Saturday, June 27, 2015

ASEAN for Asian-African Sovereignty

Asian African Conference,

Celebration of the 60th anniversary of the Asian-African Conference was done and Indonesia was successful taking its role. Hence, there were only few of concrete deals or agreements from the conference.
The final declaration condemned terrorism and transnational crime, and endorsed the peaceful resolution of disputes. But no strategy was endorsed and no commitment made for any new unified action to combat this threat. And initial language calling for intelligence sharing was dropped in the final draft.

The declaration also underscored respect for human rights. However many of the participating countries including Iran, Zimbabwe, China, and Myanmar have been criticized for censorship of the media and suppressing democratic opposition.

A second declaration called for the establishment of an independent Palestine and pledged to provide capacity building assistance. To that end Indonesia agreed to work with Sweden to develop training and development programs to help Palestinians prepare for self-rule. Israel was not invited to participate in the conference.

There was no clear framework from the conference, it was merely more the ceremony. In order to create a framework that covers wide-ranging engagement between Asia and Africa, Indonesia should take a lesson from Singapore’s former Prime Minister Goh Chok Tong, who in the 1990s persistently pursued his vision of establishing the Asia-Europe Meeting (ASEM) and the Forum for East Asia-Latin America Cooperation (FEALAC), proactively exchanging ideas with other heads of state and government. And similar effort with Africa will obviously take time, diplomatic energy, and will require careful study. But proposing an institutionalization project could certainly provide the bridge the two regions need.

The Asian African Conference should have a robust, operational vision. A successful commemoration is one that can reenergize a commitment to creating a platform that eliminates gaps in culture and mindsets. For an Asia-Africa partnership to be relevant, the conference should chart a course for more tangible, institutionalized cooperation, with economic engagement as the priority. It also should be an ideal opportunity to institutionalize a partnership that offers considerable opportunity for ASEAN and Indonesia.

Ten years ago, Indonesia hosted the Asia-Africa Conference golden jubilee, out of which came the New Asian-African Strategic Partnership (NAASP). At that 2005 summit, Asian and African leaders agreed to revive the 1955 Bandung Spirit, whose one aim was to advance cooperation between the two continents. 
The NAASP expanded the form of Asia-Africa engagement from merely non-aligned and anti-colonial rhetoric to broader cooperation. Since then, there have been several projects and programs under the NAASP banner, from diplomatic training and technical cooperation to a business forum. Nevertheless, the NAASP receives little in the way of either public attention or political will. NAASP does’nt really boost Asia-Africa relations. Certainly, interactions between Asia and Africa are growing, especially on economic matters, but they do not appear to be driven by the NAASP.

Asia and Africa currently lack any formal institutional links, despite the long-standing rhetoric of Asia-Africa solidarity. This is in contrast to Asia’s relations with other continents, which have been developed in institutions such as ASEM and FEALAC. Thus, here is framework becoming the problem.

NAASP did in fact try to institutionalize interregionalties. The 2005 NAASP agreed to hold heads of state/government summits every four years and a foreign ministerial meeting every two years, but neither actually went ahead. There were some meetings under the Asian-African Sub-Regional Organization Conference (AASROC) framework, but the long-term vision of this forum remains unclear.

Asian-African Leaders have ignored the NAASP’s commitment to establishing closer contact. Individual Asian powers that see Africa as an enormous economic opportunity, approach African within their own national frameworks. Each Asian country pursues its national interests through bilateral engagement, such as the Forum on China-Africa Cooperation, India-Africa Forum Summit, and Tokyo International Conference on African Development (TICAD). Yet there are few initiatives for African countries to pursue what they might want from cooperation with Asia. On several occasions, South Africa has proposed the inclusion of NAASP into the agenda of the African Union (AU) and the New Partnership for Africa’s Development (NEPAD), without success.

If the upcoming Asia-Africa gathering wants to be remembered, it should offer something fresh and substantive. Fail to do so, and the fate of NAASP will follow that of the Non-Aligned Movement (NAM): a lot of rhetoric, but little that is operational or significant. The institutionalization of the NAASP should enable Asian and African officials to meet on a more regular basis. A routine inter-continental meeting could become a venue to exchange views and address global challenges, such as climate change, development and terrorism, areas that are usually outside the scope of the more economically focused bilateral format. This would in turn add to the weight of Asia and Africa, which already account for 75.3 percent of the world’s population and 28.5 percent of its GDP, on the global stage.

Institutionalizing the NAASP as a driver of Asia-Africa relations will not be easy, but it is feasible, especially if it is modeled after ASEM and FEALAC, which have a strong tradition of informality. ASEM holds a summit every two years with periodic ministerial meetings on foreign affairs, economic, cultural and other areas. FEALAC, on the other hand, has only biennial foreign ministers’ meetings and gatherings of senior official. Neither ASEM nor FEALAC has a structured agenda or any secretariat – FEALAC has a cyber secretariat, but it is more an online database and a source of information on FEALAC activities. Neither ASEM nor FEALAC aspire to become arenas for problem solving. Rather, they are forums for building trust and dialogue, with the potential to open up mutually beneficial opportunities for their members.

