PAD 380 CURRENT AFFAIRS IN SOUTH EAST ASIA

ASSIGNMENT 2 (INDIVIDUAL)
ASEAN EXTERNAL RELATIONS WITH OTHER COUNTRIES
PREPARED BY
MOHD SUKRAY BAHAR
ID : 2012347405 GROUP: AAMP8A
PREPARED FOR
SIR FARID BIN SAAD
UiTM CAMPUS SERI ISKANDAR, PERAK DARUL RIDZUAN

INTRODUCTION

ASEANs commitment to develop its external relation was reflected in the 2nd
ASEAN Summit, where its objective is to develop fruitful relation and cooperation with other
countries outside this region. In the early stages of its external relation, the important agenda
was to find assistance, recognition and support from superpowers in order to allow them to
shield any form of interference from Communist powers. As ASEAN matures and evolves,
the scope of external relations was lifted to include economic and social issues.
The first step of ASEAN external relations was the granting of its dialogue partners to
its major trading partners, which were United States, Japan, EU, Australia, New Zealand and
Canada. External relation is a situation when one country cooperates with other countries in
the scope of politics, economics and social aspects that later on will bring benefits to every
single party who involve in it.
Components of the field of external relation are including foreign policy, international
laws, international organization, strategic studies and others. Hoffman (1964) defined
external relation as a systematic study of observable phenomena that tries to discover the
principles variables, to explain behaviour and to reveal the characteristics types of relation
among national units.

JUSTIFICATION OF ASEAN EXTERNAL RELATIONS

By the strategic geopolitical location of this region, Colbert (1977) believed the
foreign interest on this region is because of its role as both bridge and barrier between India
and China, the intervening countries in this region and important arena among the Allied
against Moscows threat. This region historically is a bridge between the West and East,
Indian Ocean and Pacific Ocean and Straits of Malacca is one of the worlds busiest sealanes. Due to the strategic location of it, it is very important for them to ensure peace and
stability prevail, and external relation can act as mechanism to achieve it.
DIAGRAM 2.1: STRATEGIC LOCATION OF SOUTH EAST ASIA

ASEAN EXTERNAL RELATIONS WITH EUROPEAN UNION (EU)

ASEAN - EUROPEAN UNION strategic role in ASEANs effort in promoting regional
stability.EU is among the pioneer institutions in ASEAN external relations. Involvement of EU
in ARF as a mechanism to engage major and super powers of the world is crucial in order to
create a peace and stabile region. ARF is used by ASEAN as a platform to discuss and
consult on political and security issue. This organisation aims at building mutual confidence
through regular discussion and joint activities to prevent occurrence of conflict in this region.

EU is ASEANs important economic partner. According to the diagram total trade

between both parties stood at $202 billion in 2008. EU is ASEANs 2nd major trading partner
and demand created for regional commodities and finished goods stimulate the economic
activities and will lead to regional development. ASEAN rely heavily on EUs heavy
equipments, machinery and technology to propel its economic development. In 2002-2003,
EU ranked second for ASEANs export market, and 3rd largest trading partner after the
United States and Japan. EU relationship is more focus towards Singapore and most of their
FDI flow into that country. A new partnership with Southeast Asia has been introduced and
particularly focused on investment and trade relations.
Cooperation on Environmental Conservation,both parties welcomed the declaration
of the "ASEAN Year of the Environment", and look forward to an early decision on the
establishment of the EU-ASEAN Centre of Excellence on - Biodiversity Conservation. The
Ministers also agreed to continue the discussions on environmental cooperation on the
occasion of an expert level Seminar and to have examined the establishment of a
subcommittee on environment. The Ministers urged the early implementation of the
commitments made at the Earth Summit in Rio de Janeiro.

ASEAN EXTERNAL RELATIONS WITH CHINA

Evolution of ASEAN and Peoples Republic of China relationship started in 1993.
They had been granted a Dialogue Partner Status in 1996. Presence of Peoples Republic of
China has been looked from negative perspective due to its rapid economic development
that takes majority of (Foreign Direct Investment) in Asia Pacific region. This fact can be
turned into different perspective where they should be accepted as a friend that offers a lot
of opportunities rather than an enemy.

