ECONOMIC RESEARCH CENTERDISCUSSION PAPER

No.153ASEAN AT THE THIRD TRANSITION: GROPING
FOR A NEW REGIONALISM IN EAST ASIA
bySueo SUDO

March 2005

ECONOMIC RESEARCH CENTERSCHOOL OF ECONOMICSNAGOYA UNIVERSITYASEAN AT THE THIRD TRANSITION: GROPING
FOR A NEW REGIONALISM IN EAST ASIA
Sueo SUDO*
Abstract
The nature of Southeast Asian regionalism has been altered three times during thepast three decades. Each time, it was largely external factors that helped shape theextent and direction of Southeast Asian regionalism. Especially, after thedevastating financial crisis in 1997, ASEAN decided to pursue a larger regional
strategy in the name of “ASEAN plus three”. Without any doubt, it is notproblem-free to promote East Asian regionalism and the potential workability ofthe proposed regionalism remains to be seen. Given the changing nature ofSoutheast Asian international relations, this study intends to trace the uniquedevelopment of a new regionalism in East Asia, known as the ASEAN+3, and toanalyze whether or not this ASEAN+3 is viable enough to reinvigorate a tainted
Southeast Asian regionalism.

Key words: ASEAN+3, new regionalism, East Asian regionalism――――――――――――――――*Professor, Faculty of Policy Studies, Nanzan University;
Visiting Research Fellow (From October 2003 to March 2004),
Economic Research Center, Nagoya University
E-mail: sudos@nanzan-u.ac.jp1Introduction
The nature and direction of Southeast Asian regionalism has been altered several
times during the past three decades. Each time, it was largely external factors that
helped shape the extent and direction of Southeast Asian regionalism. The
establishment of the Association of Southeast Asian Nations (ASEAN) in August
1967 was not an exception. Indeed, the Cold War in Southeast Asia was not only aconfrontation among great powers, but also a struggle among Southeast Asians
themselves. During the devastating Vietnam War (1964-1975), for instance, Hanoi
regarded ASEAN as pursuing a Washington-dictated confrontation policy against
the communist bloc. However, the end of the Vietnam War in 1975 opened a newvenue for ASEAN, which quickly seized the opportunity to embark on its search fora new regional order. ASEAN thus decided to hold its very first summit in Bali in
February 1976, followed by the second summit in Kuala Lumpur in August 1977.
Concomitantly, the dawn of the post-Cold War era, as a result of the 1989
Malta Summit, witnessed the reduction of tension in the Asia-Pacific region,
leading ultimately to a re-alignment of Cold War forces, such as Sino-Soviet,
Sino-Vietnamese, and U.S.- Vietnamese. At the same time, ASEAN's diplomaticefforts led to a political settlement in September 1991 of the thirteen year old
Cambodian conflict, therefore diffusing the polarization of the region. Moreover,
the termination of the Cambodian conflict prompted ASEAN to embark on anotherround of efforts to build constructive relations with former adversaries and seek a
new direction for itself. In so doing, ASEAN has begun to broaden the horizon ofregional cooperation traditionally framed by economic nationalism and bilateralforeign policies. Until 1997, this had been accomplished with great finesse.
Then came the devastating financial crisis that erupted in 1997. With thecollapse of the Suharto regime in 1998, ASEAN faced its biggest crisis of how to
overcome its third transition. After two years of regional search for a new order,
ASEAN decided to pursue a larger regional strategy in the name of “ASEAN plus
three”. Without any doubt, it is not problem-free to promote East Asian
regionalism and the potential workability of the proposed regionalism remains tobe seen.
Given the changing nature of Southeast Asian international relations, thisstudy intends, first of all, to trace the unique development of a new regionalism inEast Asia, known as the ASEAN+3, and then to analyze whether or not thisASEAN+3 is viable enough to reinvigorate a tainted Southeast Asian regionalism.

2

In order to fully understand the nature of the third transition and the way ASEAN
has been trying to resolve, we need to examine the first and second transition.

The End of the Vietnam War in 1975: The First Transition
Throughout the Cold War era, Southeast Asia had been characterized by its
bipolarity, predicated on interactions among the three great powers --- the UnitedStates, the former Soviet Union (Russia) and China (Sudo 2002). American policy
toward Southeast Asia had been to maintain a balance of power in the region bybilaterally extending explicit support for Thailand and the Philippines while
containing China and Vietnam. In addition, the region had a strategic significancefor Washington with the U.S. bases in the Philippines, serving as the keystone ofAmerican defense policy in the Asia-Pacific region. Thus, when the first Indochina
War broke out between France and Vietnam, Washington supported France, albeit
in a limited way. The defeat of France at Dien Bien Phu came as a shock to
Washington, which felt compelled to create the Southeast Asian Treaty
Organization (SEATO) in 1954. Although only Thailand and the Philippines joined
SEATO, a rigid American containment policy left little room for Southeast Asian
countries to maneuver their own raison d'etre, except for Sukarno's Indonesia andisolated Burma (Myanmar) which joined the first Asia-Africa conference in 1955
(better known as the Bandung Conference). Thus, a polarization of Southeast Asia
along the lines of the East-West rivalry was firmly established, continuing evenafter the outbreak of the Indochina War between the United States and Vietnam in
1965.
During the second Indochina War (1965-1975), a policy of bilateralism wasmaintained, although indigenous regionalism emerged in the form of ASEAN in
1967. In fact, since the immediate task for ASEAN was the development of a basis
for mutual trust among member states, the Bangkok Declaration did not specify amechanism for formal dealings with the external powers. As such, this earlier
sub-regional organization was inward looking and did not produce any tangible
results until the first ASEAN summit in 1976, with the exception of an agreementin November 1971 to pursue a Zone of Peace, Freedom and Neutrality (ZOPFAN).
The fact that all member states but Indonesia had foreign bases and supported
American aims in Vietnam clearly indicated the nature and limits of the
Association. Economically, both ASEAN and non-ASEAN states alike relied upon
their patron's assistance and market for their products, in effect strengthening3polarization of the region as well as bilateralism in their foreign policies.
The end of the Vietnam War in 1973 and the partial realization of thedomino theory, that is the emergence of the communist bloc in 1975, therefore,
compelled ASEAN to restructure its basic posture of regional cooperation.
Convening the first and second summit meetings in 1976 and 1977 respectively,
the ASEAN countries decided to strengthen its organizational foundation so as todeal with pressing regional issues. Under the Treaty of Amity and Cooperation(TAC) adopted at the Bali meeting of 1976, ASEAN members agreed to abide by
the following principles (Article 2): (1) mutual respect for the independence,sovereignty, equality, territorial integrity, and national identity of all nations, (2)the right of every state to lead its national existence free from externalinterference, subversion, or coercion, (3) noninterference in internal affairs of one
another, (4) settlement of differences or disputes by peaceful means, (5)renunciation of the threat or use of force, and (6) effective cooperation among
themselves.
By renewing its foundations, ASEAN also came to stress the importance ofcultivating its external relations for the first time, as the second ASEAN summit
suggests. In promoting dialogue relations, ASEAN adopted four guidelines in the
1976 Declaration of Concord and the Treaty of Amity. They consist of the following:
first, cooperation with ASEAN as a group should not be at the expense of existing
bilateral arrangements; second, cooperation should serve to complement ASEAN's
capabilities and not to supplant them; third, cooperation should be for projects
conceived by ASEAN which are of a regional character and for the benefit of all
ASEAN countries; and fourth, cooperation should be unconditional (Hamzah 1989,
9).
Equally important, ASEAN has come to meet every year with all its dialogue
partners, following the annual Foreign Ministers' Meeting which has been held
since 1979. In explicating why this unique style of consultation with external
powers began taking place, we need to understand a most critical event when thethen Foreign Minister Sunao Sonoda initiated the Japan-ASEAN foreign
ministers' meeting in June 1978. During the meeting, Sonoda promised to "takeinto account the concern of ASEAN countries, at the forthcoming Summit Meetingof Industrialized Nations in Bonn in July 1978," while reaffirming Japan's
promises made by Prime Minister Fukuda just a year ago (Sudo 1992).
Moreover, given the deterioration of regional problems, Sonoda suggested to
the ASEAN leaders that an expanded foreign ministers' meeting would be4

