CHAPTER 4 FACTS AND FINDINGS

This chapter is based on the findings of the researcher during the course of the research. This chapter has been divided into three broad parts- the first part will deal with the facts about ASEAN; the second part will deal with the relationship between and ASEAN. The third and the final part will address the ‘Results to be obtained’ which the researcher has aimed at achieving at the beginning of this research.

Part 1

1.1. ASEAN

Association of the Southeast Asian Nations in short ASEAN, which was founded on 8th , was the first successful attempt at a regional integration in the bigger Asian context- a joint effort by the five founding members, , , , Singapore and Thailand at a joint effort to promote co-operation and welfare of the people. According to Thanat Khoman, the then Foreign Minister of Thailand, who is one of the Founding Fathers of ASEAN:

“After repeated unsuccessful attempts in the past, this event was a unique achievement, ending the separation and aloofness of the countries of this region that had resulted from colonial times when they were forced by the colonial masters to live in cloisons etanches, shunning contact with the neighbouring countries. In effect this historical event represents the culmination of the decolonization process that had started after World War II” (Khoman, Thanat 1992, p. xviii)

4.1.1. Facts: ASEAN

The researcher has gathered the following facts about ASEAN during the course of this research:

1. ASEAN is an important sub-grouping located within the dynamic region of Southeast , characterized by powerful investment and innovatory capacities of the individual nations. While ASEAN may not provide an essentially economic

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framework at the beginning but its political function and cooperation have formed the paradigms behind its formation. 2. Unlike “where the impetus for integration was generated by the wish to overcome lasting contention amongst the founding members’, the underlying motivation for the creation of ASEAN was driven by external factors, of a political and security nature” (Angresano, James 2006, p.114). Thus, we can say that ASEAN members came together due to political reasons, and were held together due to political fear rather than by a desire to benefit from economic integration. According to Thanat Khoman, “The fact that the Western powers, and Britain, reneged on their pacts with Poland and Czechoslovakia promising protection against external aggression was instrumental in drawing the attention of many countries to the credibility of assurance advanced by large powers to smaller partners. The lesson drawn from such events encouraged weak nations to rely more on neighbourly mutual support than on stronger states that serve their own national interests rather than those of the smaller partners” (Khoman, Thanat 1992) Therefore these smaller nations of decided to join in hand to protect themselves from external factors like, the growing fear of a possible aggression by Vietnam, the growing trend of communism from etc. 3. From the time of its inception, the leaders insisted that economic and political matters should be kept separate. And consequently, the economic interest of the ASEAN members basically remained national. In fact, ASEAN was not established to pursue supranational objectives. At the very first ASEAN Summit in Bali, in 1976, the members signed the Treaty of Amity and Cooperation (TAC) - a non-aggression pact aimed at promoting regional stability. The underlying motive behind this is the determination of the founding states to prevent disputes of any kind erupting among them and in any case if such situation arises, to settle any such disputes by peaceful means. In 1993, the ASEAN Regional Forum was established in order to foster dialogue and consultation on political and security issues while building confidence and preventing diplomacy of any kind in Southeast Asia. And finally in 1995, the integration of the founding five members has been expanded to become 10 including Vietnam. 4. An important fact about ASEAN is that, it is not a alliance. Having no common enemies actual or potential. “ASEAN is not a military alliance or defence pact, although the individual members are free to enter into military arrangements with other countries provided that they don’t threaten the security of the neighbours” (Know Your ASEAN 2007, p. 17). On this issue, S. Rajaratnam, the Foreign Minister of Singapore at the time of inception of ASEAN said that- “We are not against anything or not against anybody. We want to ensure a stable Southeast Asia and not a balkanized Southeast Asia”. 5. The policy of non-interference in the member country’s internal affairs is another important aspect of ASEAN. In fact from its inception ASEAN as an administrative body has been kept quite separately from the internal political affairs of its member nations. “ASEAN’s institutions have been consciously kept diffuse, decentralised, and