Taking ASEM and FEALAC as models, the countries of Asia and Africa could start to seriously explore an informal institutionalization project. Informality will provide flexibility and inclusiveness, enabling all members to contribute. Regular meetings between foreign ministers should be initiated in the upcoming commemoration, with an eventual target of setting up an intergovernmental forum – let’s call it “the Asia – Africa Contact (AAC).”

If continent-wide interregional cooperation between Asia and Africa is too complex, then they could begin with regional integration like ASEAN (Association of South East Asia Nations). This could have some relevance from the Asian side because it is the only coherent regional community within Asia. ASEAN has the profile to set a “Pan-Asian agenda” for engaging Africa. ASEAN program-AEC (ASEAN Economic Community) is potentially compatible with Africa’s ambition of establishing a trade union comprising three regional organizations: the Common Market for Eastern and Southern Africa (COMESA), the South African Development Community (SADC), and the East African Community (EAC) by 2016. ASEAN, or even broader East Asia, could engage Africa nations through this huge trade union, which covers 27 African countries.

A closer  economic engagement between ASEAN with one, if not those three regional entities in Africa will not only help to solidify relations between the continents, it also has the potential to boost trade. Currently, trade volumes between ASEAN and COMESA, for instance, are still just 0.37 percent of ASEAN’s total trade with the rest of the world. Given a burgeoning middle class and demographic conditions in both regions, there is a huge potential market, are considerable unexplored economic potential.

A free trade agreement (FTA) between ASEAN and SADC could be one aim. SADC countries offer agricultural products such as fruit, vegetables, meat and livestock. ASEAN’s main goods are electrical products, machinery and automobiles, all important imports for SADC. These competitive advantages suggest an ASEAN-SADC FTA could be quite beneficial. For one thing, African consumers would certainly appreciate the removal of the relatively high tariffs SADC and COMESA apply to imports from outside their blocs.

An FTA between Asia and Africa would be challenging to achieve, but in the meantime countries from both continents should aim to improve people-to-people and business-to-business connections, who would be stakeholders in any future FTA. In this sense, the Asia-Africa Business Summit that will be convened on the sidelines of the upcoming commemoration is welcome, and should become routine. This kind of forum can improve trust in the business community.

The next following question is ‘are ASEAN countries ready for that notion?’

The AEC should be started in the beginning of 2015, but members condition was not ready yet, so they changed it into Dec 31, 2015. Even then, there are still questions about how many will be ready to cope with the impact. 

On paper, no one doubts the potential of a single market goal with a combined gross domestic product (GDP) of $2.5 trillion and intra-regional trade of $1 trillion. But reaching the full potential the AEC offers could take many years, achieved gradually.

The goal of ASEAN economic integration is to become a single production base where goods can be manufactured anywhere and distributed efficiently to anywhere within the region. ASEAN needs to work towards the goal of freer movement of labour and capital, but in reality, integration and the free flow of resources will only be gradual, step by step, sector by sector. 

For now, opinions are mixed on how far ASEAN countries have come in doing everything necessary to make the big first step. Governments and the ASEAN secretariat feel that more than 80% of their goals have been achieved, but the private sector does not see evidence of much progress when it comes to making it easier to do business across borders. Then again, some businesses, especially smaller ones, have done little or nothing to prepare themselves. 

So far, ASEAN overall has progressed to a level of 80% in terms of eliminating tariffs on goods traded within the region. Some items remain on sensitive lists in each country. ASEAN in general has been on the right track to eliminate all tariffs by the end of 2015. 

Only 50% of businesses in ASEAN are estimated to have taken advantage of tariff reductions under the regional FTA and governments have not been active enough to encourage the private sector to utilise them. Required harmonisation of standards and regulations still has to be carried out and that should encourage more businesses to apply for ASEAN privileges. 

Even though tariffs have been largely reduced, non-tariff barriers to trade (NTBs) are still used widely in the form of quotas and licences, although countries are required to scale down and totally remove them under the FTA. An example of an NTB is inconsistent and unreasonable labelling and packaging requirements that impedes free trade across ASEAN.  

Objectives such as free movement of skilled labour and free movement of capital and investment are far from having been achieved. In terms of investment and services, liberalisation of 128 sectors was scheduled to be completed by the end of 2014 but is now delayed to this year. So far, only some sectors such as retail, wholesaling and transport have been opened while banking and insurance have not been opened. 

The benefits of an integrated financial services sector and capital markets should be recognised as fundamental. ASEAN leaders are trying to protect and develop their nascent financial services and capital markets sectors. A lot of time will have been wasted before these minor markets are seen to have failed to attract capital and investment because of their lack of size, liquidity and recognised regulatory standards. 

In terms of which countries have made the most progress toward the AEC, Singapore is the most advanced. It has always been a free and open economy. Other countries are in various stages of being ready, with certain sectors, often termed strategic, still being protected. The least ready are the least developed countries (LDC) that fear being overwhelmed by more efficient neighbours.

What can be done for those countries?. They have to learn from Singapore and optimize their certain sectors in this rest of time. Indonesia also has to support the process as big country in ASEAN. AEC must work out and become benchmark for AAC. If it works, it would bring positive impacts for sovereignty of the Asian African countries.

This essay was participated in Conference on Indonesia Foreign Policy 2015

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