Lecture delivered by Rodolfo C. Severino, Secretary-General

of the Association of Southeast Nations,

at the ARCO Forum of Public Affairs, Kennedy School of Government,

Harvard University, Cambridge, Massachusetts

3 October 2002

            I wish to thank the Kennedy School of Government for this invitation to take part in the ARCO Forum.  I would like to talk about Southeast Asia and the association in which the countries of that area have chosen to organize themselves regionally, the Association of Southeast Asian Nations.

            First, a few facts, just to put things in some perspective.  The ten countries of Southeast Asia, now all members of ASEAN, have more than 520 million people, about half the population of China or India, a combined gross domestic product of US$556 billion, about the same as China�s.  Southeast Asia straddles the sea lanes between East Asia and Europe and the Middle East.  It is a region of immense diversity, any way you look at it.  Its people speak a Babel of languages, although the elites use English to communicate with one another.  Most of them adhere to Islam, Hinduism, Christianity, or the two major branches of Buddhism, but to numerous versions of each of these religions, plus any number of indigenous ones.  Southeast Asia has an enormous variety of plant and animal life -- tens of thousands of plant and animal species � some 25 percent of the world�s bird species, 23 percent of its mammals, and 18 percent of its plants.  The list is growing as more species are discovered.  The region makes up a rich tapestry of cultures.

            Like most other regions of the world, Southeast Asia has had its share of wars � centuries of them � mostly between the great kingdoms of the mainland and between the smaller sultanates and tribes of maritime Southeast Asia.  And, of course, between them and the colonial powers of the West.  But the area now seems to have entered an era of regional peace.

            Amidst their great diversity of cultures, religions, languages, historical experiences and natural endowments, and a history of conflict, the countries of Southeast Asia seem in recent decades to have found enough affinity and enough interests in common to work together in many areas of endeavor to the point of aspiring to become a free-trade area or even an integrated economy and all that that implies.

            There is one other fact about the Southeast Asia of recent decades, and that is the remarkable economic dynamism of the region.  The members of ASEAN have deliberately adopted a market-driven approach to development, although not without some direction from the state.  They have consciously kept themselves open to and actively linked with the rest of the world, with largely open trading regimes and a welcoming stance toward foreign direct investment.  Private enterprise and entrepreneurship have been encouraged.

            The result was the rapid economic growth rates from the 1980s to the onset of the financial crisis in 1997.  In the period 1988 to 1996, the average real GDP expansion of Indonesia, Malaysia, the Philippines, Singapore and Thailand hit between 6.3 and 9.2 percent, probably the highest of any region in the world.  The financial crisis of 1997 and 1998 ravaged most of the economies of the region and called into question the Southeast Asian � indeed, the East Asian � model of development.  But then, with adjustments and reforms, the now-ten ASEAN members expect regional economic growth to average 3.5 to four percent this year, a respectable rate in a sluggish global economy.

            According to the US-ASEAN Business Council, Southeast Asia is today the fifth largest export market of the United States, behind only Canada, the European Union, Mexico and Japan.  U. S. exports to ASEAN amounted to US$47 billion in 2000, three times the exports of the U. S. to China.  U. S. investments in ASEAN are larger than those in Mexico or Brazil and about the same as U. S. investments in Japan.

            What is ASEAN�s role in Southeast Asia�s development?  What value does ASEAN add to it?  Let us look back at ASEAN�s history.  I would look at that history as having two stages.  The first was the period of consolidation and stabilization, the 25 years from ASEAN�s founding in 1967 to about 1992.  The second stage is the period since then, a time when ASEAN has been expanding the area of stabilization, moving on the road to regional economic integration, and seeking regional solutions for regional problems.

First Stage

            ASEAN was founded in unpromising circumstances.  Or, perhaps, it was because things were so inauspicious that Indonesia, Malaysia, the Philippines, Singapore and Thailand found it necessary to get together in a regional association.  Indonesia had just undergone a traumatic change of regimes and emerged from a period of confrontation with Malaysia and Singapore.  Malaysia and Singapore had just been through an acrimonious separation.  The Philippines was continuing to pursue its claim to Sabah and was being challenged by an internal insurgency that it perceived was somehow connected to events in China, then in the throes of the Cultural Revolution, and in Vietnam.  Thailand felt threatened by the communist regimes next door and a communist insurgency in its own Northeast.

