Readying for ASEAN integration

is the subject of my Trade Tripper column for this Friday-Saturday issue of BusinessWorld:

The big news as far as trade in this region is concerned is the coming ASEAN economic integration, scheduled to occur in 2015. People are understandably excited about this, of course, seeing the ASEAN Economic Community (AEC) as some sort of an Asian European Community, generating visions of cosmopolitanism among the residents of the 10 ASEAN countries, as well as the considerable economic benefits.

The problem is that, although the AEC could bring benefits (though debates on that point has been extensive), the questions that we should be asking are: what benefits the Philippines expects to receive from the AEC and, if there are, are we actually ready to receive them?

It must be remembered that the AEC will be embodied in an international agreement, meaning international obligations that we need to comply with. It’s no accident that, except for the Philippines (which has always been enthusiastic for any new international agreement), the countries most enthusiastic for these things have one thing in common: strong economies that keep getting stronger. The Philippines is not in that league. At least not yet. Note that our utilization of ASEAN-CEPT (Common Effective Preferential Tariff) benefits consistently only amount to around 20% of our trade. This does not provide a pretty picture insofar as our ability to take advantage of international rules considering the fact that we had to concede something in order to qualify for those probable benefits.

Of course, people are also crowing about the fact that Philippine competitiveness levels have improved (slightly). But this improvement cannot really be considered something to boast about, as the Anti-Pinoy Blog (“The Philippines Competitiveness Rankings, Unemployment, and FDI”; Sept. 5, 2013) rightly observed:

“... the Philippines has not reduced unemployment nor attracted substantial foreign direct investments, and still remains greatly less competitive than Singapore, Brunei, Malaysia, Thailand, and Indonesia.

“It is also interesting that the Philippines has a competitiveness footprint similar to Vietnam -- a socialist country although Vietnam still beats the Philippines in terms of attracting FDI and reducing unemployment.

“So yes, it is good that competitiveness has improved -- BUT the improvement is not enough to allow us to catch up with Malaysia, Indonesia, Thailand, and Singapore.”

The Anti-Pinoy Blog does make one suggestion for improving competitiveness: “Opening the economy will allow the Philippines to greatly improve its economy, attract investments, create jobs, and reduce unemployment -- as shown by our ASEAN neighbors and competitors.” It is a suggestion that your Trade Tripper would normally agree with. But now, only with reservations.

The reason has to do with a point made by Asian affairs commentator Sourav Roy (“ASEAN: What’s That and Who Cares? Certainly Not the Common Man in Asia”; Sept. 10, 2013): “...there’s something uber-fake about the pseudo ‘one-ASEAN-one direction’ jingoism that gets my goat. It exists only in the topmost echelons of Southeast Asia’s political, diplomatic, academic and media circles. The common man in almost all its 10-member nations has no clue what ASEAN is about. We’re talking here about millions of illiterate, poor, underprivileged Asians who are in the thick of the situation, happy to progress in life, one day after another.”

And I completely agree with his observation that “most of the educated knew that ASEAN was a regional grouping and nothing more meaningful than that.”

I’ve been in this field long enough to know that, generally, when it comes to trade our (i.e., the government’s and business’) institutional memory, quality, and quantity of knowledge, and capacity for planning has consistently fallen short. That’s why I believe that Philippa Dee’s (“Time to Rethink the Global Rules”, East Asia Forum, Aug. 19, 2013) trenchant observation must be truly pondered upon: “The bigger trade problems are not at the border but behind it.”

Thus my issue with unleashing on our people an agreement that not only has a legal textual intricacy that will make our tax laws seem like grade school work but also a multi-disciplinary (economic, social, political, health) complexity that approaches the metaphysical. Because it must be remembered that, despite the homogeneity of cultures within ASEAN, the Philippines will essentially have to trade and interact heavily with countries whose philosophies on the rule of law, human rights, and democracy are different than ours.

And that has to be related to the fact that the Philippines is essentially a very “nice” country, nice almost to a fault. Which is a problem considering ASEAN’s lack of a credible dispute settlement system that our country could turn to protect its rights. Which is why Joshua Kurlantzick (“ASEAN’s Future and Asian Integration”; November 2012) pointed out: “Most Western leaders and even many of Southeast Asia’s top officials do not consider the organization capable of handling serious economic or security challenges, including disputes in the South China Sea.”

As I said before and I’ll say again: we need to exercise better circumspection regarding ASEAN integration. We might just be leading in the preparation of a feast that only others can enjoy.