EU and ASEAN policymakers share advice on how to keep integration on track

Kuala Lumpur – The challenges ahead for the newly formed ASEAN Economic Community (AEC) were discussed at the ACCA President’s Debate held on 6 April 2016, the first time this global event was hosted outside of the European Union (EU).

Datuk Alexandra Chin, ACCA President, hosted this year’s debate, saying: “As a global professional body, ACCA wants to understand better the similarities and differences between the EU and ASEAN. Can the AEC learn anything from the experience of the EU integration? The EU is built on the premise of working together towards common interests, and this is very much what the AEC is aiming to do.”

Minister in the Prime Minister’s Department, Senator Dato Sri Abdul Wahid Omar, said that Malaysia is an integral part of the AEC. In his Keynote Presentation, he said the opportunities of an integrated ASEAN are great if all the set objectives are aligned and plans are followed through.

However, Dato’ Sri Abdul Wahid believed that there is no need for ASEAN to integrate to the extent of the EU model given how the member states would like to preserve its sovereignty at present, so a system of supranational institutions like the European Parliament and the European Court, and the concept of a single currency are not feasible options.

Furthermore, ASEAN practises the consensus style of governance that requires unanimous assent among all member states on any policy before it is launched as a regional initiative.

It is this flexibility characteristic of the ASEAN cooperation – the celebrated ‘ASEAN way’ – that has many analysts saying how the ASEAN integration lacks the bite to be more than a symbolic display of political solidarity.

Speaking at the debate, Dr Jayant Menon, lead economist at the Asian Development Bank (ADB), pointed out that the ASEAN integration is a means rather than an end, as opposed to the EU model.

“If we judge ASEAN by traditional measures of integration, then ASEAN would have failed, but that is rather unfair. Unlike the EU, the end goal of ASEAN is globalisation, not just regional integration. One of the key objectives of the AEC is to increase trade not just within but also outside the region,” explained Dr Menon.

Isham Ishak, Deputy Secretary General (Trade) at the Ministry of International Trade and Industry (MITI), added: “Looking at the architecture of the EU model, there are many similarities in terms of the integration, close relationships, open borders – all of which we aspire to achieve for ASEAN. The EU has provided us with a lot of research, best practices and benchmarks to guide our way into the ASEAN integration.”

But Isham admitted that the challenge for ASEAN lies in the lack of funding and an overburdened secretariat. Furthermore, the continued existence of non-tariff barriers is affecting the speed of integration.

Sharing the EU’s experience in removing these barriers and ensuring compliance, Dr Steven Everts, Senior Adviser on EU-ASEAN and ARF Alternate Senior Official (SOM) Asia Pacific Department, European External Action Service, said: “The EU has a legal mechanism in place that allows members states to be taken to court if they do not comply by commonly agreed EU rules. This infringement procedure is used and it works; Member states may not like it, but they do comply with the rulings.”

Dr Everts stressed that the EU did not want to export any 'model' of integration and acknowledged that this notion of setting up a legal court is not accepted by ASEAN member states. But at the same time, ASEAN countries do accept the dispute settlement system of the World Trade Organisation (WTO).

“All ASEAN states are members of the WTO, which involves binding dispute settlement mechanisms. So something that is achievable in the WTO context is not achievable in the ASEAN context, and this is a paradox that perhaps needs more thought,” advised Dr Everts.

Dr Fraser Cameron, Director of the EU-Asia Centre, stressed the geopolitical centrality of ASEAN, noting that it was being courted not just by the EU but by the US, China, India and others.

As regards to the differences between the EU and ASEAN in terms of operating principles, he pointed to the acceptance of some interference in the politics and economics of member states as well as decision-making on a qualified majority basis.

“The EU has created a culture whereby people may not like interference but they accept it for the greater good. Some big member states like Germany can be outvoted on important issues, which is accepted because on the wider game of benefits, Germany understands that the EU market is good for them,” explained Dr Fraser.

He added: “You have to make ASEAN relevant to the people. Take for example the situation in Europe today: people have the luxury of traveling across EU member states cheaply, without showing their passport and using a single currency. That is a measure of the success of the EU market, and this is driven by the European Commission making legislations to achieve this.”

Given the reluctance to pursue the legal avenue or majority voting as a control mechanism, Dr Everts listed a couple of options to help ensure that ASEAN’s integration remains on track:

“Strengthen the ASEAN Secretariat – simply by doubling this workforce can free them from organising meetings and writing reports to monitoring the implementation of existing agreements. You need a central set of people to look after this crucial aspect.

“Secondly, what would be useful is having a group of people who are independent from the member states to develop proposals for ASEAN as a whole who look after the common interest. I think this is what the European Commission has done successfully to resist member state tendency to lobby for their national interest and develop a genuine European vision,” shared Dr Everts.

In closing, participants of the debate agree that there is tremendous potential for closer economic integration between ASEAN and the EU. As a whole, ASEAN represents the EU’s third largest trading partner outside Europe (after US and China) with more than €235 billion of trade in goods and services in 2013.

“The EU and ASEAN together have to tackle some of the bigger global challenges out there, in terms of the environment, dealing with imbalances in the global economy, and terrorism. So, there is an agenda that can be enhanced if ASEAN is more unified,” concluded Dr Cameron.

The President’s Debate organised by ACCA (the Association of Chartered Certified Accountants), was attended by over 120 business leaders in Kuala Lumpur. The debate had previously been held in Athens, Brussels, Cyprus, Dublin, London and Warsaw.

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Notes to Editors

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