necessary by inviting external powers such as the United States, Australia and
New Zealand. Especially noteworthy, Sonoda asked U.S. Secretary of State Vance
to meet with ASEAN foreign ministers in April 1978 in order to express jointly
their strong support for ASEAN. It was thus quite significant that the
Post-Ministerial Conference (PMC) in the present form --- the new template forsecurity cooperation --- was inaugurated in July 1979. Attended by the chief
diplomats of Japan, the United States, Australia, New Zealand, and the European
Community, ASEAN could demonstrate that ASEAN states were not alone andthat they were valued by influential states. In particular, "ASEAN members were
glad to see the United States accept their invitation and so restore some ofstrategic balance in the region" (Antolik 1990, 141). Since then, once a year, almost
all the major world powers have met with their Southeast Asian counterparts todiscuss various issues and problems, ranging from economic to social and politicalmatters of mutual concern. Although their agreements have no binding power, thefact that such a discussion even takes place is itself of great importance.
During the 1980s, the Cambodian conflict, initiated by Vietnam's invasion of
Cambodia in December 1978, threatened the security of ASEAN countries forseveral reasons. First, the Vietnamese action presented a serious challenge to theregional order ASEAN had earlier envisaged. To ASEAN, Vietnam was violating
the hallowed principle of non-interference that was the core of the 1976 Treaty ofAmity and Cooperation. Second, Vietnam had come to be portrayed by the frontline
state of Thailand as a security threat. Third, ASEAN deemed the Vietnamese
occupation of Cambodia as undermining its policy of making the region free fromgreat-power rivalry. Thus, the third Indochina conflict was a source of contention
between the ASEAN countries and Vietnam, thereby reinforcing the polarization of
the region.
Under these difficult circumstances, ASEAN emerged as a united actor to be
reckoned with. Especially during the third Indochina conflict period, the ASEAN
region developed a modus operandi among its member countries in three respects.
First, as a sub-regional organization, the countries of ASEAN have developed arule of consensus in that individual initiatives are subjected to collective
agreement as a means of strengthening ASEAN's regional resilience. Second, while
ASEAN's security perspectives have not been identical --- for instance, among thecountries of Singapore, Thailand, and the Philippines, who stressed reliance upona U.S. military presence in the region, and the countries of Malaysia and Indonesia,
who advocated a policy of neutrality --- they have come to accept ZOPFAN as a5

long-term supreme goal of the organization. Third, in TAC lies the basis for aregional order which includes mutual respect for the independence, sovereignty,
equality, territorial integrity, and national identity of all nations; the right of states
to be free from external interference; pacific settlement of disputes; renunciation of
the threat or use of force; and effective cooperation. Suffice it to say that ASEAN
stood up against Hanoi's invasion of Cambodia in order to preserve the rationale
and spirit of TAC, while taking full advantage of the PMC networks.
It was during this time that ASEAN developed its unique style of regional
cooperation, hence the formation of a new regionalism, which has the following
four characteristics: (1) non-interference in the internal affairs of member
countries; (2) amicable settlement of conflicts between members; (3) joint efforts
towardtheoutsideworld;

and

(4)

close

consultations

andconsensus

decision-making. Indeed, these four traits have come to be regarded as "theASEAN way." (Haacke 2003; Johnston 2003)

The End of the Cold War in 1989: The Second Transition
The advent of the post-Cold War era, however, has led many to consider that
ASEAN lost a major centripetal force in its political underpinning, once theCambodian conflict was over. In order to dispel this negative view, ASEAN
succeeded in convening another summit in January 1992, thereby consolidating
the new regionalism in Southeast Asia. This fourth Singapore summit will be
remembered as having produced four tangible agreements, as stipulated in the
Singapore Declaration. The ASEAN heads of government agreed to: (1) move to ahigher plane of political and economic cooperation to secure regional peace andsecurity; (2) seek to safeguard its collective interests in response to the formationof large and powerful economic groupings; (3) seek avenues to engage member
states in new areas of cooperation in security matters; (4) forge closer relations
based on friendship and cooperation with the Indochinese countries, following thesettlement of the Cambodian conflict.
Accordingly, since the fourth ASEAN Summit, ASEAN has come toemphasize the following three policies with which it can play a greater stabilizingrole in the region: economic integration, an extra-regional grouping aiming at agreater voice in international economic relations, and security cooperation. In away, the pursuit of these deepening and widening policies is thought to insure
ASEAN's survival and/or competition in the wealth game that will be played out in6this part of the world (Palmujoki 2001).

Toward an Economic Integration: AFTA
It is rather a cliché to state that ASEAN's economic cooperation is of lesssignificance than its well-articulated political and diplomatic cooperation. In thereal sense of the term, ASEAN came to agreement with the issue of regional
economic cooperation only after the inception of the Economic Ministers' Meetingin 1975. Afterwards, four major schemes were introduced: ASEAN Industrial
Project (AIP) in 1976; Preferential Trading Arrangements (PTA) in 1977; ASEAN
Industrial Complementation (AIC) in 1981; and ASEAN Industrial Joint Ventures(AIJV) in 1983. Promising as they seemed, however, these schemes produced little
impact on intra- regional trade (Narine 2002a, 24).
Because of these negligible results, major efforts were undertaken in thelate 1980s by a series of groups and institutions in the ASEAN region to explore
the ways and means of expanding regional economic cooperation. It was throughthese efforts that ideas of "a customs union" and "a free trade area" were spelled
out. Therefore, when the heads of the ASEAN governments met in Singapore in
January 1992, they were ready to agree on a major commitment to regional
economic cooperation, as indicated in the Singapore Declaration: "ASEAN shallestablish the ASEAN Free Trade Area using the Common Effective Preferential
Tariff (CEPT) Scheme as the main mechanism within a time frame of 15 years
beginning 1 January 1993 with the ultimate effective tariffs ranging from 0% to5%." Singapore Foreign Minister, Wong Kan Seng explained the historicalsignificance of this declaration: "It shows that Asean countries have understood
the profound international changes that have occurred and have responded tothem in a realistic and confident manner" (Straits Times, April 18, 1992).
As such, the adoption of the ASEAN Free Trade Area (AFTA) in November
1992, by which ASEAN intends to liberalize and stimulate its intra-regional trade,would be a major achievement if it succeeds. In particular, having shifted to a
strategy of foreign investment sponsored export-led growth since the late 1980s,
ASEAN states were compelled to prevent the possible diversion of investment in
the aftermath of the Gulf War and the collapse of Soviet Union. Indeed, ASEAN
has high expectations for AFTA because in theory the agreement would create an
integrated market of 330 million people with a combined GDP of $293 billion,
growing at 7 percent a year. Thus, if it is materialized by the projected deadline of7

