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Open Regionalism and Deeper Integration: The Implementation of ASEAN Investment Area (AIA) and ASEAN Free Trade Area (AFTA)

Dr. Lawan Thanadsillapakul*


Over the past three decades ASEAN has shown a reluctance to move towards deeper regional integration(1). A lack of political will(2) is the main reason for this low-key implementation of regional institutions. Moreover, it has been said that the specific nature and culture of "the ASEAN way or ASEAN Style" in regionalisation is based on the indigenous political culture of the region, which it is claimed to have served ASEAN well.

ASEAN way has its foundation from the "Musyawarah" practice, which has been generally used in Southeast Asia for centuries and it has been adapted to be "the ASEAN way"(3) , at all levels, from the local, national, to international level, to conduct their relationship among themselves. Musyawarah is based on the "consensus" practice that all issues concerned would be discussed and debated until reaching a final resolution with mutual recognition. This no-vote system has long been implemented in ASEAN. This is regarded as a flexible method and it has been claimed that Musyawarah practice has saved ASEAN from conflict and confrontation. Moreover, as ASEAN has played an important role in APEC, APEC has also been influenced by "the ASEAN Way" in its implementation of the Asia-Pacific Free Trade Area by setting up the scheme without legal-binding pattern but based on concerted unilateral liberalization and a "Gentlemen's Agreement".(4)

However, the circumstances have changed: the altered global economic and legal environment, the close interaction and interdependence of trade and investment, the move towards regional economic integration in Latin America and Africa, the political changes in Eastern Europe, the deepening and enlargement of the EU. Above all, the 1997-8 Asian crisis was a major turning point. Thus, The Statement on Bold Measures resulting from the ASEAN Heads of Investment Agencies Meeting on 24th July 1998 asserted that:

"The financial crisis and economic crisis has severely affected the ASEAN economies and business dynamism in the region. In order to regain business confidence, enhance economic recovery and promote growth, the ASEAN Leaders are committed to the realisation of the ASEAN Free Trade Area (AFTA). In addition, the Leaders agreed on special incentives and privileges to attract foreign direct investment into the region. To enhance further economic integration of the region, the Leaders also agreed to further liberalize trade in services".

Part 2


* Assistant professor at the School of Law, Sukhothai Thammathirat Open University, Thailand. She holds LL.B and LL.M from Thammasat University, LL.M from Vreije Universiteit Brussels, Belgium, and Ph.D. from Lancaster University, UK.

(1)  As ASEAN has no supranational institution, the highest decision-making body is the Heads of Government Meeting that provides policy, guidelines, supervision and decision leading to the ASEAN's direction. And it is the Heads of ASEAN Governments that always declare the political will of ASEAN that it would maintain the flexibility of "the ASEAN way".

(2) Chng Meng Kng has pointed out that "the basic reason for this lack of progress was not (only) institutional inadequacy (or bad program) but a lack of political will". Chng Meng Kng, 1992: 134 and Pelkmans stated that … "institutions can and should facilitate but they cannot replace political will" Pelkmans, 1992.

(3) See Kemapunmanus, Lawan. (1985) Legal Personality and Treaty Making Power of ASEAN and the Enforcement of ASEAN Agreements. LL.M Thesis, Thammasat University, Bangkok, Thailand.

(4) See the Bogor Declaration on Asia-Pacific Trade Liberalisation. APEC Leaders' Declaration Bogor, Indonesia, 15 November 1994.