Page last updated at 12:53 UTC, Wednesday, 02 July 2014 PH
Not a day passes in the Philippines when there is no conference, meeting, workshop or academic lecture on the ASEAN Economic Community. I myself have been active talking about the AEC in investment road shows both within and outside the Philippines. My most recent audience was a group of yuppies in their twenties who wanted to know what the AEC will mean to their future careers in business and other professions. It is to those twenty something generation that the AEC will blossom from a work in process today to a fully developed common market in the next twenty years. By the time they reach the peak of their professional life, the AEC will be what the EEC is today, with all its strengths and weaknesses.
I made it clear to them that the year 2015 is not to be given any special significance. Economic integration will not come in one fell swoop just because there is an agreement among the ten countries to bring down their tariff rates to zero in 2015 for Indonesia, the Philippines, Malaysia, Singapore, Thailand and Brunei and a few years later for the rest of the ten countries. Economic integration--as it was in the European Community--will be a work in process: two steps forward and one step backward. Already in the attempts of some of the member countries to consider the Trans Pacific Partnership being promoted by the U.S., there are resistances resulting from deep-seated protectionist mindsets in such countries as Indonesia and the Philippines. All sorts of non-tariff barriers are being set up like the constitutional provisions in the Philippines seriously restricting foreign direct investments or the recent moves in Indonesia to ban certain types of exports and to require more local equity in strategic industries. These should be taken as par for the course in any attempt to achieve economic integration in a region as diverse culturally and politically as the Association of Southeast Asian Nations.
The vision of the AEC is no different from what European countries--devastated by two world wars--conceived as early as 1951 through the fledgling European Coal and Steel Community. Like the EEC, the AEC is founded on a vision of a single market and production base for the members states to promote free movement of goods, services, investment, and skilled labor across the ASEAN region. The mission of the AEC is to foster equitable economic development across the region and the creation of a highly competitive economic region that will be fully integrated into the global economy. The priority sectors identified especially for integration are agro-based products, air travel, automotive, e-ASEAN, electronics, fisheries, healthcare, rubber-based products, textiles and apparel, tourism, wood-based products and logistics services. Priority will also be assigned to six core elements: competition policy, consumer protection, intellectual property rights, infrastructure development, taxation and e-Commerce. It is obvious that these motherhood statements are pretty ambitious and will take time to actualize.
Whereas it took almost half a century for the EEC to attain an integrated community that was strong enough to challenge the two other economic global powers, the US and Japan, for economic supremacy in the last century, my view is that the AEC will take half the time to gather enough economic strength as a fully integrated common market to be able to challenge the two Asian giants, China and India, for economic supremacy in the first half of the twenty first century. The diverse cultures and political systems prevalent in the ASEAN are actually an advantage for greater speed in economic integration, rather than a handicap as some analysts have articulated. Precisely because cultures and political ideologies are so different across the ten countries, the leaders will waste no time dreaming of a political union as the European Community has been attempting with very limited success. The experiment on a common currency, the Euro, has faltered precisely because a monetary union presupposes a fiscal union which in turn requires a political union. It is clear the dream of a united political community in Europe is still far from being realized. The ASEAN will not even attempt it and, therefore, will avoid like the plague introducing a common currency. The single focus will be on the advantages of forging a common market that will allow economies of scale and healthy competition among all the economic sectors in the region, leading to higher productivity and lower prices for the consumers. This single-minded concentration on the economic benefits of the AEC can accelerate the attainment of a real common market. For comments, my email address is email@example.com.