2008, AFTA would have far-reaching effects by attracting non-ASEAN investment
to the region, especially from Japan, in addition to spurring intra- regional tradeand investment. This is made possible by a clause in the agreement which
stipulates that all manufactured products, including capital goods and processed
agricultural products with at least 40 percent of their content originating from any
ASEAN state, are entitled to tariff reductions under the CEPT scheme.
Furthermore, to ensure that the AFTA plan is fully carried out, the agreement
stipulates that a ministerial council be established to supervise, coordinate andreview implementation of the plan (Tan 1996).
However, only a few countries, such as Malaysia and Singapore, havecomplied with the agreed schedule of tariff cuts. Other members faced varieddifficulties with a liberalization schedule that required some countries to startlowering tariffs earlier than others, and left many goods temporarily or
permanently out of the framework, that is on the exclusion list. At the Economic
Ministers' Meeting in October 1993, therefore, ASEAN readjusted the AFTA
scheme. The new package policy took effect on January 1, 1994, with one majordifference: unprocessed as well as processed agricultural goods will now be covered,in addition to manufactures. As a consequence, the new CEPT product lists coverabout 84 percent of the total intra-ASEAN trade values and about 88 percent of thetotal 46,505 ASEAN tariff lines. In the absence of concrete details, however, theeffect and impact of the new scheme remains to be seen (Stubbs 2000).
Nevertheless, the fact that the Director-General of GATT, Peter Sutherland,
attended the October 1993 meeting seems to have increased ASEAN's potential for
economic integration.
In accelerating the region's economy, ASEAN has also strengthened its
micro-level regional cooperation. For instance, in December 1989, the then Deputy
Prime Minister of Singapore, Goh Chok Tong, first extended the idea of a "growth
triangle," with Singapore at the center providing investment and technologies andthe Malaysian state of Johore and the Indonesian province of Riau furnishing landand cheap labor. The success of this so-called "Sijori" model of micro-level regional
cooperation is said to be based on the following factors: first, a highly developed
city that has run out of land and labor; second, a surrounding area plentiful in bothland and labor; and third, the political will to reduce the visible and invisible
barriers separating the city from the hinterland (Thambipillai 1998). Although theapplicability of this model remains to be seen, it cannot be debated that the successof Sijori has inspired other growth triangles, such as the North Growth Triangle of8Indonesia, Malaysia and Thailand, and the Eastern Growth Triangle of Malaysia,
Indonesia and the Philippines. The appeal of many such triangles underscores thefact that market forces are gradually driving economic integration in this part of
the world.
All in all, these ambitious schemes of securing foreign investment seem toface many obstacles, including different levels of development and clashes between
national and regional interests, even if they do turn out to be a success by the
projected deadline of 2008. Nevertheless, given the fact that economic integration
is something the organization's founders had never intended, AFTA has to beunderstood in terms of ASEAN's novel political commitment to go beyond anarrowly defined economic nationalism of its member states. With this kind ofcommitment, the primacy of economics as a focus in ASEAN regional cooperation
will be strengthened.

Toward Greater Political Leadership: EAEC
In order to "seek to safeguard its collective interests in response to the formation oflarge and powerful economic groupings", ASEAN designated the East Asian
Economic Caucus (EAEC) in 1990. This ASEAN plan was first presented by
Malaysian Prime Minister Mahathir in December of that year, with the rationalethat cooperation and speaking in one voice was necessary among the East Asian
nations (New Straits Times, December 11, 1990). Although EAEC gained ASEAN
approval, the initial debacle associated with the birth of the East Asian Economic
Group (EAEG) still remained a major obstacle. In a nutshell, the core of the
problem was Japan, because "East Asia" meant Japan. As Mahathir palpably put
it: "We are asking you to join us and play a leading role. You have the stature andthe means. We know that Japan has foresworn war and military adventures. We
merely want you to be our partner, to be our equal but to be also the first amongequals. If you really wish to make amends for your past, this is your chance"(Mahathir 1994, 9).
Partly in reaction to trade blocs springing up in Europe and North America
and in part because of the aborted negotiation of the Uruguay Round in late 1990,
Mahathir announced the formation of EAEG which, rhetoric aside, was notintended to be a trade bloc but rather a low level economic alliance similar to the
Cairns Group. EAEG's principles were intended to be consistent with those of theGeneral Agreement on Tariffs and Trade (GATT) as well as other Asian regional

9

groups, including ASEAN and APEC. Then, why did EAEG not receive early
approval? The most significant opposition came from those excluded from thescheme, which in turn resulted in the cautious attitude adopted by Japan andsome of the ASEAN countries. The United States, for instance, insisted that EAEG
would be inward-looking and detrimental to the APEC process, and also feared thepossibility that Japan would dominate the proposed regional body (Straits Times,
December 22, 1990). Moreover, within ASEAN there emerged strong objections
from Indonesia, partly because Mahathir did not consult Suharto before theannouncement and in part because Jakarta was concerned with the economic
repercussions of excluding the U.S. (Jakarta Post, January 9, 1991; Far Eastern

Economic Review, February 7, 1991).
Despite mounting pressure from the U.S. and other excluded countries,
ASEAN did not forgo the scheme, due mainly to the fact that Malaysia chaired theASEAN Standing Committee. Subsequently, ASEAN foreign and trade ministers
tried to flesh out the EAEG proposal at their meetings in July and October 1991,
respectively. At the latter meeting, EAEG became an ASEAN idea and was
renamed EAEC so as to defuse allegations that it was intended as a trading bloc
(New Straits Times, October 10, 1991). With this minimum agreement, EAEC wasplaced on the agenda of the fourth ASEAN summit for January 1992. The 1992
Singapore Summit, however, could not come up with a unanimous vote, and theSingapore Declaration ended up merely stating: "With respect to EAEC, ASEAN
recognizes that consultations on issues of common concern among East Asian
economies, as and when the need arises, could contribute to expanding cooperation
among the region's economies, and the promotion of an open and free global
trading system" (Far Eastern Economic Review, February 6, 1992).
However, the notion of a fortress Europe and North American Free Trade
Agreement (NAFTA) has brought home the fact that ASEAN might become
marginalized, with major consequences for the region's economy and security. Thus,
despite the early debacle between Malaysia and Indonesia, the ASEAN countries
have agreed to promote it as an ASEAN scheme, as a result of mutual consultation
among its member countries. In particular, Mahathir-Suharto talks in July 1993
concluded in an agreement that APEC should not develop at ASEAN's expense,and objections to plans to turn APEC into a forum for trade negotiations wereraised. After the meeting, Suharto became more favorably disposed toward EAEC
(Bangkok Post, August 5, 1993).
While designating EAEC as a "Caucus within APEC," the next step toward10realization of the scheme was to launch an informal meeting, especially for the
purpose of securing Japanese attendance. This meeting transpired in July 1994.
Bringing together potential members from Japan, China and South Korea for the
first time, EAEC saw its first informal meeting off the ground, although theoutcome was inconclusive due mainly to indecision on the part of the non-ASEAN
countries. As then ASEAN Secretary General, Ajit Singh explained: "We also need
input from China, South Korea and Japan. This consultation will continue andwe'll reassure the others and try to help overcome any misconception or misgivings
they may have" (The Nation, July 26, 1994).
In January 1995, an ASEAN foreign ministers' meeting issued a joint
communiqué stressing the fact that "the member countries reaffirm theircommitment to a nearly launching of the EAEC and that they recognize theusefulness of more focused discussions on specific economic and development
issues, particularly on matters that will contribute to greater development of theEast Asian region" (Japan Times, August 1, 1995). The EAEC concept was given amajor boost at the fifth ASEAN summit in December 1995, which endorsed
Malaysia’s two proposals for the East Asian region: namely, the Mekong Basin
Development, and the Trans-Asia Railway (Nihon Keizai Shimbun, December 16,1995). In a way, ASEAN revived EAEC by adopting specific policies to be pursued
by the East Asian countries.
Moreover, in March 1996 in Bangkok, ASEAN held its first meeting between
East Asia and Europe and celebrated the establishment of a multilateral dialogue,
which became known as the Asia-Europe Meeting (ASEM). Since, objectively, it
seems desirable for ASEAN to have some countervailing force when dealing withsuch superpowers as the United States and Europe, EAEC and ASEM would boost
ASEAN's efforts to deal with such asymmetry (Yomiuri Shimbun, December 16,1997). In any event, ASEAN needs to resolve the dilemma of America's concern
about Japan's dominance in East Asia as well as ASEAN’s concern about achieving
a balance between China and Japan.

