3.7 ASEAN and Look East Policy

ASEAN – Most successful model of regional integration in the third world.

Difference in approach of EU and ASEAN
1_EU is intrusive (it imposes lot of conditionalities) on member countries even in domestic sphere. ASEAN follow ASEAN way. It is based on Panchsheel – Non interference in domestic affairs and respect for sovereignty and territorial integrity.
2_EU is supranational (having power that transcends national boundaries.), ASEAN is international.
3_EU has introduced qualified majority whereas ASEAN follows consensus based approach.
4_Both EU and ASEAN are communities. ASEAN has not gone for single currency model, they have currency swap arrangement.
5_In one way ASEAN is more advanced than EU. EU still does not have its charter, ASEAN has its own charter.
6_Both EU and ASEAN have been the stabilizing forces in their regions.

Comparison between ASEAN and SAARC
1_Both are examples of the regional integration in third world.
2_If ASEAN is the most advanced example, SAARC is the worst example of regional integration. According to former foreign secretary S Jaishankar, SAARC is a jammed vehicle. According to C Rajamohan, Pakistan is a camel in the carvaan of SAARC, which slows down the traffic.

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Milestones in ASEAN

Bangkok declaration 1967. 5 Original countries
1_Singapore
2_Malaysia
3_Thailand
4_Philippines
5_Indonesia

ASEAN was seen as pro-US block. With the exception of Indonesia which was non aligned, other countries were pro-US. India was invited to become the original member, however India refused because India didn’t want to be a part of pro-US coalition.

Comparison with South Asia
In 1965 India and Pakistan had gone for war.

1971 – ASEAN countries declare ASEAN as a zone of peace, friendship and neutrality. (ZOPFAN). Why? To avoid arms race.  In the same year, there was a war between India and Pakistan.

1976 – Treaty of Amity and Cooperation (TAC treaty) – All countries will resolve the dispute in a peaceful manner. ASEAN enters into TAC treaty with its partner countries also e.g. India has also signed TAC with ASEAN.
No such treaty exists among the countries of South Asia.

1976 – Bali Concord 1.
The program for social development of ASEAN region. No such program for South Asia.
1977 – ASEAN preferential trading arrangement. In 1997 i.e. After 20 years, SAARC countries entered into SAPTA. (South Asian Preferential Trading Agreement).
1992 – ASEAN free trade agreement.
In 2004 SAARC countries agreed to create SAFTA (South Asian FTA) by year 2016, so far it has not materialized.

1994 – ASEAN regional forum. It is ASEAN’s initiative for regional security. This is the only security dialogue platform in Asia which includes North and South Korea, India and Pakistan.
1995 – ASEAN countries declared ASEAN as a nuclear weapon free zone.
In 1998 India and Pakistan became nuclear weapon states.

1997 – ASEAN adopted vision 2020. They achieved target 5 years earlier, hence the new vision was adopted in 2015.
In 1997 ASEAN free trade agreement in investment.
No such agreement in South Asia

2007 – ASEAN has adopted ASEAN charter.

2015 – ASEAN declared itself as a community with three pillars – Economic (To develop supply chains), Political and security, Social and cultural.

Overall assessment

Thus ASEAN has been a very successful model of regional integration. Intra-ASEAN trade has gone to 25% of their total trade whereas Intra-SAARC trade has stagnated to 5% of the total trade South Asian countries have with the world.
// EU countries have Intra-regional trade of 64% of their total external trade.

Kishore Mahbubani:
ASEAN is an example of pragmatic regionalism. Means instead of blindly imitating European Union, ASEAN countries develop their own model as per the situation prevailing in the region.

ASEAN went for more flexible, consensus based and informal norms. ASEAN way is slower but politically viable. ASEAN never progressed in linear manner. ASEAN movement has been like a crab, but ASEAN progress is tangible.

In his book ASEAN MIRACLE he has suggested that South East Asia has achieved very high degree of peace and stability.

South East Asia is one of the most diverse region.
1_The approx population is 640 million out of which 240 millions are Muslims, 120 millions are Christians, 150 million Buddhist and millions of Hindus and followers of other religion.
2_Similarly per capita income of Singapore is $ 52,936 and that of Laos is $ 1,353.
3_In terms of size of the population Indonesia is a giant with 261 mn people and Brunei is having just a population of 4,50,000.

