Comprehensive Economic Partnership: East Asia and Beyond

1
Comprehensive Economic Partnership East Asia
and Beyond?
5th East Asian Congress

• Mahani Zainal Abidin
• Institute of Strategic and International Studies,
  Malaysia
• 3 4 December 2007

2
Outline

• Introduction
• Regional Integration and Community Building
• Market-Driven Processes Trade and Investment
  Links
• State-Driven Processes
• Cooperation based on Common Interests
• Conclusion The Way Forward

3
Introduction

• Establishment of an East Asian regional grouping
• APT (East Asia) and APS (East Asia Plus) two
  routes both with ASEAN as the vital and
  irreplaceable part of and EA regional grouping
• Kind of regional grouping envisaged
• EAVG community-building and economic dimensions
• Use of word community different connotations
• APEC
• Economic partnership through open regionalism
• Explore the effective and most likely
  comprehensive economic integration with East Asia
  as the core driver

4
Regional Economic Integration and Community
Building

• Regions integrate through market-led and
  state-led processes
• Market-led-
• Emergence of network of businesses
• State-led
• Standard economic European Community based model
• Focus is an economic community single market
  type concept

5
Regional Economic Integration and
Community-Building

• State-led
• APT or APS need to bear in mind the community
  envisaged by ASEAN
• Economic partnership is a component of the
  broader regional integration
• Is ASEAN is a model for regional integration?
• if use ASEAN integration as the starting point,
  then ASEAN Plus needs to build on what ASEAN has
  achieved and concur with what ASEAN aspires to
  achieve

6
Regional Integration and Community-Building

• ASEANs vision ASEAN Community
• Three Pillars-
• ASEAN Economic Community (AEC)
• ASEAN Socio-cultural Community (ASCC)
• ASEAN Security Community (ASC)
• Scope of integration compared with the European
  Community
• Economic integration compared with the European
  Community

7
Market-Driven Processes

• Trade and Investment Linkages
• FDI due to the fragmentation of production
  process the evolution of regional production
  networks
• Japans role
• Growing role of China
• Role of other sources countries
• Trade linkages
• growth in intra-firm and intra-regional trade
  due to the exports and imports of MNCs in the
  region

8
Intra-Regional Trade Share, 1995-2006 ()
9
Market-Driven Processes

• Trade Links
• Rise of China
• - emergence of new trade triangles involving
  ASEAN, source countries and China
• - New division of labor between ASEAN and China
• Relative intensity of trade among ASEAN with the
  Plus Three and Plus Six

10
ASEAN-5s Export Intensity Index and Import
Intensity Index
11
State-driven Processes

• APT cooperation began in Dec 1997,
  institutionalized in 1999
• Implementation of measures of the EASG
• Establishment of the APT Study Group on
  Facilitation and Promotion of Exchange of People
  and HR Development
• Establishment of the East Asia Think-tanks
  (NEAT)
• Establishment of an East Asia Forum
• Formation of East Asian Business Council
• East Asia Summit in 2005
• Inclusion of India, Australia and New Zealand
• Second Summit in January 2007, Third Summit in
  November 2007

12
In the mean time, proliferation of state-driven
economic partnership processes

• FTAs involving ASEAN
• ASEAN-wide arrangements China, South Korea,
  Japan and India
• Japan bilaterals with Singapore, Malaysia,
  Thailand and the Philippines
• Thailand Australia concluded, Thailand NZ
  concluded
• Singapore Australia concluded, Singapore NZ
  concluded
• Malaysia - still negotiating with Australia and
  New Zealand, concluding with Pakistan
• China, Japan and Korea have concluded a number of
  FTAs with countries outside the East Asian region

13
Economic Cooperation

• Common Interests
• Financial Stability triggered by the Asian
  Financial Crisis
• - Chiang Mai Initiative a regional financing
  arrangement
• - Economic Review and Policy Dialogue
• - Exchange data on bilateral capital flows on a
  voluntary basis
• - Asian Bond Markets Initiatives (ABMI)
• - APT Research Group

14
Other common interests

• Non-traditional security
• Transnational crimes such as human and drug
  trafficking, money laundering, terrorism, sea
  piracy, arms smuggling, international economic
  crime and cyber crime
• Energy security cooperation
• Pandemic threats
• - Avian Flu and SARS
• Environmental concerns
• - deforestation, forest fires, chemical
  pollution, air
• pollution, marine and water contamination,
  global
• warming

15
APEC economic partnership is on voluntary basis

• Progress of APEC economic integration is slow
• Scope of economic liberalisation has not expanded
  significantly
• Focus of APEC has widen to beyond economic issues
  e.g. on climate change in the last APEC meeting
  in Australia
• Economic interests and links of APEC members are
  too diverse

16
Conclusion

• Diversity of countries in East Asia Plus and Asia
  Pacific
• Current economic linkages are strongest within
  the APT
• Deepening existing linkages need
  government-to-government initiatives to overcome
  barriers to trade such as regulations, customs,
  exchange rates, product standards and other
  institutions
• lower trade costs and increase trade and
  investment within APT first.

17
Conclusion

• APT has established areas of cooperation that
  serve a common purpose and support economic
  partnership
• Fundamental premise for the APT
• Goal of community building is the promotion of
  the welfare and well-being of the people and the
  realization of the East Asian vision of
  cooperative peace, prosperity and progress.

18
Conclusion

• Potential problems of expanding beyond East Asia
• Increase in size and complexities of integration
• Membership issues?
• Increasing diversity with more members
• Experience of ASEAN efforts at economic
  integration shows the difficulty of accelerating
  the pace of integration dealing with the issue
  of development gap among member countries
• APT has well established market and state led
  processes for further integration

19
Thank you