2022/118 “The Struggle for International Recognition: Myanmar after the 2021 Coup” by Joanne Lin and Moe Thuzar

 

The empty chair of Myanmar’s Foreign Minister is pictured during a Plenary Meeting session of the 55th Association of Southeast Asian Nations (ASEAN) Foreign Ministers Meeting in Phnom Penh, on 3 August 2022. Myanmar was not represented at the meeting after the other members said they would not accept a junta minister and the generals refused to send another official. Photo: Mohd RASFAN/AFP.

EXECUTIVE SUMMARY

  • The military coup in Myanmar on 1 February 2021 created huge diplomatic repercussions, throwing into uncertainty the country’s international position and representation.
  • The coup’s unconstitutional basis and the resistance to military rule in Myanmar also presented challenges for international and regional bodies to engage with stakeholders in Myanmar.  
  • The United Nations and ASEAN have approached these challenges on the basis of existing procedures and guidelines. Although the UN’s existing guidelines seem to favour democratic legitimacy, it prefers not to be perceived as taking sides in Myanmar’s representation.
  • ASEAN, lacking similar guidelines regarding credentials and representation, has created its own precedents regarding the level of representation at key political meetings. Neither the UN nor ASEAN have accorded outright recognition to the State Administration Council (SAC) or the parallel National Unity Government (NUG), although individual member states have exercised unilateral initiatives to engage in dialogue with the NUG. Additionally, some members and dialogue partners of ASEAN have turned to existing treaty practices that allow arrangements for non-recognition disclaimers in concluding regional treaties and agreements involving Myanmar. 
  • Differing views and interests among member states at either UN or ASEAN tables also add to the continued ambiguity on engaging Myanmar. This de facto de jure divide in and on Myanmar seems likely to continue in 2023, with the SAC’s election plans likely to exacerbate tensions.

* Joanne Lin is Co-coordinator of the ASEAN Studies Centre at ISEAS, and Lead Researcher (Political-Security) at the Centre. Moe Thuzar is Acting Coordinator of the Myanmar Studies Programme at ISEAS, and was previously a lead researcher at the ASEAN Studies Centre. The authors thank Dr Marcus Brand of International-IDEA for insights added to this paper.

ISEAS Perspective 2022/118, 1 December 2022

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INTRODUCTION

The coup mounted by Myanmar’s military on 1 February 2021 has thrown the country’s international representation into ambiguity and confusion. The State Administration Council (SAC) regime, headed by Commander-in-Chief Senior General Min Aung Hlaing, who also appointed himself head of a caretaker government on 1 August 2021, asserts that the SAC is the sole representative and voice of the country.

However, the SAC’s creation as an instrument of arbitral military rule and the legality of its assertions were unconstitutional. While the coup leaders physically prevented the imminent convening of the Hluttaw, Myanmar’s legislature, the parliament nevertheless proceeded to swear in its members and establish a Committee Representing Pyidaungsu Hluttaw (CRPH; Committee Representing the Union Parliament). Three days after the coup, about 70 lawmakers-elect from the incumbent National League for Democracy (NLD) proceeded to take their oaths of office, as an act of upholding the 2020 election results and their legislative commitments.[1] The CRPH eventually grew to 20 Members, with the support of 80 percent of the elected MPs, and it has been extended recognition in inter-parliamentary cooperation, including by the European Parliament and the International Parliamentary Union. Legal experts have highlighted the coup’s unconstitutionality,[2] particularly the military’s unproven and implausible claims of electoral fraud as a reason to justify declaring a state of emergency and deposing and detaining the internationally recognised leaders and senior officials, including President Win Myint, State Counselor Aung San Suu Kyi, the Chairman of the Election Commission,[3] Chief Ministers and senior cabinet members of the National League for Democracy (NLD) government.

Since the coup, and particularly since the appointment in April 2021 of the National Unity Government (NUG),[4] which draws its legitimacy both from the elected CRPH and a wider group of appointed representatives, both the SAC and those opposing military rule have put considerable effort into gaining international recognition by asserting the extent of their domestic reach and control as well as in their respective external engagements.[5]

The physical control of government buildings and the state machinery gave the military an initial upper hand, although mass resignations, strikes, and protests by an estimated 400,000 civil servants[6] hampered the military’s efforts to exercise administrative power.

The issue of representation and recognition presents challenges internationally and regionally. Both the United Nations (UN) and ASEAN operate on the basis of what they refer to as “recognising states rather than governing entities”. While Myanmar’s status as a member state is not in doubt, recognising the competency of a representative acting on behalf of a state presents a challenge in the post-2021 coup scenario.[7]

For the time being, the UN Credentials Committee has agreed that the incumbent Myanmar ambassador to the UN, Kyaw Moe Tun, would continue to represent Myanmar, and has deferred further decision.[8] In October 2021, ASEAN made an unprecedented decision to limit the SAC’s attendance at the 38th and 39th ASEAN Summits to a “non-political representative”,[9] upholding this for ASEAN’s special summits with China in November 2021 and with the United States in May 2022, respectively. In February 2022, ASEAN further expanded the non-political representative application to foreign ministers’ meetings. The practice was extended to the ASEAN Defence Ministers’ Meeting Plus on 23 November 2022.[10] However, for all practical purposes, ASEAN interacts with Myanmar’s Ministry of Foreign Affairs and embassies which are under SAC control.

At the same time, in February 2022, the International Court of Justice (ICJ) resumed hearings of the case brought against Myanmar by the Gambia regarding the Myanmar state’s responsibility for preventing genocide towards the Rohingya population, under the Genocide Convention.[11] The ICJ hearings proceeded with the SAC in the defendant’s seat.[12]

In August 2022, international civil society/rights organisations supporting the UNESCO World Education Summit, mistakenly addressed the SAC chief as head of government.[13] Even in ASEAN, other than the Summit and foreign ministers’ meetings, other sectoral and functional meetings and activities have continued with SAC representatives.

There is thus a level of ambiguity surrounding the accreditation and acceptance of Myanmar representatives to ASEAN and international meetings, and in dealings with the various regional and international instruments to which Myanmar is a party.

APPROACHES TO RECOGNITION OF GOVERNMENTS AND THE ISSUE OF CREDENTIALS

As a member of the UN and ASEAN, Myanmar’s statehood is clear and undisputed.  Myanmar meets the legal requirements of statehood under the 1933 Montevideo Convention.[14]  What is of greater concern, however, and particularly for ASEAN, is the recognition of competent representatives acting on behalf of a State, especially when the SAC and the NUG are both asserting their right to Myanmar’s ASEAN seat.[15]

Under international law, the recognition of government (as opposed to states), is largely left to individual members’ discretion. Most states or international institutions often resort to the Estrada Doctrine[16] to avoid accusations of meddling with sovereignty when different parties contest authority in a country. This bears some resemblance to ASEAN’s non-interference principle, as it is based on the principles of non-intervention and self-determination. Even so, considering the Estrada Doctrine in the context of the February 2021 coup in Myanmar runs the risk of condoning unconstitutionality. ASEAN member states had recognised the NLD’s second landslide victory in 2020. The ASEAN Chair’s statement on 1 February 2021 also emphasised the importance of “adherence to the principles of democracy, the rule of law and good governance, respect for and protection of human rights and fundamental freedoms” and a “return to normalcy in accordance with the will and interests of the people of Myanmar”.[17]

The general preference to recognise states and not governments does not resolve the question of recognising governments, especially concerning the establishment of embassies, the accreditation of ambassadors, or the signing of agreements.[18]

Thus, when the recognition of a new government needs to be considered, three criteria are usually referred to, namely: (i) the entity’s effective control of the territory; (ii) its democratic legitimacy; and (iii) its adherence to international law.[19] Before 1990, UN Credentials Committees usually referred to the traditional criterion of effective territorial control for recognising a government.

Apart from these three criteria, states may also consider moral considerations, based on whether a government gained effective control legitimately or otherwise, preferences for values or systems such as democracy, or asserting control through violence and authoritarian means. Such considerations are important, as they help to ensure that the coup in Myanmar is not a fait accompli.[20] The UN’s credential practices post-1990 have also demonstrated the importance of these values, including factors such as human rights records.[21]

In the 21st century, democratic legitimacy has emerged as having a greater claim to recognition than the earlier characteristic of effective control. The UN chose to recognise democratic legitimacy in Cote d’Ivoire (2011) and Gambia (2017).[22]

States may sometimes also use the terms de facto or de jure when the authority in a country is contested. Governments with de jure status are considered legal and constituted. In contrast, a de facto government may be in control of the political/executive affairs of the state although not legally recognised or enjoying a legal mandate.[23]

In the case of Myanmar’s representation at the UN, the 76th UNGA Credentials Committee[24] has deferred its decision indefinitely, based on the understanding that the incumbent, Ambassador Kyaw Moe Tun (appointed by the NLD government in 2019) retains Myanmar’s seat.[25] Ambassador Kyaw Moe Tun states that he represents the NUG when participating in UN procedures and votes on UNGA resolutions. Inconsistent with the UN’s own precedents and requirements, this position has not been reflected in other UN bodies, such as the secondary seats in Geneva and Vienna, or Myanmar’s representation at ESCAP in Bangkok.

ASEAN does not possess a similar mechanism to examine the credentials of member states’ representatives. The established rules in ASEAN do not have any guidelines to deal with cases in which appointments or credentials are contested, let alone the competency of the government that issues them. As such, in light of the non-recognition of the SAC’s authority by some member states and dialogue partners, ASEAN has faced an unprecedented challenge of finding options for the conclusion (and entry into force) of ASEAN instruments and agreements.

In ASEAN, treaty practices[26] allow arrangements to consider the issue of non-recognition in concluding treaties.  For example, states can issue a statement that their accession to a multilateral treaty does not imply or confer recognition to certain state(s). This practice allows ASEAN member states or dialogue partners that do not recognise the SAC as the government of Myanmar to introduce a statement or declaration as a non-recognition disclaimer. Admittedly, this disclaimer may have more to do with a country’s position rather than a legal effect on the document.

Several member states and some dialogue partners of ASEAN have taken this approach in ratifying the Regional Comprehensive Economic Partnership (RCEP) agreement. Similarly, in consideration of external parties’ accessions to ASEAN’s foundational document, the Treaty of Amity and Cooperation in Southeast Asia (TAC), the ASEAN parties to the TAC now submit individual written consent to the depository, replacing the previous (pre-February 2021) established practice of physical signatures to indicate consent.

SAC AND NUG: THE LEGITIMACY QUESTION

Although the SAC considers itself the ruling entity, and has styled itself as a provisional government since August 2021, experts have highlighted the military’s deposing and detention of existing officeholders as unconstitutional.[27] The SAC had justified the military takeover under the 2008 Constitution, but that same document contains provisions that charges relating to impeachment can only be initiated by the Union Parliament. Furthermore, the President has to inform the Union Parliament of a decision to declare a state of emergency, which did not happen in February 2021.[28] Senior NLD leaders and party members were also detained without charges presented against them (lists of charges were only presented after detention). In this aspect, the military’s actions cannot be considered as actions of a de jure government.

Apart from the unconstitutional basis of the takeover, the use of lethal force, extra judicial killings, and using the legal system to carry out the first judicial executions in decades, add to the violations of international law (in addition to the earlier legal action brought by the Gambia against Myanmar over atrocities against the Rohingya in Rakhine State).[29]

The nationwide protests and coordinated civil disobedience movements across the country following the coup, the breakdown of SAC-controlled local administration in several parts of the country, and the escalation of a cycle of violence in response to the military’s harsh crackdowns (which include airstrikes), also point to the reality that the SAC is unable to fulfil the criterion of “effective control” of the country.[30]

However, the SAC regime seems to enjoy some measure of pragmatic acceptance by China and to a lesser extent India, and outright strong support by Russia.[31] ASEAN has come under scrutiny for engaging the SAC to negotiate the cessation of violence in the country and facilitating humanitarian assistance, even as ASEAN members seek to differentiate engagement and acceptance. As at May 2022, four ASEAN member states – Brunei, Malaysia, the Philippines and Thailand, have not appointed/replaced their ambassadors to Myanmar. Thailand accepted the credentials of an SAC-appointed Myanmar ambassador to Thailand in June 2022.[32]

ASEAN’s negotiation of the Five-Point Consensus with Senior General Min Aung Hlaing in Jakarta in April 2021 at the ASEAN Leaders’ Meeting, working with the SAC-led Myanmar National Task Force to deliver humanitarian assistance,[33] accepting the SAC’s defence minister General Mya Tun Oo’s presence at the ASEAN Defence Ministers’ Meeting,[34] and the 2022 ASEAN Chair Cambodia’s approach to engaging the SAC could be construed as ‘normalisation’ of military rule in Myanmar.[35]

The NUG was formed out of a coalition of NLD law-makers, representatives of several ethnic nationalities, and members of civil society. Appointed in April 2021, it is part of a political roadmap outlined in the Federal Democracy Charter adopted by the CRPH—a body of lawmakers, largely from the NLD who had received the people’s mandate through the 2020 democratic election.[36]The NUG’s goal is to restore democratic rule and uphold the results of the 2020 election.[37] It also commits to a vision of an inclusive federal democracy.

The NUG seeks to: (i) gain formal recognition from the international community by collaborating with international governments and international organisations including the UN; (ii) work on ratification of international conventions and treaties that will protect the nation in line with international laws; (iii) collaborate with partner countries; and (iv) work through diplomatic approaches to bring effective sanctions of the international community against the council of the military junta.[38]

The NUG has spared no effort to establish its diplomatic presence despite its constraints. To date, there are NUG representatives in Australia, Czech Republic, South Korea, the United Kingdom, France, Japan, and Norway. However, NUG representatives do not have diplomatic accreditation.[39] Several countries have dialogues with the NUG but have not officially recognised it.  In this vein, various NUG ministers have held meetings with lawmakers from Canada and Spain, as well as senior government representatives from the US, Germany and Sweden.[40]

The NUG has tried to justify its legitimacy, and capacity to govern, by stating its adherence and commitment to international norms. For example, in addition to its withdrawal (in February 2021) of objections on the case against Myanmar at the ICJ,[41] the NUG has accepted the International Criminal Court’s jurisdiction and role in reviewing the crimes committed by the military against the Rohingya people since 2002, including the alleged genocide in 2017.[42]The NUG has also offered potential citizenship to the Rohingyas.  