Even the strategic environment in the region has not been peaceful. Region has been a major theatre of cold war. There have been wars between Vietnam and Cambodia, China and Vietnam, Conflicts between Singapore and Malaysia, Thailand and Philippines, territorial disputes in South China Sea. The region is full of problems from human trafficking to organised crimes.

Academic community was skeptical of success of ASEAN. British historian C A Fisher called the region as ‘Balkans of Asia’. ASEAN defied all skepticism.

ASEAN is the 7th largest economy on track to become 4th largest by 2050. Its GDP was $95bn in 1970 which has become $2.5tn in 2014. ASEAN is the 7th largest market, 3rd largest source of labour. ASEAN has strengthened security in the region. ASEAN has been able to establish itself as a community by following the culture of ‘MUSYAWARAH’ (consultation) & ‘MUFAKAT’ (consensus). EU was once the gold standard whereas ASEAN has become a way of future. ASEAN has not only contributed for the peace and prosperity of its own people but of the entire region in Asia Pacific.

Do you think regional trading agreements are challenges to WTO or building blocks?

It can be seen in both ways.
1_Regional free trade agreements challenge multilateralism because they become preferential arrangements / economic block.
2_Regional free trade agreements are seen as the building blocks of the globalization. First free trade areas in the region and ultimately global free trade area can emerge.

Challenges to ASEAN

1_US China rivalry. Present rivalry is limited to trade war. Trade war will have global ramifications i.e. slowdown of global growth/demand.
2_It is predicted that there is huge possibility of war between the revisionist power (China) and status-quoist power USA (Thucydides trap).

How rivalry is affecting ASEAN?
ASEAN solidarity is breaking down. Why?
1_Trump’s America first policy creates uncertainty in the minds of its allies.  2_USA’s economic decline also reduces the attraction of other countries towards USA. 
3_In such situations, it is natural for ASEAN countries to go for either
a) Bandwagoning with China (Philippines, Laos, Cambodia, Vietnam, Australia). 
b) Balancing – to counterbalance the regional hegemon, some countries of ASEAN region are looking for greater strategic engagement with India.

In the age of multipolarity, there are greater chances of confusion and hence outbreak of wars. The region of South China Sea and Indian Ocean can become a hotspot for the war between India and China.

Besides regional security environment, ASEAN also has some internal issues
1_Regional divide e.g. Singapore is one of the most advanced economies, Myanmar is one of the weakest. 
2_According to IMF report, there are governance challenges which undermine business environment.
i) Some of the families are owning huge enterprises, crony capitalism exists. Similarly in some of the states, there are state controlled enterprises.
ii) The problem of corruption and red tapism. 
iii) There is lack of inclusive growth. 
iv) Failure to control organized crimes

3_One of the two major challenges in front of ASEAN is how to deal with Rohingya issue. Rohingya issue is one of the spin off of US-China rivalry but more of a India China rivalry. One of the reason for Rohingya crisis is to defeat the Indian initiative of BIMSTEC.
4_South China Sea dispute. After huge tensions between China and ASEAN countries, as US pressure is increasing, China has changed its approach. China is willing to be more accommodative. Recently China and ASEAN countries have agreed on the text based negotiations with respect to the resolution dispute in South China Sea. China is also taking the initiative of BRI to attract South East Asian countries as infrastructure development connectivity is a serious concern in the region. Thus from more offensive approach, China is getting mellowed down. The experts of international relations always warn against ‘charm offensives’ of the ‘middle kingdom’.

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India and ASEAN relations

If there is any region where India punches beyond its weight, it is South East Asia. Look East / Act East proved to be the most successful initiative of South Block. Today India is well placed in the economic architecture as well as the security architecture in the region. India is in the process of negotiating RCEP (Which will become the largest regional free trade agreement in the world). Similarly India has been inducted into East Asia Summit even before US and Russia. A lot of credit goes to ASEAN countries in giving such centrality to India in Asia Pacific.

What is the significance of ASEAN in Asia Pacific?