Relations between Peoples Republic of China and the Association of Southeast

Asian Nations (ASEAN) and its member states have undergone significant changes over the
past 15 years. When Beijing first established official contacts with the original ASEAN-6 in
1991, it barely had restored diplomatic relations with Indonesia, had begun to normalize
relations with Vietnam, and just had established diplomatic ties with Singapore.
Demonstrated an evolution of Chinas policy from rogue dragon to charming relationship,
has transformed a harmonious relationship between both entities. Involvement of Peoples
Republic of China in WTO and liberalization of its economy has been recognized as a
turning point of its involvement in international politics and economy.
Chinese and ASEAN economies have many conditions which are mutually
complementary. For instance, with regards to the natural products of the temperate and
tropical zones, the Chinese advantages with respect to sciences and technologies, human
resources and ASEANs natural resources and trade, the respective shortcomings or
deficiencies can thus be corrected by mutual complementary. Southern and South-eastern
parts of China have been taking an active part in the regional cooperation: such as the
linkage of Mekong River Sub-Region and the Trans-Asia railway.
Regional economic integration between ASEAN and Peoples Republic of China
(ACFTA) may benefit ASEAN. The ASEAN China Free Trade Area that is enforced in 2010
for ASEAN 6 and 2015 for ASEAN 4 will have a major impact for the regional economic
growth Its population of 1.5 billion peoples and a Growth Domestic Product (GDP) of USD
1.5 trillion will benefit ASEANs economy. This lucrative export market destination can drive
ASEAN economic development to a fast track pace. The running of ASEAN-PRC FTA is
expected to yield an estimated 50 percent increase in bilateral trade as well as a 1.0 percent
and 0.3 percent rise in the annual economic growth of the ASEAN countries and the PRC
respectively.
Peoples Republic of China (PRC) is ASEANs strategic economic partner. Value of
trade between both entities stood at USD192 billion in 2008, and its significance is reflected
where PRC ranked as the 3rd major trading partner of ASEAN. The demand created by
Peoples Republic of China for the food, raw materials and intermediate products may be
capitalized by ASEAN. The overheating Peoples Republic of China economic development
might be spill-over to ASEAN as they currently suffered environmental degradation. The
ASEAN countries may focus the activities in the sub-sector and upstream industries in
attracting excess of FDI from Peoples Republic of China. The Mekong River Basin

Development witnesses substantial amount of money injected by them in various economic

projects in that area.
Peoples Republic of China is ASEANs key regional security partner. Position of PRC
as influential country in Asia Pacific should be benefited by ASEAN in promoting regional
stability and ensuring everlasting peace. Signing of the TAC by the Peoples Republic of
China has sent a clear message to ASEAN that they would like to engage in a harmonious
diplomatic relationship with ASEAN. The support and recognition received from them over
SEANWFZ is important since they are nuclear technology state. This will ensure that they
will not export their know-how in nuclear technology to countries in this region that share a
similar political system with them.
Joint Declaration of ASEAN and Peoples Republic of China on Cooperation in the
Field on Non-Traditional Issue. Peoples Republic of China has been identified as a source
of illegal counterfeited products. Smuggling of firearms, drug and women grow at threatening
pace. An epidemic prevention and anti-piracy issue, which was derived during 8th ASEAN
Summit in Cambodia, will lead to creation of harmony society. The commitment of ASEAN
and Peoples Republic of China to cooperate on the elimination of those subject matters
proved that both entities would like to benefit each other. Peoples Republic of China is an
important partner for ASEAN and we should eliminate our negative perception over them.

