Is ASEM still relevant?

Business Asia, August, 2003 by Randolph Ramsay

When the Asia-Europe Meeting (ASEM) was first formed in 1996, many Australian commentators were aghast that Australia had missed out on becoming a member.

The new group looked to be an important new link in Asia's global relationships--a "third arm" to complement the internally focused Association of South-East Asia Pacific Economic Cooperation (APEC), which included the world's largest economy, the US, as a member. With the European Union (EU) sown up with ASEM, Asia now had high level with all of the world's economic superblocs.

Australia's soreness at not being included was apparent. Federal Foreign Minister Alexander Downer, speaking in 1996, said that ASEM was a "historic attempt to strengthen the third side of a triangle connecting Europe, North America and East Asia".

"Australia is keen to join the ASEM process both because we recognise its importance as a new link between two economically powerful regions, and because Australia is already closely integrated with East Asia," he said. A Federal Government white paper (titled In the National Interest) released a year later continued to push the issue, saying that: "As a country closely integrated with East Asia in economic and security terms, Australia warrants inclusion in ASEM. This is already recognised by most Asian participants in ASEM, and the Government will continue to work at building further support for our inclusion in an expanded ASEM membership."

But six years on, questions are rising about the effectiveness of ASEM as a group. While ASEAN and APEC continue to make slow but steady progress towards their own large economic partnerships, ASEM's momentum seems to have stalled. Interest from its members nations run hot and cold--witness the fifth meeting of ASEM Finance Ministers held in Bali in early July 2003, where only a few of the 15 European Union Ministers attended. The others were represented by their deputies.

High level

ASEM, which emerged from an initial concept put forward by Singapore, was officially launched in March of 1996 with a high level meeting of EU and Asian leaders. ASEM aimed to bring together the 15 member states of the EU with 10 Asian economies, which included Brunei Darussalam, China, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Unlike APEC, which deals almost exclusively with economic and trade issues, ASEM has a much wider mandate. According to An Introduction to the Asia Europe Meeting, a special booklet released to coincide with ASEM's last Leader's Meeting in 2002, the group's scope goes well beyond trade and dealt with the "full spectrum of relations between the two regions". ASEM's activities are based around what the group terms as its three pillars--political, economic and cultural/intellectual.

This wider mandate is coupled with a greater amount of "informality". Where ASEAN and APEC have, over the course of their existence, set their members definite economic and free trade targets to meet, ASEM's "priority is on dialogue to foster mutual understanding", "Policy makers and officials are free to discuss political, economic and social issues without the need to go 'on the record', without the obligation to negotiate," An Introduction to the Asia Europe Meeting booklet states.

At the highest levels of goverment, ASEM also seems to resonate less than its counterparts. While ASEAN and APEC leaders meet at least once a year, ASEM's gather once every two years, with the next meeting scheduled for 2004. Other high-level government members have also met at a more "irregular" basis than those in ASEAN or APEC, with ASEM Finance, Foreign and Economic Ministers having met only five times since 1996.

No breakthroughs

With informality at its core, it's of little surprise that, at an economic level, ASEM has produced no major improvements for Asia and EU member states. Dr Darryl Jarvis, director of the Sydney-based Centre for International Risk, says that from an Asian perspective, ASEM has been "no less or more successful than anybody else that negotiates with the EU".

"They've never had what I would characterise as great breakthroughs in trade deals which really do give the Asians a greater foot in the door," he said.

The commitment of member economies to ASEM may also not be as strong as it is to other groups such as ASEAN and APEC. Jarvis says in terms of economic importance, "Asia does not resonate particularly high" for Europe.

"I tend to think it's not high on Europe's agenda--in terms of what's going on in agricultural policy for example, North America would be far more dominant," he said.

Asia could also be forgiven for not having ASEM as its highest priority. When it comes to trade, Austrade chief economist Tim Harcourt says other Asian states and the US would play a far more significant role for Asians.

"Most trade in Asia is intra-Asian trade," he said. "In terms of shares of merchandise trade over the last 10 years, intra-Asian is almost half at 46 per cent, with North America at 26 per cent and Europe 18 per cent. Europe as a whole is a player, but you'd say the rest of Asia and the US would be more significant."