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under national control” (Palmer and Reckford 1987, p. 109). It was actually the decision of the Founding Fathers of ASEAN not to go for any institutional framework which can give the potential a major voice in their national affairs. According to James Angresano- the lack of interest in building supranational institutions is also due to the fear that such institutions, in creating a higher level of governance, provide prime vehicles for corruption and the abuse of power. 6. ASEAN’s structure is often being described as a pure intergovernmental organization without any bureaucratic decision making body. This was in accordance with the member nations’ preference to a gradual and pragmatic change and their emphasis placed on maintaining their national sovereignty. “Each ASEAN member states has learned to respect each other’s political system and domestic affairs and appreciate the fact that no single has the right to impose its will on fellow members” (Gramenga 1997). Thus, the decisions made on the ASEAN platform are based on consensus or unanimity and not by taking a vote. However, this doesn’t necessarily mean that every decision has to be categorically and explicitly supported by every one of the member states. The basic philosophy of ASEAN decision making system is that no member opposes the decision making strongly enough so as to register its objection. As a matter of fact in certain cases, some of the ASEAN agreements have been formalized without the ratification of all the signatories. For instance, The Southeast Asian Nuclear Weapon Free Zone treaty required only seven ratifications to enter into force. 7. Owing to its policy of non-interference and the renounce of the use of threat as a mode of managing relation between states, ASEAN has been particularly successful in promoting peace and stability in the Southeast Asian region. It has opposed invasion and occupation as a way of bringing about a change in the neighbouring countries. ASEAN took a leading role in bringing about a political settlement of the Cambodian conflict of 1979-91. According to Thanat Khoman- the effective and successful opposition to the implementation of Vietnam’s Grand Desire, using only diplomatic and political means, won a great deal of plaudits and international credit, lifting it from an insignificant grouping of small countries to a much courted organization with much more important states now seek to have contact and dialogue. Today, ASEAN has engaged the leading powers of the region to manage the affairs of the region in a balanced and constructive way by means of different platforms like, the system of Dialogue Partnership, the ASEAN Regional Forum, the East Asian Summit etc. 8. The history of ASEAN shows hat for the first decade of its existence, ASEAN didn’t paid much focus on the economic aspect of the integration and people believe that the “token economic cooperation that did exists was only a cover for ASEAN’s anti- communist political intentions” (Angresano, James 2006, p. 115). However it was the Oil crisis of 1973 that stimulated the member states to think on the economic lines and it was only during the 1980s, that trade preferences and coordinated industrial policies gained impetus. 9. During the first two decade of its existence, the economic integration efforts were basically modest and fairly ineffective. The reasons behind this are:

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a) The ASEAN member states continued having their own national policies regarding trade, agricultural production, state-owned enterprises, foreign investment and joint ventures. b) Another reason is, until very recently the ASEAN nations “still view themselves as distinct and competitive” (Letiche 2000, p. 285). It was because, the economies of these member countries though are complementary, but until the past few years they have been producing inter-industry goods, such as rubber, oil and other natural resources in an environment that is complementary in the sense of inter-industry. c) The third reason being, these member nations are all relatively small economies and their inclination is more towards the richer trading partners outside the region like , USA and EU. 10. An important fact about ASEAN in these early years of its existence is that, little credit is given to the association for the dramatic improvement in terms of the standard economic indicators of its original member countries. In fact some analysts say that the economic importance of the association [ASEAN] however, could be said to derive more from rapid growth and development performance of some of its member economies, rather than the collective strength and cohesion idem)of the association itself (Angresano, James 2006). Statistics says that the intra-ASEAN trade grew from 3.2 per cent in 1980 to 4 percent in 1990. 11. However, the ASEAN influence in bringing about regional peace and security in the region to facilitate the growth and success of the individual economies can’t be denied. ASEAN’s impetus on peace and regional stability by means of the Treaty of Amity and Cooperation (TAC), peaceful political settlement of the Vietnam issue etc had its positive economic benefits to these individual economies. James Angresano says that in case of Japanese investors, the maintenance of the political stability in the region has been the most important factor stimulating their FDI throughout the ASEAN countries. 12. It was only in 1992, that the proposal for an ASEAN Free Trade area came into prominence owing to the success of the export promotion policies of these individual economies of the member countries which lead to their growth and development. On January 28th 1992 the ASEAN Free Trade Area (AFTA) agreement was signed by the six members including Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand. The main aim of AFTA was : a) To increase ASEAN’s competitive edge as a production base in the world market through the elimination, within ASEAN, of tariff and non-tariffs and b) To attract more foreign direct investment to ASEAN.

The other members of the association joined AFTA later on, like Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia joined in 1999 making AFTA complete with all the 10 members of the association. Today, under the Common Effective Preferential Tariff (CEPT) scheme of AFTA, the intra-regional tariff has been lowered to the tariff range of 0-5 percent for about 80 percent of their products. But for the initial ASEAN -6, (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand) the CEPT-AFTA

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Scheme include more than 99 percent of their products. The products that remain out of the CEPT-AFTA Scheme are those which are in the Highly Sensitive list like rice and those in the General Exception list.