At the UN and at international fora, the NUG continues efforts to highlight the SAC’s atrocities and illegitimate claims and to prevent/deny SAC participation in these platforms, through Ambassador Kyaw Moe Tun’s statements and meetings with the UN officials and member state representatives. Despite the obvious challenges to gaining formal recognition from the international community, the NUG seems nevertheless to have gained an advantage from existing UNGA rules that stipulate “the incumbent ambassador keeps the seat if there is a credentialing dispute”.[43] However, this does not translate into the UN recognising the NUG. In the absence of a firm decision by the Credentials Committee, the UN does not want to be seen as taking sides on Myanmar.[44] 

The NUG is also emphasising the ‘responsibility to protect’ as justification for its capacity to prove a responsible counterpart for dialogue towards a federal system in Myanmar.[45] In this endeavour, the NUG also recognises the importance of an ASEAN member state’s obligations. It has appointed an Ambassador to ASEAN,[46] who has been urging the regional bloc to uphold the principles enshrined in the ASEAN Charter and to at least recognise the duality of competing political forces in Myanmar.[47]

Notwithstanding the public meeting between Malaysia’s Foreign Minister, Dato’ Saifuddin Abdullah and NUG Foreign Minister Zin Mar Aung, on the sidelines of the ASEAN-US Special Summit in Washington DC in May 2022, the NUG is aware that attaining formal recognition from ASEAN will be extremely challenging.

Limited support for the NUG may stem from perceptions of its limited long-term strategies and structural maturity, as well as uncertainty over the extent to which the NUG can represent the diverse populations in Myanmar (and their aspirations).[48] Operationally, the NUG is also limited in its ability to deliver public and consular services (including for Myanmar citizens abroad), such as issuing identity cards, passports, or visas to foreign visitors.[49]

Furthermore, several ASEAN member states (especially those that share a border with Myanmar) remain disinterested in putting further pressure on Myanmar’s military government nor do they seem keen to improve human rights, fundamental freedoms, and democracy in Myanmar.

CONCLUSION

The self-appointed nature of the SAC has limited justification to be recognised as the legitimate government of Myanmar. The sustained nature of the resistance against military rule close to two years after the coup also shows that the SAC has not proven able to establish effective control over the country. Furthermore, sanctions targeted against SAC elites and associates by the US and EU, among others, show that it is the SAC, rather than the Myanmar government, whose actions are unacceptable. Similarly, ASEAN’s decision to invite only non-political representatives from Myanmar to ASEAN’s high-level meetings, and the non-recognition disclaimers used by several ASEAN members in regional legal instruments indicate a disinclination to accord the SAC recognition.

The NUG’s democratic legitimacy and its status as the entity broadly representing the forces for democracy in Myanmar, and its stated commitment to uphold international obligations and standards of human rights, are being increasingly viewed as important in considering credentials in international settings.[50]  Even in the ASEAN setting, the argument that ASEAN has used in the past concerning the SAC, i.e. that engagement does not necessarily constitute conferring legitimacy, could also be applied to the actions of any member state seeking to engage with the NUG, as illustrated by Malaysia’s action and proposals. Additionally, the Five-Point Consensus’ provision that the Special Envoy of the ASEAN Chair meets with “all parties concerned” indicates that ASEAN does not necessarily need to seek further permission to carry out that mandate. The ASEAN Leaders have now given the special envoy of the ASEAN Chair more leeway to proceed accordingly.[51]

Although NUG may seem to be the more popular choice for the international community, the path ahead for its formal recognition remains uncertain. China and Russia’s veto power at the UN Security Council and differing preferences in ASEAN may continue to provide SAC with the expectation that it could still pursue recognition and legitimacy via its plans for an election in 2023 under the SAC’s five-point roadmap. Scepticism abounds on whether this planned election will be free and fair. Even so, seasoned Myanmar watchers are cautioning that the military will doggedly continue its election plans, most likely limiting polls to areas that it deems sufficient to make the vote “legitimate”.

Members of the international community that have clearly stated their rejection of the February 2021 coup will maintain their positions, while the SAC will continue to find ways to retain its participation in ASEAN and strengthen its ties with countries such as Russia. Finally, even with stricter measures by ASEAN related to the implementation of the Five-Point Consensus,[52] and a more favourable attitude towards unilateral engagements with the NUG, the NUG may still find itself still in need of exploring diplomatic tools and opportunities for wider recognition by the international community.

ENDNOTES

For endnotes, please refer to the the pdf document here.


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2022/117 “Setbacks for Moscow, Progress for Kyiv: The Russia-Ukraine War and its Impact on the ASEAN, G20 and APEC Summits” by Ian Storey

 

The Russia-Ukraine conflict complicated the preparations for, and hosting of, three major back-to-back international summits in Southeast Asia in November: the ASEAN Summits in Phnom Penh (11-13 November); the G20 in Bali (15-16 November); and the APEC Leaders’ Summit in Bangkok (18-19 November). In this picture, Cambodia’s Prime Minister Hun Sen (C) speaks during a press conference at the conclusion of the 40th and 41st Association of Southeast Asian Nations (ASEAN) Summits in Phnom Penh on 13 November 2022. Photo: Tang Chhin Sothy/AFP.

EXECUTIVE SUMMARY

  • The Russia-Ukraine War complicated but did not derail the ASEAN, G20 and APEC summits in Southeast Asia.
  • The host nations stood their ground and refused to heed calls from Western countries to exclude Russia. All three meetings were a qualified success thanks to skilful diplomacy.
  • President Putin did not travel to Southeast Asia due to a series of humiliating military setbacks in Ukraine and to avoid being shunned by other leaders.
  • The language of the final summit statements was highly critical of Russian aggression in Ukraine.
  • The ASEAN Summit was a success for Ukraine as it acceded to the ASEAN Treaty of Amity and Cooperation and strengthened relations with Cambodia.

* Ian Storey is Senior Fellow and co-editor of Contemporary Southeast Asia at ISEAS – Yusof Ishak Institute

ISEAS Perspective 2022/117, 29 November 2022

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INTRODUCTION

Russia’s invasion of Ukraine on 24 February 2022 has impacted the countries of Southeast Asia in many ways. The most important, and damaging, ones have been in economics. The rising price of energy, food and other commodities has lowered GDP growth forecasts and slowed the region’s economic recovery from the COVID-19 pandemic. The Kremlin’s invasion has undermined the rules-based international order, further aggravated US-China tensions and inserted another wedge issue in ASEAN unity.[1] The conflict has forced regional states to reassess their defence and arms procurement policies, particularly those that have purchased military hardware from Russia.[2] Myanmar’s tightening ties with Russia have the potential to worsen the country’s civil war.

The conflict also complicated the preparations for, and hosting of, three major back-to-back international summits in Southeast Asia in November: the ASEAN Summits in Phnom Penh (11-13 November); the G20 in Bali (15-16 November); and the APEC Leaders’ Summit in Bangkok (18-19 November).

The three summits tested the ASEAN countries’ convening power and their ability to resist calls from outside the region to disinvite Russia. That none of the events were derailed, and final statements were issued, is a testament to the hosts’ diplomatic skills in navigating complex geopolitical tensions. However, the events also underscored their limited ability to influence the dynamics of the conflict.

For the combatants themselves, the meetings provided important opportunities to lobby participating countries and articulate their competing narratives. Ukraine was able to advance its agenda and interests in Southeast Asia, especially at the ASEAN meetings. However, for Russia, the summits highlighted the difficulties the invasion has created for Moscow’s diplomacy in the Indo-Pacific region, including in its relations with traditional partners.

THE RUN-UP TO THE SUMMITS

In the immediate aftermath of Russia’s attack on Ukraine, the viability of the three summits was called into question. Some Western leaders declared that it could not be “business as usual” in multilateral forums which included Russia, and even raised the prospect of boycotting the meetings if Russian officials were invited.[3] As the first major in-person summits to be held in Asia since the outbreak of the COVID-19 pandemic, Cambodia, Indonesia and Thailand had a great deal at stake ensuring that the meetings took place without incident. More importantly, they felt that because there were many pressing global problems that required international cooperation to address, multilateral processes should not be held hostage to the Russia-Ukraine War.

Accordingly, on 4 May, the foreign ministries of the three countries issued an unprecedented joint press release. The statement emphasised the importance of maintaining ASEAN centrality through “constant engagement based on the principle of equal mutual respect and interest”, the important role the G20 played in facilitating a “strong and inclusive [economic] recovery for all” and the need for APEC to “accelerate regional economic integration to achieve shared prosperity”. The hosts declared they were “determined to work with all our partners and stakeholders to ensure a spirit of cooperation, as we in Southeast Asia continue to strengthen ASEAN centrality, credibility and stability in our regional and global endeavours”.[4] Cambodia, Indonesia and Thailand stood their ground, arguing that it was neither in the interests of the region nor in their power to exclude certain countries. Invitations were thus issued to Russia by the three states. However, to assuage Western discomfort, Indonesia also extended an invitation to Ukrainian President Volodymyr Zelenskyy to attend the G20.

By mid-year, the threat of a boycott had receded, but the preparatory meetings highlighted how the war had impeded multilateral processes that involved Russia. In July, for instance, the G20 foreign ministers and G20 finance ministers held separate meetings in Bali. Russian Foreign Minister Sergei Lavrov attended the former in person, but walked out of the meeting following withering criticism of the invasion from his Western counterparts.[5] No joint communique was issued. Russia’s finance minister, Anton Silvanov, attended the latter meeting virtually, and although it too ended without a communique, Indonesia issued a chairman’s statement which noted that “many members” had condemned the war while noting one member believed sanctions had added to existing economic challenges.[6]

In the run-up to the three summits, much of the media coverage centred on which leaders would attend, especially Russian President Vladimir Putin. While the Kremlin had accepted the invitations to all three events, it remained non-committal on whether Putin would attend in person. It was widely assumed that Moscow would make a last-minute decision, and that his attendance would depend on how Russia’s armed forces were faring in Ukraine. By late October, it had become clear that Putin would not attend the summits but this was not confirmed until 7 November.[7] The Kremlin was always concerned about the poor optics of Putin being ostracized by other world leaders at the summits (as he had been at the G20 summit in Brisbane in 2014 a few months after Russia had annexed Crimea). Putin may also have weighed the personal risks to his own position while travelling overseas, though the prospects of a palace coup were always remote. But the deciding factor was a series of disastrous setbacks for Russia’s armed forces on the battlefield in the face of a successful Ukrainian counter-offensive. Most significantly, on 11 November, Russian occupation forces retreated from the strategic city of Kherson, the only major city captured by the Russians since the invasion and which in September the Kremlin had declared Russian territory “forever”.[8] As a result, Putin did not participate in any of the three summits, not even virtually. However, his absence may well have come as a relief to the hosts as it spared them the potential headache of having Putin in the same room as other leaders opposed to the war.

THE ASEAN SUMMITS

No matter how the war was going in Ukraine, it was always highly unlikely that Putin would have travelled to Phnom Penh. This was for two reasons.

The first is Putin’s lack of interest in the annual East Asia Summit (EAS). Since Russia joined in 2011, Putin has only attended once in person (in 2018 in Singapore) and twice virtually (in 2020 and 2021). Putin, it seems, is only interested in attending multilateral forums in which Russia can exert real influence, such as BRICS and the Shanghai Cooperation Organisation. The presence of the US and China at EAS tends to overshadow Russia.

ASEAN has always viewed Putin’s participation in the EAS as a yardstick of how serious Russia is about its dialogue partnership with ASEAN, especially as the member states regard it as the key forum for leadership-led dialogue on the major issues facing the region. Putin’s absence will reinforce the belief among some ASEAN members that Moscow does not see relations with the bloc as a high priority.

The second reason is Cambodian Prime Minister Hun Sen’s vehement opposition to Russia’s invasion of Ukraine. Hun Sen has called it “an act of aggression”, and a “grave breach of the UN Charter” which threatens “the foundation of international order”.[9] Cambodia co-sponsored the United Nations General Assembly (UNGA) resolution condemning Russia’s invasion on 2 March.

Hun Sen has not only denounced Putin’s invasion but has also thrown his political support behind Ukraine. In a telephone call with President Zelenskyy on 1 November, Hun Sen condemned Russian aggression and supported the Ukrainian leader’s request to address the ASEAN meetings virtually. However, Zelenskyy was unable to do so because the ASEAN members could not reach a consensus.[10] Reports suggest that Myanmar, which has pursued closer relations with Russia since the February 2021 coup,[11] was the only ASEAN member to oppose Zelenskyy’s request.[12]

According to the chairman’s statement of the EAS issued by Cambodia, “most” of the EAS countries had condemned the “aggression against Ukraine”, called for an immediate end to the war and the non-use of nuclear weapons.[13] However, in a concession to Russia’s concerns about NATO expansion, including Ukraine’s possible membership of the alliance, it also noted the “view that the root cause of the situation in Ukraine should be addressed and the legitimate concerns of all countries must be taken into consideration”. But this phrase was of little consolation to Moscow.

Speaking at a press conference after the EAS, the head of the Russian delegation, Foreign Minister Lavrov, objected to the “absolutely unacceptable language regarding the situation in Ukraine”. Lavrov also accused the West and its allies of “militarising” the Indo-Pacific region with the aim of “containing” Russian and Chinese interests, and establishing “inclusive structures” that undermined ASEAN centrality, including the 2021 Australia-United Kingdom-United States (AUKUS) technology-sharing agreement. Russia and China were, he argued, the only two major powers still supporting ASEAN centrality.[14]

For Ukraine, the ASEAN Summits were a diplomatic success. Although Zelenskyy was not able to address the meeting, Foreign Minister Dmytro Kuleba attended as a guest of Cambodia. Most significantly for Ukraine, Kuleba signed the Treaty of Amity and Cooperation in Southeast Asia (TAC) which enshrines the principles of friendly and peaceful relations among member states, including respect for the sovereignty and territorial integrity of states, and which is open to accession by countries outside the region (Ukraine became the 50th country to accede to the TAC). Ukraine had only applied to join the TAC in June, so its accession in November clearly indicated that ASEAN had fast-tracked the approval process. Although the ASEAN member states have taken different positions on Russia’s invasion, the bloc’s rapid approval of Ukraine’s application was a gesture of political support for Kyiv.

