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THE ASEAN WAY AND THE RULE OF LAW

Address by Rodolfo C. Severino, Secretary-General

of the Association of Southeast Asian Nations,

at the International Law Conference

on ASEAN Legal Systems and Regional Integration

sponsored by the Asia-Europe Institute and the Faculty of Law,

University of Malaya

Kuala Lumpur, 3 September 2001

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I wish to thank the Asia-Europe Institute and the Faculty of Law of the
University of Malaya for inviting me to participate in this important conference
on this very interesting subject. Above all, I thank them for organizing the
conference. We in ASEAN have much to learn from Europe on laying the legal
foundations for regional integration and cooperation, and we need the lawyers
of ASEAN to guide us in this.

I believe that it is about time that people looked upon ASEAN in terms of
legal obligations and norms. People are not used to doing so, because ASEAN
has never been associated with international law and treaties. ASEAN has
always been regarded as a group of sovereign nations operating on the basis of
ad hoc understandings and informal procedures rather than within the
framework of binding agreements arrived at through formal processes.

Indeed, ASEAN has often been contrasted with the European Union – in
somewhat facile fashion – in those terms. The EU regulates the relationship
between the Union and its members and the cooperative arrangements among
its members largely through agreements with the force of law. ASEAN has been
cooperating through informal understandings that impose no legally binding
obligations.

This is a bit of an oversimplification, of course. It is true to a substantial


extent, although not entirely. Certainly, it was entirely true in ASEAN’s early
years. ASEAN’s founding document, the Bangkok Declaration of August 1967,
was a mere declaration of two pages setting forth the ends and means of
ASEAN and of Southeast Asian cooperation. The foreign ministers of the five
founding states signed it. It required no ratification. It certainly was no Treaty
of Rome.

The slow, cautious start of ASEAN was understandable. The five


founding members still nursed historic animosities toward and suspicions of one
another. It required remarkable statesmanship and a veritable act of faith on
the part of ASEAN’s founders to see beyond those animosities and suspicions --
deeply embedded legacies of history -- and articulate and commit themselves
to a shared vision and common aspirations. ASEAN’s start was, inevitably,
tentative.

With the hindsight of history, we can say that this aspect of the ASEAN
Way has served Southeast Asia well. By not forcing its incredibly diverse and
mutually suspicious members into legally binding standards, ASEAN has done
the remarkable job of moving its members from animosity to the close
cooperative relationship that they enjoy today, a relationship in which violent
conflict is all but unthinkable. We can say that the ASEAN Way has served
ASEAN well.

Even today, thirty-four years after its founding, ASEAN adheres to the
evolutionary approach, relying largely on patient consensus-building to arrive at
informal understandings or loose agreements. With the recent entry of new
members, ASEAN seems to be, in a way, starting over in terms of having to
delicately manage the legacies of history.

It is not just a matter of history; it is also a matter of culture. Southeast Asians’


way of dealing with one another has been through manifestations of goodwill
and the slow winning and giving of trust. And the way to arrive at agreements
has been through consultation and consensus – mushawara and mufakat –
rather than across-the-table negotiations involving bargaining and give-and-
take that result in deals enforceable in a court of law. Let us not exaggerate
this distinction. Much consultation and consensus-building goes into the
making of the European Union, which has, in any case, been itself painstakingly
gradual. Personal chemistry and trust are also important for European
processes. Southeast Asians can and do engage in hard bargaining and
exchanges of concessions. But historical circumstances and culture can provide
at least a partial explanation for ASEAN’s avoidance, particularly in its early
days, of legally binding agreements.

The First Treaty


ASEAN did not conclude a legally binding treaty until the first ASEAN
Summit in Bali in 1976 – the Treaty of Amity and Cooperation in Southeast Asia
– almost nine years after ASEAN’s founding. The fact that it took nine years for
ASEAN to convene its first summit meeting itself speaks volumes about the
ASEAN Way.

It took another ten years for ASEAN to produce another agreement that
carried some measure of legal obligation. This was the 1977 Preferential
Trading Arrangements. Yet another ten years were to pass before ASEAN was to
conclude, at the third ASEAN Summit in 1987, the Agreement for the Promotion
and Protection of Investments and the agreement on the standstill and rollback
of non-tariff barriers, both of which conferred legal rights and obligations upon
their signatories.

In the intervening period, three industrial cooperation schemes were agreed


upon – the ASEAN Industrial Projects (1980), the ASEAN Industrial
Complementation (1981), the ASEAN Industrial Joint Ventures (1983) – and,
later, the Brand-to-Brand Complementation Scheme (1988). And there were the
1977 ASEAN currency swap arrangement, the 1979 agreement on the food
security reserve, the 1985 agreement on the mutual recognition of drivers’
licenses, and the 1986 establishment of the petroleum security reserve.

These were relatively minor agreements of a workaday, practical nature. The


swap arrangement has been revivified and expanded under the 1998 Chiang
Mai Initiative. I suppose the agreement on drivers’ licenses continues to be
observed. The industrial cooperation agreements have been superseded by the
ASEAN Industrial Cooperation scheme of 1996, which remains active. The food
security and petroleum security arrangements have never been invoked. These
are rather obscure agreements, but they demonstrate the need for binding
instruments if economic cooperation is to have substance and real effect.
It was the conclusion, at the ASEAN Summit of 1992, of the agreement
on the Common Effective Preferential Tariff for the ASEAN Free Trade Area,
simply known as AFTA, that was to give substance to – indeed, we could say,
launched -- the economic integration of ASEAN. The agreement is very much
alive. Its timetable has, in fact, been accelerated, and it is basically on track.
Under this agreement, the first six signatories to the AFTA treaty – that is, the
first six members of ASEAN – are legally committed to reducing tariffs on their
trade with one another, with a few exceptions, to a range of zero to five percent
by the beginning of 2002 or, in some cases, the beginning of 2003. The newer
members are given a little more time. The tariff reductions are to be carried out
through national legal enactments by each party to the agreement in
accordance with an agreed schedule. More recently, the ASEAN countries
agreed, formally, on an arrangement to govern delays in the inclusion of
products in the AFTA scheme or suspensions of AFTA concessions under very
stringent conditions.

