The National Element in Regional Trade Agreements: The Role of Southeast Asian Countries in ASEAN-EU Trade

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Keywords: ASEAN, EU, foreign trade, free trade agreement, regional trade agreement, trade balance.

I. Introduction

This year does not only mark the celebration of the forty years that have passed since the formation of ASEAN, the Association of Southeast Asian Nations, but it is also the thirtieth anniversary of the formalizing of the trade-political dialogue between the ASEAN countries and what was then the European Economic Community (EEC), leading to closer relations between the regions. (1) When these talks were initiated, they symbolized a new period of Southeast Asian-European political and economic contacts, finally breaking away from the colonial past, entering an era of mutual trade on a more equal basis. In 1977, the EEC consisted of nine member countries, while ASEAN comprised six states. Thirty years later, the group of twenty-seven EU member states and ten-member ASEAN are prepared to take the next step in the deepening of mutual economic integration with the decision to start negotiations aiming at an interregional ASEAN-EU free trade agreement (FTA). While the specific design and membership has been widely discussed, (2) the Economic Ministerial Meeting in Brunei on 4 May 2007 concluded that negotiations should be launched for an FTA based on a region-to-region approach, taking into account the different levels of development and capacity of individual ASEAN member countries. It was also agreed that a Joint Committee comprising officials from both regions should be established to develop the details of the modalities, work programme, and time schedule for negotiating the FTA. The ambition is to launch the negotiations some time this year and to conclude them within two years thereafter.

These plans should not be seen as a deviation away from efforts and priorities at the multilateral level, the World Trade Organization (WTO) and the Doha Development Agenda (DDA), to which both parties are first and foremost committed. Rather, they seek complementary ways to facilitate trade and liberalization, as have many other trading partners done since the early 1990s by launching bilateral and regional FTAs (BTAs and RTAs), resulting in 368 FTAs notified to the General Agreement on Tariffs and Trade (GATT)/ WTO, 215 of which are in force (as of December 2006). (3) Critics regard these as a cobweb of rules and regulations, a spaghetti-bowl, or a noodle-soup, of mutually contradictory agreements, resulting in slow and bureaucratic processes and confusion as to how to interpret what tariff rates should apply (see, for example, Bhagwati and Panagariya 2003; Sally 2007). Proponents, on the other hand, stress the complementary nature of these FTAs to the multilateral talks, and the fact that properly designed and ambitious FTAs can create new trade and investment. (4)

While showing support to multilateral talks, ASEAN has, in parallel, over the last few years engaged in a number of different partnership and free trade agreements with China, Japan, Korea, India, Australia/New Zealand, and the United States (see, for example, Lindberg 2006). The EU, on the other hand, has in recent years refrained from engaging in new bilateral and regional FTAs. This position has recently changed as the outlook for the DDA has deteriorated at the same time as other countries have increasingly engaged in signing FTAs with important trading partners of the EU. Hence, the EU has reappraised its standpoint, and recognized that in order for European companies not to risk losing competitiveness it has to integrate its trade policy with its wider approach to competitiveness in a globalized world. This point is highlighted within the "Global Europe" strategy, under which the EU currently sets its agenda for its trade policy. Broad FTAs are here seen as essential complements to the WTO negotiations, as the EU has realized that it needs to look after its interests by means of stronger presence in certain important markets. …