In a wide-ranging interview with a Cambodian media outlet, Kuleba called Ukraine’s accession to the TAC “a big political achievement”.[15] He thanked Cambodia for its support at the UNGA and for offering to send de-mining trainers to Ukraine. He announced that the two countries had agreed to establish embassies in each other’s countries. Kuleba also held bilateral meetings with his counterparts from Cambodia, Indonesia, the Philippines, Thailand and Vietnam. He urged the ASEAN countries to condemn Russia’s invasion, not only because it was an attack on Ukraine, but also the UN Charter and international law, adding “I’m confident that none of the ASEAN countries is interested in seeing any country following the pattern of behaviour of Russia here in Asia”.[16]

THE G20 SUMMIT

From February onwards, Indonesia had repeatedly argued that the G20 was an economic forum that should not be politicised by the war in Ukraine, and that the participants should focus their attention on post-pandemic economic recovery. However, among the three hosts, Indonesia went the furthest to try and bridge the gap between Western countries and Russia. In June, President Joko (Jokowi) Widodo himself travelled to Kyiv and Moscow to personally deliver invitations to Zelenskyy and Putin.[17] Yet Jakarta was under no illusions how difficult it would be to bridge the gap between the two opposing camps. Foreign Minister Retno Marsudi admitted that Indonesia’s presidency was “among the most difficult, or even the most difficult to date of all G20s because of the geopolitical issues, economy and others”.[18] Jokowi was clearly passionate about the necessity for the G20 to achieve concrete results. In his opening address he warned “If the war doesn’t end, it will be difficult for the world to move forward” and that the G20 “must be the catalyst for inclusive economic recovery”.[19]

President Zelenskyy addressed the G20 leaders by video, prompting Lavrov to walk out. Although a final statement was not expected, the G20 was able to issue a Leaders’ Declaration largely thanks to the behind-the-scenes diplomacy of Indonesia and India.[20] Moscow could not have been pleased with the language of the declaration. It referenced the UNGA resolution of 2 March which “deplores in the strongest terms the aggression by the Russian Federation against Ukraine” and added “Most members strongly condemned the war in Ukraine and stressed it is causing immense human suffering and exacerbating existing fragilities in the global economy.” In reference to Russian threats to use nuclear weapons, the declaration stated “The use or threat to use nuclear weapons is inadmissible.” And in a push back to Jokowi’s plea not to politicise the summit, it recognised that while the G20 was not a forum to resolve security issues “we acknowledge that security issues can have significant consequences for the global economy”.[21] In response to the declaration, Lavrov accused the West of just that:  politicising the G20.[22]

In addition to the harsh declaration, Russia failed to find support for its military operation in Ukraine from two of its closest partners, China and India. Although both countries have tried to maintain a neutral but sympathetic stance since February, it is becoming clearer that both countries are increasingly dissatisfied with Putin’s war. The White House reported that at a meeting between US President Joe Biden and Chinese President Xi Jinping, the two leaders had expressed their opposition to the use or threat to use nuclear weapons.[23] President Xi also warned against the “weaponisation” of food and energy (but expressed opposition to unilateral sanctions).[24] Indian Prime Minister Narendra Modi reiterated his call for a “return to the path of ceasefire and diplomacy in Ukraine”.[25]

The Kremlin was to receive more bad news related to Ukraine as the summit got underway. On 14 November, Zelenskyy made a triumphal visit to the liberated city of Kherson. On the same day, the UNGA passed a resolution calling on Russia to pay reparations to Ukraine for damage to property and loss of life caused by its illegal invasion.[26] Three ASEAN states―Myanmar, the Philippines and Singapore―voted in support of the resolution while the other seven abstained. Three days later, a Dutch court sentenced in absentia two Russians and a Ukrainian for their role in the shooting down of Malaysian Airlines flight MH17 with a Russian-supplied missile in July 2014 with the loss of 298 passengers and crew, including 43 Malaysians.[27] The G20 meeting itself was interrupted by an emergency meeting of G7 and NATO leaders to discuss an accidental missile strike on Poland.[28]

Overall, however, despite the problems caused by the war, the G20 was a relative success for Indonesia as agreements were signed on a number of issues, including pandemic preparedness, energy transition and the financial sector.[29] It also provided a venue for a cordial meeting between Biden and Xi, which appears to have eased tensions between the two superpowers.

THE APEC SUMMIT

Of the three summits, Putin would most likely have attended APEC had he travelled to Southeast Asia. Russia was a founding member of APEC in 1988, and as president, Putin has attended most of the leaders’ summits. Putin’s participation in APEC summits underscores his transactional approach to the region. He regards it as an important venue to build trade and investment ties with the largest economies in the region, and promote investment in the infrastructure-poor Russian Far East. Putin was proud to host the APEC Leaders’ Summit in Vladivostok in 2012.

Thailand seemed eager to have Putin attend, especially after President Biden announced in late September that he would not participate and that Vice President Kamala Harris would go in his place. On 12 October, seemingly to avoid offending the Kremlin, Thailand abstained on the UNGA vote which called on member states not to recognise Russia’s illegal annexation of four territories in the Donbas.[30] In another concession to Russia, Thailand did not invite Zelenskyy to address the APEC leaders. Putin did not attend, however, and Russia was instead represented by the relatively unknown figure of Deputy Prime Minister Andrey Belousov.

As with the G20 summit, the APEC leaders defied expectations and issued a joint statement. And in yet another setback for Moscow, the language in the declaration on the conflict in Ukraine was identical to the G20 statement.[31]

CONCLUSION

The Russia-Ukraine War bedevilled preparations for the three summits in Southeast Asia but did not derail them. The three hosts successfully rebuffed calls for Russia’s exclusion, and in the case of the G20, Indonesia was able to assuage Western criticism by inviting President Zelenskyy to address the meeting virtually. But for Russia, the meetings amounted to an embarrassing diplomatic failure. Putin was unable to attend any of the summits due to a series of humiliating military setbacks in Ukraine and the prospect of being marginalised by other world leaders. All three of the summit statements contained language highly critical of Russian aggression. Even China and India issued thinly veiled criticism of the Kremlin’s invasion. Ukraine did much better, especially at the ASEAN Summit where, thanks in large part to Cambodia’s support, it was able to raise its diplomatic profile with the bloc. Kyiv would also have been satisfied with the references to the conflict in the final statements of the three meetings.

Despite the relative success of the three summits, the ongoing conflict in Europe will continue to pose challenges for multilateral processes in the Indo-Pacific. As the chair of ASEAN in 2023, Indonesia will face many of the same problems it did during its presidency of the G20, and will need to continue to play the role of an honest broker between Russia and the West. India will take over the presidency of the G20 and has been touted as a possible mediator between the two sides. The US will host APEC in 2023 and the Leaders’ Summit will take place in San Francisco in November 2023. Given the fraught relationship between the US and Russia, President Putin will thus miss another APEC meeting.

ENDNOTES

For endnotes, please refer to the the pdf document here.


ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong  
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2022/89 “Sustainability Collaborations between Businesses: Proposing a Roadmap for Cooperation between ASEAN Competition Authorities” by May Loh and Poh Lip Hang

 

There is a strong imperative for ASEAN competition authorities to cooperate and examine how sustainability collaborations can be addressed without undermining fairness and market efficiency. In this picture, a worker standing beside floating solar panels for the Sirindhorn Dam hydro-solar farm run by the Electricity Generating Authority of Thailand (EGAT) in Ubon Ratchathani on 23 February 2022. Photo: Jack TAYLOR/AFP.

EXECUTIVE SUMMARY

  • Abiding by competition laws could pose a challenge to business collaborations designed to meet environmental sustainability targets. Surveys of companies show that a majority choose not to pursue sustainability-related collaboration with other companies due to competition law compliance risk.
  • Collaboration between competition authorities is crucial for the achievement of sustainability outcomes across territories. However, the cost-benefit analysis of relaxing competition laws to allow for sustainability collaborations between businesses is challenging due to the difficulties in quantifying environmental benefits. It is also unclear how a consideration of environmental sustainability targets features in competition authorities’ assessment frameworks.
  • As such, a roadmap is herein proposed which fosters collaboration between ASEAN competition authorities, and facilitates cross-border sustainability collaborations and sustainability collaborations that bring about extra-territorial environmental benefits.
  • Recommendations include issuing guidance for businesses involved in sustainability collaboration. Such guidance should explain how the competition authority will assess environmental benefit claims under the relevant provisions in their competition legislation.
  • A supportive policy environment in ASEAN, especially for sustainability collaborations which are at the intersection of ten sets of national competition laws and other national environmental laws, will advance businesses’ efforts to pursue and implement sustainability collaborations in the region.

*May Loh is Senior Advisor at Conservation International (Asia-Pacific) and the Albright Stonebridge Group where her advisory work covers the intersection of issues of public policy, philanthropy, corporate governance and sustainability. Poh Lip Hang is a competition economist with Baker McKenzie.Wong & Leow, and an Adjunct Faculty at the Singapore Management University School of Economics where he teaches Economics of Competition Law to postgraduate students. The views set out in this article are the authors’ own and do not represent the views of the authors respective organisations.

ISEAS Perspective 2022/89, 9 September 2022

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INTRODUCTION

There is increasing debate globally on the intersection between competition law and sustainability in recent years. Countries want to promote free and fair marketplaces, but dealing with environmental challenges may require businesses to collaborate in a way that is contrary to most precepts of competition law. In Southeast Asia, the sustainability imperative is clear as the region is one of the most vulnerable to climate change and sustainable development has become a strategic priority outlined in the ASEAN Socio-Cultural Community Blueprint 2025. At the same time, ASEAN Member States have also committed to fostering a culture of fair business competition for enhanced regional economic performance in the long-term. To date, all ASEAN member states have enacted national competition laws, and initiatives are ongoing to strengthen enforcement. Herein lies a key question – while ASEAN continues to encourage open competition, will its laws and policies inhibit business collaborations designed to meet environmental challenges such as climate change?

Private sector-led initiatives are key to addressing urgent sustainability challenges, most of which are too large and interconnected to solve without collaboration between businesses across industries and supply chains. A report by IMAGINE and the University of Michigan highlights that persistent global problems require systems change through collective, collaborative action. It further notes that “collaborations present an opportunity for companies to expand their knowledge base, expertise, market reach and social impact”.[1] Pre-competitive collaboration is proposed by the report as a form of system change, which differs from other forms of private sector collaboration as it takes place before differentiation in the market occurs. For example, the Global Salmon Initiative (GSI) is a pre-competitive platform launched by aquaculture companies representing 70% of global production to advance sustainability practices in the sector. The GSI enabled information-sharing and drove the uptake of Aquaculture Stewardship Council (ASC) certified salmon, resulting in about 40% of the industry being certified today.[2]

Pre-competitive sustainability collaborations can therefore bring about positive, lasting impact when it is well-implemented across the value chain. Unfortunately, competition law enforcement can stymie sustainability collaboration between competing businesses. A 2020 survey of sustainability leaders in the UK, USA, France, Germany and the Netherlands found that over 90% of companies want to work together to address sustainability goals. However, almost 60% of these companies chose not to pursue sustainability-related collaboration with other companies due to competition law compliance risk.[3] Relatedly, more than half (57%) of the 800 business leaders in the Asia Pacific region surveyed in 2021 cite regulatory enforcement and investigations as a top “ESG” risk.[4] A key factor especially for multi-national organisations is the fragmented nature of ESG regulation across Asia Pacific where regional collaboration is not as well-established as for example, in the European Union. 

COOPERATION BETWEEN COMPETITION AUTHORITIES IS KEY

The OECD opined on the importance of international cooperation between competition authorities on sustainability collaboration between businesses. This is because even if a sustainability collaboration is not subject to competition law prohibition in one jurisdiction they might still be so in other jurisdictions. This can sometimes lead to perverse outcomes. For example, the OECD noted that Indonesia’s competition authority (KPPU) “faced pressure to prohibit a private standard for palm oil that reduced deforestation [and so the standard] was subsequently abandoned”.[5]  This was the Indonesia Palm Oil Pledge (IPOP), an agreement between major palm oil companies aimed at fighting deforestation and forest fires. These companies agreed to not develop peatlands of any depth as peatland fires are a major source of the haze problem in Southeast Asia. The KPPU found that the IPOP has “the potential to become a cartel that will lead to monopolistic practices and/or unfair business competition amounting to an infringement of Indonesia’s competition law.”[6]

Certainly competition law should first and foremost be enacted and enforced to safeguard market competition and consumers in the jurisdiction. Southeast Asian countries’ competition legislation are therefore aimed at safeguarding national interests and promoting free and fair markets. Competition authorities will be hard-pressed to explain why public resources are expended to intervene in market competition outcomes in other jurisdictions. A summary of the policy objectives of the 10 Southeast Asian member states’ competition laws by Burgess (2020)[7] is set out in the table.

SE Asian CountryEconomic EfficiencyEconomic Growth and DevelopmentConsumer WelfareFairnessPromotion and Protection of Competition
Brunei DarussalamXXXN/AX
CambodiaXN/AXXX
IndonesiaXN/AX People’s welfareXX
Lao PDRN/AXX Protect interests of State and businesses, as well as consumersXX
MalaysiaN/AXXXX
MyanmarN/AXX Public interests also consideredXX
PhilippinesXXXXX
SingaporeXN/AN/AN/AX
ThailandXN/AXN/AX
VietnamXXX Consumer interests and social welfareXX

However, it is short-sighted, like in the case of a prisoners’ dilemma, if we consider the foregone extra-territorial environmental benefits that sustainability collaborations can bring about. For the sake of discussion, we use the IPOP as a hypothetical example. The benefit arising from IPOP’s contribution to the reduction in environmental cost of transboundary haze pollution e.g. to neighbouring Singapore and Malaysia, should be weighed against costs of allowing IPOP to engage in monopolistic practices and/or unfair business practices in Indonesia. This cost-benefit analysis is nonetheless challenging due to difficulties in quantifying environmental benefits and externalities, especially those that are extra-territorial and long-term in nature.

Relatedly, it is unclear how the consideration of environmental issues feature in competition authorities’ assessment frameworks. The OECD Competition Committee suggests that the interpretation of competition law to environmental issues can have two different outcomes:[8]

(a) The extent that competition law provisions are to be interpreted so that environmental costs arising from prohibited agreements, conduct and mergers are prevented/prohibited.

(b) The extent that competition law provisions can possibly be interpreted so that sustainability collaboration that brings about environmental benefits are allowed.    

It may also be the case that the consideration of environmental issues fall outside the scope of the competition legislation. In order to steer Southeast Asia away from the sub-optimal prisoners’ dilemma outcome, the current trajectory that ASEAN competition authorities with regard to sustainability issues has to change.

A ROADMAP FOR SOUTHEAST ASIAN COMPETITION AUTHORITIES

We propose a roadmap for ASEAN competition authorities to ensure that sustainability collaborations, in particular those that lead to extra-territorial environmental benefits, are not stymied.

