Hugh Stephens: Canada can’t afford to ignore ASEAN

by Hugh Stephens

National Post
March 15, 2013

The Association of Southeast Asian Nations (ASEAN) will be holding its 22nd Leaders’ Summit in Brunei Darussalam between April 24th and 25th. Canada should be paying attention. The outcomes of this meeting, and the directions that it sets for ASEAN’s security and economic agenda, can significantly affect our rediscovered interests in the region.

ASEAN, 10 nations in the heart of Asia (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam) has been around since 1967, but it is only in recent years that it has become the linchpin of economic growth and trade in the region. With a market of 600 million people, ASEAN covers the spectrum of development from advanced service economies like Singapore to economies just emerging from decades of mismanagement like Laos and Myanmar, to mixed but growing economies like Indonesia, Thailand, Vietnam and Malaysia. Tiny Brunei, with a population of just 400,000, is one of the world’s wealthier states owing to its enormous oil resources. What this grab-bag of economies has in common is a desire to hang together (lest they hang separately) in dealing with their politically and economically powerful neighbours – China, Japan, Korea and India – while at the same time strengthening engagement with the U.S., their southern neighbours (Australia and New Zealand), Russia, and, yes, even Canada.

Canada has recently focused its efforts at revitalizing links with ASEAN. Although a “Dialogue Partner” since 1977, Canada seemed to lose interest from the 1990s onward. That is changing. We appointed our first ambassador to the ASEAN in 2009, signed the Treaty of Amity and Cooperation in 2010 and last year Minister Ed Fast inaugurated a new Canada-ASEAN Business Council, based in Singapore.

The ASEAN Summit will need to deal with two particularly difficult issues: security concerns related to China’s aggressive claims to most of the South China Sea and economic and trade issues, including two regional trade pacts currently under negotiation. China is flexing its muscles to assert its claim to 90% of the strategic and resource-rich South China Sea, bolstering its threadbare legal claim by populating and establishing administrative regulations over minuscule islets, and leaning on countries with competing claims to settle with it bilaterally. ASEAN, for its part, wants to deal with China as a bloc and seek multilateral solutions. While Canada has no direct security interests in the South China Sea, the area is a potential international flashpoint with the United States refusing to recognize Chinese sovereignty over what it considers to be international waters.

Of more direct interest to Canada are the trade and economic issues centred on ASEAN. The organization is the hub of a number of trade agreements with its neighbours – China, Japan, Korea, Australia, New Zealand and India. These bilateral agreements are now being rolled into one big package known as the RCEP (Regional Cooperative Economic Partnership) Agreement. Building on the agreement it already has with ASEAN, each of the “spoke countries” will have to negotiate agreements with each other. These negotiations between China and Japan, Japan and Korea, India and China etc. will likely prove difficult. That said, the breadth of the RCEP makes it a likely foundation for the ultimate goal of a Free Trade Area of the Asia Pacific (FTAAP).

While the RCEP includes all 10 ASEAN countries, it excludes economies on this side of the Pacific. That niche is filled by the Trans-Pacific Partnership (TPP), the regional trade bloc now under negotiation from which Canada was initially excluded. The TPP is not only an alternate track to an Asia Pacific trade agreement, but one with a higher degree of discipline in terms of opening markets.

The fact that four ASEAN countries are part of the TPP process is a concern to some ASEAN leaders, fearing a split between those members with preferential access to North America and those without. However, the presence of four ASEAN economies within both the TPP and RCEP can serve as a bridge between the two tracks. There has been much discussion about whether these tracks are complementary or competing. For now, they are presumed to lead ultimately to the same trade objective. The good news is that Canada is firmly embedded in the TPP process.

Although seemingly far away, the upcoming ASEAN Summit must be on Canada’s radar.

Hugh Stephens is a Research Fellow of the Canadian Defence and Foreign Affairs Institute and Executive in Residence of the Asia-Pacific Foundation.