13. The change in ASEAN member’s attitude towards a deepening integration through closer financial cooperation and trade relations can be attributed to the Asian Financial Crisis of 1997-98, which engulfed not only all the countries of Asia but also spread to the entire world. “this attitudinal change was due in part to collective dissatisfaction with both the timing of the IMFs response to the crisis and what Asian countries believed to be inappropriate loan conditions imposed by the IMF” (idem). This has lead to the realization that their financial markets without any supernatural institution is not prepared to manage the global capital flows. 14. It was this dissatisfaction that lead to the formation of the ASEAN+3, an initiative for regional financial arrangements in Chiang Mai, Thailand in May 2000, which includes the ASEAN member countries and the three major powers of Asia- China, Japan and Korea. The prima facie of this agreement was to establish an economic surveillance to reduce the risk of liquidity crises and to manage the regional currency attacks and contagions. 15. This important milestone in the history of ASEAN is known as the Chiang Mai Initiative, which comprises of two important elements. i. The expansion of the existing ASEAN Swap Arrangements in both amount and membership and ii. To create a new network of Bilateral Swap Arrangements among the ASEAN+3 members.

Today, this ASEAN+3 forum is an important platform for a deeper integration of the East Asian region on a formal basis going beyond the border restrictions and pursuing economic benefits as a whole based on investment liberalization, promoting greater competition in the domestic market and harmonizing the established standards and procedures.

16. One important aspect of the ASEAN+3 forum is the proposed Asian Currency Unit, the weighted index of currencies for ASEAN+3 in line with the European Currency Unit now Euro. The proposed ACU is basically a currency basket and not a real currency, a weighted index of the East Asian Currencies that will function as a benchmark for the regional currency movements. Presently, it is under process under the purview of the Asian Development Bank, who is considering the various technical aspect of the ACU calculation, including the nature of the basket, the choice of fixed weights vs. fixed units, the selection of currencies to be included, the criteria for periodical revision etc. 17. The ASEAN+3 which started on the basis of financial cooperation and integration, now has been broadened and deepened to include other aspects such as food and energy security, trade facilitation, disaster management, people-to-people contact, narrowing the development gap, rural development and poverty alleviation, human trafficking, labour movement, communicable diseases, environment and sustainable development and trans-national crime including counter terrorism.

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18. Another important milestone in the history of ASEAN is the East Asian Summit (EAS) - the forum for conducting dialogue and cooperation on the key challenges faced by on a global platform. The EAS which came into existence in 2005 includes all the member states of ASEAN, , China, Japan, Korea, Australia, New Zealand, USA and . The EAS provides a significant opportunity for the leaders to engage on key strategic, political and economic issues of common concern with the aim of promoting stability and economic prosperity in the region. Today, collectively the 18 members EAS represents 55 per cent of the world’s population and account for almost 55 percent of global GDP. 19. One another platform that ASEAN provides for the consultation and dialogue on regional security issues in the light of the evolving configuration of power in the region. Held for the first time in July 1994, it is the only Asia-pacific wide venue for the discussion of security issues where ASEAN invites its observers, Dialogue partners and consultative partners to foster mutual confidence and clarify positions on security issues through consultations and dialogues at the ministerial and senior- official levels. It discusses defence-related confidence building measures such as laws on armed conflict, the conversion of defence industries to civilian purpose, logistic outsourcing and civilian- military relations. It also includes various other issues like- peacekeeping operations, search and rescue, disaster relief, counter-terrorism, transnational crime as well as maritime security. The participating countries in ARF are- the ten member states of ASEAN, the EU, USA, India, China, Japan, North Korea, , Russia, Australia, New Zealand, Canada, Mongolia, Papua New Guinea, Timor Leste, Pakistan and Bangladesh. The latest addition to ARF is Sri Lanka. 20. An important achievement of ASEAN is- converting Southeast Asia as a Nuclear Weapon Free Zone by means of signing the ‘Southeast Asia Nuclear Weapon- Free Zone’ treaty in December 1995 and thereby committing the ASEAN members “not to develop, manufacture or otherwise acquire, possess or have control over nuclear weapons; station or transport nuclear weapons by any means; or test or use nuclear weapons in Southeast Asia” (Know Your ASEAN 2007, p. 22). The ASEAN member nations are thus committed not to dispose of radioactive materials or waste on land, in the sea or in the air or will allow others to do so. ASEAN is currently negotiating with France, Russia, the and the the terms of a protocol in which those states would undertake to respect the terms of the treaty. China, another nuclear weapon state, has already showed its readiness to sign the protocol. 21. ASEAN head of States/Governments at their Summit in Kuala Lumpur in December 1997, envisioned an outward looking Southeast Asia, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring society. Thus, in 2003, the ASEAN member states adopted the ASEAN Concord II (Bali Concord II) to concretise this vision of One Community in the reason called the ASEAN Community 2020. However in the 2007 ASEAN Summit the leaders affirmed their strong commitment to make the dream of ASEAN Community a reality by 2015 only and thus agreed to speed up the process.