Recommendation 1 (National Level): Recognise the importance of environmental issues in the competition authority’s strategic plan. The strategic plan will facilitate communication and accountability, and enhance business stakeholders’ understanding of the competition authority’s purpose and functions in relation to environmental issues. For example, the Malaysia Competition Commission noted in its Strategic Plan 2021 to 2025  that “Investment in green technology can be cost-prohibitive and businesses may want to cooperate with their competitors to achieve the ESG agenda. The MyCC may need to study how Act 712 works to encourage the ESG agenda amongst businesses in Malaysia.” [9] This will set the “tone” of the competition authority, and promote consultative discussions between the competition authority and businesses looking to implement sustainability collaborations.

Recommendation 2 (Individual Level): Issue guidance for businesses involved in sustainability collaboration. The International Competition Network Special Project 2021 carried out by the Hungarian Competition Authority on “Sustainable Development and Competition Law” noted that 85% of the non-governmental advisors surveyed chose “more/better guidance documents” when asked to suggest ways that competition authorities can enhance transparency in their decision making.[10] Such guidance should explain how the competition authority will assess environmental benefit claims under the relevant provisions in their competition legislation e.g. cartel, abuse of dominance, mergers or unfair trade practices. Additionally, guidance on specific standards and/or quantification methodologies that are acceptable to the competition authority when assessing environmental costs and benefits should also be provided. This will alleviate compliance risk concerns that businesses have when pursuing sustainability collaboration. An example is the “Draft Guidelines on Sustainability Agreements” first published by the Netherlands Authority for Consumers and Markets (ACM) in 2020, which was followed by a revision in 2021 after public consultation. The guidelines explain different types of sustainability agreements that are allowed and how environmental benefits should be substantiated. The ACM also jointly commissioned a technical report with the Greek competition authority elaborating on methods used to substantiate benefits of sustainability agreements.[11]  

Where the consideration of environmental issues falls outside  the scope of competition legislation and the providing of exemptions is not feasible, competition authorities should consider solutions to address the lacuna e.g. proposing legislative amendments or holding discussions with relevant regulatory authorities in their respective jurisdictions.

Recommendation 3 (Individual Level): Cooperate with relevant regulatory authorities that have oversight of sustainability policy. Apart from designing and administering environment-related regulations on businesses, regulatory authorities may also engage in public-private partnerships to address environmental issues. Where regulations or private-public partnerships have unintended adverse impact on market competition, competition authorities play an important role in the advocacy of pro-competition policy-making, and in assisting regulatory authorities with re-shaping policy options to mitigate the adverse impact. One example would be enabling a regulatory sandbox regime for pre-competitive collaboration. This in turn could strengthen competitive collaboration at the bilateral or regional level. For example, the Hellenic Competition Commission introduced the “Sustainability Sandbox” in June 2022 where businesses can request for ex ante evaluation of their pre-competitive collaboration. It is aimed at enhancing legal certainty and reducing regulatory risks for businesses engaging in green investments.

Recommendation 4 (Bilateral or Regional Level): Initiate discussions on how ASEAN competition authorities can cooperate to assess cross-border sustainability collaborations, and sustainability collaborations that bring about extra-territorial environmental benefits. As highlighted by the OECD, even if sustainability collaborations are not subject to competition law prohibition in one jurisdiction they might still be in other jurisdictions. Such cooperation is also consistent with the general thrust to promote greater harmonisation of competition policy, law and enforcement in the region, following the creation of the ASEAN Economic Community. The ASEAN Expert Group on Competition (AEGC) is an excellent regional platform to facilitate or join discussions on specific cross-border sustainability collaborations as they arise. Such initiatives can fall under the ASEAN Competition Action Plan 2021-2025’s Strategic Goal 3; namely, for steps toward ensuring that regional cooperation arrangements on Competition Policy and Law are in place.

Recommendation 5 (Regional Level): Conduct a study to scope ASEAN-wide competition law and sustainability-related policy objectives. The study should ideally commence with a survey of the sustainability-related key result areas and the corresponding strategic measures of the ASEAN Socio-Cultural Community Blueprint 2025.[12] It is clear that private-sector involvement, and sustainability collaborations are crucial to achieving most of the strategic measures in the key result areas. The study can be part of the work under “Strategic Goal 3” of the ASEAN Competition Action Plan 2021-2025. Likewise, the AEGC would be the appropriate platform to engage with other relevant ASEAN-wide platforms e.g. the ASEAN Senior Officials on Environment to scope ASEAN-wide competition law and enforcement, and sustainability-related policy objectives. Once these policy objectives are agreed upon, guidance on how (i) cross-border sustainability collaboration, and (ii) sustainability collaborations that bring about extra-territorial environmental benefits, are assessed, should be issued.

CONCLUSION

There is a strong imperative for ASEAN competition authorities to cooperate and examine how sustainability collaborations can be addressed without undermining fairness and market efficiency. With increasing focus on region-wide initiatives such as the ASEAN Taxonomy for Sustainable Finance[13] and scaling-up carbon markets to unlock the potential of nature-based solutions,  the cost of inaction is far too great to ignore.

A supportive policy environment in ASEAN, especially for sustainability collaborations which are at the intersection of ten sets of national competition laws and other national environmental laws, will advance businesses’ efforts to pursue and implement sustainability collaborations in the region. To borrow from a popular Chinese proverb: “The best time to plant a tree was 20 years ago, the second best time is now.”

ENDNOTES


[1] Naomi Barker, Douglas Ely, Nicholas Galvin, Anya Shapiro, and Adrienne Watts (2021) Enacting Systems Change: Precompetitive Collaboration to Address Persistent Global Problems (Ann Arbor, MI: University of Michigan).

[2] WWF (2019). The Business Case for Pre-Competitive Collaboration (Global Salmon Initiative). Access: https://c402277.ssl.cf1.rackcdn.com/publications/1283/files/original/GSI_Business_Case_07-19_v8.pdf?1576875829

[3] Linklaters (2020), Competition law needs to cooperate: companies want clarity to enable climate change initiatives to be pursued.

[4] Baker McKenzie (2021), From Strategy to Action – Advancing ESG in Asia Pacific.

[5] Julian Nowag (2020). Sustainability & Competition Law and Policy – Background Note. 134th Meeting of the OECD Competition Committee 1-3 December 2020

[6] KPPU Tanggapi Keberadaan Indonesia Palm Oil Pledge (IPOP) (2016). Access: https://www.kppu.go.id/id/blog/2016/04/kppu-tanggapi-keberadaan-indonesia-palm-oil-pledge-ipop/?utm_source=twitterfeed&utm_medium=twitter

[7] Burgess (2020), Commonalities and Differences across Competition Legislation in ASEAN and Areas Feasible for Regional Convergence

[8] Sustainability & Competition Law and Policy – Background Note. Access: https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP(2020)3&docLanguage=En

[9] Malaysia Competition Commission Strategic Plan 2021 – 2025. Access: https://www.mycc.gov.my/sites/default/files/pdf/newsroom/MyCC_Strategic%20Plan%202021-2025%20%28Public%20Ver.%29_English%20%2814%20Dec%202021%29.pdf

[10] ICN Special Project 2021 (NGA.II.B.% Ways of enhancing transparency). Access: https://icn2021budapest.hu/site/assets/docs/spec_project/sustainability_survey%20REPORT%20(2ndEd%202021%2009%2030)%20final%20PUBLIC.pdf

[11] Guidelines on sustainability agreements are ready for further European coordination. Access: https://www.acm.nl/en/publications/guidelines-sustainability-agreements-are-ready-further-european-coordination

[12]ASEAN Socio-Cultural Community Blueprint 2025. See key results areas under Section C: Sustainable. Access: https://www.asean.org/wp-content/uploads/2012/05/8.-March-2016-ASCC-Blueprint-2025.pdf

[13] Introduced in 2021, the ASEAN Taxonomy for Sustainable Finance provides a common language to communicate and co-ordinate on labelling for economic activities and financial instruments, and thus can be used as a reference or starting point for competition authorities to understand the types of activities that are credibly considered ‘green’ across ASEAN.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong  
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha.  
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2022/87 “Can ASEAN and India Share a Common Outlook and Approach in the Indo-Pacific?” by Joanne Lin

 

India’s Foreign Minister Subrahmanyam Jaishankar (L) speaking at the ASEAN-India Ministerial Meeting during the 55th ASEAN Foreign Ministers’ Meeting in Phnom Penh on 4 August 2022. Picture: Tang Chhin Soth AFP.

EXECUTIVE SUMMARY

  • Over the past three years, ASEAN and India, as strategic partners, have been finding ways to align their outlook and strategic interests in the Indo-Pacific. As such, identifying common approaches and strategic alignment between the two can help elevate the relations to a higher level.
  • ASEAN’s approach to the Indo-Pacific through the ASEAN Outlook on the Indo-Pacific (AOIP) aims to defend its centrality through inclusive partnerships to promote greater strategic trust in the region. However, operationalising the AOIP will be challenging due to a lack of collective outlook.
  • India aims to strengthen its influence in the Indo-Pacific through the Indo-Pacific Oceans Initiative (IPOI) by focusing on three key aspects, namely purposeful partnerships (with like-minded countries), power promotion, and broad pluralistic policy.
  • ASEAN and India may find convergence in four aspects, namely, upholding common values; seeking balance in the Indo-Pacific and maintaining neutrality; broad and pluralistic approaches to engagement; and issues-based cooperation which may result in strategic alignment.
  • However, India’s interest to project its own leadership in the Indo-Pacific may pose a challenge to ASEAN centrality. ASEAN’s inability to exert its leadership role in the Indo-Pacific due to the limitations in ASEAN-led mechanisms and a lack of collective outlook will result in India relying on other mechanisms such as the QUAD to project a greater influence in the Indo-Pacific.

* Joanne Lin is Lead Researcher in Political-Security affairs at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute.

ISEAS Perspective 2022/87, 2 September 2022

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INTRODUCTION

The Indo-Pacific region, signifying the confluence of the Indian Ocean and the Pacific Ocean, is becoming increasingly important to ASEAN and India. Although there is no common definition of the strategic nature of the region, the construct was made with the strategic interests[1] of major powers in mind, including the US, Japan, Australia, and India—members of the Quadrilateral Dialogue (QUAD)—and others like the European Union, United Kingdom and the Republic of Korea.

In the case of ASEAN and India, the strategic importance of the Indo-Pacific region is underscored in their respective guiding documents, namely the ASEAN Outlook on the Indo-Pacific (ASEAN’s collective outlook to guide ASEAN’s engagement in Asia-Pacific and Indian Oceans region), adopted in June 2019 and the Indo-Pacific Oceans Initiative (India’s non-treaty-based initiative for cooperation with partners in the Indian and Pacific Oceans region), launched in November 2019.

Over the past three years, ASEAN and India as strategic partners, have been finding ways to align their outlook and strategic interests in the Indo-Pacific; and this eventually culminated in the Joint Statement on Cooperation on the ASEAN Outlook on the Indo-Pacific for Peace, Stability, and Prosperity in the Region[2] being adopted at the 18th ASEAN-India Summit in November 2021.

The joint statement which seeks to deepen ASEAN-India strategic partnership by exploring clear convergences and potential cooperation between the ASEAN Outlook on the Indo-Pacific (AOIP) and Indo-Pacific Oceans Initiative (IPOI), reaffirmed shared values and common fundamental principles. It also highlighted a long list of potential activities that are aligned to the four areas of cooperation outlined in the AOIP, namely maritime and economic cooperation, connectivity, sustainable development, and other areas of mutual interest. Apart from India, Japan has a similar joint statement with ASEAN[3] on the AOIP adopted in 2020.

While most documents and literature on ASEAN-India relations seek to identify areas of cooperation for strengthening the strategic partnership, this paper explores ASEAN’s and India’s strategic alignment in the Indo-Pacific through their respective approaches, and examine if a common outlook can be established to take ASEAN and India relations to the next level.

ASEAN’S APPROACH TO THE INDO-PACIFIC

ASEAN’s motivation in the Indo-Pacific has always been lacklustre and is driven primarily by its need to ensure that the region is not dominated or driven by any great power. The adoption of the AOIP in 2019 was in response to the growing narratives on the Indo-Pacific that are increasingly being shaped by major powers with vested interests in the region.[4] ASEAN, under the leadership of Indonesia, decided to come up with its own collective outlook to carve out its role in the Indo-Pacific in order to maintain its centrality in the evolving regional architecture.[5] Apart from Indonesia and Vietnam[6] which chose to embrace the Indo-Pacific, others in the bloc were less keen on a strong ASEAN approach towards the Indo-Pacific.

As such, the AOIP was deliberately kept broad, rudimentary and ambiguous to cater to the ambivalence or different levels of interest (or lack of interest) within the regional bloc on a construct that is, in fact, malleable.[7] Several ASEAN member states were apprehensive about the new Indo-Pacific construct for fear of being seen to be embracing the free and open Indo-Pacific strategies of countries such as Japan and the US which were interpreted as countering the rise of China.

Apart from underlining key principles,[8] forging inclusive partnerships is one of the main thrusts of ASEAN’s approach to the Indo-Pacific. This approach enables ASEAN to defend its centrality in the regional architecture and, at the same time, ensure the sustainability of initiatives in the Indo-Pacific through the support of external partners. ASEAN, on its own, has limited resources to maintain multilateral processes and platforms or to fund sizable initiatives and activities.

Notwithstanding the lack of strategic and substantive elements within the AOIP, or any salient or concrete ASEAN-led Indo-Pacific initiatives, ASEAN has managed to gain considerable success in garnering support for its maiden document on the Indo-Pacific. Many of ASEAN’s dialogue partners, including India, have seemingly welcomed its adoption and underscored ASEAN’s central role in the Indo-Pacific in various statements with ASEAN. Attempts have also been made by partners to find areas of synergy between the various Indo-Pacific strategies and the AOIP.

However, operationalising the AOIP will be challenging due to the lack of a collective outlook. ASEAN’s role in the region (let alone a leading one) will be limited due firstly to ASEAN’s inability to undertake substantive positions on key issues owing to the diverse interest and alliances among its members; secondly, the need to preserve its neutrality and unity amidst major power rivalry will limit ASEAN’s options; and thirdly, the absence of hard power in its security mechanisms cannot serve as a deterrence against potential aggressors.

INDIA’S APPROACH TO THE INDO-PACIFIC

In a similar vein, given the increasing salience of the Indo-Pacific discourse, Prime Minister Narendra Modi outlined India’s vision for the Indo-Pacific region[9] in a speech delivered at the Shangri La Dialogue in Singapore in June 2018. In that speech, India envisioned the Indo-Pacific as a free, open and inclusive region based on international law.

