Sunday, May 08, 2011

ASEAN, Indonesia & Australia

I jotted down Gillard's refugee deal as a quick response to the Australian PM's announcement. Interesting to see the subsequent Australian political and media reaction. I won't comment at this point beyond noting that the commentary jammed the whole thing into past frames.

If the refugee issue achieved major national coverage, the same cannot be said for the 18th ASEAN Summit. There is zero coverage this morning in the on-line editions of both the Australian and the Sydney Morning Herald. If this an example of what I mentioned in India, Australia and Asia, the decline in Australia's interest in Asia or what Michael Wesley calls 'insular internationalists'?

ASEAN has declined in importance, I think, in a general sense. India and China are far more important than they were when Australian interest in ASEAN was at its peak, when Malaysian PM Mahathir kept Australia waiting in the lobbies, blocking increased involvement. Yet you would still think that ASEAN was of sufficient importance as this country's immediate neighbour to warrant some coverage.

In this case I got sufficiently frustrated that I actually went in search of coverage. You will find the official summit web site here.

Necessarily, things such as the present Thai/Cambodian conflict as well as problems with Burma (the generals want their chance to chair ASEAN) affect Summit discussions. However, these things pass. There is also an issue with diplomat speak, the way that discussion at all these international gatherings gets clouded in language that acts to conceal as much as reveal.

In opening the Summit, the Indonesian President suggested that there were three priorities from an Indonesian perspective:     

The three priorities are : to ensure the attainment of concrete progress in realizing the ASEAN Community; to ensure the maintenance of order and condition in the region favorable for the achievement of development objectives,through the East Asia Summit, while maintaining the centrality of ASEAN; and to ensure successful discussion on the urgent need for a "post 2015 ASEAN" vision, namely the role of the ASEAN Community in the  global community of nations."

In the full text of his speech, the Indonesian President referred to the increasingly complex international environment.

ASEAN is responsible to responding to dynamic conflict that may influence the image of ASEAN and sustainable peace in our region.  If conflict occurs, ASEAN must be capable of facilitating a forum for diplomacy and open dialogue with the intent of attaining common peace

He also referred to climate change, to global population growth and to the issues posed for ASEAN by the need for energy and food security. "The competition for energy, for food, and for clean water will become part of the global competition", the President noted.

We need not to forecast what would happen in ten or twenty years in the future, we are already facing food and energy price fluctuations that attend to continue rising globally....

We must give serious attention and take concrete measures to address the soaring of food prices and world energy, which in turn will negatively affect the prosperity of our people. History shows that the rise of food and energy prices usually cause has always caused the increase in the number of people living in poverty. Yet we know very well that decreasing the poverty level is not an easy task.

He went on:

We have just passed the period of global economic and financial crisis that has yet to recover. At the same time, we have to deal with the climate change problem that has been causing damages in littoral and island states, and other countries. We can no longer argue that human migration in large number continues to take place, irregularly and illegally, so that it creates many political, social, security problems, not only in countries of destination, but also in transit countries.

Other serious challenge is concerning disaster striking quite frequently in our region. We realize that our region is prone to disaster. An example of this is the the earthquake and tsunami that struck the eastern part of Japan just two months ago. Thousands of people perished and unaccounted loss of property and infrastructure. That reminds us of the tsunami that devastated Aceh seven years ago where thousands of people lost their lives and  huge material loss.

One of the difficulties I face in interpreting President Susilo Bambang Yudhoyono's remarks and the proposed solutions and actions lies in my own lack of knowledge of some of the structures involved, as well as the power dynamics.

In the midst of all the chaff created by international organisations and by bi- and multi-lateral relations between countries, it can be very hard to identify the wheat at any point in time. However, over time, there is a natural winnowing effect as the chaff drops away.

ASEAN was formed on 8 August 1967. At the time it was formed, there were actually very few real linkages between South East Asian countries. ASEAN gave those countries a voice and influence that they could not have achieved on their own. Further, even though attempts to create closer economic relations between ASEAN countries were initially ineffective, those links did grow with time.

In 1983 I came back to the Australian Department of Industry and Commerce after a period of post graduate study at the University of New England. Then Trade Minister and Deputy PM Doug Anthony had become interested in the question of an Asian Free Trade Area and asked the Bureau of Industry Economics to look at the issue. I was asked to carry out the task, supported by Noel Benjamin from the Bureau.

As we worked our way through the country by country detail of trade patterns and trade barriers including all the ASEAN countries, the difficulties became clear. However, and unexpectedly from my viewpoint, we concluded that such a free trade area would benefit Australia. This was the the dying days of the Fraser Administration, so nothing happened.

As an aside, prior to this I hadn't looked in detail at the economics of either free trade areas or customs unions. One side effect of the study was that it gave me a framework to interpret the economic distributional effects flowing from the creation of an Australian customs union as a consequence of federation. I still use that framework today.

