Political Economy of East Asian Financial and Economic Regionalism

The economic regional integration that has developed in East Asia since the mid-1980s is one of the
most unique cases in the study of the International Political Economy. With the powers in the region
Japan, South Korea, and China establishing economic links with the smaller Southeast Asian nations we
are entering an age where economic regionalism could potentially supplement the functions of the
major financial institutions where regional economics is the concern. Economic regionalism entails
preferential agreements and/or ties in economic affairs among a group of nations located in the same
geographic area. (Cai, 29, 2010).

Political and economic developments in East Asia in the 1960s and 70s, such as the normalization of
relations between Japan and South Korea, and the entrance of China into the regional and international
economy, paved the way for new regional cooperation initiatives throughout the region (Cai 91, 2010).
On the Southeast Asian side, the main regional grouping, ASEAN, was shifting focus from peacekeeping
in regional conflicts to further its economic ties with the three powers (Acharya 23, 2002). Former
political enemies in the region reconciled or at least normalized relations, and the stage was set for a
regional grouping in Asia that had the presence of some of the most developed economies in the world.
Credit must be given to the Southeast Asian nations, as this was a region known by many scholars as the
Balkans of the East, meaning there was high potential for conflict there, owing to the many people
living there with disparate ethnicities and religions. So to put all of that aside for the common economic
good is commendable.

Naturally, the entrance of the big three would see a jostling for influence over their smaller partners.
The inclusion of China, Japan, and South Korea into the regional grouping ASEAN Plus Three (APT) which
also consists of the ASEAN member states have created a financial architecture in Southeast Asia in
which these three regional power seem to have more desire compete with one another rather than
contributing together towards achieving mutual benefits alongside their ASEAN partners. The particular
rivalry that critics argue could stunt the growth of regional cooperation in East Asia is the one between
China and Japan. John Ravenhill states that, in order to increase their influence in the region, these two
rivals have proposed alternatives to the other countries development projects in the Southeast Asian
Nations (230, 2009). For example, Ravenhill cites competing proposals from both China and Japan in the
Mekong Regional Cooperation project.

This architecture and rivalry between the three regional powers also gives rise to situations where
ASEAN is more or less forced to enter into separate bilateral treaties with each of them, rather than
have a comprehensive APT trade deal (Ravenhill 230, 2009). These ASEAN Plus One agreements are
instances of the three powers influencing the economic regionalism in East Asia, thus unofficially
creating three separate regions aligned to each of them and they compete with one another. The
apparent lack of uniformity and cohesion in the economic regionalism of East Asia was further put in the
spotlight with the establishment of the East Asia Summit (EAS), which included the participation of
Australia, India, and New Zealand, together with the APT countries. The inclusion of the three countries
was at the behest of Japan. In doing so, Japan was seen to act on behalf of APT member states that were
concerned that Chinas growing economy and global influence would entitle Beijing to take a more
central role in the APT (Ravenhill 231,2009).

Japans request would have undoubtedly satisfied its strongest ally and de facto military protector in the
region, the United States. Unipolarity in the global order is giving way to multipolarity with Russia and
China on the horizon, and the U.S. does not want to give up top spot that easily (Acharya 26, 2002).
Tokyo knows this and apart from strengthening its own claims of regional leadership and influence,
diluting Chinas influence in regional economic groupings throughout East Asia such as its role in setting
up the EAS would also be favorable to Washington. This posturing for power in the economic region is a
byproduct of Japans longstanding alliance with the United States as well as the shared ideals between
the two countries.

While the case mentioned above is normally cited above by ASEAN critics such as Ravenhill, this type of
intrusive regionalism as described by Amitav Acharya, has been mostly absent in Southeast Asia. The
lack of intrusive regionalism in ASEAN has led to a more stable regional order (Acharya 30, 2002). ASEAN
has always stood by its commitment to not interfere in the domestic affairs its states. The ASEAN Treaty
of Amity and Cooperation (TAC) spells out this norm explicitly.

According to Acharya, the most important factor that intrusive regionalism relies on to survive is the
sending of humanitarian intervention and aid. NATOs intervention in Serbia during the Kosovo crisis is
cited as an example of this. But because the norm in ASEAN is and always has been to not interfere in
another member states internal and domestic affairs, this kind of regionalism has been mostly absent
within the grouping. Related to this, one must be critical of the TAC. The TAC is somewhat of an
admission that all ASEAN member states have less importance placed on the well-being of individual
citizens who may be discriminated against under oppressive regimes. Business, economy, and finance
are more vital to the success of the economic regions of East Asia and specifically, Southeast Asia.

Speaking on ASEANs decision to engage with Myanmar in the late 1990s, Acharya acknowledges the
fact that the constructive engagement policy undertaken by ASEAN with regards to the countrys
oppressive military junta was not to the liking of a bigger and more influential regional organization, the
European Union (EU) (30, 2002). A distinction to point out between the two regional groupings is that
while ASEAN has its TAC, which many of its member states believe safeguard member states
sovereignty, the European regional organizations have built themselves on political association as well
as political intervention. The aforementioned campaign in Serbia by NATO being an example.