Modi had specifically underlined that “India does not see the Indo-Pacific region as a strategy or as a club of limited members, nor as a grouping that seeks to dominate, and by no means do we (India) consider it as directed against any country”.[10] The importance of ‘ASEAN centrality’ and the need for greater cooperation in the region was highlighted.

Subsequently, Modi launched the IPOI at the East Asia Summit in November 2019, shortly after the AOIP was adopted. The IPOI draws on existing regional cooperation focusing on seven key pillars,[11] namely, maritime security; maritime ecology; maritime resources; capacity building and resource sharing; disaster risk reduction and management; science, technology and academic cooperation; trade connectivity and maritime transport.

A separate “Indo-Pacific” Division was set up within the Ministry of External Affairs to help consolidate India’s vision of the Indo-Pacific across the Government of India and to provide substantive policy elements and programmes to its vision. ASEAN-India relations have since been subsumed under the new division.[12]

While the IPOI appears to be an announcement and framework rather than an actual policy document, it aims to provide a specific institutionalised structure[13] and strategic direction to the Indo-Pacific architecture. It is to establish India as a ‘rule-maker’ rather than a ‘rule-taker’,[14] and to bolster New Delhi’s strategic posturing.[15] This is in line with India’s ambition to be a stronger regional security power as evidenced in its Act East Policy. Scholars have also noted the important role that the Indian Ocean plays in supporting India in its economic rise, and as a maritime power in the region.[16]

The need for India to extend its influence in the Indo-Pacific also stems from India’s sensitivity to China’s expanding influence through its Belt and Road Initiative (BRI), and China’s growing partnership with Pakistan.[17] Safeguarding maritime security and strengthening relations with countries in the Indo-Pacific region, especially with ASEAN, has become an important priority for Modi.

However, India has not taken a defined position on the contested power politics in the Indo-Pacific[18] and has maintained cordial relations with most countries in the region. It has also kept its objectives and definition of the Indo-Pacific very broad to suit its interest to maintain a degree of “fuzziness”.[19]

It is observed that India’s approach to the Indo-Pacific focuses on three key aspects, namely, purposeful partnerships (with like-minded countries), power promotion, and broad pluralistic policy.[20] In addition, strategic autonomy, non-alignment (or multi-alignment), and inclusiveness are core to India’s foreign policy and have been translated into its Indo-Pacific approaches. 

India’s aim, therefore, is to foster a culture of institutional participation[21] in the Indo-Pacific region, especially the Indian Ocean region, that will strengthen India’s power and influence. Cooperation with international organisations and regional groupings (such as the Indian Ocean Rim Association, and the Indian Ocean Naval Symposium), minilateral partnerships (i.e. QUAD), trilateral (i.e. India-Australia-Japan Supply Chain Resilience Initiative), bilateral engagements (including with ASEAN countries), as well as issue-based partnerships[22] (i.e. the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, BIMSTEC), form the cornerstone of India’s approach to the Indo-Pacific.

A COMMON OUTLOOK AND APPROACH

While ASEAN and India have attempted to explore synergies and identify areas of cooperation that are complementary to the AOIP and IPOI, what is equally important to understand is the extent to which ASEAN and India may align their approaches in the Indo-Pacific.

There are converging approaches including upholding fundamental principles and values, as well as the pursuit of multilateralism and neutrality that will allow ASEAN and India to further advance their strategic partnerships. At the same time, certain divergences between ASEAN and India may also pose challenges to their relations in the long run.

Seeking Balance in the Indo-Pacific and the Need for Neutrality

India is keen to balance—although not specifically contain—China’s influence[23] in the Indo-Pacific.[24] Thus, India’s membership in the QUAD will help to satisfy India’s security needs. However, India is also viewed as the weakest link in the QUAD due to its need to maintain strategic autonomy and therefore may not align with Australia, Japan, and the US to the same extent in their outlooks toward China or even Russia. India’s history and policy of non-alignment (and being a founder of the Non-Aligned Movement, NAM) reflects its desire to “be friendly to all countries…and not being entangled in any alliance”, in the words of Jawaharlal Nehru.[25]

This aspect bodes well with ASEAN’s aim to preserve neutrality. The importance of neutrality in ASEAN has been reflected in the Zone of Peace, Freedom and Neutrality Declaration (ZOPFAN) signed in 1971[26] in which the five ASEAN foreign ministers (then) agreed to work towards the neutralisation of Southeast Asia, free from outside interference in its internal affairs. The need for neutrality was also considered in ASEAN’s AOIP which did not mention any specific countries or align itself to the Indo-Pacific strategies of major powers.

This principle has therefore allowed ASEAN to bring together major powers and regional players—regardless of ideologies or values—for inclusive dialogues and strategic cooperation through its multilateral mechanisms including the ASEAN Regional Forum (ARF), the East Asia Summit (EAS), and the ASEAN Defence Ministers’ Meeting Plus (ADMM-Plus) which India is a member of.  Similarly, this principle has allowed India to extend its diplomatic influence into the wider Indo-Pacific and engage freely with multiple partners through established rules, processes and institutions.

Broad Pluralistic and Multi-Pronged Engagement

Another similarity between ASEAN and India as observed in the AOIP and IPOI is the vagueness and broad nature of both approaches.  This is perhaps designed to allow both parties to have a stake in the Indo-Pacific without the need to parse the nature of the Indo-Pacific.[27] The avoidance of having a definitive position on the contested power politics in the Indo-Pacific has allowed ASEAN and India to maintain cordial relations with most countries and stakeholders in the region.[28]

India’s plurilateral approach in the Indo-Pacific as reflected in the IPOI not only focuses on its engagement with ASEAN and its multilateral mechanisms but also through various forms of cooperation (minilateral, trilateral and bilateral, as illustrated in the earlier section).

Apart from cooperation in the Indo-Pacific, India is also part of the Shanghai Cooperation Organisation (SCO)—a growing China-led organisation—and the BRICS (Brazil, Russia, India, China, and South Africa). This reflects the reality of India’s “need for a strong multi-polar world order for dealing with the challenges of our times”, according to Modi.[29] India’s preference for multi-pronged engagement has therefore prompted observations that India’s non-alignment policy is increasingly shifting to multi-alignment.[30]  Some scholars have also referred India’s enlargement of partnerships and strategic space to “conjectural alliances”[31]—alignments without political or military alliance structure—which can result in little commitment.

This in a way is similar to ASEAN’s outward-looking approach to external relations in which multiple partnerships are formed bilaterally (with over 95 Non-ASEAN Ambassadors accredited) and through sub-regional, regional and international organisations.  The number of formal partnerships including dialogue partners, sectoral dialogue partners, and development partners as well as with various organisations have grown over the years, although commitment remains low. In fact, scholars have observed that ASEAN’s strategy for external relations is to embrace as many outsiders as possible to balance any threat arising from one single power.[32]

Projection of Leadership in the Indo-Pacific (Power Promotion vs ASEAN Centrality)

As much as India has always placed emphasis on the importance of ASEAN centrality and leadership in the regional architecture (as underscored in most documents), India has also been active in projecting its own power across the military and commercial domains in the Indo-Pacific. Some scholars have argued that the Indo-Pacific as envisioned by the IPOI, “celebrates the rise of India, re-emergence of Japan and the return of the US to the region”.[33]

Furthermore, India’s partnerships through regional sub-groupings or minilaterals like the QUAD help to promote greater (and largely unexplored) roles of middle powers such as India, Australia, Japan, France, and the UK, and hold the potential to bridge between the smaller littoral states of the region with the bigger powers like the US.[34]

By embracing the QUAD, India is able to rise above its middle-power status[35] and project a greater influence in the Indo-Pacific, particularly post-pandemic through various vaccines and economic initiatives. Scholars have noted that New Delhi visualises a regional and global order which facilitates a greater role for India in its diffusion and distribution of power.[36] As such, its promotion of a “Quad Plus”[37] will enable India to build a more concentrated power structure in the Indo-Pacific that could help it gradually break away from its dependency on the Chinese economy.[38]

It seems then that the value of the QUAD to India far surpasses that of ASEAN. India’s aspiration to project its leadership through the QUAD or QUAD-Plus will run contrary to its support for ASEAN as the driving force in the regional architecture.

Although ASEAN has not issued any official statements on the QUAD, the bloc is cautious about QUAD replacing ASEAN centrality in the regional architecture. In addition, ASEAN does not wish to be entangled in a possible power transition taking place[39] in the Indo-Pacific region and does not wish for the Southeast Asia region to be securitised.  In this aspect, ASEAN and India do not have the same level of ambition when it comes to the securitisation or building of a power structure in the Indo-Pacific region, especially if such a move is to counter the rise of China in the region.  

However, the convergence of strategic interests between a multilateral organisation and a minilateral group cannot be ruled out if the QUAD and ASEAN find common ground in shared normative and practical engagements.[40]

CONCLUSION

The examination of ASEAN’s and India’s approaches to the Indo-Pacific shows many similarities which could lead to significant strategic alignment. India’s pragmatism, neutrality and open approaches to engagement in the region will allow both sides to advance their strategic partnership, especially in areas of common interests or issues to forge a win-win partnership.

However, there remain differences when it comes to leadership in the Indo-Pacific. The limitations in ASEAN-led mechanisms coupled with the declining unity of ASEAN have resulted in ASEAN centrality appearing obsolete in the face of emerging challenges. Fundamentally, ASEAN will not be able to exert its leadership role in the Indo-Pacific due to the lack of a collective outlook among ASEAN countries toward this construct. As such, it will be tough for India to rely on ASEAN alone to satisfy its ambitions in the Indo-Pacific.

As ASEAN and India work towards a comprehensive strategic partnership after 30 years of relations, ASEAN and India may need to find new options to sustain its strategic alignment, including closer cooperation between ASEAN and the QUAD.

ENDNOTES


[1] Brendon J. Cannon and Kei Hakata, Indo-Pacific Strategies: Navigating Geopolitics at the Dawn of a New Age”, Routledge, London and New York, 2021, Pp. 5

[2] ASEAN, “ASEAN-India Joint Statement on Cooperation on the ASEAN Outlook on the Indo-Pacific for Peace, Stability, and Prosperity in the Region”, 28 October 2021, https://asean.org/wp-content/uploads/2021/10/71.-ASEAN-India-Joint-Statement-on-Cooperation-on-the-ASEAN-Outlook-on-the-Indo-Pacific-for-Peace-Stability-and-Prosperity-in-the-Region-Final.pdf

[3] ASEAN, “Joint Statement of the 23rd ASEAN-Japan Summit on Cooperation on ASEAN Outlook on the Indo-Pacific”, 13 November 2020, https://asean.org/joint-statement-of-the-23rd-asean-japan-summit-on-cooperation-on-asean-outlook-on-the-indo-pacific-2/

[4] This was recognised even in the founding days of ASEAN when Indonesian Foreign Minister Adam Malik noted that “Southeast Asia is one region in which the presence of interests of most major powers converge, politically as well as physically”.

[5] ASEAN, “ASEAN Outlook on the Indo-Pacific”, 22 June 2019, ASEAN Secretariat, https://asean.org/asean2020/wp-content/uploads/2021/01/ASEAN-Outlook-on-the-Indo-Pacific_FINAL_22062019.pdf

[6] Hoang Thi Ha, “ASEAN Navigates between Indo-Pacific Polemics and Potential”, Perspective, ISEAS-Yusof Ishak Institute, 20 April 2021, /wp-content/uploads/2021/03/ISEAS_Perspective_2021_49.pdf

[7] Ibid.

[8] Such as openness, transparency, inclusivity, rules-based framework, good governance, respect for sovereignty and international law, non-intervention, mutual respect and benefit among others.

[9] Ministry of External Affairs India, Indo-Pacific Division Briefs, https://mea.gov.in/Portal/ForeignRelation/Indo_Feb_07_2020.pdf

[10] Narendra Modi, Prime Minister’s Keynote Address at Shangri La Dialogue, 1 June 2018, Ministry of External Affairs, Government of India, https://www.mea.gov.in/Speeches-Statements.htm?dtl/29943/Prime+Ministers+Keynote+Address+at+Shangri+La+Dialogue+June+01+2018

[11] Ibid.

[12] Rahul Mishra, “Indo-Pacific Oceans’ Initiative: Providing Institutional Framework to the Indo-Pacific Region”, AIC Commentary, No. 20, August 2021, ASEAN India Centre, https://aei.um.edu.my/img/files/AIC%20commentary%20No%2020%20August%202021%20final.pdf

[13] Panda, J. P. The Strategic Imperatives of Modi’s Indo-Pacific Ocean Initiative, Asia-Pacific Bulletin No. 503, East West Centre, 8 April 2020.

[14] Rahul Mishra, “Indo-Pacific Oceans’ Initiative: Providing Institutional Framework to the Indo-Pacific Region”, AIC Commentary, No. 20, August 2021, ASEAN India Centre, https://aei.um.edu.my/img/files/AIC%20commentary%20No%2020%20August%202021%20final.pdf

[15] Jagannath P. Panda, “The QUAD Plus and India’s pointed alignment strategy”, in QUAD Plus and Indo-Pacific, The Changing Profile of International Relations, edited by Jagannath P. Panda and Ernest Gunasekara-Rockwell, Routledge, 2022. Pp. 45-77.

[16] Frederic Grare and Jean-Loup Samaan, The Indian Ocean as a New Political and Security Region, Palgrave Macmillan, 2022. Pp. 43.

[17] Panda, J. P. The Strategic Imperatives of Modi’s Indo-Pacific Ocean Initiative, Asia-Pacific Bulletin No. 503, East West Centre, 8 April 2020.

[18] Jagannath Panda, “The Strategic Imperatives of Modi’s Indo-Pacific Ocean Initiatives”, Asia Pacific Bulletin, Number 503, 7 April 2020, East West Centre, https://www.eastwestcenter.org/system/tdf/private/apb503.pdf?file=1&type=node&id=37466

[19] Ibid.

[20] Jagannath Panda, “The Strategic Imperatives of Modi’s Indo-Pacific Ocean Initiatives”, Asia Pacific Bulletin, Number 503, 7 April 2020, East West Centre, https://www.eastwestcenter.org/system/tdf/private/apb503.pdf?file=1&type=node&id=37466

[21] Samikshya Das, “Understanding India’s Indo-Pacific Ocean’s Initiative, CESCUBE, 10 June 2022, www.cescube.com/vp-understanding-india-s-indo-pacific-ocean-s-initiative

[22] Premesha Saha, “India’s Role in the Emerging Dynamics of the Indo-Pacific”, Observer Research Foundation, 26 January 2022, https://www.orfonline.org/expert-speak/indias-role-in-the-emerging-dynamics-of-the-indo-pacific/

[23] The need to balance China also result from clashes between India and China forces along the disputed Himalayan border.

