India – ASEAN | Origins, member countries, trade history and the growing geo politic discourses

Keep a tab on their relative positions. UPSC tends to ask map based questions in prelims

Backgrounder

Despite India’s geographical proximity to South-East Asia, sharing over 1,600 km of land boundary with Myanmar and maritime boundaries with Myanmar, Thailand and Indonesia, South-East Asia was hardly a priority area in Indian foreign policy before the 1990s. Initiated in the early part of the 1990s, India’s ‘Look East’ policy has been directed to the region through the Association of Southeast Asian Nations (ASEAN).

Though it is claimed that the Look East policy encompasses the entire Asia-Pacific region, its primary focus was undoubtedly on South-East Asia during the first phase of this policy that lasted until recently. It appears that during the second phase, India, apart from consolidating its relations with South-East Asia, is looking beyond at the larger Asia-Pacific region.

ASEAN members were, anyway, initially lukewarm to any idea of India’s membership in the regional association for individual reasons:

  • Indonesia, the natural and de facto leader of the organization, feared that if India became a member it would dominate the organization.
  • India’s strong anti-Chinese feelings, particularly after the Sino–Indian border conflict of 1962, might have created an adverse impact on Singapore’s majority ethnic Chinese population if India at that time had been admitted as a member of ASEAN.
  • Furthermore, Thailand and the Philippines were opposed to India’s non-aligned foreign policy and were overtly pro-USA.
  • Moreover, after the signing of the Indo-Soviet Treaty of Peace, Friendship and Co-operation by India in 1971, the ASEAN states were suspicious of the USSR’s role in determining India’s foreign policy towards the region in general, and Viet Nam in particular.
  • After Viet Nam’s military intervention in Kampuchea in December 1978, India, by its decision to recognize the Heng Samrin regime in Kampuchea backed by Viet Nam forfeited whatever little goodwill it enjoyed in the ASEAN region at that time. Such Cold War postures created a distance between India and the ASEAN for a long time until the world bipolar structure collapsed in the late 1980s, ushering in a new era of regional equations.
Focus on the last lines of each member countries to get a sense of where the new loyalties lie
source

Changes in the Discourses

  • The cumulative impact of the political and strategic changes that followed the end of the Cold War after the demolition of USSR
  • The adoption of market reforms by the Congress (I) Government in India headed by P.V. Narasimha Rao (1991–96) led to a gradual transition in Indian-ASEAN relations. It was during this time that the Congress Government in India initiated the Look East policy, with the aim of re-ordering India’s relations with the states in the South-East Asian region
  • Many ASEAN states were attracted by the economic opportunities that a huge market like India offered after the decision to liberalize the Indian economy was taken. India was, in turn, attracted by the economic vitality of South-East Asia
  • After 1998 Nuclear explosions provided an option to play off against china in the region (Chinese policies were quite aggressive towards Southeast Asian nations)

ASEAN: Origins

  • The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand
  • The Founding Fathers of ASEAN were, namely Indonesia, Malaysia, Philippines, Singapore and Thailand
  • Since then, membership has expanded to include Brunei, Cambodia, Laos, Myanmar (Burma), and Vietnam
  • The creation of ASEAN was motivated by a common fear of communism, and a thirst for economic development

 

Musyawarah & Mufakat

ASEAN follows the principle of “ASEAN way”:

  1. Musyawarah And Mufakat  [deliberation and consensus]
  2. Don’t use force/confrontation
  3. Don’t interfere in the internal matters of states
  4. Informal discussion
  5. Minimal institutionalisation

To achieve “the ASEAN way”, Treaty of Amity and Cooperation in Southeast Asia (TAC) was signed.

TAC Treaty

It provides the guiding principles of ASEAN

  1. They’ll not interfere in the internal affairs of one another,
  2. They’ll not use threat or use of force to settle differences / disputes
  3. They’ll settle of differences or disputes by peaceful means,
  4. They’ll effectively cooperate among themselves.
  5. They’ll mutually respect each other’s’ independence, sovereignty, equality, territorial integrity and national identity
  6. Every State has right lead its national existence free from external interference, subversion or coercion, India had signed TAC treaty with ASEAN in 2003

Timeline: Growth of ASEAN since 90s

source

A generic timeline wrt. origins and expansion

1994 ASEAN regional forum (ARF)
1997 ASEAN+3 is formed to increase regional integration. This includes

  1. China
  2. Japan
  3. South Korea
2002 Treaty to control haze pollution in South East Asia
2006 ASEAN gets observer status in UNGA (General assembly)
2007 Cebu declaration for energy securities and renewable energy.
2010 Chiang Mai Initiative (CMI)

It is a currency swap agreement among ASEAN +3,

It provides emergency liquidity to those economies during crises.

