ASEAN health warning: Myanmar stunts your growth
Reuters 11/06/2007
ANALYSIS: ASEAN health warning: Myanmar stunts your growth
By Mark Bendeich
KUALA LUMPUR — Southeast Asia’s diplomatic club is 40 years of age but its growing pains are just beginning — thanks to Myanmar and a plan to adopt a group charter.
The Association of South East Asian Nations (ASEAN) is due to make one of its most adult decisions as an organization this month, when its 10 member states, including Myanmar, plan to sign a common charter and give the grouping a legal identity.
Right now, despite encompassing more than 500 million people and about 6.0 percent of world trade in goods, ASEAN has less standing in law than a golf club or a registered charity.
By adopting a constitution and rules, it aims to become a fully fledged organization, separate from its members but capable of representing them. According to ASEAN, it should strengthen the group internally and improve its external relations.
But diplomats and experts say the risks could be just as large as the rewards for ASEAN, assuming that it takes its new legal identity seriously and adopts a firm charter — a big "if".
For a start, the presence of member state Myanmar, now more than ever an embarrassment to ASEAN after its recent bloody crackdown on pro-democracy protests, would be even more difficult to air-brush out of the picture, they say.
If ASEAN ever moves like the European Union toward common trade and investment policies, the current option of excluding Myanmar from deals will end, a European diplomat said.
"Then, a trade agreement is an either/or proposal. You go into a deal with ASEAN as a single entity and it includes Myanmar, or you don’t go into a deal at all," said Thierry Rommel, the European Commission’s envoy to Malaysia.
And in that case, the decision of such trade partners as the European Union and the United States, which both apply sanctions against Myanmar’s military rulers, could well be — "don’t".
FLEXIBILITY OR FUDGE?
Brussels and Washington have taken steps toward free-trade agreements with ASEAN, but they could be stopped in their tracks if the destination was a deal that had to include Myanmar.
Last month, a member of the European Parliament said the proposed EU-ASEAN trade pact could only be realized if it excluded Myanmar. "It was almost impossible before the recent events. I think it’s completely impossible now for that FTA to include Myanmar," Glyn Ford told reporters in Singapore.
It is already awkward for these two trading giants, which buy 27 percent of ASEAN’s exports and account for a third of its inward direct investment, to sign deals with ASEAN, even though in reality they are collections of bilateral agreements that can be tailored to exclude or differentiate among ASEAN states.
Where the United States has signed an ASEAN agreement with Myanmar as a co-signatory, it has not been legally binding, such as when US Trade Representative Susan Schwab signed a trade and investment framework arrangement with the bloc last year.
When deals are binding, not everyone signs them. Thailand has still not inked ASEAN’s 2005 free-trade pact with South Korea.
ASEAN doesn’t come to the negotiating table with a common position on tariff reduction; it comes with as many as 10, then puts to one side all the products that neither they nor their negotiating partner can agree on.
They end up in "exclusion lists" that can be very long.
"They will all sit together and negotiate as ASEAN but when it comes to listing all products (for free trade), essentially all 10 countries have to come out with a list of goods," a Southeast Asian diplomat said. And all 10 can be different.
In ASEAN, this is known as flexibility and is unlikely to be abandoned anytime soon in favour of a common trade policy, even though a legal identity would give it the vehicle to adopt one.
"I expect bilateralism will continue to rule the day on concrete negotiations," said Natasha Hamilton, political analyst at the National University of Singapore.
"I very much doubt any ASEAN member would want to be tied down to the group’s position on any substantive negotiations."
ASEAN, A TAX DEDUCTION
So why take the ground-breaking step toward a legal identity and a common charter (assuming all 10 ratify it)?
Internally, it could strengthen ASEAN by enabling the secretariat to monitor compliance of member states’ commitment to internal economic agreements like the ASEAN free-trade area and, eventually, an ASEAN economic community.
For outsiders, though, there are fewer tangible benefits from dealing with a "new look" ASEAN that behaves in the same old way — but one stands out: ASEAN donors could claim a tax break.
Currently, donors who help fund an ASEAN development project cannot get a tax deduction because, unlike a registered charity, ASEAN does not legally exist, the Southeast Asian diplomat says.
"Who wants to give money when you can’t get back a tax exemption?" he adds. — Additional reporting by Clarence Fernandez
