IKONOKLAST: ASEAN TRADE LIBERALIZATION, PREPS FOR 2015 UNION

Republished article, to drumbeat the need for more intratrade within the region. This is instrumental in creating the economic union by 2015.

ASEAN TRADE LIBERALIZATION, PREPS FOR 2015 UNION

Erle Frayne Argonza y Delago

Will the ASEAN ever achieve economic integration that its member states have long dreamed of? Being an advocate of ASEAN unification, let me once more share thoughts about my humble region.

Binding rules of tariff reforms are now in the offing for implementation this year across the region, a proof that the unification efforts are going on despite internal barriers. The original ASEAN 5 –Philippines, Indonesia, Malaysia, Singapore, Thailand—are the most prepared for execution of the rules, while Brunei can test-case them as it has the resources to cushion off negative repercussions if ever.

Agreed, the continental countries that are catching up in their development—Vietnam, Cambodia, Myanmar, Laos—need some breather space of five (5) more years to be considered as executors of the same rules. They can catch up, rest assured, so collective trust should permit their self-confidence to propel themselves to high growth.

Economic integration can induce enormous growth and fast-track development in the region altogether. Pushing through with the integration would yield a result that no more member country would be poor by as early as 2020. In other worlds, every country would move on to middle income country status, fast-tracked in its growth momentum by the economic union.

Integration would go beyond tariff reforms, for a reminder. An economic union would need central institutions to note: (a) central bank, (b) regional currency, and (c) related regulatory institutions. Governance institutions, such as a regional parliament and executive council, can undergo deeper study and preparatory formation right after 2015 (political union will take a longer time to traverse).

As to a regional currency, do note that Asian countries have already agreed on a resolution to create an Asian Monetary Fund and an Asian currency. The former speaker of the Philippines’ House of Representatives, Speaker De Venecia, was a prime mover in getting the Asian states to agree on the matter. With him out of power now in the legislature, some other key personalities in Asia should take on the cudgels for implementing the resolutions.

There are surely kinks to be resolved in matters pertaining to economic sector priorities. ASEAN countries tend to compete with one another in certain manufactures and services, so the resolutions could yield an elimination of competition and/or concurring cooperation among the competitors concerned.

ASEAN integration is coming at a time of an evolving paradigm of mixed land use. This paradigm, on a macro-level, could justify well the existence of all key manufacturing and services in a member country, thus undercutting complaints about competition across borders.

Population-wise, the ASEAN will be 700 million head-strong before 2015, which renders the region as a gigantic one. Imagine if just half of the population will be middle income in status, the class that can sustain consumer spending across time. That would be a 350-million head count serving as the economic powerhouse at the household level!

In terms of aggregated Gross National Product or GNP, the figure is nearing $3 Trillions for the region. The prospect of the ASEAN overtaking Japan is no longer remote, a possibility that can happen before 2020. Such a possibility, however, can best happen should economic integration take place as scheduled, an eventuality that will render more focused managing of economic policies and governance reforms that will fast-track growth & development.

Meantime, we can only wish for now that the trade reforms will push through, thus resulting to a semi-integrated economy. The semi-integration will produce pronto a context of ‘import-substitution’ on a regional scale, which I think is a long-overdue goal in the region.

From hereon, ASEAN has only over four (4) years to resolve the last kinks, study the integration directions inclusive of institutional designs. It will be 2011 in just two months’ time, with we hope will be another auspicious year for the humble region and its noblesse diplomats, experts, and leaders.

[Philippines, 03 November 2010]

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