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22. This vision of the ASEAN Community 2020 is based on three pillars- the ASEAN Political-Security Community (APSC), the ASEAN Economic Community (AEC) and the ASEAN Socio-Cultural Community (ASCC). 1. ASEAN Political-Security Community (APSC): The APSC will be based on what has already been constructed by ASEAN over the years in the field of political and security cooperation. The objective behind APSC is to ensure that the countries in the region live at peace with one another and with the world in a just, democratic and harmonious environment and thus to establish APSC by 2015 to make it a reality. The APSC envisages the following key points: a) A Rule-based Community of shared values and norms; b) A Cohesive, Peaceful, Stable and Resilient Region with shared responsibility for comprehensive security; and c) A Dynamic and Outward-looking region in an increasingly integrated and interdependent world. 2. ASEAN Economic Community (AEC): The AEC is the final step of the economic integration process of ASEAN, which aims to transform ASEAN into a region with free flow of goods, services, investment, skilled labour as well as the free flow of capital. Taking into consideration the importance of the external trade of ASEAN with the rest of the world, the AEC will remain outward looking and will give ASEAN more bargaining power. In fact the AEC blueprint thus adopted, serves as the logical master plan which guides the firm establishment of AEC. It facilitates the identification of the characteristics and the elements of AEC with clear targets and timelines for the implementation of the various pre-agreed flexibilities which will accommodate the general interest of the ASEAN members. The key characteristics of the proposed AEC are: a) and Production Base: With the very implementation of the AEC, the ASEAN member states will become a single market with a single production base. This will make ASEAN “more dynamic and competitive with new mechanism and measures to strengthen the implementation of its existing economic initiatives, accelerating regional integration in priority sector, facilitating movement of business persons, skilled labours and talents; and strengthening the institutional mechanism of ASEAN” (World Wide Web Document: ASEAN Economic Community Fact book, http://www.aseansec.org/publications/ASEAN_AECFactBook.pdf , accessed on 4th November 2012). This comprises five core elements: i. Free flow of goods ii. Free Flow of services iii. Free flow of investment iv. Free flow of capital and v. Free flow of skilled labour In fact, this will considerably help in the development and growth of the production network in the region and will enhance the ASEAN’s capacity to serve as the global production centre and a part of the global supply chain.

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b) Highly Competitive Economic Region: It implies the creation of a stable and prosperous ASEAN economic region standing in firm competition in the global scenario. “ASEAN Member States have committed themselves to introduce nation-wide competition policies and laws (CPL) to ensure a level playing field and incubate a culture of fair business competition for enhanced regional economic performance in the long run” (idem) . The six core elements of the highly competitive economic region includes: i. Competition policy ii. Consumer protection iii. Intellectual property right iv. Infrastructure development v. Taxation and vi. E-commerce. c) Equitable Economic Development: The basic idea behind this is to help the newer members like Cambodia, Lao PDR, Myanmar and Vietnam to attain quicker economic development and thereby to enable all the member countries of ASEAN to move forward in an unified manner and also to enhance the competitiveness of ASEAN as a whole. The two key elements of Equitable Economic Development includes: i. Small and Medium Enterprises (SME) development and ii. Initiative for ASEAN Integration. d) Integration with Global Economy: In this era of globalization ASEAN doesn’t want to be segregated remain aloof. Thereby AEAN is increasingly operating in an increasingly inter-connected and highly networked global environment. ASEAN perceive that in the near future, in order to enable the ASEAN business to compete internationally with more fervour, to make ASEAN a more dynamic and mainstream global supplier and to ensure that the internal market of ASEAN remains attractive for the foreign investors; ASEAN has to look beyond AEC. The three important steps that ASEAN has to take to accomplish it are: i. A coherent approach towards external economic relations through Free Trade Agreements (FTAs) and ii. A closer economic partnership and iii. Enhanced partnership in the global supply network. 3. ASEAN Socio-Cultural Community (ASCC): The ASCC by 2015 aims to contribute to make realise that the proposed ASEAN Community is people oriented in character and is socially responsible. Its objective is to achieve lasting solidarity and unity among the peoples of the member nations. It seeks to forge a common identity among everyone and to build a caring and sharing society. The ASCC is committed for nurturing the human, cultural and natural resources for sustained development in a harmonized and people-oriented ASEAN.