Toward Multilateral Security Cooperation: ARF
Although not a military organization itself, ASEAN has been concerned withsecurity problems that stem from both internal and external environments.
Nevertheless, up until 1975, the ASEAN countries saw their primary security
problems as internal to each society, emphasizing a combination of policies to11

achieve economic growth and the integration of various ethnic groups. In otherwords, they sought to deal with internal security questions --- including the issueof subversive forces --- on their own, by pursuing a goal of national resilience.
Externally, the ASEAN countries agreed in November 1971 to establish a Zone ofPeace, Freedom and Neutrality (ZOPFAN). The idea was to achieve a neutralized
Southeast Asia as a long-term regional solution in which the great powers would
agree to foreswear involvement in the region. ASEAN's first commitment tosecurity cooperation came with the 1976 Bali Concord, which officially recognized"continuation of cooperation on a non-ASEAN basis between the member states insecurity matters in accordance with their mutual needs and interests," while
maintaining that "the stability of each member state and of the ASEAN region isan essential contribution to international peace and security. Each member state
resolves to eliminate threats posed by subversion to its stability, thus
strengthening national and ASEAN resilience." In other words, the ASEAN states
have come to share the concept of "comprehensive security" based on collective
internal security (Alagappa 1998).
In the post-Cold War era, however, it appears that ASEAN's second majorcommitment to security cooperation has occurred for the following two reasons.
First, in parallel with the resolution of the Cambodian conflict, the naval and airforces of several ASEAN countries have been upgraded to a large extent because of
the high stakes of control of the South China Sea. In fact, Malaysia and thePhilippines had a quiet dispute in April 1988, not to mention the fact that a monthearlier, ASEAN had observed with considerable trepidation the struggle between
China and Vietnam over this same conflict zone. What happened was that Hanoi
challenged China's fortification of eight of the islands by sending a navy patrol.
The result was a bloody clash that left 77 Vietnamese dead and three ships sunk.
Hence, the South China Sea conflict was designated as the latest trouble spot for
the ASEAN countries, resulting in an arms race in the region. The critical issue inthis instance is not so much conflicting territorial claims, but an expanding
Chinese naval capability. Should the current trend in China’s naval modernization
program continue, the so-called "China Threat" would become a reality with somerather serious consequences. As one scholar suggests, "ASEAN countries will not
only continue to upgrade their defenses, but they may join more closely together
with Vietnam and even seek countervailing power from outside the region tobalance China” (Yahuda 1993, 47).
Second, then-Philippine Foreign Minister Raul Manglapus proposed that

12

ASEAN countries should assume joint political responsibility for the Americanpresence or otherwise secure a redistribution of the bases, in light of the growing
prospect of a total withdrawal of U.S. bases. When the Philippine Senate rejected
the new bases treaty in September 1991, the prospect for total withdrawal loomed
large --- even after September 1992 --- to which some ASEAN countries responded
by advocating further security cooperation. Clearly, spurred by the possible
phasing out of American bases and the South China Sea conflict, the ASEAN
countries have begun their quest for a viable alternative.
Facing a rapidly changing security environment in the region, and after
considering the various proposals made by Canada, Australia and Russia, ASEAN
members finally agreed to establish a regional body in July 1993, which they
formally called the "ASEAN Regional Forum (ARF)." The fact that they did notname the forum "Asian" suggests that the Association was intended to be thebackbone of future security discussions, with its PMC acting as a centrifugal body,to which decision such external powers as the United States, Russia, China, andJapan gave their full support. In fact, a proposal by the Japanese government toutilize ASEAN's PMC as a security forum contributed to the formation of the ARF.
This decision was a major step for ASEAN, in that the Forum holds the potential togenerate its own momentum toward a new regionalism and become the focus of all
matters relating to political and security issues (Kerr 1994).
Furthermore, ASEAN-ISIS has come to play a prominent role in theso-called Track Two process. In May 1991, for instance, ASEAN-ISIS organized a"senior officials’ meeting" made up of senior officials of the ASEAN countries anddialogue partners in order to support the ASEAN PMC process. And then, together
with a few other Asia-Pacific think tanks, ASEAN-ISIS established the Council for
Security Cooperation in the Asia-Pacific (CSCAP) to provide a non-governmental
dialogue and give direction and research support for the ARF, in the same mannerthat the Pacific Economic Cooperation Conference (PECC) used to function for
APEC (Singh 1997). Without a doubt, the establishment of CSCAP is one of themost important milestones in the development of institutionalized dialogue andcooperation concerning security matters in the region. It may be expected that theresulting CSCAP-PMC-ARF nucleus could serve as a basic security network in the
Asia-Pacific region.
The first ASEAN Regional Forum was held in July 1994 in Bangkok with six
member nations of ASEAN, seven dialogue partners and five observers and guests(Russia, China, Vietnam, Laos, and Papua New Guinea) attending --- this broad

13

representation implicitly underscoring the centrality of ASEAN. After a three-hour
discussion on Asian security, the chairman issued a brief statement stressing that"the ARF would be in a position to make significant contributions to efforts toward
confidence- building and preventive diplomacy" and peaceful settlement ofdisputes in the region. Since this was an inaugural meeting, the eighteen
participants simply agreed to only two future actions: to convene the ARF on anannual basis and hold the second meeting in Brunei Darussalam in 1995, and toendorse the purposes and principles of ASEAN's Treaty of Amity and Cooperation
in Southeast Asia, as a code of conduct governing relations between states and aunique diplomatic instrument for regional confidence building, preventive
diplomacy, and political and security cooperation (The Nation, July 26, 1994). Most
importantly, securing China and Russia's participation would constitute a major
breakthrough, bringing together for the first time all the major powers in the AsiaPacific region.
In February 1995, the Philippines revealed that China had built
military-style structures on Mischief Reef, which has since come to be regarded asa great security challenge to ASEAN. As a result, after holding successive ARFs,
ASEAN's intentions were becoming clearer. As one scholar explains: "ARF is seen
primarily as a means of engaging China in a multilateral security dialogue without
expectation of solving disputes or building a comprehensive regional security
structure" (Whiting 1997, 300). With the birth of ARF, therefore, the channels of
dialogue for Asia-Pacific regional security have now taken on multi-layered
structures, centering on the ASEAN-PMC framework and Track II dialogue. Thesedevelopments bode well for the initiation of "security networking" in the region.
Ever since ASEAN pledged in January 1992 to move the Association "towarda higher plane," it was able to fulfill this pledge over the following five years byadopting a higher profile in the wider Asia-Pacific region, based on the ASEAN way.
By introducing a new element of multilateral interaction and cooperation,
ASEAN's deepening and widening efforts led to the new regionalism in Southeast
Asia as a way to deal more confidently with the post-Cold War conditions that arepresently unfolding, as evidenced by AFTA, EAEC, ARF, ASEM, and a unified "oneSoutheast Asia."

The 1997 Financial Crisis and the Third Transition
In July 1997, however, a pervasive financial crisis occurred in Thailand, which14

soon engulfed East and Southeast Asian countries. Especially hard hit were
Indonesia and South Korea. Although exact reasons for the economic turmoil varyfrom country to country, there are several common factors: (1) an over-reliance on
short term foreign borrowing by private firms and banks; (2) over-investment inreal estate; (3) inadequate supervision of financial institutions; and (4)over-dependence on the U.S. dollar (Hirakawa 2001; Lukauskas and Rivera-Batiz
2001; Bustelo 2003). These factors were exacerbated by the lack of democratization.
In August, Thailand entered into an agreement with the International Monetary
Fund (IMF) for an emergency stand-by credit, in exchange for the adoption ofstringent fiscal austerity and a range of structural reforms. However, by the timethe informal summit meeting in Kuala Lumpur started on December 14, 1997,"many were helpless spectators to a mauling of their currencies, stock markets andeconomies in general by forces they barely comprehended" (The Economist,
December 20, 1997).
As such, the crisis became so pervasive that Asia is said to have lost its
confidence in the "Asian Miracle." Although this conclusion needs to be debated, it
seems undeniable that the prolonged economic crisis is likely to have some
important politico-security implications. Since Southeast Asian countries havebased their legitimacy largely on promoting rapid economic growth, the following
four implications of the financial crisis could be extrapolated: (1) the end ofdevelopmental states, for instance, Indonesia's Suharto regime; (2) slower defense
modernization; (3) a divisive ASEAN; and (4) the retreat of the new ASEAN
regionalism, for instance, AFTA and ARF. Now that some of these implications
have become reality, the pessimists may claim that "the ASEAN way no longer
works" (The Economist, February 28, 1998).
Especially, the collapse of the longest regime in Southeast Asia in May 1998
brought home the fact that ASEAN without Indonesian leadership could be
ineffective, as the East Timor debacle amply suggests. The consequences forIndonesia’s national cohesion could be a catastrophic. While a complete breakdown
in Jakarta’s authority remains unlikely, as one observer explains, “Concernedneighbours and interested powers will need to coordinate their planning for such acontingency” (Huxley 2002, 91).
While resolving in their Vision 2020 statement to move closer toward
regional cohesion and economic integration in December 1997, the hard-hit
ASEAN countries, individually and collectively, turned to Japan for assistance.
Thailand, for instance, sent its finance minister to Tokyo before asking for IMF