ASEAN EXTERNAL RELATIONS WITH JAPAN

ASEAN and Japan first established informal dialogue relations in 1973, which was
later formalized in March 1977 with the convening of the ASEAN-Japan Forum. Since then,
significant progress has been made in ASEAN-Japan relations and cooperation in the areas
of political security, economic-finance and socio-culture. The signing of the Tokyo
Declaration for the Dynamic and Enduring ASEAN-Japan Partnership in the New Millennium

together with the ASEAN-Japan Plan of Action (ASEAN-Japan POA) at the ASEAN-Japan
Commemorative Summit, held in December 2003 in Tokyo, have contributed to the
strengthening of relations between the two sides. The 2003 Tokyo Declaration and the
ASEAN-Japan POA served as the roadmap in moving ASEAN-Japan relations forward until
2010. At the 14th ASEAN-Japan Summit on 18 November 2011 in Bali, Indonesia, the
Leaders issued the Joint Declaration for Enhancing ASEAN-Japan Strategic Partnership for
Prospering Together (Bali Declaration) and adopted the ASEAN-Japan Plan of Action 2011
2015.
ASEAN and Japan celebrated the 40th anniversary of ASEAN-Japan Friendship and
Cooperation in 2013. To celebrate the milestone, ASEAN and Japan carried out
commemorative activities throughout the year. Japan hosted the ASEAN-Japan
Commemorative Summit on 13 15 December 2013 in Tokyo. The Summit adopted a Joint
Statement with the theme Hand in hand, facing regional and global challenges. The Summit
also adopted a Vision Statement on ASEAN-Japan Friendship and Cooperation and its
Implementation Plan.
ASEAN-Japan relationship is less stormy as compared to Japan-China-Korean
relations, dictated by Japanese involvement in World War II., due to approach of Japanese
Prime Minister that concentrated on mutual respect and partnership.
This is further supported by Wong (2006) who recognized the importance of Japan
as major foreign aid donor and Foreign Direct Investment source for ASEAN. It is absolute
that influx of capitals and aids from Japan, either from the government or the MNC uplift the
development level of Southeast Asia. Cooperation between ASEAN and Japan was
established in 1973. Establishment of ASEAN - Japan Forum in 1977 in order to rationalize
the cooperation between them signaled that both entities are depending on each other.
Importance of Japan can be outlined by their significant contributions.
Japan is ASEANs major economic partner. Its significance is reflected where Japans
ranked as the 1st major trading partner of ASEAN. Most of ASEANs imports from Japan are
capital machineries and high-tech equipment that helped ASEANs economies to sustain its
industrial growth. The growing economy of Japan has created a market demand for
ASEANs commodities and agriculture products. This symbiotic trade relationship between
both entities has complemented each other economic growth and development.

ASEAN and Japan signed the ASEAN-Japan Comprehensive Economic Partnership

(AJCEP) on 14 April 2008. The AJCEP Agreement is comprehensive in scope, covering
trade in goods, trade in services, investment and economic cooperation. The Agreement
entered into force on 1 December 2008. As of March 2009, all ASEAN Member States and
Japan have ratified the ASEAN and Japan have substantially concluded the negotiations on
the Services and Investment Chapters of the AJCEP Agreement.
The ASEAN-Japan 10-year Strategic Economic Cooperation Roadmap was
endorsed at the 18th Consultations between the ASEAN Economic Ministers and the
Minister for Economy, Trade and Industry of Japan on 30 August 2012. The Roadmap aims
to promote strategic partnership in a wide range of areas including improvement of business
environment, trade and investment facilitation and liberalization, infrastructure development
and connectivity. The Leaders of ASEAN and Japan at the 16th ASEAN-Japan Summit in
October 2013 welcomed the progress of the ASEAN-Japan 10-Year Strategic Economic
Cooperation Roadmap, where 66 activities or 84.6% of the activities have been
implemented, especially in the areas of intellectual property, information and communication
technology, industrial human resource development and medical collaboration. The Leaders
reiterated the need for our officials to effectively implement the activities under the Roadmap
to help move towards our goal of doubling trade and investment flows by 2022.
Most of ASEAN countries depend on Foreign Direct Investment that origin from
Japan as a largest single contributor of Foreign Direct Investment to regional economy.
Japan as the leading countries of Foreign Direct Investment sources to this region.
Investment in ASEAN countries by its Multi National Corporation (MNCs) such as Panasonic,
Honda, Sony and several others conglomerates provide job opportunities and transfer their
technologies to several ASEAN countries.