[24] Iqbal Singh Sevea, “ASEAN and India in an Evolving Indo-Pacific”, ISAS Briefs, Institute of South Asian Studies (ISAS), 22 June 2022, https://www.isas.nus.edu.sg/papers/asean-and-india-in-an-evolving-indo-pacific/

[25] India Constituent Assembly Debates, 17 May 1949, Part 1, https://indiankanoon.org/doc/1990531/

[26] ASEAN, Zone of Peace, Freedom and Neutrality Declaration, 27 November 1971, https://www.pmo.gov.my/wp-content/uploads/2019/07/ZOPFAN.pdf

[27] Vivek Mishra, Scholars’ Point- IORA Set of Events in New Delhi: Embracing the Indo-Pacific, Kalinga Institute of Indo-Pacific Studies, 15 December 2019, http://www.kiips.in/research/iora-set-of-events-in-new-delhi-embracing-the-indo-pacific/

[28] Premesha Saha and Abhishek Mishra, “The Indo-Pacific Oceans Initiative: Towards a Coherent Indo-Pacific Policy for India”, ORF Occasional Paper No. 292, December 2020, Observer Research Foundation. 

[29] Narendra Modi, Prime Minister’s Keynote Address at Shangri La Dialogue, 1 June 2018, Ministry of External Affairs, Government of India, https://www.mea.gov.in/Speeches-Statements.htm?dtl/29943/Prime+Ministers+Keynote+Address+at+Shangri+La+Dialogue+June+01+2018

[30] Raghavan, P.S. “The Making of India’s Foreign Policy: From Non-Alignment to Multi-Alignment.” Indian Foreign Affairs Journal 12, no. 4 (2017): 326–41. http://www.jstor.org/stable/45342011.

[31] Brendon J. Cannon and Kei Hakata, “Indo-Pacific Strategies: Navigating Geopolitics at the Dawn of a New Age”, Routledge, London and New York, 2021, Pp. 62

[32] M. Mayilvaganan “ASEAN and India: navigating shifting geopolitics” in ASEAN and India-ASEAN Relations, Navigating Shifting Geopolitics, edited by M. Mayilvaganan, Routledge, 2022, pp. 2.

[33] Mishra, Rahul, “Where ‘Act East’ meets Indo-Pacific: Mapping India’s Southeast Asia engagement”, Presentation made at the Conference, Asia’s Post Pandemic Order and Integration Outlook of ASEAN and the Indo-Pacific at Crossroads organised by the Research Institute on Contemporary Southeast Asia with the ASEAN Studies Centre (Chulalongkorn University), and the ASEAN India Centre(AIC), RIS, New Delhi, 8 July 2021.

[34] Frederic Grare and Jean-Loup Samaan, The Indian Ocean as a New Political and Security Region, Palgrave Macmillan, 2022. Pp. 8.

[35] Harsh V. Pant, “India and the Quad: Chinese belligerence and Indian resilience”, Observer Research Foundation, 20 March 2022, https://www.orfonline.org/research/india-and-the-quad/

[36] Jagannath P. Panda, “The QUAD Plus and India’s pointed alignment strategy”, in QUAD Plus and Indo-Pacific, The Changing Profile of International Relations, edited by Jagannath P. Panda and Ernest Gunasekara-Rockwell, Routledge, 2022. Pp. 45-77.

[37] QUAD-Plus includes countries such as Israel, South Korea, Brazil, New Zealand and Vietnam which are seen as like-minded partners.

[38] Jagannath P. Panda, “The QUAD Plus and India’s pointed alignment strategy”, in QUAD Plus and Indo-Pacific, The Changing Profile of International Relations, edited by Jagannath P. Panda and Ernest Gunasekara-Rockwell, Routledge, 2022. Pp. 45-77.

[39] Hernaikh Singh, “ASEAN-India Relations: Potential for Further Growth”, ISAS Insight, Institute of South Asian Studies (ISAS), 1 July 2022, https://www.isas.nus.edu.sg/papers/asean-india-relations-potential-for-further-growth/

[40] Evan A. Laksmana, “Whose Centrality? ASEAN and the QUAD in the Indo-Pacific”, Journal of Indo-Pacific Affairs, Special Issue 2020: 106-117, https://media.defense.gov/2021/Mar/12/2002599864/-1/-1/0/6-LAKSMANA.PDF/TOC.pdf

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2022/67 “Better Safeguards Needed for Trusted Data Use in ASEAN Countries” by Sithanonxay Suvannaphakdy

 

The expansion of digital connectivity among businesses, consumers and governments both within and across borders increases the need for data safeguards. Image: Designed by pikisuperstar/Freepik at http://www.freepik.com.

* Sithanonxay Suvannaphakdy is Lead Researcher at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute. He is grateful for valuable comments and suggestions from Sharon Seah. All remaining errors are his own.

EXECUTIVE SUMMARY

  • The expansion of digital connectivity among businesses, consumers and governments both within and across borders increases the need for data safeguards to promote trust in data governance and data management.
  • An analysis of 31 regulatory elements using data from the World Bank’s Global Data Regulation Diagnostic Survey in 2021 reveals that ASEAN as a group has underregulated data safeguards. It has moderately developed a regulatory framework for safeguarding cybersecurity and non-personal data, while it remains at an early stage in the development of a regulatory framework for protecting personal data.
  • The regulatory framework for data safeguards is unevenly developed across ASEAN countries. Measures to safeguard cybersecurity are most advanced in the Philippines and Vietnam, but less so in Cambodia, Indonesia, Malaysia, Myanmar, and Thailand. Personal data protection is most advanced in the Philippines, but is at a basic level in Myanmar and Thailand.
  • Although limited regulations imply less restrictions on the movement of data, this may affect the willingness of stakeholders in digital trade (e.g. firms, consumers, and governments) to share their data. This highlights the need for coherent regulations to promote digital economies and trade.
  • ASEAN should strengthen data safeguards by adopting sector-wide personal data protection laws; establishing coherent data security measures and cybersecurity requirements for data controllers and processors; and providing capacity-building assistance on data safeguards to its members. This should promote more equitable distribution of the gains from data flows, and address risks and concerns of data flows across countries.

ISEAS Perspective 2022/67, 5 July 2022

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INTRODUCTION

The expansion of digital connectivity among businesses, consumers and governments both within and across borders increases the need for data safeguards. Data safeguards promote trust in the data governance and data management ecosystem by avoiding and limiting harm arising from the misuse of data or breaches affecting its security and integrity. Firms engaging in digital trade usually store customers’ bank account and credit card information, email addresses, mailing addresses, and usernames and passwords. One of the key cyber threats to online shoppers in ASEAN in 2020[1] is the e-commerce data interception, which obstructs consumer data transmission to and from the device and remotely alters the messages[2]. This reduces consumer confidence in online payments since cybercriminals may use online data to steal credit card information or use consumers’ personal information for identity theft and fraud.  

The present study assesses the extent to which ASEAN countries have established national regulatory frameworks for safeguarding data. This is a precondition in the promotion of digital economies and trade in ASEAN. The lack of trust in data use across ASEAN countries could slow cross-border data flows and lead to fragmentation of data, which complicates firms’ access to regional supply chains. Cross-border data restrictions and fragmentation could also reduce opportunities for ASEAN governments and firms to strengthen regional collaborations in addressing privacy breaches and cyberattacks.

Following the method used by the World Bank (2021),[3] regulatory frameworks for data safeguards are analysed against 31 regulatory elements; these fall into three broad categories, namely, cybersecurity, personal data protection and nonpersonal data protection (Figure 1). Cybersecurity refers to measures for protecting internet-connected devices, network and data from unauthorized access and criminal use. Cybersecurity safeguards consist of three groups and 18 regulatory elements. These groups include security requirements for automated processing of personal data, cybersecurity requirements for data controllers and processors, and regulation of cybercrime activities for personal data. Safeguards for personal data contain two groups and 12 regulatory elements. These include legal basis and government exceptions in the data protection laws, and the quality and enforcement of data protection laws. The analysis of non-personal data focuses on the use of intellectual property rights (IPR) to prevent data sharing.

Using the World Bank’s Global Data Regulation Diagnostic Survey from 2021[4], the analysis of regulatory frameworks for data safeguards in this study reveals that ASEAN has underregulated data safeguards. ASEAN as a group has a moderate level of regulatory framework for safeguarding cybersecurity and nonpersonal data, while it remains at an early stage of developing a regulatory framework for protecting personal data (Table 1). While limited regulations on data safeguards imply less restrictions on the movement of data, they may affect the willingness of digital trade’s stakeholders (e.g. firms, consumers, and governments) to share their data due to concerns over data privacy or national security.

The study also shows different levels of regulatory framework across aspects of data safeguards and ASEAN countries. This study suggests the need for ASEAN to constitute more coherent regulations for data safeguards to promote the development of digital economies and trade.

SAFEGUARDING CYBERSECURITY

The analysis of cybersecurity measures in Table 2 reveals that none of the ASEAN countries in this study has imposed a full range of cybersecurity measures on data processors and controllers. The Philippines has the most comprehensive regulatory framework for cybersecurity, followed by Vietnam, Singapore, and Laos. The remaining five ASEAN countries have adopted less than half the cybersecurity measures. 

ASEAN countries have made much progress in developing safeguard measures to prevent cybercrime activities such as unauthorized access to databases, unauthorized interception of data, unauthorized deletion or alteration of databases, unauthorized interference of databases, and the establishment of national CERT. Most ASEAN countries are still in early stages in developing data security measures and internal adoption of cybersecurity standards. The less developed data security measures include the anonymization of personal data, the ability to restore data and systems that use or generate personal data after a physical or technical incident, and ongoing tests, assessments and evaluation of security of systems that use or generate personal data. The less developed cybersecurity standards include appointment of a personal data processing office or manager, and assessment of the harm caused by a data breach.

Data security measures

Data security measures include security requirements for automated processing of personal data used by data controllers and processors. In ASEAN, the Philippines and Vietnam have the most comprehensive regulatory framework for data security, but they still need to create a data security measure on the anonymization of personal data. Malaysia and Singapore have not yet established four data security measures, namely, the encryption of personal data, anonymization of personal data, ability to restore data and systems, and ongoing tests of data security systems. Indonesia has not yet created data security measures on anonymization of personal data, integrity of data and systems, ability to restore data and systems, and ongoing tests of data security systems. Cambodia, Laos, Myanmar, and Thailand have not yet adopted any data security measures (Table 2).

Internal adoption of cybersecurity standards

Internal adoption of cybersecurity standards refers to the adoption of cybersecurity requirements by data controllers and processors. This is uneven across ASEAN countries. Only the Philippines has adopted all cybersecurity standards for data controllers and processors. Data controllers and processors in Vietnam are not required to comply with a cybersecurity standard for appointing a personal data processing office or manager, while those in Singapore are not required to comply with cybersecurity requirements on confidentiality of data and systems, performance of internal controls, and assessment of the harm caused by a data breach. Data controllers and processors in Cambodia, Indonesia, Malaysia, Myanmar and Thailand are not required to comply with any cybersecurity standards (Table 2). This suggests the fragmentation of cybersecurity standards in ASEAN. Harmonizing these standards is needed to reduce the compliance costs for firms engaging in digital trade. 

Regulation of cybercrime activities for personal data

Regulatory measures to prevent cybercrime – criminal acts committed online by using electronic communications networks and information systems[5] – have been widely adopted by ASEAN countries. These measures include unauthorized access to systems or other databases holding personal data; unauthorized interception of data from systems or other databases holding personal data; unauthorized damaging deletion, deterioration, alteration or suppression of data collected or stored as part of databases holding personal data; unauthorized interference with databases holding personal data; and misuse of devices or data for the purpose of committing any of the above criminal behaviour (Table 2).

Establishment of cybersecurity infrastructure and enforcement agency (CERT)

All nine ASEAN countries in this study have established a legal framework to establish their national CERT. Seven out of these nine ASEAN countries also have a legal framework to create a cybersecurity plan to protect key national infrastructure. These include Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam (Table 2).

In Singapore, for example, the Cyber Security Agency of Singapore (CSA) was established in 2015 and is managed by the Ministry of Communications and Information. CSA aims to protect critical information infrastructure to ensure the continuous delivery of essential services such as telecommunication, energy, healthcare, and banking; create a vibrant cybersecurity ecosystem comprising skilled professionals, strong research and development expertise, and companies with deep cybersecurity capabilities to promote a digital economy; and conduct outreach programmes to raise awareness and promote adoption of good cyber hygiene practices by the public.[6] These goals are further elaborated in its cybersecurity strategy 2021, which was first launched in 2016.[7] 

SAFEGUARDING PERSONAL DATA

Measures to protect personal data are based on individuals’ substantive and procedural rights. Substantive rights include measures that prevent the unauthorized disclosure of personal data and the use of personal data for unfair treatment as well as measures that require purpose specification, data minimization, and storage limitations. Procedural rights include measures that allow individuals to receive notice about and to object to the use of their personal data as well as measures that allow them to correct and erase their data.

The analysis of personal data protection in Table 3 reveals that the Philippines has the most comprehensive regulatory framework for the protection of personal data, but it still needs to adopt a regulatory measure that requires the necessity and proportionality test for the use of personal data by public authorities. Malaysia and Singapore need to establish regulatory measures for the necessity and proportionality test for government exceptions, incorporation of privacy by design, and limitation on algorithmic decision-making. The regulatory frameworks for safeguarding personal data in the remaining six ASEAN countries are significantly lagging behind the Philippines, Malaysia, and Singapore, especially in the adoption of data protection law across sectors, the imposition of limitations on data storage, and the establishment of national personal data protection authority.

Establishment of personal data protection laws

Laws on personal data protection – the protection of data about an individual who can be identified from those data, or from those data and other information to which a data controller or processor has or is likely to have access to – provide a baseline standard of protecting personal data. Such a law comprises various requirements governing the collection, use, disclosure and care of personal data in a country. It aims to protect individuals’ personal data, while enabling the public and private sectors to collect, use or disclose personal data for legitimate and reasonable purposes.

Three out of the nine ASEAN countries have constituted a data protection or privacy law of general application to govern the use, collection and processing of personal data across sectors. These are Malaysia, the Philippines, and Singapore (Table 3). The remaining six countries have only sector-specific personal data protection law. Different scopes of regulatory framework on data protection may impede the transfer and sharing of data for digital trade in ASEAN.