15

assistance. For its part, Japan agreed to play an important part in facilitating
assurances of continued Japanese investment in Thailand and agreement fromJapanese banks to roll over existing loans, and any additional Japanese support
that might be available (Funston 1998). Collectively, Japan and ASEAN tried to set
up an "Asian Monetary Fund" to deal with the IMF deficiency. As Thai Finance
Minister Thanong explained, the scheme envisions Japan becoming "a pillar of
economic stability in the region comparable to the United States and Europe in
their own continents" (Bangkok Post, September 20, 1997). However, thisambitious plan was rejected by the United States, and thus never materialized(Amyx 2002).
On the other hand, the financial crisis also seems to have had some unifying
effects on ASEAN. Most importantly, the crisis has provided additional impetus toliberalization while emphasizing that regionalism is not only important politically,
but also economically (Palmujoki 2001). Indeed, if the affected countries can adopt
much needed structural reforms --- including greater accountability andtransparency in their financial systems and more open markets --- the crisis may
provide opportunities for them (Kuroda and Kawai 2002, 15). The 1998 Summit inHanoi is the case in point. Following the Manila agreement in November 1997,
ASEAN financial ministers agreed to set up a peer surveillance system tosupervise macroeconomic policies, financial regulations and transparency ofmember countries. Furthermore, the sixth ASEAN summit in Hanoi adopted theso-called Hanoi Action Plan as part of a series of action plans to achieve theASEAN Vision 2020, bonded together in partnership. This action plan has six-yeartime frame of 1999 to 2004. While producing three agreements, namely, the Hanoi
Plan of Action, the Hanoi Declaration of 1998, and a Statement of Bold Measures,
ASEAN could send the right message that moves toward further regional
integration (The Economist, December 19, 1998). However, the main problem withthe action plan is that it is all-embracing, covering a wide range of issues. Thus theplan appears overly ambitious (Hew and Anthony 2000, 23).
Since the financial crisis has exacerbated its inherent weakness, ASEAN
needs to undergo reforms. Otherwise, its role in the region could be marginalized.
As one scholar explains: “ASEAN is likely to lose its pre-eminent regional status toother institutions, and may even fade into irrelevance, in the next century” (Narine
1999, 358).

16

Groping for an ASEAN+3: Double-Edged Sword?
ASEAN’s another response to the financial crisis was to forge a new regionalism inEast Asia while retaining ASEAN’s position as “driver’s seat.” The EAEC debacle
has definitely affected the ways and means of formulating the content anddirection of a new regionalism. As former Philippine Foreign Minister Domingo
Siazon cogently put it: “EAEC . . . provided the initial rationale for theestablishment of an East Asian grouping (Terada 2003, 256).
Accordingly, the ASEAN+3 (Japan, China, South Korea) framework
emerged from an increasing drive among the East Asian countries to learn fromthe currency and financial crisis and strengthen regional cooperation (Rowena and
Layador 2000; Lincoln 2004). Now that ASEAN could not deal with the financial
crisis, Asian leaders turned to East Asian cooperation instead of Asia-Pacific(Stubbs 2002; Webber 2003). The first summit took place in December 1997, withleaders agreeing at the second summit in December 1998 to regularize the event.
Since some countries in the region were reluctant to commit themselves tocooperation in East Asia, the ASEAN +3 began in quite a low-key way. No jointstatement was launched. Moreover, the term ‘ASEAN +3’ was cautiously andrarely used in the first two meetings, much less in the agenda for the meeting. It
was only after the ASEAN+3 meeting of finance ministers in March 1999 that theterm ‘ASEAN+3’ was widely used (Terada 2003, 264). Let us see more closely how
this process has been evolving.
At the third meeting in 1999, the plus three leaders adopted the "Joint
Statement on East Asia Cooperation," in which leaders resolved to promote
cooperation in a wide range of areas encompassing monetary and financial
cooperation, social and human resources development, scientific and technicaldevelopment, the cultural and information area, development cooperation,
political-security, and transnational issues, as the first ever joint statement within
the framework of the meeting. Given the importance of steadily implementing the
Joint Statement in the future, as a result of a Japanese proposal, it was decided
that the first ASEAN+3 Foreign Ministers' Meeting would be held on the occasionof the ASEAN PMC in Bangkok in July 2000. At this summit, the first dialogue
among the leaders of Japan, China and South Korea took place as a breakfast
meeting at the proposal of Prime Minister Obuchi (Nihon Keizai Shimbun,
November 29, 1999).
In May 2000, the ASEAN+3 financial ministers surprised the world leaders17when they launched an initiative to form a network of regional bilateral currency
swap arrangements designed to shield regional currencies from strong andunexpected depreciation (Hund 2003, 407). The so-called Chiang Mai initiative is ahighly significant watershed in the history of East Asian regionalism, as Nabers
explains: “The extension of the currency swap accord epitomizes the sincerity of
East Asian attempts to strengthen regional cooperation (Nabers 2003, 120)”.
The first ASEAN+3 Foreign Ministers' Meeting took place on the margins of
the ASEAN PMC in Bangkok in July 2000, with the main purpose of conducting aninterim review of the implementation of the Joint Statement (Nihon Keizai

Shimbun, July 27, 2000). At the meeting, Foreign Minister Kono called for "openregional cooperation" and a Japan-East Asia Partnership Initiative, identifying
human resources development and intra-ASEAN economic disparities as concrete
areas for cooperation. Discussion also took place on the Korean Peninsula andIndonesian situations, with the meeting adopting the Joint Statement of theASEAN+3 in support of the sovereignty, territorial integrity and national unity ofIndonesia.
Strengthening regional cooperation in East Asia was the central agenda at
the November 2000 ASEAN+3 summit in Singapore, where Prime Minister Mori
proposed three principles to guide the promotion of East Asian cooperation towardthe 21st century, namely (1) building partnership, (2) open regional cooperation,and (3) comprehensive dialogue and cooperation including the field of politicalsecurity. ASEAN also proposed an East Asian summit and an East Asian Free
Trade and Investment Area (Nihon Keizai Shimbun, November 25, 2000). It was
decided that the East Asian Study Group (EASG) advocated by South Korean
President Kim Dae Jung would consider these proposals from a medium-to-longterm perspective. The remarks of each leader in response to the statement by thePrime Minister of Singapore, Goh Chok Tong (Chair of the meeting), as he raised
the issue of how to promote ASEAN+3 cooperation, while touching on the outcomeof the ASEAN Summit Meeting, were as follows:(1) Chinese Premier Zhu Rongji defined China's positive stance toward ASEAN+3
while referring to specific cooperation. Premier Zhu Rongji also stressed that
China's accession to the World Trade Organization (WTO) would not pose athreat to ASEAN.
(2) Japanese Prime Minister Yoshiro Mori proposed the following in terms ofspecificcooperation:

1)