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23. One major responsibility of ASEAN is to stimulate in the region so that there can be increasing opportunities for jobs and less poverty. Therefore, ASEAN cooperates with the member countries in this vital endeavour in several ways. ASEAN has laid the foundation for regional economic integration through which investors can be attracted by the prospect of a large regional market. It also facilitates its member countries in learning of vocational training from each other in skills needed by a modern economy. 24. Another positive step of ASEAN is the promotion of tourism in the region. It organizes an annual ASEAN Tourism Forum in one of the ASEAN countries by rotation is one of the largest and the most successful tourism events in the world. In 2002, ASEAN concluded a broad tourism agreement that commits them to liberalise the tourism industry, collectively promote tourism and to ensure the safety of the travellers. In order to promote tourism ASEAN has made a Strategic Plan for Tourism during 2011-2015, to grant a common visa for the non-ASEAN arrivals within 5 years. Following this move by ASEAN two of its member states, Thailand and Cambodia has already started granting a common visa to these two countries for the non-ASEAN tourists in February 2012. 25. AEAN has also dedicated its concern for the most urgent environmental problems that Southeast Asia faces periodically that is the haze caused by land and forest fires. Based on the 1995 ASEAN Cooperation Plan on Transboundary Pollution, it has taken many measures like, strengthening the ASEAN Specialized Meteorological Centre in Singapore, work towards a common air quality index and a fire danger rating system. In response to the 1997-98 episodes, ASEAN has adopted a Regional Haze Action Plan which includes a detailed set of measures to prevent land and forest fires and to mitigate their effect. In 2002, ASEAN concluded the Agreement on Transboundary haze Pollution formalizing the parties’ commitments. 26. On the environmental issue, ASEAN has designated 27 protected areas as ASEAN Heritage parks, has also launched a programme for water resource management, set up an ASEAN Centre for biodiversity, established a project to restore degraded forests and ecosystems, agreed on the setting up of marine water quality criteria and has adopted a programme on environmental education and public awareness. 27. ASEAN along with the other partners of the ASEAN+3 framework is working in cooperation with the World Health Organization (WHO) to stop the spread of communicable diseases in the region, like the one that happened in 2003(the SARS Crisis) that struck down lives and ravaged economies in several countries. The anti- SARS measures as adopted by ASEAN and its partners, China, Japan and Korea includes- strict quarantine, thermal screening at airports and common protocol for land, sea and air travel. Moreover, ASEAN and its partners have taken strict measures against a possible pandemic of avian influenza, with Japan funding the vacancies and has also adopted a work plan on HIV/Aids with ASEAN, Australia, China, Japan and Korea collaborating on an Emerging Infectious Disease Programme. 28. Realizing the importance of food security for ASEAN and the world as a whole, at the time of the rising commodity prices and economic uncertainty, ASEAN has focussed on promoting programmes that increases agricultural productivity and production,

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also providing more credit facilities to the agricultural sector and also developing infrastructure in the region in order to have greater market accessibility for the region’s agriculture related products. 29. On its 2007 Summit, ASEAN leaders signed an anti-terrorism convention indicating definitions of terrorism, laying down measures for cooperation in anti-terrorism and specifying the rights of terrorism suspects. ASEAN has also concluded a multilateral treaty on mutual legal assistance to facilitate cooperation against terrorism and transnational crime. 30. In Southeast Asia, the women are generally treated as equal to their male counterpart, but elsewhere the situation is not the same. They are the victims of violence, abuses and crimes. Thus, in 2004, the ASEAN leaders signed the ASEAN Declaration on the Elimination of Violence against Women in the ASEAN Region, thus prohibiting misbehaviour of any kind on women in this part of the world. ASEAN has called for the full implementation of the UN Convention on the Elimination of All Form of Discrimination Against Women.

