From Isolationism to Pan-Asianism

* Lanka a passive observer? Asia Moves Towards a Giant Regional Comprehensive Economic Partnership

By Gomi Senadhira

Most countries had adopted isolationism at various points of their history.Given the dominant role of trade in international relations, protectionist trade policies, in the form of high protective tariff walls or import prohibitions are often associated with such regimes. For example, the Hawley- Smoot Tariffwas a key feature of America’s isolationist policies of the 1930s, which resulted in adverse economic and political consequences. Fortunately in most cases these policies don’t last long. Asia, as we are aware, has the some of the worst and longest surviving isolationist states. Today, Myanmar and North Korea lead the pack. However, the most isolationist state of therecent years, in Asia or elsewhere, was Cambodia under the brutal Khmer-rouge regime.

The popular tourist town of Siem Reap was perhaps the worst victim and the epicentre of such policies by the Khmer Rouges. The town attracted thousands of visitors and it remained one of Asia’s leading draws until the late 1960s. The visitors the town, during that period, included celebrities likeCharlie Chaplin and Jackie Kennedy. The days of the celebrity visits and tourists revenue came to halt, particularly after the evacuation of the population of the town, by the communist Khmer Rouge. Today, Siem Reap is back on the list of the must see places, for the affluent tourists. Recent visitors to the town included, among others, Indiana Jones and Lara Croft. Remember the scenes atthe temples of Angkor Wat, in the "Tomb Raider" and "Indiana Jones" movies.

Everyone goes to Siem Reap, for the same reason as Harrison Ford and Angelina Jolie visited the town; to visit the world-famous Angkor temple complex. However, when the trade and economic ministers from the 10 ASEAN countries and six of their dialogue partners, China, Japan, South Korea, India, Australia and New Zealand visited Siem Reap, at the end of last month, they had more than Angkor temples on their agenda. At that meeting ASEAN plus Six agreed "in principle" to create a free trade area spanning Asia. These Sixteen nations with 3.5 billion people and accounts for a third of the world’s current annual GDP. As per the agreement reached at Siem Reap, the negotiations would commence in early 2013 with the objective of concluding aRegionalComprehensive Economic Partnership, or RCEP, among the 16 countries before the end of 2015.

At first glance this appears an extremely ambitious objective. However, Japan, Australia, China, India, South Korea and New Zealandalready have EPAs/ FTAs with the ASEAN. In addition to that these six countries also have FTAs among themselves or are in the process of negotiating such arrangements.Expanding and harmonizing the existing frameworks towards regional framework would be relatively easier exercise than the negotiation of a new agreement.As the levels of trade liberalization vary among the existing FTAs the business lobbies had been prompting for unified trade rules. Once the agreement is concluded it would be easier to assemble motor car in Malaysia with Japanese and Chinese parts and sell it in India or to make a shirt in Indonesia with Chinese fabric and sell it in Japan. This proposal has to be formally approved at the ASEAN plus six summit to be held in Phnom Penh in November.

Still, the negotiations of this nature may not proceed smoothly. In addition to complex trade and investment as well as regulatory issues involved, these countries have a number of major territorial disputes which leads to frequent deterioration of relations.

It is also significant that the U.S Trade Representative Ron Kirk, who was touring Asia around the same time stated in Hanoi that "he doesn’t see plans for an Asia-only trade pact that would bind China and Japan to other economies throughout the region as a threat to U.S. economic interests", as he believes the conclusion of the Trans-Pacific Partnership or the TPP, would offset any negative impact of such a deal. The nine countries participating in the TPP; Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States are meeting for their 14th round of negotiations from 6th to 14th of this month at Leesburg in the United States and it appears that the U.S. is very keen to conclude the deal before November elections. The TPP is an ambitious, 21bst-century trade agreement that will enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs. It is also possible that Japan, South Korea, Thailand and the Philippines as well as Canada and Mexico may also join the TPP.

Ron Kirk has also stated given the tensions related to the territorial disputes that have flared up in the South China Sea and in North Asia, expansion of trade relations is advisable as trade has a role to play in ensuring such disputes don’t get out of hand. "One way to inoculate yourself against strategic conflagrations is to make sure you have strong commercial relations. Countries that trade with one another don’t go to war with one another," he had stated in an interview with Daw Jones News.

Given this background, it is very symbolic that the ministers met in the town of "Siem Reap", meaning "the flat defeat of Siam or Thailand" , to agree to establish RegionalComprehensive Economic Partnership. In addition to tradition mistrust between the two nations, there had been a number of border clashes since 2008 between Thailand and Cambodia. They had, more than once, sought the intervention of the International Court of Justice in this dispute. Cambodia is also one of the weakest economies in ASEAN and was the most inward looking. Siem Reap was also the epicentre of the impact of the isolationist policies of Khmer Rouge. The agreement would integrate even the most isolationist regimes such as Myanmar with rest of Asia

Once the negotiationson REPA are concluded Asia would edge towards a giant free trade zone, a new regional economic and trade area, spreading from Palk Strait, which separate India and Sri Lanka, to the 38th parallel which divide North Korea from South Korea. It is also significant that Australia and New Zealand have opted to be a part of this Asian regional agreement while Sri Lanka remains, at best, a passive observer. Only other countries in the region which have been left out are the South Asian LDCs Bangladesh, Nepal and Bhutan. However, Bangladesh is proactively involved in getting preferential access for the LDCs in the important markets in the REPA countries through the WTO provisions for the LDCs.

(The writer is a former Director General of the Department of Commerce)

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