            It was in this situation � indeed, it was in response to it � that the five countries formed ASEAN, after several previous attempts at various forms of regional association.  They did so in order to provide a regional framework and environment in which disputes could be dealt with peacefully, without resort to force.  They gathered together partly as a hedge against further embroilment in the rivalries of powers much stronger than they.  Even then, even with Indochina in turmoil and in the tightening grip of communism, and with Burma determined to stay out of international organizations, ASEAN was from the beginning declared open for membership to all countries in Southeast Asia.

            In the meantime, Southeast Asia remained divided between ASEAN�s then-five members and the rest.  By 1975, Vietnam had been reunited under Hanoi, Cambodia had fallen under communist rule, and Laos stayed firmly allied to Vietnam.  Burma remained outside these developments.  The situation was complicated by the 1978 Vietnamese invasion of Cambodia.  With support from China, the United States and a majority in the United Nations, ASEAN opposed this use of external force against a country by a more militarily powerful neighbor, even as it dealt with the hordes of �boat people� that fled the turmoil in the former Indochinese area.

            Thus, in its first quarter-century, ASEAN sought to stabilize the region by consolidating the foundations and processes of the association, providing a framework and an environment for peaceful relations among its members, and taking a leading part in the management of the new situation that emerged from the Vietnam war.

Second Stage

            ASEAN entered its next and present stage around 1992.  By then, the Cambodian question had been settled.  The Cold War had ended with the fall of the Berlin Wall, the break-up of the USSR, and the toppling of communist power in Russia.  China was rapidly opening itself up to the world economy and within its own society.  The Rio Earth Summit brought to the world�s collective consciousness the fragility of the global environment and its relationship to development.  The international community was beginning to confront new problems that transcended national boundaries, like HIV/AIDS, and old ones like trafficking in drugs and people.  Not least, the combination of technology, international agreement, state policy and corporate action that is shaping the current phenomenon referred to as globalization was gathering momentum.

            The ASEAN response to this new situation was three-fold.  It expanded the region of stability that was the subject of its immediate concern.  It embarked on the integration of the regional economy.  It stepped up its efforts to work out regional solutions to regional problems.

            The end of the Cold War and the events leading to it dissolved the regional security configuration in East Asia, with nothing to replace it.  With formal alliances losing their old prominence, East Asia and the Pacific, at the very least, needed a forum in which to talk about regional security issues in the new situation and, after years of conflict and mutual suspicion, build confidence among the countries of the region and other powers with interests in it.  Responding to this need, ASEAN, in 1994, gathered into what it called the ASEAN Regional Forum its then Dialogue Partners � Australia, Canada, the European Union, Japan, South Korea, New Zealand, and the United States � its observer Papua New Guinea, its future Dialogue Partners, China and Russia, and later, as it became another Dialogue Partner, India, and finally Mongolia and North Korea.

            Meanwhile, ASEAN brought into membership the remaining countries of Southeast Asia � Vietnam in 1995, Laos and Myanmar in 1997 and Cambodia in 1999.   This not only realized the vision of ASEAN�s founders; it also responded to the strategic imperative for Southeast Asians to heal the divisions of the past and together deal with the challenges coming from the new security situation in the region and from the gathering momentum of globalization.

            In the beginning of the 1990s, the countries of Southeast Asia recognized that they had to plug more firmly into the globalizing world economy if they were to survive the inevitable onslaught of competition and take their share of the expanding global economy.  After all, the market economies of Southeast Asia had achieved their phenomenal growth on the strength of their openness to foreign trade and foreign direct investment.  They also recognized that they had to move together and integrate the regional economy if they were to compete successfully for markets and investments.

            Thus, at its summit meeting in 1992, ASEAN decided to make itself into a free trade area by a certain date, essentially by reducing and eventually abolishing tariff and non-tariff barriers to trade among themselves.  At the beginning of this year, ASEAN largely achieved its target, which had been twice advanced, of dropping tariffs to no more than five percent or eliminating them altogether on trade among the six original signatories to the AFTA agreement, which happen to be the region�s leading trading nations � Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

            Integrating the regional economy, of course, calls for more than tariff-cutting among the six more economically advanced countries.  The four newer members have to move faster in taking down their own tariffs.  All have to chip away at the non-tariff barriers among themselves.  Customs procedures have to be streamlined and coordinated.  Product standards have to be harmonized.  Transportation links � aviation, sea transport, highways and railways, gas pipelines � have to be welded together if goods are to move more freely within the region.  A regional approach to the development and use of information technology has to be taken.  Not least, ASEAN countries have to free up trade in services � finance, business services, construction, communications, transport, tourism and so on � among themselves.  We are working on all of this, but progress, for a variety of reasons, has been slow.