4.1.2. ASEAN Today

In the present global scenario, ASEAN- which came into existence as a small and young group of Southeast Asian countries to what is now regarded as a potential powerhouse. It has travelled a really long way from a group of five nations to a thriving and leading group of 10 member states in the Southeast Asian region. Moreover with the ASEAN+3 on its move, ASEAN will soon become a major powerhouse of the world. Moreover, if the propose ASEAN+6 framework which includes, ASEAN member countries, China, India, Japan, South Korea, Australia and New Zealand, will launch the world’s biggest free trade market.

1. In 2011, the collective GDP of the ASEAN members valued US $ 2.72 trillion and thus, making up to 3% of the word’s GDP. It has been projected that by 2050, ASEAN is expected to contribute up to 25% of the world’s GDP and will expand by 400%.

Graph 3: Projected GDP of ASEAN by 2050

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Projected GDP of ASEAN by 2050

4,321

2,947 2,058 1,490 1,109

2010 2020 2030 2040 2050

(Source: ASEAN in the World’s Spotlight, May 2012, published by ASEAN Business Intelligence)

2. In recent years, ASEAN has attracted over US $7 trillion worth of Foreign Direct Investment (FDI) and it is likely to increase in the near future. The main attraction for this large inflow of foreign investment in the ASEAN region is its abundant and untapped bases, supporting infrastructure and the growing labour force. 3. ASEAN has been able to gain strategic global attention, both economically and politically. This is exemplified by the fact that 55 countries across the globe have appointed their envoys to ASEAN and this number is showing a growing trend. 4. After the Financial Crisis of 1997-98, ASEAN has come up with two crucial aspects of economic growth. First the proliferation of the bilateral and multilateral Free Trade Agreements (FTAs) and second, possessing an unique and sophisticated production network comprising of both big firms and the SMEs. 5. ASEAN has been signing FTAs with the neighbouring non-ASEAN countries which are known to be world’s biggest powerhouses. For instance, the ASEAN-South Korea FTA came into effect in 2006, the ASEAN-Japan FTA came into effect in 2008 and more recently, the ASEAN-India FTA was signed and came into effect in the early 2010 and this bilateral trade is projected to increase to US $ 100 billion up to 2015. The ASEAN-China FTA also came into effect in 2010, creating a market size of around two billion people or we can say a quarter of the world’s population with trade close to US$ 200 billion. 6. In terms of economic values, these agreements are highly significant for ASEAN since today, ASEAN is the world’s third largest regional agreement after EU and NAFTA and thus these FTAs signed with the emerging economic powers India and

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China, may eventually lead to the replacement of EU and USA as ASEAN’s largest trading partners. 7. The proposed ASEAN Economic Community (AEC) 2015, would be an another milestone for ASEAN because, it would make the whole region as one single market with free flow of goods and services, capital and investment and skilled labour. The AEC would include more than 500 million people and have a combined GDP of more than US $ 700 billion. 8. Also, the proposed ASEAN+6 framework when formulated will represent an staggering economic group. It has been estimated that the combined power of China, India and Japan with ASEAN could create a bilateral trade agreement of worth US $ 8 trillion, representing one quarter of the world’s total GDP and about 40% of its reserves. 9. The Regional Comprehensive Economic Partnership (RCEP) - a joint venture by the ASEAN+6 countries regarding their Free Trade Agreement which is due to be launched by the end this year will be a great opportunity for everyone. It will be the biggest free-trade area in the whole world and will act as an important stepping Stone to achieving the Free Trade Area of the Asia-Pacific before 2020.

Part 2

1.2. Thailand and ASEAN

ASEAN was formed by five countries of the Southeast Asian region namely- Indonesia, Malaysia, Philippines, Singapore and Thailand. Thus, Thailand’s relation with ASEAN can be attributed to its birth and thus Thailand has played a key role in the whole ASEAN concept. As a matter of fact, the very inception of ASEAN took place in , the capital of Thailand on 8th August 1967 and the declaration thus signed by the Founding fathers of ASEAN. Thus it is often referred to as the Bangkok Declaration. The relation of Thailand and ASEAN can be summed up in the following points:

1. Thailand was the only nation in Southeast Asia which escaped the formal colonization of foreign imperialism due to the farsighted wisdom and the political skills of its Monarchs, however, after the Second World War, there was a completely new