2012 Asean Human Rights Declaration

21st ASEAN Summit in Phnom Penh Combodia with theme:“ASEAN: One Community, One Destiny”

2013 22nd ASEAN summit in Brunei, theme: Our People, Our Future Together.
2015 ASEAN community will be setup.

ASEAN Community (2015)

Similar to European Union, ASEAN community is a dream with three pillars

  1. ASEAN Political Security Community
  2. ASEAN Economic Community
  3. ASEAN Socio-Cultural Community

This old article at The Diplomat analyses the importance (or lack of it) of such initiatives. The important paragraphs are reproduced here:

The ASEAN Leaders have declared that the 2009-2015 Road Map consisting of the three Community Blueprints – Economic (AEC), Political-Security (APSC), Socio-Cultural (ASCC) -shall form the basis of the overall ASEAN Community (AC15). Of course, the ASEAN Charter and other subsequent key initiatives would also define the AC15. By focusing on the broader goals, objectives, strategies, and targets set in these instruments, the contours and key markers of the AC15 can be easily framed, both in quantitative and qualitative terms as appropriate.

More work needs to be done on trade facilitation, expedited uniform customs clearance, removal of non-tariff measures, and facilitated movement of skilled persons. The Open Sky policy has clearly benefitted the people resulting in a dramatic increase in air travel, physically bringing ASEAN people closer for meaningful interaction and regional integration.

The fact that ASEAN has been a relatively peaceful region compared to the rest of the world should score high for APSC. The Preah Vihear Temple, Sipadan and Ligitan Islands, Pedra Branca, and even development issues such as the Malayan Railway Land deal between Malaysia and Singapore have shown the States’ maturity in using bilateral, regional and international mechanisms to resolve disputes amicably while accepting the verdicts gracefully.

Such multiple channels of dispute settlement should be pursued concurrently for the South China Sea disputes.

ASEAN has also been affected by terrorism and transnational crimes. Ensuring a drug-free ASEAN by 2015, on hindsight, is way off the mark, but with recent record-breaking seizure of illegal drugs, coordinated enforcement, and severe penalties we should be moving steadily towards that goal. The ASEAN Intergovernmental Commission on Human Rights is already operational, and more needs to be done on human rights protection.

Has ASEAN worked for the world & how?

ASEAN’s 3 greatest contributions are peace, prosperity, and geopolitical stability for Southeast Asia. We source this content from a Mckinsey study:

A. Why is peace such a big thing to achieve & maintain here? Here’s why:

ASEAN includes 240 million Muslims, 125 million Christians, 150 million Buddhists, 7 million Hindus, and 50 million followers of folk religions. ASEAN’s political systems, too, span a wide spectrum, from competitive democracies to one-party states and monarchies.

How did ASEAN achieve peace?

#1. It cultivated a culture of “musyawarah and mufakat” (“consultation and consensus” in Indonesian). This ethos is now hailed by many as the “ASEAN way” and has helped nations such as Myanmar achieve a peaceful transition from decades of harsh military rule, while nations in similar situations in other regions—Syria, for example—were riven by conflict

#2. ASEAN now organizes more than 1,000 meetings a year that touch on virtually every topic, from trade to tourism and from health to the environment. As a result, thousands of invisible formal networks have evolved in the region

#3. ASEAN embraced a policy of nonintervention. The West frowned on this and encouraged ASEAN states to criticize one another when their human-rights records slipped. Yet ASEAN countries wisely ignored this advice and assiduously avoided meddling in one another’s domestic affairs. The result has been peace

B. With peace comes prosperity and poverty reduction

#1. From 2001 to 2013 alone, ASEAN’s combined GDP rose threefold, reaching $2.4 trillion. If the ASEAN bloc were a country, its growth rate during those years would rank second to China as the highest in Asia

#2. Between 2004 and 2011, ASEAN member states’ trade volumes, among one another and with the rest of the world, more than doubled

N4S: You do not have to memorise the figures and chances are you won’t be much overwhelmed by them because much of you wont remember similar figures across other economies. Chill. Just understand that ASEAN has done better economically 🙂

C. Geopolitical collaboration among major powers

ASEAN has played an important role in reducing geopolitical tension and rivalries by providing an annual platform for all the great powers to meet and resolve outstanding issues. Don’t take our word for that:

In 2010, when Sino–Japanese relations took a downturn over disputed islands in the East China Sea, Chinese Premier Wen Jiabao and Japanese Prime Minister Naoto Kan met on the sidelines of an ASEAN meeting in Hanoi.

In addition, each year the ASEAN Regional Forum (ARF) plays host to 27 different countries to discuss security issues in the region. Many major powers attend, including the United States, the European Union, China, India, Japan, Russia, and South and North Korea.

Sensitive topics that have been discussed on the sidelines of the ARF include North Korea’s nuclear program and maritime disputes in the South China and the East China Seas.