ASEAN-Japan FTA is enforced in 2010 and expected to grow both economies at

faster rate. The ASEAN-Japan FTA is expected to boost ASEANs exports to Japan by as
much as 44 percent, while Japanese exports to the region would rise by 27 percent.
Liberalization of both market through elimination of trade discriminations allow Japanese
capital product to enter ASEAN market at competitive selling price and help this region to
propel their industrial based economy.

Security cooperation with Japan. ASEAN and Japan conduct their dialogue relations
through various mechanisms, which include Summits, ministerial meetings, senior officials
and experts meetings, as well as broader ASEAN-initiated regional dialogue mechanisms
such as the ASEAN Regional Forum (ARF), ASEAN Plus Three (APT), the East Asia Summit
(EAS) and ASEAN Defense Ministers Meeting Plus (ADMM Plus).
Japan acceded to the Treaty of Amity and Cooperation (TAC) in Southeast Asia in
July 2004 in Jakarta. Japans accession to the TAC has further strengthened the Treatys
importance as a code of conduct governing relations among countries in the region and as a
diplomatic instrument for the promotion of peace and stability in the region.
ASEAN and Japan adopted a Joint Declaration for Cooperation on the Fight against
International Terrorism at the 8th ASEAN-Japan Summit in November 2004 in Vientiane.
This was a concerted response to the emergence of threats posed by transnational crimes,
terrorism and piracy not only to the region but the world over. In relation to this, the ASEANJapan Counter Terrorism Dialogue (AJCTD) was launched in March 2006, and since then
eight Dialogues have been conducted and eleven projects have been completed.
Cooperation between Japanese Coast Guard and ASEAN to combat sea piracy at
South China Sea and Straits of Malacca can of course enhance the state of peace and
stability in this region. This particular threat has been identified as formidable threat as ships
that ferry precious cargo and dangerous commodities once hijacked by pirates will offer
disastrous impacts to region security and environment. Involvement of Japan in ARF and
Six-Party Talks meeting reflect commitment of Japan to contribute to the creation of peaceful
region. Japan is fund provider for regional development of facilities and infrastructures.

Japanese government has created Overseas Development Assistance (ODA) fund

specifically focusing in providing loans to ASEAN countries who want to modernize their
infrastructure. Several developing countries have utilized this fund which is disbursed at
lower interest rate. Several funds have also been created to help ailing ASEAN countries
during economic crisis in stabilizing their own weakening currencies.
It is clear that presence of Japan in this region act as a catalyst and growth facilitator for
several ASEAN countries. Even though Japaneses occupation during World War II had

caused trauma and nightmare to several peoples in this region, it did not forbid strategic
cooperation between in order to achieve a win-win situation.

ASEAN EXTERNAL RELATIONS WITH INDIA

There is a rapid development of ASEAN India relations as several regional and
international politics and economics issues had been discussed such as framework
agreement on Comprehensive Economic Cooperation between ASEAN and India. This will
boost members economic development and bridge the development gap among them. In
2008, India merchandise trade with ASEAN totalled $47 billion. Cooperation in agriculture,

biotechnology, human resources development, agro processing and information and

communication technology edge of India. Under the ASEAN-India Sectoral Dialogue,
they agreed on a plan of action for the development of activities in the three identified areas
of S&T cooperation, namely advanced materials, biotechnology and information technology.
The proposed activities for the first year include return visits by Indian scientific officials to
ASEAN Member Countries and workshops to identify specific topics and develop the project
proposals for collaboration.
Joint Declaration for Cooperation to Combat International Terrorism. ASEAN and
India share a similar regional threat which is international terrorism. Exchange of information
and joint training between enforcement and intelligence officer will put them in a better
position to overcome this threat.
ASEAN India Free Trade Area. The signing of the AIFTA Trade in Goods
Agreement comes at an opportune time as part of the regions response over the growing
concern of a global economic and financial crisis. The AIFTA could serve as a vehicle to help
sustain the regions growth that would benefit and improve the welfare of peoples of ASEAN
and India, as well as the East Asian region. The creation of an open market in a region
comprising about 1.7 billion people and with a combined gross domestic product of
approximately US$ 2.75 trillion as of 2008. The Ministers noted the increase in ASEAN-India
investments, which reached US$ 500 million in 2008.