            Meanwhile, certain problems have arisen that transcend national boundaries and, therefore, have to be dealt with regionally � the environment, particularly the haze that arises periodically from a combination of natural forces and human activity, HIV/AIDS and other communicable diseases, drug-trafficking, the trafficking in people and other transnational crimes, and now terrorism.  ASEAN cooperates in all these areas.

The Third Stage?

            What next for ASEAN?  ASEAN�s stage of regional stabilization and consolidation took twenty-five years.  It has been ten years since the association embarked on the stage of expanding the scope of regional stabilization, integrating the regional economy, and strengthening regional cooperation.  It is time for ASEAN to go on to the next stage � the stage of competitiveness.

            For ASEAN to compete in the global economy today, the regional economy has to be brought to a much deeper and broader state of integration than its members have so far been willing to undertake.  This has become urgent with the rapid rise of continent-sized economies like China and India, with their increasing openness, attractiveness to investors and greater economic vigor, and other integrating markets like Mercosur.  ASEAN has publicly expressed alarm over the trend, in East Asia, of new foreign direct investment flowing in increasing volumes to China instead of to ASEAN as in the past.  The fact is that ASEAN is perceived to be far from the level of integration of China�s national economy, with its huge population and rapid growth.

Political Decisions, Political Consequences

            From this concern arises a renewed ASEAN resolve to deepen and broaden its economic integration.  The question is whether the ASEAN countries are willing to make the political decisions to bring this about.  The regional economic integration required for ASEAN to be competitive has implications far beyond the merely economic.  Not only are political decisions required for regional economic integration and competitiveness; economic integration will have important political consequences.

            For example, closer regional integration would require stronger regional institutions with greater authority than the ASEAN Secretariat is currently allowed to wield � more-binding economic agreements, the standardization of products and of safety and environmental requirements, the coordination of national policies, the authority to ensure compliance with such agreements and measures, the power to adjudicate disputes.  This would mean voluntarily ceding a measure of sovereignty for regional purposes.  This would, in turn, call for a sufficiently high degree of mutual trust among member-states.  Mutual trust would, in turn, have to derive from a deeply felt sense of community and popular support for regionalism.  As it is, pressures for regional economic integration come mainly from Japanese and American business rather than from ASEAN enterprises, much less from the ASEAN public.

            ASEAN would also have to strengthen its protection of intellectual property and bring down levels of official and corporate corruption, areas where it might have an advantage over China in the competition for foreign investment.  Regional economic integration is intended to improve ASEAN�s attractiveness to investments, but individual ASEAN members still have to compete for those investments among themselves.  This would mean strengthening those factors that make them individually attractive � the rule of law, predictable policies, respect for contracts, an independent judiciary, adequate infrastructure, accessibility in terms of transportation and communications, a commitment to training and education, stability and security in the country as well as in the region.  All this would tend to standardize norms of governance in an upward direction.

            One thing ASEAN has going for it is its policy of tightening economic links with other countries and groups of countries.  It is about to conclude with China an agreement to build an ASEAN-China free trade area.  It is working on deepening its long-established economic ties with Japan.  It is developing measures to facilitate trade with Australia and New Zealand and remove obstacles to that trade.  It is studying a proposal from the United States business community for an ASEAN-US free trade area.  It is exploring linkages with India as well.  All this would help ASEAN in its drive for competitiveness.

            At the same time, ASEAN will have to cooperate much more closely and more actively in such areas as the environment, HIV/AIDS and other communicable diseases, trafficking in drugs and people and other transnational crimes.  Such cooperation is necessary not only for its own sake but also for the sake of strengthening the foundations for regionalism and cultivating the mutual trust necessary for further economic integration.  In the end, an integrated and competitive ASEAN would bolster regional stability and fortify its influence in the world.

            For ASEAN, then, the question today is whether its members have the vision and political fortitude to take the steps necessary to move to the next stage in its history.