ASEAN is called as the nucleus of Asia Pacific. ASEAN is also called as the gateway of India to the region. We should not ignore the fact that center of gravity of international politics and economy has shifted in the Asia Pacific region. ASEAN is the biggest ally of India in the region.

Timeline of India ASEAN relations.

1967 – When ASEAN was formed and India was invited to be a part of the initiative, India ignored ASEAN

After the end of cold war, as India lost USSR and opened up its economy, there was no positive environment in immediate neighbourhood, India had to look towards the extended neighbourhood. If South Asia forms the first mandal, South East Asia and West Asia come in the second concentric circle.

1992 – India became sectoral dialogue partner. Same year Pakistan also became sectoral dialogue partner.

1996 – India became full dialogue partner.

2002 – India’s status was elevated and India became summit level partner.

ASEAN invited India to be a part of all of its initiatives like ASEAN regional forum, East Asia Summit, ADMM+ and RCEP.

2012 – India and ASEAN have become strategic partners. It is to be noted that Pakistan continues to be sectoral dialogue partner.

2010 – India entered into its first and only regional trading agreement with any block. (AIFTA – ASEAN India Free Trade Area).

2015 – India ASEAN free trade agreement in services.
Significance. There is huge imbalance in India ASEAN trade, which is tilted towards ASEAN. Inclusion of services will play in bringing the balance in the trade.

In 1990 India ASEAN trade was $9.4bn, In 2014-15 it became $76.53bn. (ASEAN China trade is $452.2bn).
In 2017-18, bilateral trade was $81.3bn. Exports from India $34.2bn while imports to India were $47.13bn.

India and ASEAN are also involved in sub regional initiatives like Mekong Ganga Cooperation. India and Thailand are working together for the advancement of CLMV countries (Cambodia, Laos, Myanmar, Vietnam), LDCs of the region. (China also has a similar initiative known as GMR – Greater Mekong Region.)

Mekong Ganga initiative has been India’s strategic initiative to weaken the initiative of China. It was formed in year 2000. The four pillars of cooperation have been education, culture, tourism, transport and communication. Like all other Indian initiatives, it has also been languishing. Thailand became too disappointed and launched its own initiative (Irrawaddy Chaophraya). Modi govt. has given a new lease of life to the platform. In 2016, a plan of action was adopted to expand cooperation in infrastructure, IT, pharmaceuticals and intermediate goods. India has given $2bn LoC to CMLV countries. Mekong and Ganga are known as civilizational rivers, there is huge influence of India in the region, India should give strategic view to the region which is a land bridge to connect further with South East Asia.

Connectivity is the thrust area. The two major projects involving India are Kaladan Multimodal Transit and Transport Project.
India Myanmar Thailand trilateral highway which will start in Moreh (Manipur), Bagan (Myanmar), Maesot (Thailand).

Kaladan Multimodal Project.
It is a $500mn project, connecting Kolkata to Sittwe port of Myanmar. Then through Kaladan river to Paletwa in Chin region of Myanmar. Then via road route to Aizawl in Mizoram. It is expected to operationalized by 2020.

It will reduce distance of 1880 km to mere 900 km to Aizawl from Kolkata.
However the route of the project along Kaladan river and Paletwa port is troubled with Chin conflict, Rohingya conflict and some militant groups.

The India–Myanmar–Thailand (IMT) Trilateral Highway (Friendship Highway)

It is a highway under construction that will connect Moreh, India with Mae Sot, Thailand via Myanmar. The road is expected to boost trade and commerce in the ASEAN–India Free Trade Area, as well as with the rest of Southeast Asia. India has also proposed extending the highway to Cambodia, Laos and Vietnam. The proposed approx 3,200 km (2,000 mi) route from India to Vietnam is known as the East-West Economic Corridor (EWEC).

This trade route will boost India ASEAN trade.

RCEP (Regional Comprehensive Economic Partnership)

10+3+3 members. They are negotiating since 2012 ASEAN summit in Cambodia. The region represents a market of 3.4bn people, a GDP of 49.5 trillion USD. Half of the GDP is that of India and china. It is expected to become 250 trillion by 2050. 75% share will be of India and China. This will be the largest trading block.

