Growing Together: Economic Integration for an Inclusive and - escap

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CHAPTER ONE 13 The case for regional economic integration in Asia and the Pacific Similarly, the South Asian Association for Regional Cooperation (SAARC) came into being in 1985 but did not adopt a programme of economic cooperation until 1991 when it formed the Committee on Economic Cooperation. In 1995, the members created a SAARC Preferential Trading Agreement and in 2004, they eventually agreed to create a SAARC Free Trade Area to be implemented over 10 years starting in 2006. At a summit in Bhutan in 2010, SAARC members adopted a SAARC Agreement on Trade in Services and established the SAARC Development Fund. Another notable initiative is the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). This spans two subregions: from South Asia, it includes Bangladesh, Bhutan, India, Nepal and Sri Lanka and from South-East Asia, Myanmar and Thailand. In 2004, BIMSTEC adopted a framework agreement for a free trade agreement to be implemented within 10 years. Initiatives in other subregions include the Economic Cooperation Organization (ECO), initially formed in 1985 by the Islamic Republic of Iran, Pakistan and Turkey, but later expanded to include Afghanistan and six Central Asian countries – Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. In 2003, the members established the ECO Trade Agreement. In the Pacific, what is now the Pacific Islands Forum (PIF) was set up in 1971 and has 16 member States, including Australia and New Zealand and 14 independent Pacific island developing economies. In 2006, within the framework of the 2001 Pacific Agreement for Closer Economic Relations, 12 members of PIF, also signed the Pacific Island Countries Trade Agreement. These subregional agreements are complemented by a number of bilateral trade agreements between countries of the subregions and across the subregions. Seeking broader regionalism As observed earlier, the complementarities and synergies between subregions are generally greater than those within subregions. Therefore, for capital, people and natural resources to be deployed optimally, they should be able to work within a broader regional framework. 44 This can be achieved by coalescing bilateral and subregional FTAs. In this respect, ASEAN has taken some exemplary initiatives to bring together countries from different subregions. Since 2002, ASEAN has upgraded its dialogue partnerships with neighbouring countries to an annual summit level that has fostered numerous arrangements for regional and bilateral free trade that are at different levels of implementation. It has, for example, negotiated “+1” RTAs with Australia, China, India, Japan, New Zealand and the Republic of Korea. These economies are also engaging each other – for instance, through the India-Japan and the India-Republic of Korea comprehensive economic partnership agreements, already concluded. ASEAN’s engagement with dialogue partners has also led to broader groupings. Besides ASEAN+3, it also organizes an annual East Asia Summit (EAS) which involves ASEAN and all its dialogue partners. EAS, which brings together 16 of the largest and fastest-growing economies, is expected to pave the way for a broader regional arrangement in Asia that could be the third pole of the world economy. 45 In 2007, the EAS leaders launched a track-II study group for examining the feasibility of a Comprehensive Economic Partnership of East Asia (CEPEA) comprising 16 (ASEAN 10 +6) countries whose results were presented at the fifth EAS summit in 2009. At the Bali Summit in November 2011, two new members were admitted to EAS – the United States and the Russian Federation. A further indication of the growing recognition of broader regional economic integration in Asia and the Pacific is that the region’s leaders have articulated their visions of a broader Asia- Pacific community allowing exploitation of the region’s vast synergies for mutual benefit (box I.1). The past decade has also witnessed a steady stream of studies making the case for broader regionalism in Asia and the Pacific, including by the Asian Development Bank. 46 Gains from economic integration A number of recent studies have indicated the potential gains from economic integration.
An ADB study, for example, compared the impact of regional integration with global trade liberalization under different scenarios to 2025. 47 Using the Global Trade Analysis Project database with the World Bank’s LINKAGE model, the study found that regional trade and integration could offer great potential. It also concluded that much of the gains in Asia from global trade liberalization could be realized by a regional initiative alone. Significantly, it ascertained that the gains from abolishing global tariffs BOX I.1. Asia-Pacific leaders’ statements on broader regionalism Dr. Manmohan Singh, Prime Minister of India, said at the Third India- ASEAN Business Summit in New Delhi on 19 October 2004: “We envision an Asian Economic Community. (…) Such a community would release enormous creative energies of our people. One cannot but be captivated by the vision of an integrated market, spanning the distance from the Himalayas to the Pacific Ocean, linked by efficient road, rail, air and shipping services. This community of nations would constitute an ‘arc of advantage’, across which there would be large-scale movement of people, capital, ideas, and creativity. (…)This is an idea whose time is fast approaching, and we must be prepared for it collectively.” The Chairman’s Statement at the Fourth East Asia Summit in Chaam Hua Hin, Thailand on 25 October 2009 included the following passage: “We acknowledged the importance of regional discussions to examine ways to advance the stability and prosperity of the Asia- Pacific region. In this connection, we noted with appreciation the following: a. the Philippines’s proposal to invite the heads of other regional fora and organizations in Asia-Pacific to future EAS meetings to discuss measures that will protect the region from future economic and financial crisis and strengthen Asia economic cooperation, including through the possible establishment of an economic community of Asia. b. Japan’s new proposal to reinvigorate the discussion towards building, in the long run, an East Asian community based on the principle of openness, transparency and inclusiveness and functional cooperation. c. Australia’s proposal on the Asia Pacific community in which ASEAN will be at its core, will be further discussed at a 1.5 track conference to be organized by Australia in December 2009. “ Sources: Singh (2004), East Asia Summit (2009), emphasis added. 14
Page 4 and 5: ii Photo by Warren Field
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Page 12 and 13: x FIGURES I.1. Real rates of growth
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CHAPTER THREE 63 Building seamless
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CHAPTER THREE 89 29 EIA, 2010b. 30
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CHAPTER FOUR 91 Enhancing regional
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CHAPTER SIX 135 Towards an inclusiv
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CHAPTER SIX 137 Towards an inclusiv
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139 Annex Technical notes Photo by
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References 145 Photo by Warren Fiel
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References 147 __________ (2009). E
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References 149 Brenner, Cath (2009)
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References 151 __________ (2010b).
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References 153 Hertel, T., ed. (199
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References 157 Quah, Danny (2010).
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References 161 United Nations, Econ
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