Government exceptions to limitations on data collection and processing

The collection and processing of personal data by ASEAN governments should be subject to the necessity and proportionality test to enhance transparency and trust in data use. Limitations on the use of personal data should apply to both the private and public sectors which processes or controls personal data. Four out of the nine ASEAN governments have created exceptions to limitations for data processing by public authorities. These are Indonesia, Malaysia, Singapore, and Vietnam. These exceptions should be limited to specific data uses such as ensuring national security and performing lawful government functions.

However, ASEAN governments have not yet constituted a legal provision to regularly review the efficiency and effectiveness of the established government exceptions. This may result in the lack of transparency and a monitoring mechanism in the implementation of government exceptions on personal data, and hence undermines trust in data use.   

Quality of data protection laws

The quality of data protection laws is also uneven across ASEAN countries. These laws should allow individuals to challenge the accuracy and object to the use of personal data, while requiring data processors to limit the purpose of data use, the volume of data collection, and timeframe for data storage. The Philippines is the only ASEAN country that incorporates all of these legal provisions. Indonesia, Malaysia, Singapore, and Vietnam have not yet included legal provisions on privacy by design and automated decision. A legal provision on the privacy by design requires data processors to incorporate technical and organizational privacy-by-design or use privacy enhancing technologies in the design and implementation of processing systems. A legal provision on the automated decision limits decision making about individuals due to automated processing of personal data such as the use of artificial intelligence and machine learning.

Legal provisions on the quality of data protection laws are much less prevalent in Cambodia, Laos, Myanmar and Thailand. Cambodia has incorporated only a provision on individual rights to challenge the accuracy and rectify personal data. Thailand has included only a provision on limitations on data sharing, while Laos has incorporated provisions on limitations on data sharing, individual rights to challenge the accuracy and rectify personal data, and redress. A provision on redress allows individuals to object to the use of personal data about them, file complaints and seek redress.

Enforcement of data protection laws

The enforcement of data protection laws has been undermined by the lack of a national data protection authority. Only four out of the nine ASEAN countries have established such a national data protection authority. Malaysia, the Philippines and Singapore have adopted sector-wide personal data protection laws, and created the authorities for their enforcement. Laos has constituted a sector-specific personal data protection law, and established the institution to enforce it. Cambodia, Indonesia, Myanmar, Thailand, and Vietnam have constituted sector-specific personal data protection laws, but they have not yet created any institutions to enforce such laws.

SAFEGUARDING NON-PERSONAL DATA

Safeguards for the use and reuse of non-personal data produced by the private sector may be covered by the IPR. Five out of the nine ASEAN countries have constituted the IPR that can be used to prevent the sharing of nonpersonal data. These include Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The remaining ASEAN countries have not yet done so.

However, the IPR protection of non-personal data contradicts other policies that encourage the interoperability of data systems and the free reuse of data. In this case, governments should create rules for the private sector to set reasonable prices for the use of licensed data-driven products and services generated using public sector data. One way to do this is to mandate firms to license those products on fair, reasonable and non-discriminatory (FRAND) terms.

In ASEAN, only Malaysia (e.g. standard-setting organizations) has mandated IPR holders to provide voluntary licensing access to critical data or applications based on FRAND terms.[8]

CONCLUSION AND POLICY IMPLICATIONS

The development of a regulatory framework for data safeguards is uneven across ASEAN countries. On average, safeguards for cybersecurity and non-personal data in ASEAN are moderately developed, while safeguards for personal data are the weakest area of performance. The level of regulatory framework for safeguarding cybersecurity is most advanced in the Philippines and Vietnam, while it is less developed in five of the ASEAN countries, namely, Cambodia, Indonesia, Malaysia, Myanmar, and Thailand. The level of regulatory framework for protecting personal data is most advanced in the Philippines, while it is at the basic level in Myanmar and Thailand. Indonesia, Malaysia, the Philippines, Thailand and Vietnam have used the IPR to prevent the sharing of nonpersonal data, while other ASEAN countries have not yet done so.

Strengthening data safeguards in ASEAN should focus on three aspects. First, ASEAN countries that lack a sector-wide personal data protection law should accelerate the process of adopting and implementing it. The personal data protection law plays an important role in enhancing trust for data use in digital economies and trade. Without it, individuals may not be willing to share their personal data; and policymakers would impose restrictions on data flows. Although the existing consumer protection and competition laws in ASEAN can be helpful to address certain manifestations of the misuse of personal data, their scopes of application are limited. These laws are complements, but not substitutes for the personal data protection law.

The development of personal data protection law in ASEAN should follow good regulatory practices, which consist of impact assessment of proposed law, stakeholder consultations, and ex-post evaluation of the law. These practices should enhance the quality of personal data protection law, and avoid unnecessary, duplicative or inefficient provisions in such a law. ASEAN countries should also promote the interoperability of data privacy approaches and reference to international standards, principles, guidelines and criteria when developing their national personal data protection laws. This is essential to facilitate cross-border data flows and protect personal data in the region.

Second, ASEAN countries should accelerate the adoption of coherent data security measures and cybersecurity requirements for data controllers and processors. Under-regulation of cybersecurity increases the risks of cyber threats and reduces trust in digital economies and trade. ASEAN countries should use the existing regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) to reinforce the role of consensus-based standards with commitments to develop international standards and to use international standards where they exist as a basis for developing their domestic regulations on data security and cybersecurity requirements for data controllers and processors. This should support the implementation of the ASEAN Cybersecurity Cooperation Strategy 2021-2025[9] to enhance regional cybersecurity cooperation. Also, this should also promote the development of globally consistent and least trade-restrictive approaches to cybersecurity, while reducing concerns over the use of cybersecurity measures as a disguised restriction on trade aimed at supporting domestic industry.

Finally, ASEAN as a group should pledge capacity-building assistance on data safeguards for its members, especially emerging economies such as Cambodia, Laos, Myanmar and Vietnam. Such assistance should aim at raising awareness and understanding of the importance of data safeguards that meet international standards, principles and guidelines as well as supporting them to implement national regulatory reforms for developing or aligning their laws. This should ensure more equitable distribution of the gains from data flows, while addressing risks and concerns across countries. Without such technical assistance, ASEAN countries that have limited technical capacity may not be able to undertake regulatory reforms for data safeguards, which result in regulatory divergence in ASEAN. Such regulatory divergence impedes cross-border data flows, and limits the benefits of digital economies and trade in the region.

Efforts to strengthen regional data safeguards should be driven by the existing sectoral bodies  in ASEAN. These include the ASEAN Network Security Action Council (ANSAC), Working Group on Digital Data Governance (WG-DDG), and ASEAN Coordinating Committee on Electronic Commerce (ACCEC). The ANSAC is in charge of coordination on ASEAN cybersecurity cooperation activities, while the WG-DDG is responsible for developing and implementing the ASEAN Framework on Digital Data Governance in the digital sector.[10]

These two working groups should play an important role in translating the existing commitments on regional data safeguards into national action plans, or proposing new ones. Meanwhile, engaging the ACCEC in the establishment of regional data safeguard measures should be helpful in providing feedback on the potential impacts of the proposed data safeguard measures on cross-border e-commerce transactions, and hence reducing the compliance costs for traders. The ACCEC aims to enhance the coordination of initiatives on ASEAN e-commerce, and consists of representatives from trade-related government agencies (e.g., trade, customs, transport facilitation, consumer protection, standards and conformance, and micro, small, and medium enterprises)  from all ASEAN countries.[11] 

ENDNOTES


[1] ASEAN Cyberthreat Assessment 2021: https://www.interpol.int/content/download/16106/file/ASEAN%20Cyberthreat%20Assessment%202021%20-%20final.pdf

[2] IGI Global: https://www.igi-global.com/dictionary/data-interception/63971

[3] World Bank. 2021. World Development Report 2021: Data for Better Lives. Washington, DC: World Bank.

[4] World Bank, Global Data Regulation Diagnostic Survey Dataset 2021: https://microdata.worldbank.org/index.php/catalog/3866. Accessed April 12, 2022. This study does not include Brunei due to data unavailability; that country was not included in the survey either.

[5] European Commission: https://ec.europa.eu/home-affairs/cybercrime_en

[6] Cyber Security Agency of Singapore: https://www.csa.gov.sg/Who-We-Are/Our-Organisation

[7] The Singapore Cybersecurity Strategy 2021: https://www.csa.gov.sg/News/Publications/singapore-cybersecurity-strategy-2021

[8] ISES Perspective: /articles-commentaries/iseas-perspective/2022-32-enabling-domestic-data-flows-for-e-commerce-in-asean-countries-by-sithanonxay-suvannaphakdy/

[9] ASEAN Cybersecurity Cooperation Strategy: https://asean.org/wp-content/uploads/2022/02/01-ASEAN-Cybersecurity-Cooperation-Paper-2021-2025_final-23-0122.pdf

[10] ASEAN digital sector: https://asean.org/our-communities/economic-community/asean-digital-sector. Accessed June 16, 2022.

[11] ASEAN e-commerce: https://asean.org/our-communities/economic-community/asean-e-commerce. Accessed June 16, 2022.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong  
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha.  
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2022/49 “Asia’s Regional Security Architecture: An Australian Perspective” by Nick Bisley

 

Prime Minister of Australia Scott Morrison speaks during a meeting with US Secretary of Defense Lloyd Austin (not in photo) at the Pentagon on 22 September 2021 in Arlington, Virginia. One week before 22 September, Australia, the United States and the United Kingdom announced a security pact (AUKUS) to help Australia develop and deploy nuclear-powered submarines and other military cooperation. Picture: Drew Angerer/Getty Images/AFP.

EXECUTIVE SUMMARY

  • The regional security architecture established in the 1990s and early 2000s is under considerable challenge in the face of Sino-American rivalry.
  • Some states, Australia amongst them, are exploring new, non-ASEAN-centred ‘minilateral’ means of advancing their security goals in a region which is now viewed more pessimistically than in the past.
  • The Quadrilateral Security Dialogue (Quad) and AUKUS have rapidly emerged as dynamic and high-priority endeavours to advance collaborative military operations, share technology and coordinate strategic policy.
  • The new initiatives are small-scale, narrowly focused, and result-oriented, in contrast to inclusive, process-focused mechanisms.
  • These circumstances reflect ASEAN’s declining centrality to security regionalism which in turn may reduce ASEAN’s importance in the region and to its members. The new ‘minilaterals’ may indeed mark the end of the road for the existing inclusive approach to security multilateralism in the region.

* Guest writer, Nick Bisley, is Dean of Humanities and Social Sciences and Professor of International Relations at La Trobe University, Melbourne, Australia.

ISEAS Perspective 2022/49, 10 May 2022

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INTRODUCTION

In the decades following the end of the Cold War, Asia’s security environment was notable for the emergence of a distinctive security architecture.[1] Comprising both the extensive bilateral security alliances forged by the US to manage its containment policy in the Cold War, as well as a set of new multilateral mechanisms and institutions, these arrangements provided a mix of liberal and realist ways of managing the region’s changing environment.[2] The desire of most states was to retain a stable strategic balance, organised around the preponderance of US military power, in the face of a rising China, while also creating mechanisms to tackle the emerging non-traditional security challenges that globalisation had brought to the fore.[3] ASEAN sought to position itself at the centre of these new mechanisms.[4] With India, the US and Russia all joining the most expansive of these, the East Asia Summit (EAS), in the early 2010s the architecture looked well placed to keep the region peaceful and prosperous in spite of the many threats that loomed over the horizon.[5]

More than ten years on from the EAS expansion in 2011, the regional security architecture looks decidedly shaky, given that its ability to prevent or contain US-China rivalry has proven illusory. Equally, the ASEAN-centred mechanisms look leaden footed and poorly placed to respond with the necessary speed and agility to a rapidly deteriorating regional and global security environment. While ASEAN-led groupings struggle, states seeking to advance their security interests are taking things into their own hands, and ‘minilateral’ groupings, hitherto at the margins of the broader architecture, have come to the fore.[6] The rapid reinvigoration of the Quadrilateral Security Dialogue (Quad), as well as the creation of the Australia, United Kingdom and US trilateral security partnership (AUKUS), are illustrative of these new dynamics.

Australia, always an enthusiastic multilateralist, has been an especially active player in this period. This article takes stock of the state of the region’s security architecture and in particular explores Australia’s recent approach to security multilateralism. It does so both because Australia has been so instrumental to these new developments and also because the country has become something of a bellwether. Its circumstances as a security ally of the United States with important economic ties to China reflect the situation of many middle-ranking powers in the region. It was an enthusiastic participant in the proliferation of new multilateral mechanisms in the 1990s and 2000s but has clearly changed its priorities, reflecting a turn from a more optimistic sense of the region to a gloomier outlook about both the region and the mechanisms needed to advance the country’s interests.

AUSTRALIA’S PESSIMISTIC TURN

Until the early 2010s, particularly before the ascension to power by China’s President Xi Jinping in 2012, the regional architecture appeared to be a good, if not optimally designed, means to secure the world’s most important region. Australia had been an enthusiastic participant in the development of these new mechanisms as well as being keen to reshape its alliance with the US to reflect the changing circumstances.[7] During this period, Canberra evinced an optimistic sense about the region and its prospects. While Sino-American rivalry was evident, it appeared to be able to be kept within the guardrails established by the security architecture and the economic interests that were shared across the region. Australia’s Foreign Policy White Paper of 2017 was imbued with this outlook.[8]

Shortly after the paper’s publication, Australia began to take a more pessimistic view of the region, prompted in the main by a significant recasting of its relationship with China.[9] Australian policy elites were unsettled by the more assertive turn in Xi’s foreign policy in the region, the heavy-handed approach to Hong Kong, as well as by the significant modernisation and expansion of its military capabilities. Canberra also perceived that China was seeking to challenge Australia at home through political interference and espionage activities. The government blocked Chinese companies Huawei and ZTE from participating in Australia’s 5G network rollout, and introduced legislation intended to curtail foreign interference in key institutions such as universities and corporations more broadly.[10] In addition, Washington has adopted a much harder line towards Beijing, putting great power contestation with China as the centrepiece of its global strategy,[11] which confirmed to elites in Canberra the need to put aside the optimistic sense that major power conflict was a generation away. In the 2020 Defence Strategic Update Australia adopted a much bleaker outlook towards the region.[12]

NEW FORMS OF SECURITY COOPERATION

The Quad

As a result, Australia has recalibrated its approach to its security and strategic policy. Most obviously, this has entailed a commitment to the biggest expansion of Australia’s armed forces outside of war time.[13] However, as a middle-ranking power with extensive international vulnerabilities, security cooperation has long been a central component of its defence policy. Unsurprisingly, this shift in approach has generated some of the most dynamic new initiatives in Australian policy. The two most visible forms of this shift are the reinvigoration of the Quad and the AUKUS partnership.