Information

18

Communication

Technology(IT):Cooperation of Japan, China, and the Republic of Korea in the e-ASEAN
Initiative and holding of the "Joint Conference of Government Officials,
Prominent Academics and Business Leaders for IT Cooperation in East Asia."2) Anti-piracy: Necessity of a comprehensive approach toward piracy andholding of the "Asian Cooperation Conference on Combating Piracy and Armed
Robbery against Ships." 3) Chiang Mai Initiative: Prime Minister Mori
welcomed the agreement on the basic principles of the swap agreement andannounced Japan's support towards the ASEAN Secretariat. 4) Cooperation inpolitical-security fields: Prime Minister Mori emphasized the importance ofthe Korean Peninsula and Indonesia for the stability of Asia.
(3) Referring to the "East Asia Vision Group," South Korean President Kim Dae
Jung suggested the establishment of an East Asia Study Group in order toreview the modalities of cooperation in East Asia by both government and theprivate sector.
(4) ASEAN should consider the possibility of holding an "East Asian Summit" topromote cooperation in East Asia. ASEAN+3 should discuss political-security
fields in the future. ASEAN should foster partnership in East Asia; Asia
should present a candidate for the next United Nations Secretary-General;
ASEAN should not forget to see things from both bilateral and multilateralpoints of view; ASEAN welcomes Japan's US$15 billion Comprehensive
Cooperation Package on Information Technology (IT); ASEAN should carry out
research regarding the possibility of creating a free trade and investment area
in East Asia in the East Asia Study Group (http://www.asean.or.id).
Prime Minister Goh summarized the discussions, commenting that it isconceivable that the "ASEAN+3 Summit Meeting," in which the member countries
discuss how Japan, China, and the Republic of Korea should cooperate with
ASEAN, will evolve into an "East Asian Summit," in which member countries will
participate as an individual member of East Asia, in order to advance cooperationin the East Asia region. Prime Minister Goh said that he would have the East Asia
Study Group consider the possibility of an "East Asian Summit" as well as thepossibility of a free trade and investment area in East Asia (Nihon Keizai Shimbun,
November 26, 2000).
The second ASEAN+3 Foreign Ministers Meeting was held in Hanoi in July
2001. At the meeting, the progress of cooperation within the ASEAN+3 frameworkand the need to strengthen ASEAN+3 as an open regional cooperation was

19emphasized (The Nation, July 25, 2001). Furthermore, the theme of the November
2001 ASEAN+3 summit in Brunei was building a closer East Asian partnership, in
which context leaders exchanged views on terrorism and the progress of ASEAN+3
cooperation in particular (Nihon Keizai Shimbun, November 6, 2001). An East
Asian Vision Group (EAVG) report was also submitted to the summit, and leadersfrom the various countries expressed their appreciation for South Korean
President Kim’s leadership of the EAVG. The East Asian summit was discussed
briefly, but leaders decided to wait for the results of deliberations by the EASG.
The main discussions of the fifth summit were:(1) On the Korean peninsula, Prime Minister Junichiro Koizumi explained thatJapan placed the highest priority on the abduction issues and security
issues, including the nuclear problem at Japan-North Korea normalization
talks. Regarding the nuclear problem, he explained that the Japanese side
conveyed the concerns of Japan and the international community to theNorth Korean side in detail at the normalization talks. He expressed his
determination to strenuous1y work on North Korea for the resolution of thevarious issues through normalization talks and the security consultations inaccordance with the Tokyo-Pyongyang Declaration. Concerning North
Korea's nuclear development, several leaders stated that North Korea
should observe its international commitments, and this problem should be
peacefully resolved. They released a clear message as the Chairman's Press
Statement regarding the dismantlement of the nuclear development
program.
(2) On strengthening of economic cooperation, China announced a reduction ofdebts for developing countries. Also, with regard to the report by the East
Asia Study Group (EASG), many leaders emphasized the significance offorming an East Asian free trade area. Prime Minister Koizumi referred toJapan's efforts to strengthen economic partnerships, including theInitiatives for Japan-ASEAN Comprehensive Economic Partnership, andstated that these efforts would lead to the energizing of economic activity
and the strengthening of competitiveness in East Asia as a whole.
(3)

On the report of the East Asia Study Group, most leaders referred to theEast Asian Free Trade Area and East Asian Summit Meeting mentioned in20the report. Prime Minister Koizumi stated that, for the steady
implementation of the report, the state of implementation should be
discussed at meetings of related ministers and, if necessary, a progress
report should be compiled at the meetings of foreign ministers, andsubmitted to the annual summit meeting. Prime Minister Kim of ROK
proposed the holding of an East Asia Forum.
(4) Concerning the Initiative for Development in East Asia (IDEA), Prime Minister
Koizumi delivered a report on the IDEA ministerial meeting in August. He
referred to the importance of a follow-up to that meeting's joint statement
and said that he would like to make preparations for the next meeting.
Many leaders made statements that they highly evaluated the IDEA.
(5) Concerning the efforts to strengthen ASEAN Integration, many ASEAN leadersstated that cooperation for the Initiative for ASEAN Integration (IAI) fromJapan, China, and the ROK is important. In response, Prime Minister
Koizumi announced that Japan wanted to positively contribute to the IAI.
The ROK announced that it was prepared to offer US$5 million to the IAI
project.
(6) Concerning the cooperation for promoting exchange of people, Prime Minister
Koizumi proposed that concrete network building among think-tanks, assuggested in the EASG report, should be started and that eminent persons
should be asked to submit a report to next year's summit on ways to promote
human resources development and exchange of people. He also announced
the promotion of tourist exchange. China suggested that a forum should beheld in Yunnan Province in October 2003 with the participation of all social
sectors.
(7) On the cooperation for transnational issues, China proposed the holding of aministerial meeting on transnational crime, and many leaders expressedtheirsupport.

Regardingterrorism,

many

leaders

declared

theirantiterrorism intentions. The Philippines proposed the holding of a seminaron antiterrorism measures either in December or at the beginning of next
year. Prime Minister Koizumi announced the acceptance of more training
seminar personnel as a measure to support antiterrorism capacity building21

(http://www.mofa.go.jp).
In January 2002, visiting five of the ASEAN countries, Prime Minister
Koizumi explained Japan’s strategy of making maximum use of the ASEAN+3
framework and building up concrete regional cooperation as a means of creating a“community that acts together and advances together” by expanding East Asian
cooperation, Australia and New Zealand included, while stressing that promoting
open regional cooperation in a form that is transparent to extra-regional countries
will contribute to the peace and prosperity of the region. (Nihon Keizai Shimbun,
January 15, 2002)
The sixth summit was held in November 2002 in Phnom Penh. The
ASEAN+3 process has expanded to include regional political and security issues
such as the fight against terrorism and transnational crime in the near future. The
leaders expressed willingness to explore the phased evolution of the ASEAN+3
summit into an East Asian summit (Nihon Keizai Shimbun, November 5, 2002). In
addition to supporting ASEAN initiatives, the three countries have been helping
integration through their own efforts, notably Japan’s Initiative for Developmentin East Asia (IDEA), the East Asia Vision Group and the East Asia Study Groupinitiated by the Republic of Korean and the Framework Agreement on
ASEAN-China Economic Cooperation. Most importantly, the final report of the
Vision Group was submitted to the Summit and twenty six specific measures wererecommended. The thirteen leaders tasked their economic ministers to study andformulate options on the gradual formation of an East Asia Free Trade Area andreport the results to them at the next summit (ASEAN Secretariat, November 4,
2002, http://www.asean.or.id).
The seventh summit was held in October 2003 in Bali, Indonesia. Thirteen
leaders discussed several important issues such as the nuclear question on Korean
Peninsula, the future of East Asian cooperation, poverty alleviation, humanresources development and the development of infrastructures for ASEAN
Integration. They also endorsed the Implementation Strategy of the Sort-Term
Measures of the Final Report of the East Asia Study Group. It was agreed toensure that the measures would be implemented effectively, efficiently andsystemically. They welcomed the Report of the ASEAN+3 Study Group as
presented by Japan on Facilitation and Promotion Exchange of People and Human
Resources Development and appreciated the initiative taken in implementing theshort-term measures as recommended by the Group, while discussing on the22

progress of the Initiative for Development in East Asia in the framework of
ASEAN+3 cooperation (http://www.asean.or.id).
In substance, then, we have not as yet seen any substantial and tangible
results due to internal division and uncertainties, as shown by Table-1 below.