In legally committing ASEAN’s members to reduce and eventually


remove tariff barriers between them, AFTA is the first substantial step toward
integrating the ASEAN market, integration that ASEAN countries have
recognized as essential for making their production and commercial processes
more efficient, bringing down costs, encouraging investments, and, in general,
strengthening their economic competitiveness. Obviously, the AFTA
commitments have to be legally binding if they are to be credible both to the
member-states themselves and to the business sector.

Extending the Logic

ASEAN has extended this logic beyond trade in goods to the equally
important realm of trade in services, like transportation, telecommunications,
financial services, construction and tourism. At the summit of December 1995,
ASEAN concluded the Framework Agreement on Services. The agreement is to
be given flesh through sector-by-sector negotiations. The resulting agreements
will be legally binding upon the parties.

At the same summit of 1995, ASEAN entered into an agreement


committing its members to undertake national measures to protect intellectual
property, a move that would address another deterrent to investment as well as
encourage industrial and scientific innovation.

In October 1998, ASEAN decided to allow the freer flow of investments


through the ASEAN Investment Area agreement, under which each country
legally undertakes to open up its industrial sector to investments from other
ASEAN countries and accord national treatment to such investors.

As further measures to facilitate trade and encourage investments, ASEAN


concluded, at the summit of December 1998, framework agreements on mutual
recognition arrangements and goods-in-transit. The framework agreement on
mutual recognition is to be carried out by agreed arrangements on specific
product groups, under which ASEAN countries are obligated to recognize results
of conformity assessments issued by any one of them, such as test reports,
product certifications or registration approvals. Negotiations on such
arrangements are at various stages today. The framework agreement on
goods-in-transit is to be put into effect through nine legally binding protocols,
four of which have already been concluded. Agreements on multi-modal and
inter-state transport are being worked out.
Meanwhile, in 1996, ASEAN agreed on a mechanism and rules for
settling disputes arising from any of the economic agreements binding the
association.

On the security front, ASEAN’s leaders signed, at their summit in 1995,


the Southeast Asia Nuclear Weapons-Free Zone treaty legally committing their
states not to “develop, manufacture or otherwise acquire, possess or have
control over nuclear weapons,” station nuclear weapons within or transport
them through the treaty’s zone of application, or test or use nuclear weapons.
The ASEAN states are obligated not to allow others to do so (except for port
calls and airfield transit) in their respective territories. They pledged not to
dump nuclear waste in the zone. They also undertook certain obligations
pertaining to the non-proliferation of nuclear weapons and the peaceful uses of
nuclear energy.

Legal Foundations for Integration

Two things are to be noted about the legally binding agreements that
ASEAN has concluded thus far. The first is that they are overwhelmingly
economic in nature. The second is that, since the conclusion of the CEPT/AFTA
agreement in 1992, ASEAN has entered into such agreements with increasing
frequency. This may be an indication of ASEAN’s growing realization that closer
regional economic integration requires basing it on binding legal foundations if
integration is to be stable, credible and effective. The commitments undertaken
must be clear, firm and enforceable, and those making them cannot lightly back
out of them.

As ASEAN moves into further integration, we can expect an expanded


number of binding undertakings. The e-ASEAN framework agreement, which
the ASEAN leaders signed in November 2000, may require legally binding
agreements on such things as the authentication of signatures, the use of
electronic documents in business transactions, privacy and confidentiality, and
so on. The further deepening of ASEAN economic integration, involving tariff
nomenclatures, product standards, policy coordination, banking and finance,
transportation and telecommunications, would surely need agreements in these
areas – clear and enforceable ones -- and soon.

More broadly and fundamentally, ASEAN countries will have to


harmonize domestic laws and regulations that govern trade and investment.
This is to make sure that the regional market is a level playing field. It is to
ensure that differences in domestic laws and regulations on “fair trade,”
competition policy, government procurement and product standards are not
used to frustrate the purposes of AFTA and the benefits of an integrated market.
It is to provide the harmonized regional investment regime that investors
increasingly require.

I have a sense that this developing rules-based economic regime will


gradually extend to other areas of ASEAN cooperation. After all, ASEAN is more
than an economic association. Already, a binding, landmark agreement dealing
with the haze that periodically arises from land and forest fires in parts of
ASEAN is nearing completion and may be signed soon. I foresee ASEAN
undertaking legal obligations related to such transnational regional problems as
the marine environment, the preservation of biodiversity, money-laundering,
trafficking in human beings, drug-trafficking and piracy.

I thus envision ASEAN as evolving into a more rules-based association –


although, I hope, not excessively so. As the experience of the EU shows,
regional agreements may need national legislation to carry them out. Already,
the CEPT/AFTA agreement, as well as the agreement on intellectual property,
requires legal enactments by the national governments in order to take effect.
This would help strengthen the national legal systems of the member-states as
well as the rule of law in the region as a whole.