Will ASEAN be the next EU?

The 35th ASEAN Summit came to a close in Bangkok with great success. We are now one step closer toward realizing the ASEAN dream of economic integration with Japan as a development partner.

It will be recalled that back in 2015, ASEAN made a breakthrough toward establishing itself as a single market and a region where companies can operate seamlessly across nations. Tariff rates on goods were cut to between zero and five percent, skilled professionals were allowed to work across borders and capital was allowed to flow freely. This made it possible for ASEAN-based companies to expand regionally. It also attracted scores of investors keen to take advantage of ASEAN’s enormous market of 620 million consumers, the majority of whom are below the age of 30.

The economic integration of 2015, dubbed the ASEAN Economic Community, brought phenomenal wealth to the region. ASEAN has since targeted deeper integration as it moves forward.

I recently sat down with the former ASEAN Deputy Secretary General and former Philippine Permanent Representative to ASEAN, Ambassador Wilfrido Villacorta. Over lunch, we talked about the extent in which ASEAN is set to integrate and whether or not it will follow the model of the European Union (EU).

As the saying goes, “when you know better, you do better.” ASEAN has learned important lessons from the EU and has chosen to chart its own integration path, declared Ambassador Villacorta.

The fundamental difference between the two is that ASEAN was purposely designed as a intergovernmental organization while the EU is structured as a supranational organization.

How are they different? An intergovernmental organization is a grouping of sovereign states bound together by a treaty and who work together for common interest. A supranational organization, on the other hand, is a state created from the unification of smaller states. It is one where members cede certain powers and aspects of their sovereignty to a supranational authority (or central government) like the European Commission.

A supranational authority follows the principle of the greater good. Hence, while it always acts for the greater good of the regional grouping, its actions may sometimes work against the interest of some of its members states.

I reckon the difference between ASEAN and the EU is best exemplified in the manner by which the two make decisions. Approximately 80 percent of EU laws were adopted through majority voting, which requires the consent of 55 percent of member states and 65 percent of the population. In contrast, ASEAN members, big and small, have an equal say in decision making. Decisions require a unanimous vote so as not to undermine the sovereign rights of its members.

As one can tell, sovereignty is jealously protected among ASEAN nations. This is because all have only recently won their liberties from colonial rule and have just started to embark on their own journeys toward nation building. Respect and non-interference in the internal affairs of others is the manner by which ASEAN members choose to work together. It is called the “ASEAN Way.”

Another significant difference between the two is the absence of a supranational authority like the European Commission in ASEAN. Within the EU, the European Commission has the power to slap consequences on member states should they defy the common law. No such entity exists in ASEAN as it prefers to work within a framework of consultation, consensus and voluntary action.

In addition, the ASEAN Way negates the need to finance an entire bureaucracy like the European Commission and its many branch offices. The savings is enormous. In 2017, the EU spent $9.6 billion just to cover the expenses of the European Commission and its agencies. ASEAN spent $20 million.

Ambassador Villacorta and I sum it up this way. A supranational organization like the EU is one that is legalistic, institutionalist and expensive to maintain. However, it is also more regulated, more cohesive and more homogenous. An intergovernmental organization like ASEAN, however, is one that operates according to consultation and mutual consent. While less stringent, it is also plagued with lethargy and still individualistic to its core.

Because ASEAN members are not tied as closely together as EU states are, a situation like “Brexit” is unlikely to occur. No state within ASEAN’s is inclined to break-away to regain control over matters within its own territorial boundaries. Neither will anyone complain about having to spend too much to finance the administration costs of the bloc.

So back to the title of this piece – will ASEAN be the next EU? Yes, in the sense that it will be a powerful economic bloc with enough diplomatic gravitas to influence global policy. However, it will not resemble the EU with the adoption of a common currency, a central government and a single voice in defense matters.  ASEAN will continue to operate as ten sovereign states, each with its own development path.

Moving forward, ASEAN will intensify its cooperation to allow each member state to become more competitive and economically vibrant. More than geopolitics, economics is at the heart of ASEAN’s agenda. Poverty alleviation and improving the quality of lives of our people are still the priority.

Following the success of the ASEAN Economic Community of 2015, new integration goals have been set for the year 2025. The plan is geared toward achieving seamless connectivity across Southeast Asia. This will be done by the interconnection of hard infrastructure (airports, roads and railways); the synchronization of soft infrastructure (government operating systems); strengthening linkages of logistic chains; aligning regulatory policies; and improving the mobility of people, goods, services and capital across boarders.

The future looks bright for Southeast Asia. Collectively, ASEAN is now the eighth largest economy with an average growth rate of 4.7 percent, double that of the EU.

Perhaps when ASEAN members mature to become high income economies as most EU nations are, it can contemplate evolving into a supranational organization. In the meantime, the ASEAN Way works just fine.