Table 1 Evolution of ASEAN+3
The First

Kuala Lumpur

December 1997
The Second

Emphasis on Manila framework
Importance of dialogues with Europe

Hanoi

Proposal for East Asian Vision Group

December 1998

Agreement on institutionalization of the plus
three
Importance of Miyazawa initiative

The Third

ManilaDeclaration of East Asian cooperation

November 1999
The Fourth

Announcement of Obuchi Plan
Singapore

Proposal for East Asian summit

November 2000

Proposal for East Asian FTA
Establishment of East Asian Study Group
Chiang Mai initiative

The Fifth

Bandali

Suri Submission of EAVG report

November 2001

BugawanDiscussion of terrorism

The Sixth

Phnom Penh

Discussion of EAVG report

November 2002

Emphasis on EAFTA and EA summit
Discussion of North Korean issues

The Seventh
October 2003

Bali

ASEAN’s support for six-party dialogue
Discussion of EASG report

Nonetheless, the 1997 financial crisis has created new possibilities for
ASEAN as a regional politico-economic actor (Narine 2002b). For instance, becauseof the ASEAN+3 framework, ASEAN has been able to enhance its politicalleverage vis-à-vis Japan and China, profiting politically and economically fromtheir strategic opposition. ASEAN members can be comfortable with the Northeast
Asian giants vying for influence in Southeast Asia and each struggling toaccommodate their Southeast Asian neighbours as best they can (Hund 2003, 411).
In this respect, the ASEAN+3 has the potential to become the dominant regional23

institution in East Asia “because neither APEC nor ASEAN has provensatisfactory in terms of advancing the regional interests of the East Asian
governments (Stubbs 2002, 454).
Should the ASEAN+3 be realized, is ASEAN going to be marginalized or fadeinto irrelevance? Former Indonesian Foreign Minister Ali Alatas denies this claim.
“Instead of congratulating ASEAN on its achievement in finding a solution to the
Cambodian problem, many remarked that this would be the end of ASEAN
because the cement that kept it together, which was to be against Vietnam’s
incursion, would not hold. Thus the member states would probably go theirseparate ways. It never happened that way, but this is typical illustration of therathergloomyassessment

every

time

ASEAN

faces

new

international

developments. Once again commentators question ASEAN’s relevance and statethat ASEAN’s future is perhaps better subsumed in the ASEAN Plus Three. Thiskind of statement misses the point completely.” (Alatas 2001, 6)

ASEAN’s Search for the New Regionalism: Major Tasks Ahead
Thus far, we have been discussing ASEAN's inclination toward a new regionalism
in its external relations, including ASEM, ARF and ASEAN+3. There are threecharacteristics of the new ASEAN regionalism (Dosch 2003). First of all, ASEAN
intends to include external powers, especially Japan, as a safeguard against actualand latent regional problems. In a way, ASEAN’s dependence upon Japan both
economically and politically contains the North-South relationship. Second,
ASEAN's multi-layered regionalism suggests that members are not confined only
to the organization, but overlap with other regional groupings and organizations.
Third, ASEAN's external orientation embodies "open regionalism," in the sensethat it stresses the importance of participating in an international economic
system. It is this very dynamism that contributes to the integrated nature ofSoutheast Asian regionalism, that is, a new regionalism based on the ASEAN way.
However, it has to be pointed out that there are also serious caveats that
may jeopardize ASEAN's major multilateral efforts of the 1990s (Denoon andColbert 1998/99; Ganesan 1999). Three factors will be considered here, namely: (1)growing division among the members, (2) limited regional schemes --- AFTA and
ARF, and (3) a circumscribed ASEAN way.

24

Growing Division
Since the end of the Cambodian conflict in 1991 as well as the great powers'
disengagement from the region, the countries of Southeast Asia have reappraised
their need to make the region more cohesive and conducive toward regional
cooperation. To this end, a sub-regional ASEAN group has approached the rest of
the Southeast Asian countries for the purpose of consolidating its position, in partdue to the demise of a "monolithic" Indochina dominated by Vietnam.
Among the three Indochinese countries and Myanmar, Vietnam was the firstto express its desire to join ASEAN, for both economic and political reasons.
Economically, Hanoi needed the capital and know-how for joint ventures incarrying out its Doi Moi reforms. Politically, Hanoi began to see ASEAN, andIndonesia in particular, as an ally in dealing more confidently with Beijing, asshown by their collaboration in the South China Sea conflict zone. Following suit,
Laos has begun to open up by adopting a policy of Labopmay.
The ASEAN heads of state discussed membership for Vietnam and Laos attheir fourth meeting in January 1992, in spite of the fact that economic disparities
and a delay in Vietnam's market-oriented reforms remained as obstacles. In July
1992, Laos and Vietnam went one step further by joining the 1976 Treaty of Amity
andCooperation during

ASEAN’s

Ministerial

Meeting held in Manila.

Furthermore, at their next Ministerial Meeting in July 1993, ASEAN approved theparticipation of Laos and Vietnam in six areas of functional activities. When
Vietnam became ASEAN's seventh member after the July 1995 meeting, it was
expected that the modalities and timing of membership of Laos, Cambodia and
Myanmar would be considered at the next ASEAN summit scheduled for 1997.
Myanmar, on the other hand, has been facing serious problems, due todomestic political upheavals. As it is well known, Myanmar's junta seized power in1988 after soldiers killed hundreds of pro-democracy demonstrators; in 1990 theyrefused to acknowledge the results of the parliamentary elections. Also, the rulingState Law and Order Restoration Council (SLORC) --- since 1997 renamed as State
Peace and Development Council (SPDC) --- has kept opposition leader and Nobel
Peace Prize winner Aung San Suu Kyi under house arrest for more than five years.
The United States and other Western nations have used economic and othersanctions to try to push the ruling junta toward democracy. However, whilepursuing a policy of "constructive engagement," ASEAN has rejected Western
criticism on human rights issues as attempts to impose Western values on25different Asian cultures. ASEAN has insisted that isolationism does not work andwould even be counterproductive (Far Eastern Economic Review, March 3, 1994).
These problems notwithstanding, in late May 1994 government officials andacademics from all the Southeast Asian countries met in Manila to draw up a"vision for a Southeast Asian Community", better known as "one Southeast Asia"
or "ASEAN-10." As their final report proclaims: "This Southeast Asian communityof peace and prosperity that we envision should be a model of international
cooperation for the rest of the global community" (Japan Times, July 22, 1994).
Thus, it was highly commendable that officials of the ten nations met once again in
Bangkok within six months and that the community concept received high-level
endorsement at the 1995 ASEAN summit (Soesastro 1997). The vision of"ASEAN-10" was close to realization when Laos and Myanmar joined ASEAN in
July 1997, although it was agreed that Cambodia would have to wait until current
domestic upheavals were peacefully resolved. In April 1999, Cambodia became thetenth member of ASEAN. Clearly, therefore, the deepening and widening of
ASEAN have steadily progressed since the fourth summit of 1992, in spite of thefact that some of the region’s domestic problems remain intact.
Upon realizing the ASEAN-10, it is imperative to resolve serious economic
disparity between the members. The seventh ASEAN summit in Brunei discussed
the ways and means of resolving the growing gap: “Bridging the development gap
is crucial for regional integration and part of our confidence-building efforts to help
members cope with challenges. Our priorities are developing human resources,
infrastructure and information technology, especially with the private sector andour dialogue partners. In this regard, we noted the decision by our foreign
ministers in Hanoi in July to initiate ASEAN projects in these areas and agreed tofocus on self-help programs for human resources development. Other efforts tonarrow the development gap include an ASEAN Integration System of Preferences
for the newer members. This will allow Cambodia, Laos, Myanmar and Vietnam togain tariff-free access to the more developed ASEAN markets earlier than theagreed target date of 2010 for all members.” (http://www.asean.or.id)