ASEAN Free Trade Area (AFTA)

This is a drastic effort taken by ASEAN to develop its economic due to previous
economic development project did not yield satisfactory result and there is no direct impact
to the regional and member countries economic development. AFTA was produced during
the 4tf ASEAN Summit 1992 which was held in Singapore.

Motivating factors towards AFTA.

In 1980s and 1990s, majority of countries in this world began to dismantle their trade
barriers and protection in order to become a member of World Trade organisation (WTO)
that promote fair and just trade. As a result, ASEAN is not excepted where it needs to open
their market in order to comply with WTO rules and regulations. This is a motivating factor
that leads to establishment of AFTA, where trade barriers can be imposed if there is creation
of trading block that imposed different set of tax and tariff to members and non member
countries. In addition, creation of AFTA is the answer to achieve rapid economic
development where integration of member countries economic to create a bigger and new
unsaturated market. Market will become huge as all ten countries open their territories and
borders to receive member countries production factors. This will provide more space and
opportunities for corporations to expand and market their products and gods, which later
lead to economic development.
Objectives of AFTA.
The ultimate mission of AFTA is to position ASEAN as a competitive production base that
produce a products and goods for the world market. It is a situation where this region must
be a manufacturing centre or hub that comprised of multinationals corporation (MNC) that
utilizes regional raw material and natural resources, employing local human resources,
transferring its technology, market the product to majority part of the world that contribute to
increase of GDP and per capita income, that finally lead to regional economic development.
In short, its aim is to convert this region from agriculture based industries and economy to
industrial or manufacturing high technology industries.
Implementation mechanisms.
Realization of AFTAs objectives will be achieved by Common Effective Preferential Tariff
(CEPT), an important tariff reduction formula. Products and goods in manufacturing and
agriculture industries that are included in Inclusion Lists will be reduced its tax gradually
from 1994 to 2004. Tax and tariff rates can be only levied ranging from 5% to 0% by 2004. In
other words, member countries must only impose maximum 5% tax and tariff for products
and goods imported by member countries to encourage intra region trade and stimulate
regional economic development.
Several countries are not ready to open their market totally due to some reasons, especially
the ASEAN 4, and require more time before they can comply with CEPT mechanisms.
Therefore in order to provide flexibility, several lists have been introduced such as

Temporary Exclusion Lists where time is given to the products or sector to become more
mature before tax reduction is implemented.
Last but not least, objectives of AFTA that have been derived during 4th ASEAN Summit in
Singapore will be realized when member countries would reduce the domestic tax and tariff
according to CEPT scheme on all manufactured and agriculture goods included inside
Inclusion Lists. As a result, ASEAN competitive edge as a production base for world market
can be achieved. Through elimination of regional tax and tariff due to economic integration,
ASEAN manufacturing sector will become much stronger and competitive, that finally
contribute to the economic development.
Advantages of AFTA.
i. Benefits from economic of scale.
Economic of scale is a situation when cost of production can be reduced if particular
products or goods are produced in mass quantity. For example, major automobiles
corporations such as General Motors, Honda and Toyota are able to sell car at a cheaper
price because of this region has abundance of parts manufacturer and supplier that lead to
price reduction. When the products can be sold close to cost price, it will lead to increase of
demand and will result to economic growth.
ii. Fully utilisation of regional production factors.
We are totally clear that this region has abundance storage of natural resources and raw
materials that are not fully utilized. With its cheap cost of labour, land and doing business, all
these production factors will be used totally and will lead to economic development.