Why it has not come into existence?
It was supposed to come into existence by Nov 2018 but India is ‘elephant in the room’. India prime minister has promised that by the next year, we can expect RCEP to come into existence. India is looking for the ‘balanced outcome’. 
i) China and other ASEAN countries are manufacturing hub. India will not be able to compete in trade and goods. 
ii) Australia and New Zealand will give a big competition to India in farming, dairy, horticulture sector. Hence for balanced outcome, it is necessary that India can get service sector liberalization.

India should insist on ‘single undertaking’. India had already suffered because ASEAN countries first undertook ASEAN free trade agreement in goods and later on were reluctant for free trade agreement in services. Existing free trade agreement with ASEAN in services is not very ambitious.

What are the apprehensions of India?
The biggest apprehension is China. FTA with China, with which India already has unsustainable trade imbalance (In 2003-04 $1.1bn, 2016-17  $51.1bn). China continues with unfair trade practices. China follows coercive diplomacy. According to the scholars, trade has transformed India China relations, that there is a peace at borders but there is huge potential that trade imbalance may result into geopolitical conflicts.
In India following sectors are expected to be adversely impacted.
i) Steel, Plastic, Textile, Copper, Aluminum, Machine tools, Chemical and Pharmaceuticals by Chinese policies. 
ii) At present India is not also in a position to liberalize agriculture. RCEP will affect India’s Make in India initiative. Member countries are reluctant against India’s demand with respect to
a) Generic medicines 
b) Keep mining profits within the country. 
c) India does not favour privatization of key sectors like water, energy, transport and telecom. There is opposition to RCEP from civil society, indigenous groups.

Why India should join RCEP?
India will be out of biggest free trade agreement. India is already out of APEC. WTO has no future.
India is not in a position to give concessions. Indian industries are hardly competitive. As tariff walls are increasing, competitiveness is further going to decline.

Views of Rajiv Bhatia (Former Indian ambassador to Myanmar)
Article INDIA’S BALANCING ACT.

With assertive China driving BRI, destructive USA, India has to navigate carefully. Lee Kuan Yew has already suggested that ‘India must be a part of South East Asia’s balance of forces’. It is high time that India should draw to-do list and do some heavy-lifting (There are opportunities for India as China has changed from friendly Panda to fiery dragon.) China no longer export revolutions but has economic weight to subjugate smaller neighbours and impose new form of neo-colonialism.

India must be a part of South East Asia’s balance of forces.

Lee Kuan Yew, former President of Singapore.

Look East Policy of India
Initiated in 1991, it marked strategic shift in India’s perspective of world. Under last government, it was changed from Look East to Act East.

Recently, at the 2018 edition of the Shangri La Dialogue, PM Narendra Modi in his keynote address emphasized the centrality of ASEAN to the newly emerging geopolitical construct of the Indo-Pacific.
He also shared India’s vision of an inclusive, rules-based order taking shape in the region, which, he concluded, is large enough to amicably accommodate the rise of all the stakeholders.
// Rest all things are same for ASEAN and Look East.
1_India’s historical and cultural linkages with region.
2_Hinduism and Buddhism. Non assertive conversion.
3_India helped in decolonization of SEA. But couldn’t do much during Cold War.
4_Several connectivity projects like Kaladan, Friendship Highway etc.
5_Large Indian diaspora in the region.
6_Culture, Commerce, Connectivity : PM Modi. Allocation of $1bn for physical and digital connectivity.

Why China cannot be a world leader? by Ex Diplomat Pinak Chakravarty.
1_ China centric world order cannot be stable and China does not history of hegemon.
2_China’s ‘middle kingdom’ mentality was regional and limited to China’s periphery.
3_Moreover, China is authoritarian state whose default position is not based on democracy or consensus.
4_China has no history of creating and protecting international world order on maintaining public goods.
5_Hence probably we will see a multipolar world order with China, US, India and little bit of Russia and Japan.

Not just look east but act and engage east.

Hillary Clinton in 2011.

Recent development between India and ASEAN
Delhi declaration Jan 2018. It contains 36 paragraphs. 9 paragraphs are devoted to security and political issues, 11 are devoted to social issues, 11 are devoted to economic issues, rest are devoted to connectivity.
Delhi declaration also has some unspoken declarations. India is gearing itself to act east.

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