Limited Regional Schemes: AFTA and ARF
The financial crisis has amply demonstrated the inefficiency of regional
institutions, including AFTA and ARF (Wesley 2003). Let us see how ASEAN could
reform its organizational weakness. First, one of the major economic schemes,

26

AFTA needs to be upgraded. Without any doubt, ASEAN’s commitment to set up
AFTA is impressive (Tan 2000; Ong 2003). The disparities of tariff structures
among ASEAN countries have been reduced, facilitating further regional
integration efforts. However, its gradual, informal, and cautious approach, basedon the ASEAN way, has raised doubts as to whether AFTA could be implemented
efficiently. Progress toward AFTA has been held up by some ASEAN members,
including Malaysia’s deferment in trade liberalization for automotive products,
Thailand’s exclusion for palm oil, and Philippine’s exclusion of petrochemicals.
This negative publicity leaves little room for a bright prospect for AFTA (Daquilaand Hui 2003, 923). As former Thai Foreign Minister put it: “AFTA has been amockery. ASEAN has kept moving the deadlines and we still cannot open ourmarkets to each other. Our target of a free trade area was originally scheduled to
be fully realized by the early 2002 and by then, ASEAN will be an integrated single
market with 500 million consumers but at current projections we are unlikely toachieve this. We will not be able to attract foreign investments if we cannot
guarantee an integrated common market” (Pitsuwan 2001, 7).
Another issue is the fact that ASEAN has overstretched its role in directing
APEC and ARF. In particular, the so-called “driver role” of ASEAN in organizing
and promoting the ARF process has been under serious scrutiny in recent years.
One observer argued that “the ARF can do little to promote security because
ASEAN insists on its primacy in it, even though North Asia and not Southeast
Asia is the locus of regional strategic tension” (Lim 1998, 115; Narine 2002a). On
the other hand, a Southeast Asian scholar counters this argument by stating that
“ASEAN’s leadership role in the ARF is only the result of strategic convenience dueto the fluidity in the major power relations. The irony, however, is obvious: while
recent developments in China-U.S.-Japan relations could be detrimental toregional security and stability, it nonetheless has worked to the advantage of
ASEAN’s claim to be in the driving seat” (Sukma 1999, 246). The test for ASEAN
here will be whether the peaceful resolution of the South China Sea should be
realized through ARF’s mediation (Kivimaki 2002).
Can ARF be reformed? ARF seems to allow member states to air grievances
to China in a way and with a force that was impossible previously. But most states
continue to act according to traditional concepts on self-interest and withjustifiably traditional expectations about how other states will respond (Garofano
2003, 519). This is the reason why ARF cannot embark on its preventive diplomacy.
Finally, in executing these reforms, ASEAN Secretariat is likely to play an27increasingly crucial role (Beeson 2002). Should it be the case, the functional
capacity and capabilities of the ASEAN Secretariat need to be further
strengthened to enable it to effectively coordinate and monitor the progress of
ASEAN’s economic and other initiatives. Although the decisions to implement
ASEAN projects and initiatives lie only with member governments, the ASEAN
Secretariat can help to facilitate and expedite regional projects, if empowered to doso(Hew and Anthony 2000,24).

Circumscribed ASEAN Way
The East Asian financial crisis has indeed damaged ASEAN’s credibility. As someobservers succinctly put it: “the economic crisis may well make the Association
more distracted, inward-looking and less cohesive. Long- standing rivalries within
ASEAN may resurface” (Dibb, et.al. 1998). As a result, the ASEAN way has beenquestioned. Of the four main aspects of this approach, as discussed earlier, theprinciple of non-interference is the key to reorganizing the Association. By
modifying the non-interference principle, many proposals have emerged within
ASEAN, including “constructive intervention,” “constructive engagement,” and“flexible engagement.” However, all these concepts were eventually toned down to“enhanced interaction,” which represents a more compromised approach toregional issues, combining both the ASEAN way and more direct intervention(Haacke 1999; Funston 2000; Acharya 2001; Haacke 2003). Whether thiscompromise will allow the Association to function more effectively remains to be
seen.
Since the financial crisis, it has been possible to discern a gradual erosionof the non-interference doctrine, in the form of mutual surveillance of one another’s
economic policies and domestic affairs. Most significant was the establishment of
the ASEAN Surveillance Process (ASP) in December 1998. The ASP became
operational in early March 1999 when the ASEAN financial ministers conducted
their first peer review in Hanoi. This was quite significant simply because “thepeer review is considered to be a departure from the ASEAN way of
non-interference in other member countries’ domestic affairs” (Manupipantpong
2002, 115).
According to a recent study, furthermore, ASEAN’s willingness to upholdits principle of non-use of force has been inconsistent. Thus, to argue that ASEAN
has a significant security identity based on the principle of non-use of force would28

require evidence that that principle is consistently affirmed in practice (Sharpe
2003, 248).
One possible direction will be concerted efforts to regularize ASEAN’s“troika” and “retreat” practices. The ASEAN troika was introduced by Thailand in
November 1999 as an ad hoc body at the ministerial level in order that ASEAN
could address more effectively and cooperate more closely on issues affecting
regional peace and stability. It comprises the foreign ministers of the present, pastand future chairs of the ASEAN Standing Committee (ASC), which rotates inaccordance with the ASC chairmanship. The purpose of the ASEAN troika is toenable ASEAN to address in a timely manner urgent and important regional
political and security issues and situations of common concern likely to disturb
regional peace and harmony. By helping ASEAN to be more responsive to thegrowing interdependence between the countries of Southeast Asia, the ASEAN
troika would serve to elevate ASEAN cooperation to a higher plane and further
serve to enhance ASEAN’s unity and solidarity, as well as its overall effectiveness.
The retreat practice, on the other hand, was introduced by the Foreign Ministers’Meeting in March 2001. The retreat provides an opportunity for all ten ASEAN
foreign ministers to hold frank and wide-ranging discussions on the future of
ASEAN, the ARF and ASEAN’s dialogue relationships. It is part of a continuous
process of serious reexamination of the longer-term issues facing ASEAN(Luhulima 2002, 398-399).

Conclusion
Having analyzed the ASEAN way to overcome challenges wrought by externalchanges, we have come to understand the crucial factors of economic integration,
an extra-regional grouping aimed at a greater voice in international economic
relations, and security cooperation. These factors have accelerated ASEAN’s
search for a new direction based on multi-layered regional cooperation andnetworks. Given the fact that the balance of power in Southeast Asia is likely to becontinuously shifting, let aside any lingering economic difficulties caused by themost recent financial crisis, it seems imperative that greater unity and cooperation
be accorded more emphasis. The key to success seems to be the upgrading of
economic interactions, through bodies such as AFTA which will sustain the region's
stability and security, while also consolidating the "Aseanization" of Southeast
Asia and promoting democratization. An economically viable, enlarged ASEAN will29

be able to play a centrifugal role in the East Asian region.
The ASEAN+3 could serve as an insurance policy to strengthen ASEAN’s
reform strategy. It is true that East Asian regionalism is founded oninterdependence among the economies in the region, based on market principles as
seen in close intra-regional trade and investment. East Asia does not have a strong
political framework to unite the region since there are no security arrangements.
As we have seen above, the ASEAN+3 is heavily dependent upon how Japan and
China can cooperate and whether they take a leading role. However, since there isno security arrangement between the two, they cannot contribute to regional
integration in East Asia.
In this respect, having adopted the TAC II on October 7, 2003, ASEAN will
be able to strengthen its political, economic and cultural foundations on which thedevelopment of the ASEAN+3 hinges (Asahi Shimbun, October 8, 2003). Indeed, it
is remarkable that ASEAN members promised to live at peace with each other andwith the world at large “in a just, democratic and harmonious environment.”
ASEAN leaders also pledged to achieve an ASEAN Community by the year 2020
which would rest on the three pillars of ASEAN security community, ASEAN
economic community, and ASEAN social-cultural community embodied in the TAC
II.

30

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