Potential threats to continued success? Note these 2:

A. Geopolitical Risk (USA/ China)

World’s greatest power, the United States, and the world’s biggest emerging power, China—poses a new threat to stability throughout Asia. Why do we say so?

  1. In Phnom Penh in July 2012, for the first time in its history, ASEAN failed to issue a joint communiqué after its annual meeting. This failure stemmed from the unwillingness of Cambodia, then the ASEAN chair, to allow mention of several member states’ maritime disputes with China, a close economic partner
  2. At the 24th ASEAN summit in Naypyidaw, Myanmar; there, despite harsh remarks by Vietnam’s prime minister, the official ASEAN statement made no mention of the Chinese deployment of a giant oil rig in waters claimed by both nations about 150 miles from Vietnam’s coast

B. Rising of India, China as Asia superpowers

In the 1970s and 1980s, when China was just opening up its economy and India remained closed, ASEAN had little difficulty in outpacing either in attracting FDI. While China has caught up now, India’s share of global FDI has remained low, reaching only 1.9 percent in 2012, but that could change quickly if India follows through with the economic-reform agenda it began more than two decades ago.

Good news for India then (UPSC ahoy!) but bad news for ASEAN:

In response to this new competition from China and India, ASEAN launched two major economic projects:

  1. The ASEAN Economic Community (AEC) and
  2. Regional Comprehensive Economic Partnership, both due for completion in 2015

We all know that ASEAN countries are a lil liberal with their timelines 🙂

India and ASEAN relationship

A quick overview. Important items are highlighted:

1992: India becomes ASEAN’s sectoral dialogue partner

1995: India invited to become full dialogue partner in 5th ASEAN Summit, Bangkok

1996: ASEAN invites India to become member of ASEAN Regional Forum

2002: India and ASEAN begin to hold annual summit level meetings

2003: India accedes to the Treaty of Amity and Cooperation in Southeast Asia at Bali summit

2003: India signs framework pact for free trade agreement with Thailand in October

2004: India-Thailand sign Free Trade Agreement

2004: Negotiations with Malaysia begins on comprehensive economic cooperation agreement, Dec 20

2005: India-Singapore sign Comprehensive Economic Cooperation Agreement, June 29

2005: Joint study group set up for comprehensive economic cooperation agreement with Indonesia, Nov 11

2007: India-ASEAN target $50m bn bilateral trade by 2010

2008: India-ASEAN conclude free trade pact, Aug 28

2008: India-ASEAN agree to negotiate pact on investment and services, Aug 28

2014: India-ASEAN signs FTA


Before you read ahead, please ensure that you know about the pecking order of the trade agreements – click here to read the different types of trade agreements

Cons of India FTA Agreement:

  1. While there are many benefits to the ASEAN-India FTA, there is concern in India that the agreement will have several negative impacts on the economy.
  2. Aim of FTAs? To reduce their tariffs on a majority of their traded goods. This will allow them to increase the market access of their products. It is criticised, however, that India will not experience as great an increase in market access to ASEAN countries as ASEAN will in India.
  3. The economies of the ASEAN countries are largely export-driven, maintaining high export-to-GDP ratios (in 2007, Malaysia had a ratio of over 100%)
  4. Considering this, as well as the global financial crisis and India’s expansive domestic market, the ASEAN countries will look eagerly towards India as a home for its exports

Kerala raised issues with PM Modi on this:

Before the agreement was signed, the Chief Minister of Kerala, V.S. Achuthanandan, led a delegation to the Indian Prime Minister protesting against the FTA:

  1. The state of Kerala is an important exporter in the national export of plantation products. It fears that cheap imports of rubber, coffee, and fish would lower domestic production, adversely affecting farmers and ultimately its economy
  2. Kerala has already experienced a flooding of its market with inexpensive imports under the South Asia Free Trade Agreement of 2006. What’s that?
  3. Cheap coconuts from Sri Lanka and palm oil from Malaysia has since hindered Kerala’s coconut cultivation.

If you have the bandwidth to study more on the legacy issues between India and ASEAN, here are some references:

  1. http://www.ipcs.org/article/india/india-asean-fta-gap-between-expectation-and-reality-4644.html
  2. http://www.mckinsey.com/industries/public-sector/our-insights/asean-the-way-forward
  3. http://www.idsa.in/idsanews/india-asean-approach_080416
  4. http://www.ideasforindia.in/article.aspx?article_id=1593

Previous Year Questions

Q.1) Evaluate the economic and strategic dimensions of India’s Look East Policy in the context of the post-Cold War international scenario. (2016 Mains)

Q.2) With respect to the South China sea, maritime territorial disputes and rising tension affirm the need for safeguarding maritime security to ensure freedom of navigation and over flight throughout the region. In this context, discuss the bilateral issues between India and China. (2014 Mains)

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