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emergence which made it important for the smaller countries to come together to express a sense of solidarity with one another. According to Thanat Khoman, the then Foreign Minister of Thailand and one of the Founding Fathers of ASEAN, the reason behind Thailand’s initial participation was- “for Thailand, in particular, it’s disappointing experience with SEATO taught it the lesson that it was useless and even dangerous to hitch its destiny to distant powers who may cut loose at any moment their ties and obligations with lesser and distant allies”. Thus ASEAN was formed in order to promote peace and stability in the region and to accelerate the process of economic growth, social progress and cultural development in the region through joint endeavours in a spirit of equality and partnership. 2. The Asian Financial crisis of 1997-98, which originated in Thailand and spelled havoc on the Thai economy, was an important indicator for the advantage of being in a regional grouping. The dissatisfaction regarding both the timing of the IMFs response to the crisis and what the Asian believe to be the inappropriate loan conditions imposed by the IMF led to a greater economic and financial integration of the ASEAN countries and the three other big powers of East Asia, namely-China, Japan and Korea. In fact it was after the first meeting of the ASEAN+3 countries in ; a much needed Thai package was given to the crisis-affected Thailand.

Also, an important milestone achieved by these countries after the crisis was the infamous Chiang Mai Initiative which aimed at establishing a regional framework for monetary and financial cooperation. The Chiang Mai Initiative was to strengthen the financial system of these countries by mitigating problems ensuing from unfavourable balance of payments and short term liquidity crisis. 3. ASEAN has been a main pillar of the Thai . With its policy to transform the battlefield in Southeast Asia into a marketplace, it was Thailand who proposed in 1992, the ASEAN Free Trade Area which would transform the entire ASEAN region into one huge market by the year 2003. 4. Thailand has also hosted the first ASEAN Regional Forum (ARF) - the platform for the political and security dialogue which brings together all the major powers in the region. 5. The Kingdom’s strategic geographical location positions it as the heart of ASEAN provides an easy access to the entire ASEAN market- the largest growing economic market of the world. 6. Presently Thailand holds the ASEAN Chairmanship, which came to Thailand on 24th July 2008. What makes this Chairmanship exceptional is that the proposed ASEAN Charter, which the leaders decided to adopt in its Kuala Lumpur Summit in 2005, came into force on 15th December 2008, five months into the Chairmanship of Thailand. With the adoption of the ASEAN Charter, the organization got a legal character. 7. Thailand has always emphasized in making ASEAN a people- oriented and people- centred community and of reinforcing human development and human security for everyone. Thus, to reinforce its firm aspiration to deliver the benefits to all the people

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of ASEAN, the theme of the 14th ASEAN Summit held in Cha-Am Hua Hin, Thailand on 27th February- 1st March 2009 was ‘ASEAN Charter for ASEAN Peoples’. In addition, realising that peoples’ awareness and sense of ownership is crucial for the creation of the ASEAN Community, Thailand had organized the ASEAN Youth Summit to get people of the next generation more involved with ASEAN. Also, it has also initiated formal engagement of the youths by means of ASEAN Inter- Parliamentary Assembly (AIPA) and representatives of the Civil Society Organizations within the region. 8. An another milestone achieved for realizing an ASEAN Community was the establishment of the ASEAN Intergovernmental Commission on Human Rights (AICHR) which was officially inaugurated t the 15th ASEAN Summit and related Summits in Cha-Am Hua Hin in 2009. Thailand Chaired the 1st AICHR meeting and thus the first step was laid down for ensuring that ASEAN will have at its core the interest of its peoples, and that the ASEAN Community which are now to be built will develop into a caring and sharing community where the rights of the people will be ensured. With a positive note on its part, Thailand is all prepared to work closely with all the concerned parties to ensure that AICHR will be a strong pillar for human rights development in ASEAN. 9. Thailand’s ambition to build an ASEAN Community is also reflected in the theme that was chosen for the 15th ASEAN Summit – ‘Enhancing Connectivity, Enhancing Peoples’ which echoes Thailand’s vision that in moving forward with the creation of an ASEAN Community, ASEAN should focus its efforts in three areas- first, creating a Community that is action oriented, second is fostering a Community that is interconnected both physically and through mutual understanding and third, realising the goal of a Community that truly belong to the people of ASEAN. 10. According to the Customs Department of Thailand, the proposed AEC of 2015 will cost Thai government US $ 220 million to $ 252 million as lost revenue a year due to the slashed tariffs. However, it is worth going with the integration process for Thailand because, it will open new avenues and a market of approximately 600 million people. Also, it will also facilitate in making the Thai industries more competitive by exposing them to more competition. 11. Also, the proposed Regional Comprehensive Economic Partnership (RCEP) by the ASEAN+6 countries which is due to be set in motion by end this year will boost the Thai economy by 4.03 per cent. It is because; the proposed RCEP is going to be the biggest Free-Trade Market in the globe. In fact, the six countries, namely- China, India, Japan, South Korea, Australia, New Zealand and the other ASEAN countries together account for 56 per cent of Thailand’s total trade, which is US $ 255 billion. If this regional free trade agreement is successfully executed, Thailand will be able to increase its trade with these countries significantly. 12. In February 2012. Thailand along with Cambodia has started issuing a common visa for the non-ASEAN tourists visiting these two countries. This move by these two ASEAN countries is in accordance with the ASEAN’s Strategic Plan for Tourism during 2011- 2015 to grant a common visa for the non-ASEAN arrivals within five

