ASEAN+3 framework
• EAFTA to be of high quality
• Economic cooperation along with EAFTA
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Institutionalizing Asian
Regionalism: EAFTA Phase II
• Leaders put EAFTA as an important initiative
during the 13th ASEAN+3 Summit
• Gradual and realistic strategy be pursued to
achieve a desirable and feasible EAFTA
• Consolidating existing FTAs
• Working groups on (1) unified ROOs and (2)
tariff nomenclature and other customs-related
issues
• Negotiations to be launched by 2012, at the
latest
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Institutionalizing Asian
Regionalism: CEPEA Phase I
• Objectives and structure to be composed of 3
pillars
– economic cooperation
– trade and investment facilitation
– trade and investment liberalization
• Discussion to be commenced among officials on
cooperation and facilitation
• Necessary decision to be made regarding on
FTA
• Mechanism to be developed for the private
sector
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Institutionalizing Asian
Regionalism: CEPEA Phase II
• Objectives and structure reaffirmed by
leaders
• Study and discusses on
– concrete steps to realize CEPEA
– comprehensive framework that includes
cooperation, facilitation and liberalization, and
to be commenced immediately among
officials.
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Impact on GDP
China
India
Japan
Korea
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
ASEAN+6
4.65
ASEAN+3
4.49
3.40
0.64
2.67
-0.07
0.63
2.64
4.35
9.53
5.95
3.83
4.15
9.24
5.77
3.67
7.46
11.06
7.21
10.79
Source: CEPEA Report
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Institutionalizing Asian
Regionalism: ASEAN’s Centrality
• Role of ASEAN in the ASEAN+3 and
ASEAN+6
• ASEAN’s in the driver’s seat?
• Bloc’s top-down, what’s about bottom-up?
• Upcoming challenges: Who’s in or out?
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Institutionalizing Asian
Regionalism: Latest Initiatives
• Leaders accepted both EAFTA and
CEPEA initiatives, still to be decided how
to proceed
• In addition, more proposals added at the
4th East Asia Summit
– “East Asia Community” by Japanese PM
Hatoyama
– “Asia-Pacific Community” by Australian PM K.
Rudd
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