Looking at ASEAN in 1983, the combination of trade flows and trade barriers meant that ASEAN was still a long way from becoming a meaningful economic unit. To some degree, that's still true in 2011. The creation of an ASEAN equivalent of the EU by 2015 remains a complicated task. Yet over the long period since ASEAN was formed in 1967, you can see the progress.

Looking forward, ASEAN, Australia and New Zealand actually share common and complicated problems. The rise first of China and then of India create complex geopolitical issues. The exact relationship of each ASEAN country to the new environment varies, creating new difficulties for ASEAN in achieving common purpose.

I have argued that the relationship between Australia and ASEAN is one of the most important determinants in delineating out future. ANZ plus ASEAN is still large enough to provide a balancing block in a way that neither can do on their own.

Within ASEAN, Indonesia is critical from an Australian perspective because of its size and proximity. We just don't know enough about Indonesia. To illustrate, in his speech, the Indonesian President said:

Of course, it does not end there. There remains a lot that we have to do and work on together. We must make sure that the Master Plan on ASEAN Connectivity can be implemented effectively. In this regard, Indonesia is in the process of finishing the Master Plan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia (Master Plan for Acceleration and Expanded Economic Growth of Indonesia/MP3EI), in order to boost the development of six economic corridors in Indonesia. I believe that what Indonesia is planning to do will boost the national economy and intra-Indonesian connectivity, as well as awaken ASEAN’s economy and speed up the construction of ASEAN connectivity.

Do you know what Indonesia's six economic corridors are? I don't. Yet I suspect that's more important to Australia's future than the question of refugees.


Like me, Winton Bates had not heard of either the six corridors or the master plan. In the end, I did a search.

On trade policy more broadly, Winton referred me to this post by Peter Drysdale, Why Doha Round matters to Asia and the Pacific. There Peter said in part:

What leaders who have it in their power to do this deal must understand is that failure to conclude the Round now will put a stake in the heart of a multilateral system that is in retreat on all fronts, not solely for economic reasons at a critical stage of global recovery from financial and economic crisis, but for deep, geo-political reasons.

Europe is seriously weakened. The Middle East and Africa have brought the world to an intensely unstable moment. Far more importantly, the emergence of China in Asia and the Pacific challenges the established political order.

How does this all matter to the global trading system?

The multilateral trading system is the economic sinew that constrains the exercise of international political muscle in ways that damage global well being and inflicts national self-harm.

Should Doha fail now, there will be powerful momentum to doing other deals of some kind no matter what. In Washington, the Trans Pacific Partnership (TPP) is all the rage. Does it matter if we get yet another pseudo ‘free trade’ agreement, between the US and group of eight partners who in the total scheme of things are pretty insignificant?

Now I really hadn't focused on the Trans Pacific Partnership. I am not sure whether or not it's a good thing. But what I suddenly realised was the extent to which trade policy seems to have vanished from Australian national discussion. That's not a good thing.

The present mining boom is nice, but in the long term Australia's economic survival is best protected by freer trade at at a global level, and that is under threat.

Postscript 2

I hate not knowing things. Tomorrow I will bring up a summary of all of Australia's free trade agreements.

Postscript 3

Australia's Free Trade Agreements provides a list of current Australian free trade agreements.

Winton Bates' Has Australia's media dropped the ball in reporting on Asia and the Pacific? is a companion post to this one, providing Winton's perspective on the issues raised. 


Winton Bates said...

I have no idea what Indonesia's six economic corridors are, Jim. And there is a Master Plan, too. I wonder what it all means.

Perhaps the trade bureaucrats would attract more media attention to such issues if they started negotiating an East-Asia Co-Prosperity Sphere to replace ASEAN. Then again, it might be dangerous to joke about such matters because someone might think I am being serious. Actually, if words mean anything, a Comprehensive Economic Partnership Agreement (as proposed between Australia and Indonesia) sounds more ominous than a Co-prosperity Sphere.

Jokes aside, it seems to me to be good for us to belong to forums ASEAN if neighbouring countries use them to encourage each other to reduce trade barriers across-the-board.

I suppose Indonesia's economic policies would have a larger impact on well-being of Australians than our refugee policies. However, there isn't much we can do about Indonesia's economic polices, so it is not surprising that refugee policies attract more media attention here.

Winton Bates said...

Jim, I have just noticed this post by Peter Drysdale about Doha and TPP on the East-Asia Forum blog. I don't think I have seen much in the papers about the implications of Washington's focus on TPP.

I think discussion of those issues also deserves more media attention than it is getting at the moment.

Jim Belshaw said...

Very interesting comments, Winton. I had never heard of TPP. I had to look it up. I am obviously badly out of touch.

The disappearance of trade policy from national discussion is something that I had noticed in passing, but had not focused on. I guess that trade in general doesn't seem important when everybody is focused on the apparent mining cornucopia - and refugees!