iii. Competition with Multi National Corporations (MNC) will stimulate productivity.
Influx of foreign investors must be seen from positive perspective. This situation provides a
healthy competition where local corporations must try to become more productive and learn
any useful knowledge and experience from foreign players.
iv. Attract more Foreign Direct Investment (FDI)

With a total market of close to 550 millions of people which is underdeveloped market, this
region is a lucrative market. Influx of FDI into this region will bring capitals that are needed
by countries in this region in order to develop their economics. The money invested by
investors can be used to generate economic development and inject cash to the economy.
v. As a competitive edge of this region.
By establishing AFTA, it will serve as a specialty or uniqueness of this region. This region will
be identified as a worlds manufacturing hub when AFTA is fully worked in 2009.

Disadvantages of AFTA.
i. Question whether member countries are willing to liberalise its economy.
We should understand that tax and tariffs serve two purposes, one is as a traditional sources
of revenue that countries depend on to develop their countries and two as a mechanism to
protect local industries and interest from foreign investor. For some countries that adopt
capitalist economics, it is easy for them to open their market, but for communist state where
economics are dominated and planned by the government, it may be difficult for them to
liberalize their economics. Liberalization wills means substantial loss of revenue and will
provide threat to local industries. In addition, tariff barriers on all goods are still not lifted, and
it affects the pace of AFTA. This is important in order to integrate the ASEAN 4 economics
at a faster speed.
ii. Imbalances and huge gap of economic development.
As we mentioned before, ASEAN can be divided into to major groups, which are ASEAN 6
and ASEAN 4. Countries that are categorised in ASEAN 6 are Malaysia, Indonesia,
Singapore, Thailand and Brunei that advanced far further from economic and industrial
perspectives. Where else ASEAN 4 is Cambodia, Laos, Vietnam and Myanmar, which are
left behind and backwards in economic and political stability as compared with the six.
ASEAN 6 enjoys more advantages than the ASEAN 4 because of capital strength, political
peace and stability and educated, well-trained and literate human workforce.
Therefore ASEAN 4 will not be a preferred investment destination by foreign investors unless
they improve their stability, able to provide skilful labour force and gain confidence from
international business community. AFTA will be successfully implemented and can
consolidate all ten countries in this region if they are able to close a gap between the six and
the four.

iii. Threat to infant industries

Infant industries are industries that are not yet achieving experience curve and just be
incorporated. It is lack of experience, very small in term of size, operation and profit. These
industries need to be protected so to make them mature and strong. AFTA will with no
doubt threaten these industries and may lead to its destruction.
iv. Threat to national security and interests.
Several local industries employ hundreds of thousands of local people and become a
streamline industry for the government. The question that will arise when AFTA is fully
implemented is what will happen if this industry failed to compete when the market has been
opened. Several developing countries possess a feeling of anxiety if this industry is closed
down because it will lead to increase of unemployment in that particular country.
v. Readiness to face stiff competition and challenges of globalization.
The yardsticks that are used to measure whether particular country are global or not are
mastery of K-economy, usage of English, number of computers and internet networking,
involvement in international political arena, better and modernization of infrastructures an
facilities, human resources development and implementation of democracy system. The
question is that whether all ten ASEAN countries are having these capabilities in order to
compete with foreign players.

CONCLUSION
ASEAN external relations has expanding in a rapid mode where at initial stage, it
covers cooperation in political aspects, has been expanded to include cooperation in
economic and trade, social and human resources development. ASEAN not only engages
individual countries but also regional organisation in finding strategic partnership to achieve
their sacred principles. Globalization and liberalization are the motivating factors that shaped
ASEAN external relation. The benefits gained from international relation can be said as a

catalyst that propels ASEANs economic development, creation of peace and stable nation
and producing a loving, caring and developed society.

References

Manual Current Affairs In South East Asia PAD380

http://www.asean.org/asean
http://fta.mofcom.gov.cn/topic/chinaasean.shtml
http://www.state.gov/pleap/regional/asean/

http://asean.org/asean-economic-community/asean-free-trade-areaafta-council/