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European Union integration lessons for
ASEAN\u00fe 3: the importance of
This paper will argue that EU integration appears to offer ASEAN and three Northeast Asian Countries (China, Japan and South Korea) political and security lessons concerning maintenance of regional stability, as well as some economic lessons. There is not, however, any institutional blueprint for integration that these countries could emulate. This is in part because economies are characterized by \u2018\u2018contextual speci\ufb01city\u2019\u2019 of chosen institutions and their corresponding working rules. These institutions and rules evolve in particular cultural and historical settings and are shaped by the speci\ufb01c country\u2019s philosophical basis, political structure, and attitudes of authorities towards alternative types of economic institutions and the types of corresponding rules they could choose to establish for those institutions.
Behind the economic importance [of the China\u2013ASEAN Free Trade Area membership] is the deeper political implications caused by trade liberalization between ASEAN and the PRC, or it will be difficult to answer, for example, why Japan, ASEAN\u2019s oldest dialogue partner that has a huge economic scale and close economic ties with both Southeast Asia and mainland China, has not been in the game. Hence, the
Integration of European Union (EU) members was part of a development strategy with multiple goals, especially the strong desire to improve political relations among members so as to reduce nationalism and the likelihood of war. However, at the time of the European Coal and Steel Community\u2019s inception there was little economic theory upon which to base institutions and rules pertaining to integration.1Member country authorities and their advisors chose to adopt some unique supranational institutions and rules for integration in response to their particular historical, political, and socio-economic conditions. They did not adhere to any blueprint for development such as the model of a\u2018\u2018free market economy.\u2019\u2019
The post-1951 experiences of EU members indicate that concurrent with the deepening and widening of integration, which has included market-oriented reforms (e.g. reduced tariff and non-tariff barriers, easier cross border transport, a stronger competition policy) has been a record of economic development that could be considered quite favorable. Some analysts argue that integration has contributed favorably to this successful performance.2 Others point out that integration in the form of regional trading arrangements (RTAs) has proliferated to over 250 such arrangements, creating a\u2018\u2018spaghetti bowl\u2019\u2019 of tariffs making any world trade regime\u2018\u2018chaotic\u2019\u2019 (Bhagwati, 1995). With the deepening and widening of integration within those arrangements, an issue is whether the EU development experience offers lessons for current ASEAN members and potential new members. This is pertinent due to the enlargement of ASEAN,3which may soon include China, Japan, and South Korea (hereafter referred to as ASEAN\u00fe 3).
This paper will argue that EU integration appears to offer ASEAN\u00fe 3 political and security lessons concerning maintenance of regional stability as well as some economic lessons. There is not, however, any institutional blueprint for Southeast Asia to emulate. This is due in part to economies being characterized by\u2018\u2018contextual speci\ufb01city\u2019\u2019 of institutions and their corresponding working rules. These institutions and rules evolve in particular cultural and historical settings and are shaped by the speci\ufb01c country\u2019s philosophical basis, political structure, and attitudes of authorities towards alternative types of economic institutions and the types of corresponding rules they could choose to establish for those institutions.4Authorities\u2019 attitudes, in turn, are heavily in\ufb02uenced by the economy\u2019s past and recent performances and authorities\u2019 perceptions as to which factors have contributed most signi\ufb01cantly to those performances. Another factor mitigating the
the preference. Adam Smith had argued in favor of preferential trade agreements on a bilateral basis, arguing that the recipient of preferential treatment could bene\ufb01t. Robert Torrens argued that bene\ufb01ts could be derived for a nation from discriminatory trade policies if it could establish a\u2018\u2018nationally optimum tariff\u2019\u2019 along the lines of a price-discriminating monopolist. In 1950 Jacob Viner\u2019s pioneering work identi\ufb01ed that preferential trade arrangements could have both bene\ufb01ts (trade creation) and costs (trade diversion), and consequently global welfare needed to be considered in evaluating the net economic impact of economic integration among nations. For further discussion, seePomfret (2001, pp. 176\u2013182).
in\ufb02uence of the EU supranational institution-building experience for ASEAN\u00fe 3 is that unlike authorities in Central and East European countries and their Western advisors, ASEAN\u00fe 3 policy makers have consistently demonstrated a clear understanding that it is unwise to transplant in a wholesale manner institutions and rules from another economy\u2014 particularly a Western economy\u2014to their own country and expect favorable outcomes.
This paper utilizes an evolutionary-institutional perspective towards economies is utilized for analyzing some development cases.5In order to demonstrate that innovative policies aimed at\u2018\u2018getting the institutions right\u2019\u2019 at the outset of the development process appear to have contributed favorably to the economy\u2019s subsequent performance.Section 1 examines the EU\u2019s development experience, particularly the relationship between the deepening and widening of integration and the economy\u2019s performance. Common aspects of the Japanese and Chinese development experiences and the performance of each economy as pertinent to integration will be analyzed inSection 2. The evolution of ASEAN, its economic performance, and its political and economic relationships with China, Japan and South Korea are presented inSection 3. The paper concludes by suggesting lessons the EU integration experience provides for ASEAN\u00fe 3.
Since 1951 the EU has simultaneously been one economy and the numerous separate economics of which it is comprised. Both the EU and its members are continually evolving: although integration has deepened and widened, each participating economy\u2019s degree and pace of political, economic, and social integration has varied. The commitment to integrate was stimulated by centuries of war and the underdeveloped state of European economies after World War II.6The French were at the center of the integration process. They sought a Franco-Germanrapprochement that would not impose harsh economic suppression on Germany (such as the Treaty of Versailles penalties), thereby avoiding adverse economic effects on Germany\u2019s natural trading partners along its western and southern borders. The Benelux countries and Italy endorsed the French position. The political, economic and social challenges that ensued from the subsequent decision to form the European Coal and Steel Community (ECSC) challenged authorities from these six countries to design appropriate institutions and corresponding rules. United States defense spending, by guaranteeing the military protection necessitated by the Cold War, obviated the necessity for the ECSC to allocate substantial resources toward its own military defense. This aid facilitated the establishment of supranational institutions that would achieve the commu- nity\u2019s political, security and economic objectives. Subsidiary to the political and security
common market was in politics, not in business. That is, the common market was primarily formed not to gain the considerable economic advantages envisioned, but to meet the political challenges of post war Europe. A political solution to Franco-German animosity had to be found; a European effort to face up to the Soviet military-strategic challenge was a necessity; and a way to fend off American economic domination was considered essential. Although not the only factor, the European Community was important in achieving all these goals\u2019\u2019 (Krause, 1999, pp. 5\u20136).
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