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years. This model started by Thailand and Cambodia is expected to be extended to Laos and Vietnam by the end of this year. 13. Moreover, owing to its strategic location, Thailand is the base for many foreign trade organizations that are trading with ASEAN, like European ASEAN Business Centre (EABC), whose prime objective is to increase the European Trade and Investment in the region.

Part 3

1.3. Addressing Results to be obtained

This part is going to deal with the results that the researcher aimed to obtain at the beginning of the research.

Result to be obtained 1: ASEAN was initially formed due to Political reasons rather than out of the desire to form economic integration

Result: It is evident from the research that ASEAN was formed due to external factors which were political and security related. The growing fear of communism from the neighbouring China, the potential aggression by Vietnam after their victory in the Vietnam War and the retrieval of the US forces etc were the reasons behind the coming together of the initial five members of ASEAN namely Indonesia, Malaysia, Philippines, Singapore and Thailand.

Hence, this assumption by the researcher, made at the beginning of the research has been accepted.

Result to be obtained 2: ASEAN- the biggest regional block of the South-East Asian region has its own contribution and influence in the Political, Economic, Social and Technological environment of Thailand since its existence.

Result: From the research it is evident that ASEAN didn’t resemble a supranational institution like EU. From the beginning of its existence, the ASEAN leaders have decided to autonomy to the member countries in its internal matters. This was actually the decision of the Founding Fathers of ASEAN not to go for an institutional framework which can give the potential superpowers a major voice in their internal affairs. Thus, the working and policy making of the individual member nations were kept largely decentralized and under national control. The Treaty of Amity and Cooperation is the most important step towards this- a non- aggression pact aimed at promoting regional peace and stability. Therefore it can be concluded that

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 At the beginning the economic, political, social and technological issues of the member states remained national, with each member state learning to respect each other’s national sovereignty and ASEAN was largely replicating a pure intergovernmental organization.  It was after the Asian Financial crisis that the leaders decided to go for a closer economic integration and thereby the ASEAN Free Trade Agreement in 1992 in order to increase the competitive advantage of ASEAN as a whole and to attract more foreign investment to ASEAN.  Now when ASEAN is going for the ASEAN Community in 2015, which will integrate the economies of these ten countries together under one roof, we can expect some sort of changes in the functioning and the principles of ASEAN.

Hence, the assumption made at the beginning can’t be fully accepted

Result to be obtained 3: The future potential of Thailand in terms of its Socio-economic- political and technological front will depend upon ASEAN and the recognition of ASEAN in the global platform.

Result: With the coming up of ASEAN Community in 2015, with its three pillars namely, ASEAN Political-Security Community, ASEAN Economic Community and ASEAN Socio- Cultural Community, we can expect deeper level of integration in the association. In the political scenario, Thailand will be under pressure to come to a logical conclusion regarding its decades long political instability that it is characterized with for peace and stability in a larger context. Since the proposed ASEAN Community is going to project all the ten members as one single entity so these individual members have to collectively cater for peace and stability within the region. Economically it is beneficial for Thailand as it is going to expose Thailand to a single market of 500 million people and make the Thai indigenous industries more competitive. Moreover, the different Free-Trade Agreements that ASEAN has entered into with the other economic powers is also going to help the Thai economy. It is evident in the research that, the proposed RCEP that is going to be launched by the end of this year will boost the Thai economy by 4.03 per cent as it will be the biggest free trade area of the whole world consisting of economic powers like India and China. The ASEAN Community will also have its impact on the socio-cultural as SEAN will be one single entity, which is people oriented in character and is socially responsible.

Therefore, the assumption made at the beginning is accepted.

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