ASEANs seeming lack of interest in the domestic political, humanitarian and social affairs of its member
states is proof that domestic affairs do not necessarily influence the policy making of states when they
engage in economic regionalism. This scenario is an example of the ASEAN way being integrated into
the regionalism that the member states practice. Despite the changes in the practice of regionalism,
which has seen groupings like ones in Europe practicing sovereignty-eroding intrusive regionalism,
ASEAN has held on to the norms of not interfering with each others domestic affairs so as to respect
sovereignty.

However, as resistant as the ASEAN member states have been in not interfering in the other members
domestic policies, Acharya argues that further economic globalization might force the body to
reconsider its policy of non-interference (29, 2002). Citing the Asian Financial Crisis (AFC) of 1997, it is
argued that Southeast Asian countries worse hit by it could have been warned before their economies
were badly hurt. Therefore, countries like Thailand and Indonesia could have taken vital early steps to
prepare for it better by reviewing their respective economies.

By setting up the ASEAN Surveillance Process, the regional body has shown that it is willing to adopt
European regionalism practices, on the economic front at least (Acharya 29, 2002). As a grouping that
conducted its business in a way seen to be the opposite of what the European bodies did, with its lack of
official bureaucratic institutions and monitoring the domestic policies of each other, what ASEAN had
done recently is certainly interesting (Acharya 27, 2002).

On the question of whether this increased economic monitoring among member states or rather,
peer reviewing as one Thai foreign minister put it would lead to the establishment of a similar
ASEAN-backed institution that is effective in dealing with social and humanitarian issues, the ASEAN
Intergovernmental Commission on Human Rights (AICHR) comes to mind. Nearly 10 years after its
establishment in 2009, it is still seen as a toothless tiger when it comes to safeguarding human rights in
the region. The ASEAN Human Rights Declaration (AHRD), drafted by the AICHR as ASEANs main
document in keeping human rights abuses and instances of undemocratic governance to a minimum,
contained several provisions that were of concern to human rights observers and NGOs.

According to the East-West Center, chief among them were AHRDs core principles of balancing
human rights and fundamental freedoms with corresponding duties, considering human rights within
regional and national context, subjecting human rights to limitations such as national security and
public morality, and specifying that certain basic rights, such as the right to life, conform to domestic
law. There is no explicit mention of lesbian and gay communities or indigenous groups. (Southwick 1,
2013). To be fair to the AHRD, it does have a mandate to promote human rights development and
organize community empowerment programs in this regard.

One of the reasons for this imperfect declaration is that there are still member states being governed by
undemocratic and repressive regimes, to varying levels. Just recently, the government of Cambodian
Prime Minister Hun Sen dissolved the main opposition party, virtually guaranteeing his Cambodian
Peoples Party a walkover victory in the 2018 Cambodian General Election (Smith & Burke, 2017). The
relatively low level of democratization in the region contributes to ASEAN member states being
reluctant to unanimously agree on a human rights agenda that is more similar to that of international
standards.

Ultimately, the AHRD is an effort by ASEAN to come to a middle point between proliferating a uniform
human rights agenda among its member states and its long-standing principles of consensus and non-
interference as underlined by the TAC. It remains to be seen whether member states will be more open
to the idea of keeping partners accountable for human rights issues. As Acharya notes, incremental
democratization in the region is one of the factors that can kick start a more active human rights
commission in the region (30, 2002).

Coming back to the issue of economic regionalism, strict adherence to the TAC principles could also be
what is holding ASEAN back in achieving a more holistic integration of its member states economies
(Southwick 2, 2013). Whatever ASEAN decides, it must be stated that its member states have really
strong reasons as to why they must support a cooperative regional economic initiative. Four such
reasons are: To prevent the occurrence of a financial crisis similar to the AFC in 1997, to better manage
a crisis should one occur, for ASEAN member states to have more say in the financial architecture of the
region, and to facilitate economic integration (Chin 64, 2006).

When referring to regionalism in East Asia in relation to the AFC, Chin Kok Fay states argues that
regional cooperation in money and finance is as important as regional cooperation trade, which
unfortunately the East Asian countries limited themselves to before the crisis (64, 2006). This
demonstrates the importance of a holistic economic regional integration plan as mentioned earlier.

References

Acharya, Amitav. Regionalism and the Emerging World Order: Sovereignty, Autonomy, Identity in New
Regionalisms In The Global Political Economy: Theories and Cases, ed. Shaun Breslin, et al. Routledge,
New York, 2002. Pages 20 -32.

Cai, Kevin G. The Politics of Economic Regionalism: Explaining Regional Economic Integration in East
Asia. Palgrave Mcmillan, New York. 2010.

Chin, Kok Fay. East Asian Monetary and Financial Cooperation: The Long Road Ahead in Monetary and
Exchange Rate Systems: A Global View of Financial Crises, ed. Louis-Phillipe Rochon & Sergio Rossi.
Edward Elgar Publishing, Northampton, 2007. Pages 63 82.

Ravenhill, John. East Asian regionalism: Much Ado about Nothing? in Globalising the Global,
Regionalising the Global, ed. Rick Fawn. Cambridge University Press, Cambridge, 2008. Pages 215 235.

http://www.telegraph.co.uk/news/2017/11/16/cambodian-opposition-party-dissolved-supreme-court-
hun-sen-clears/

Southwick, Katherine G. Bumpy Road to ASEAN Human Rights Declaration in East-West Center Asia
Pacific Bulletin at
http://scholarspace.manoa.hawaii.edu/bitstream/10125/25586/1/APB%20no.%20197.pdf