Challenges to ASEAN unity: Beijing’s coercion and US-China trade war

Challenges to ASEAN unity: Beijing’s coercion and US-China trade war

ASEAN, which comprises 10 racially and religiously diverse members, is a regional grouping that promotes economic, political, and security cooperation among its ten members. The charter laid out a blueprint for a community made up of three branches: the ASEAN Economic Community (AEC), the ASEAN Political-Security Community, and the ASEAN Socio-Cultural Community. In 2013, ASEAN decided to develop a Post-2015 Vision to realise a politically cohesive, economically integrated, socially responsible, and a truly people-oriented, people-centred and rules-based organisation. This formed the basis for the ASEAN Community Vision 2025.

Maintaining unity among international groups is not an easy task as different nations comprising them have different interests, priorities and compulsions. The challenges for ASEAN for maintaining unity are daunting as the region is fraught with uncertainty. The continuing tension because of South China Sea (SCS) disputes with China claiming almost the entire region and adopting bullying tactics, acquiring and artificially creating features, militarizing the features under its control, encroaching into the EEZs of other nations, sinking boats of other nations to intimidate them, obstructing the drilling operations of other countries in their EEZs, carrying out intimidating military exercises and using its economic power to coerce the ASEAN members have vitiated environment. The growing trade rivalry between the US and China makes the situation very complex. The strategic balance in the region under severe strain.

China’s attitude towards ASEAN is based on its perception that it could collectively harm its interests as several members of ASEAN are disputing China’s illegal claims in the SCS. While it has agreed to have the Code of Conduct for the SCS, it is trying to delay its finalisation. It is trying to divide the members using its coercive power. Most important example of such an act was the use of coercion in 2012 on Cambodia, which chaired ASEAN that year. It may be recalled that the ASEAN Ministerial Meeting in 2012 failed to release the joint communique because of disagreement among the members. Cambodia as chair of ASEAN under the influence of China refused to agree for a joint statement criticising Chinese activities.

Since then in Chairman’s statements instead of joint approach, the terms like “some leaders” and “some ministers are used instead of “leaders” and “ministers” to express concerns over the Chinese activities. The ASEAN Meet at Bangkok in Nov 2019 again repeated the same formulation. However, there was no mention of PCA Ruling. Cambodia, Laos, Thailand and Myanmar position themselves with China to ensure that China may not get annoyed with them. While earlier the Philippines had sided with China in the hope that it would gain more than by opposing China, of late Philippines, appears to be moving away from China.

The use of threats of economic sanctions and allurement of financial assistance by Beijing to ensure that the members of ASEAN do not take a stance unitedly against its interest is quite common. In 2012 dispute with the Philippines over Chinese fishermen operating in the Scarborough Shoal, Beijing imposed tighter measures on agricultural imports from the Philippines, and in particular on bananas. Given the importance of bananas and other agricultural exports for the Philippine economy, China’s economic pressure convinced Manila to settle the dispute quickly. Such coercive tactics are frequently used by Beijing to keep the ASEAN divided.

The trade war between China and the US is increasing problems for the unity of ASEAN. The export-oriented ASEAN economy demands continuing trade with both US and China. Trade tensions have affected ASEAN, especially in sectors such as electronic exports, given that China is its top trading partner. At the ASEAN Business summit in November 2019, ASEAN leaders expressed their deep concern over the rising trade tensions and on-going protectionist and anti-globalization sentiments.

Although ASEAN countries are concerned about the ripple negative impact, changing trade patterns from the trade war can attract displaced opportunities. In the first quarter of 2020, China’s exports to ASEAN (16%) became more than its exports to US (15%). FDI is getting attracted to ASEAN. While Japan is relocating its companies from China, US is considering Economic Prosperity Network of trusted trade partners. Japan’s investment is now more in the ASEAN than in China. US has also started moving its companies from China to ASEAN.

Some countries of ASEAN, have benefitted as alternative manufacturing locations to China. Several companies have already moved to Vietnam. Samsung now makes most of its mobile phones in Vietnam—the nation has become the chief source for the world’s largest phone producer. Thailand has growing clusters of vehicle assembly plants for Japanese, US, and Chinese auto companies, while also making components for tier 1 suppliers. Such opportunities exist and it is up to ASEAN to make use of them. The countries which have stable economies with large labour force with the required skills are going to benefit. Vietnam stands out among the ASEAN but all the nations in the group are likely to gain from increased export of manufactured products.

While the differences among the ASEAN members can get accentuated because of the US-China trade war among the ASEAN members in immediate terms, the unified approach can get the economic benefits in the long term. A united ASEAN can also counter the pressure from any nation including that of Beijing and empower it to negotiate from the position of strength.

ASEAN would have to also examine the functioning of Regional Comprehensive Economic Partnership (RCEP) may not become an instrument for flooding their markets with the Chinese goods. This could further strengthen Beijing’s capability to coerce ASEAN members.

The above factors should be kept in view by the ASEAN. An alignment of interests of ASEAN members to create the region as a manufacturing hub, efforts to develop necessary skills and establish connectivity with the markets in the different parts of the world should be on priority as that would allow the seamless flow of ASEAN goods to major markets without any string. The success of the ASEAN Community Vision 2025 should be evaluated on these parameters. Vietnam Chair’s five priorities for the year, which includes strengthening of ASEAN solidarity, deepen ASEAN integration economically and leveraging the fourth industrial revolution to alleviate inequality, promoting ASEAN identity by encouraging the development of common ASEAN values and educational projects, strengthening good relations with ASEAN’s external partners and improving ASEAN’s institutional capacity, are precisely in this direction.

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