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AUSTRALIA & ASEAN March 2018

 

AUSTRALIA & ASEAN      March 2018

ASEAN
SYDNEY WEEKEND
(www.rfa & Philippines DFA)

BACKGROUND BRIEFING
Australia pulled off a diplomatic coup by hosting an ASEAN Special Summit in Sydney in mid-March, the more so since Australia only had ‘Dialogue’ status upgraded to ‘Strategic Partner’ in 2014. As background information,  the constraints and obligations of treaties and agreements swirling round individual ASEAN members  add to political complexities for an aspiring  cohesive southeast Asian community.

Precursor to the ASEAN agreement was the 1967 Treaty of Amnity and Cooperation initiated in Bali by Indonesia, Philippines, Singapore and Thailand. The objective was to promote perpetual and everlasting amnity among their peoples, an anti-colonial consensus facilitated a common bonding.

The ASEAN Agreement was signed in Bandung in 1987 by the founding fathers, Indonesia, Philippines, Singapore, Thailand and Malaysia and other regional nations, Vietnam, Myanmar, Cambodia, Loas and Brunei joined soon after. The objective was to promote Pan Asianism, intergovernmental cooperation, and to facilitate economic, military, educational and socio-cultural integration. Obviously Australia is anxious to forge closer ties with ASEAN for economic and strategic reasons, but there are fundamental reasons why a closer association might be difficult. ASEAN, like the EU, was conceived as a mechanism to maintain harmony and border security between fractious southeast Asian nations. A basic tenet was there was to be no interference in the internal affairs of any member nation.

In 1989, Prime Minister Hawke promoted the establishment of the Asia Pacific Economic Forum  (APEC). Later the same year national representatives met in Canberra to formalise the Association, they were Malayasia, Brunei, Japan, Korea, Canada, New Zealand and the United States, Ultimately, the group was joined by China, Vietnam, Russia, Chile, Mexico, Hong Kong and Peru. The objectives were to promote  trade and peaceful cooperation across the Pacific. It is significant that APEC brought to the table nations that ASEAN regarded as enemies or who sought economic domination.

APEC was an international  grouping where industrialised  (First World) nations would seek markets into less developed nations struggling to free themselves from agrarian constraints. The former raising taxes on commercial production, the latter raising rent seeking income.

In 2005, Australia reluctantly signed the Treaty of Amnity and Cooperation  (TAC) to ensure Prime Minister Howard  received an invitation to the year end East Asian Summit which was to be attended by eighteen regional nations. Australian attendance was critical since the southeast Asian region receives 60% of Australia’s exports. (AM RN 10 December 2005) Australia’s concern on signing the TAC was this action should not impact on the ANZUS Agreement or be binding on the Bandung Principle of Non- Alignment.

In 2006, the P4 Trade Agreement signed between Brunei, Singapore (two wealthiet ASEAN economies), New Zealand and Chile formalised a desire to promote trade.

Another layer of complexity impacting on ASEAN is the Trans Pacific Partnership ratified in March 2018 to promote trade and closer economic ties. Signatories are Brunei, Malaysia, Singapore, Vietnam, Canada, Australia, New Zealand, Chile, Mexico, Peru and Japan.

 

CORE ISSUES
The ASEAN community is in a state of developmental flux, from modern industrial  to relatively undeveloped agrarian economies. There is a desire to raise living standards under controlled democratic principles. The difference between most ASEAN members and Australia is stark. The data in Table1, illustrating GDP/pperson (not wages) and hourly labour rates, illustrates the disparity in living standards. The data on Brunei, Singapore and Australia clearly indicates problems of economies reliant on natural resources: Brunei is blessed with abundant energy resources; Singapore has built up a strong economy on trade, services and high tech exports; Australia’s economy still overly relies on natural resource exports which must be partly replaced by manufactured exports to maintain the very high living standards.

Table 1   Australia and Asean – Comparative Data   $US   IMF   2018

Data sets out population, national GDP, GDP/person (not wages) and minimum hourly wage, a measure of economic development.

COUNTRYPOPULATION MGDP BGDP/personHourly Rate
Indonesia26110924,1840.46
Philippines1033573,4661.12
Vietnam932352,5260.73
Thailand694676,7681.06
Myanmar53741,3450.39
Malaysia3134111,0000.93
Australia24120450,16613.59
Cambodia16241,500na
Loas7192,7140.83
Singapore631652,366na
Brunei0.41230,000na

 

The table below illustrates Australian Export and Import data with the global trading blocs. It should be noted the ASEAN bloc is relatively minor in value with Australia showing a negative Terms of Trade for 2016.

 Table 2   Australia and its Trading Blocs.

 

TRADING BLOCEXPORT $A BEXPORT %!MPORT $A BIMPORT %T of T
APEC2517623766+24
ASEAN38115516-5
EU3096720-37
G202347123368+1
OECD1303917150-37

(Composition of Trade, Australia. DFAT Table 9)

Unsurprisingly, Australia has an overall trading deficit which, of course, shows up in the national accounts. Australia’s long term objective is to assist in raising education and living  standards which will be reflected in higher labour rates. Australian exports must concentrate on education, services and development products.

Now to the smaller picture where the devil is in the detail. The table below provides export-import data on Australia’s top fifteen trading partners. These figures are surprising in that they indicate the southeast Asian nations have a trading surplus with Australia for 2016. This is a problem that should interest DFAT and AusTrade.

Table 3  Australia’s Trade with ASEAN,  among top 15 Partners

CountryExportExportImportImportT o T
Rank$A BRank$A B$A B
Hong Kong8
12.5---
Singapore910.3712.3-2.3
Indonesia117.4117.9-0.5
Malaysia127.41010.2-2.8
Vietnam135.1155.4-0.3
Thailand144.6416.5-11.9
4746

DEBRIEF
The Sydney Declaration following the Summit formalises the Leaders’ consensus way forward. There will be a joint effort to shape and secure a prosperous regional future through a range of measures. and there is to be significant collaboration in strenthening regional security. The public manifestation  of the Summit has been one of necessary protocol, smiles, pressing flesh, compliments and canapés. What should happen when leaders return to their respective fiefs, but probably will not, is firm instruction to a myriad bureaucrats, industry executives, technologists and academics to ‘make it happen’.

Australian politicians will have to look beyond the next three-year cycle to the IMF projections when, by 2030, ASEAN is slated to increase from the seventh to the fourth largest export market.

At the Summit, an ASEAN minister made a very polite but adamant statement that “Australia will never become a member of ASEAN. Australia is an extremely good friend of ASEAN nations and Australia is welcome as a dialogue partner”. (SMH, 24 March 2018) The principle problem is that Western European Caucasian-rooted culture is totally different to the southeast Asian Indo-Aryan and Dravidian-rooted culture. There is virtually no common ground except a desire for prosperity and security. There is no desire to see a powerful economic neighbour overwhelm the system and there is certainly no appetite to have Australia impose Western style democracy, rule of law or Christian inspired human rights legislation.

The last word comes from the Lowy Institute. (27 Marct, 2018) Former Prime Minister Keating addressed Australia’s Southeast Asian dilemma by stating “Australia needs to seek security in Asia, not from Asia”. Since Australia cannot integrate until its demographic substantially changes, the best policy is for Australia to remain a Dialogue and Strategic Partner and position itself to become a tower of technical assistance and an unbiased trading partner.

ASEAN
SULTAN OF BRUNEI DEPARTS
(Grahame Hutchinson, 16Right.com)