The Quad was first established in 2007, and then Japanese Prime Minister Abe Shinzo was its most voluble advocate.[14] Lasting barely twelve months before being mothballed, the gathering of Australia, India, Japan and the US to discuss shared security matters seemed not well suited to the needs of the four nor to the security environment at the time.[15] Ten years later it reconvened with a meeting at the sidelines of the 2017 EAS. It then held a series of senior officials’ meetings in 2018 and at the foreign minister-level in 2019 on the sidelines of the UN General Assembly, with subsequent ministerial meetings in 2020 in Tokyo and virtually at the start of 2021. The first leaders’ level meeting was hosted by President Joe Biden in 2021 and will be an annual event to ensure sustained political momentum for a grouping that the four now see as a crucial new component of what they describe as the Indo-Pacific’s security setting. As they explained in the rather lengthy first leaders’ communique, the Quad exists to promote “the free, open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific and beyond”.[16]

The Quad is avowedly focused on security cooperation with a particular emphasis on coordinating military operations and strategic policy more broadly. But it has, in fairly swift order, expanded its remit to include proposed work programmes on the environment, public health and high technology. Economic matters are not part of the equation at present, a notable shortcoming given the ways in which China uses geo-economics to advance its interests. That said, it has developed rapidly and is the most dynamic of the region’s many security groupings. This is aided by its small size, narrow focus and pragmatic approach. Yet it is important to note that while it has swiftly gathered political momentum and a shared sense of purpose, as yet it has not taken any major steps to turn its words into action and the decidedly not-unified views of the four to Russia’s invasion of Ukraine show the ongoing challenge of aligning the interests of these major maritime powers.[17]

For Australia, the Quad is a priority in terms of political emphasis and bureaucratic resourcing, with a Quad branch recently established by the Department of Foreign Affairs and Trade, and a deputy secretary responsible for the Quad, AUKUS and naval shipbuilding in the Department of Prime Minister and Cabinet.[18] This priority comes because of Canberra’s perception that the regional consequences of China’s rise require developing and managing balancing coalitions to contain the expansion of Chinese influence and power, especially in the maritime domain. It is also underpinned by the consensus across the four countries about how to respond to China. Australian policy-makers have long found the process-oriented approach and consensus building at the heart of ASEAN and its offshoots frustrating – the view in Canberra has long been more focused on results – and the sense of geopolitical pessimism has driven this to the fore. The sentiment, entirely unspoken of course, is that the existing regional security architecture is unable to provide the kind of collaborative action that Australia, the US and Japan think is needed and they will take the necessary steps to achieve those goals even if it means creating new mechanisms. The emergence and dynamism of the Quad is an unmistakable vote of no-confidence by Canberra in both the form and function of Asia’s existing multilateral security initiatives.

Interestingly, Australia and the other members have been at great pains to try to avoid this perception, emphasising repeatedly that they are committed to ASEAN centrality and the importance of the Southeast Asian grouping to the region. The Quad leaders’ joint statement of March 2021 “reaffirm[s] our strong support for ASEAN’s unity and centrality as well as the ASEAN Outlook on the Indo-Pacific”.[19] In the September communique, the four “reaffirm our strong support for ASEAN’s unity and centrality and for ASEAN Outlook on the Indo-Pacific, and we underscore our dedication towards working with ASEAN and its member states—the heart of the Indo-Pacific region—in practical and inclusive ways”.[20] The most full-throated declaration of ASEAN-fealty to date came from a meeting of the Quad foreign ministers in February 2022: “As unwavering supporters of ASEAN unity and centrality, and the ASEAN-led architecture, we continue to support ASEAN partners to advance the practical implementation of ASEAN Outlook on the Indo-Pacific. The Outlook’s principles are fundamental to regional stability and prosperity and will be key to guiding the region’s economic and political future.”[21] Australia and its Quad partners talk a good ASEAN game, but their deeds do not match their words.

AUKUS

The sudden announcement of the AUKUS partnership on 15 September 2021 took the world by surprise. With no warning to friends and allies, indeed with few even in the Australian government being aware, Australia announced that it was walking away from its contractual agreement with the French Naval Group to provide its next-generation submarine fleet. Instead, Australia entered into an ambitious technology sharing arrangement with the US and the UK to acquire nuclear-powered submarines, and committed to a wide range of technology sharing and capability enhancing cooperative endeavours.[22] The intent of the partnership is to “help sustain peace and stability in the Indo-Pacific region”[23] and presumably over time will move beyond matters of technology cooperation and into strategic policy collaboration.

AUKUS represents a striking development in Australia’s approach to security cooperation in Asia, and not only because of the nuclear dimension. It embodies, more than any other policy decision Canberra has taken, its priority on outcomes, its surprising disregard for partners and the benefits of multilateral processes, as well as an appetite for risk that had hitherto not been the norm. It is important to note that AUKUS is in its infancy. It remains a statement of intent – notably no further formal documentation has been agreed to beyond the press release of September 2021; and what it will eventually deliver both in terms of specific capability enhancements and cooperative activity is difficult to discern with any clarity. Nonetheless, it illustrates a significant shift in Canberra’s approach to a range of military matters – nuclear-powered submarines had previously been ruled out for both technical and political reasons. It clearly indicates that a middle-ranking power seeks to collaborate with others to advance its security interests in a much more contested Asian region in a more risk-taking and outcome-driven manner.

AUKUS is also notable for the rather lesser concern its members show for ASEAN. Where the Quad has volubly declared its rhetorical commitment to ASEAN centrality – perhaps protesting a bit too much – the AUKUS arrangements show much less concern with the Southeast Asian institution or its members. Indeed, the lack of any substantial prior warning to the group or key partners, along with the rudeness shown to France, produced diplomatic blowback.[24] ASEAN is mentioned once somewhat perfunctorily in Australian Prime Minister Scott Morrison’s AUKUS press release that the trilateral agreement “will complement Australia’s network of strategic partnerships, including with our ASEAN friends”.[25]

These new security initiatives in which Australia is closely involved share a number of distinctive attributes. Most obviously they are narrowly focused on matters of military and defence. Whereas in the past, security cooperation in Asia often centred on non-traditional concerns, humanitarian assistance and disaster relief and other areas of low political contention, now, reflecting Australia’s heightened focus on more old-fashioned security threats, controversial military matters are at the centre of activity. Second, they are collaborations between a small number of countries. The more broad-based and inclusive visions of security architecture of the past are not seen as particularly useful in the current climate. Instead, Australia is attracted to more circumscribed groups where it is easier to generate consensus and rally common actions based on shared interests and where the group is not hide-bound by rules and norms that might get in the way of concrete action. While Canberra retains a strong rhetorical commitment to ASEAN and to its norms and centrality, pragmatic outcome-oriented groups are the order of the day. Third, security cooperation has, in the past, been driven by a liberally inspired outlook whereby economic cooperation and technical collaboration in functional spheres can build trust among elites, drive cooperation in other more sensitive domains, and in turn reduce security risks over the longer term. This outlook is plainly not part of these moves, and indeed the emergence of the Quad and AUKUS should be interpreted as a repudiation of that approach to security cooperation.

This also reflects the broader reality that while Australia has focused on ASEAN for some time, most notably hosting a special summit in 2018 and appointing a resident ambassador to ASEAN in Jakarta, and even established a ‘comprehensive strategic partnership’ with the grouping in 2021, it has struggled in getting that engagement with the institution to generate preferred policy outcomes. Southeast Asia will remain important for Canberra, but the focus on the region will be less through the lens of ASEAN and multilateralism and instead be concerned with specific issues and bilateral ties. Overlaying that will be the overriding concern of security risks and great power competition.

CONSEQUENCES FOR ASEAN AND THE REGION

Although the evolution and expansion of the region’s security architecture was very much an ASEAN-centred development, the dynamism and significance of the non-ASEAN bodies with which Australia has invested so much time and political capital should be a cause of some concern within the grouping. Put simply, ASEAN’s goal of remaining at the centre of regionalism in Asia is at risk. The Quad and AUKUS are centred around the US due to its paramount military power. Washington also shares Australia’s interest in result-oriented security mechanisms, and has found it difficult to sustain long-term engagement with ASEAN. The Southeast Asian grouping was able to command the stage precisely because none of the region’s great powers was interested in leading security cooperation; with the US favouring these minilateral groupings and showing little confidence in ‘inclusive’ approaches to cooperation, ASEAN’s appeal to members and non-members alike is likely to be diminished.

The erosion of ASEAN centrality is also likely to reduce the institution’s broader regional influence. This in turn risks exacerbating the already extant cleavages within the grouping. An often-forgotten aspect of ASEAN centrality is the locus of the organisation in the foreign policy of its members. Its importance to the region is a function of its importance to its members and vice versa. A decline in ASEAN centrality in the regional security architecture will likely lead to a decline in ASEAN’s importance to its members, thus driving the already existing divisions within the group to the surface.[26]

This speaks to the final more worrying implication of initiatives such as AUKUS and the Quad. When Asian security multilateralism emerged, it was driven by a number of motives, key among which was the desire to manage great power relations and prevent the return of great power rivalry following the violent experiences of Asia during the Cold War. The extraordinary destruction and millions of deaths in the wars on the Korean Peninsula and Indochina remain in living memory; Asia knows the cost of uncontrolled great power competition. There is a good chance that the moves in the region that Australia has been at the heart of will mark the end of post-Cold War security multilateralism in Asia. The casting aside of the more inclusive forms of security cooperation, and the focus on exclusive mechanisms which are intended to shape great power competition and not to prevent it, reflect the grim reality of a region in which war is once again in the realm of the thinkable.

ENDNOTES


[1] Michael J. Green and Bates Gill (eds), Asia’s New Multilateralism: Cooperation, Competition and the Search for Community (New York: Columbia University Press, 2009).

[2] Kai He (ed.) Contested Multilateralism 2.0 and Asian Security Dynamics (Abingdon, UK: Routledge, 2020).

[3] Nick Bisley, Building Asia’s Security, Adelphi No. 408 (London: Routledge for the Institute of International Studies, 2010).

[4] Alice D. Ba, “Regional Security in East Asia: ASEAN’s Value Added and Limitations”, in Journal of Current Southeast Asian Affairs 29, no. 3 (2010): 115-30.

[5] Victor D. Cha, “Complex Patchworks: US Alliances as Part of Asia’s Regional Architecture”, Asia Policy no. 11 (2011): 27-50.

[6] Joel Wuthnow, “U.S. ‘Minilateralism’ in Asia and China’s Responses: A New Security Dilemma?”, Journal of Contemporary China 28, no. 115 (2019):133-50.

[7] Nick Bisley, “Enhancing America’s Alliances in a Changing Asia-Pacific: The Case of Japan and Australia”, Journal of East Asian Affairs 20, no. 1 (2006): 2006.

[8] Department of Foreign Affairs and Trade, Foreign Policy White Paper, 2017, Australian Government, 2017, https://www.dfat.gov.au/sites/default/files/2017-foreign-policy-white-paper.pdf.

[9] Rory Medcalf, “Australia and China: understanding the reality check”, Australian Journal of International Affairs 73, no. 2 (2019):109-18.

[10] Andrew Chubb, “The Securitization of ‘Chinese Influence’ in Australia”, The Journal of Contemporary China (2022), tandfonline.com/doi/full/10.1080/10670564.2022.2052437?src=recsys. 

[11] White House, National Security Strategy of the United States, December 2017, https://trumpwhitehouse.archives.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf.

[12] Department of Defence, 2020 Defence Strategic Update (Canberra: Department of Defence, 1 July 2020), https://www.defence.gov.au/sites/default/files/2020-11/2020_Defence_Strategic_Update.pdf.

[13] Andrew Greene, “‘Defence to grow to largest size since Vietnam War, increasing by nearly 20,000 people by 2040”, ABC News, 10 March, 2022, https://www.abc.net.au/news/2022-03-10/defence-workforce-growing-2040-national-security/100896902.

[14] Brahma Chellaney, “Quad Initiative’: an inharmonious concert of democracies”, The Japan Times, 19 July 2007, https://www.japantimes.co.jp/opinion/2007/07/19/commentary/quad-initiative-an-inharmonious-concert-of-democracies/.

[15] Daniel Flitton, “Who really killed the Quad 1.0?”, Lowy Interpreter, 2 June 2020, https://www.lowyinstitute.org/the-interpreter/who-really-killed-quad-10.

[16] Prime Minister’s Office, Quad Leaders’ Summit Communique, 24 September 2021, https://www.pm.gov.au/media/quad-leaders-summit-communique.

[17] Nick Bisley “Contested Asia and the Return of the Quadrilateral Security Initiative”, Melbourne Asia Review, no. 9 (March 2022), https://melbourneasiareview.edu.au/contested-asia-and-the-return-of-the-quadrilateral-security-initiative/.

[18] Department of Foreign Affairs and Trade, Organization Chart February 2022, https://www.dfat.gov.au/sites/default/files/dfat-org-chart-executive.pdf, Department of Prime Minister and Cabinet, Organization Chart, March 2022, https://www.pmc.gov.au/sites/default/files/files/pmc-org-chart-31-march-2022.pdf

[19] Prime Minister’s Office, “Spirit of the Quad Statement”, 13 March 2021, https://www.pm.gov.au/media/quad-leaders-joint-statement-spirit-quad.

[20] Prime Minister’s Office, “Quad Leaders’ Summit Communique”, 24 September 2021, https://www.pm.gov.au/media/quad-leaders-summit-communique.

[21] Office of the Minister of Foreign Affairs, “Quad Cooperation in the Indo-Pacific”, 11 Feburary 2022, https://www.foreignminister.gov.au/minister/marise-payne/media-release/quad-cooperation-indo-pacific.

[22] For an excellent summary of the surprise and fallout see “An AUKUS surprise – Best of The Interpreter 2021”, Lowy Interpreter, 29 December 2021, https://www.lowyinstitute.org/the-interpreter/aukus-surprise-best-interpreter-2021.

[23] Prime Minister’s Office “Joint Leaders’ Statement on AUKUS”, 16 September 2021, https://www.pm.gov.au/media/joint-leaders-statement-aukus.

[24] William Choong and Ian Storey, “Southeast Asian Responses to AUKUS: Arms Racing, Non-Proliferation and Regional Stability”, Perspective, No. 134, 14 October 2021, /wp-content/uploads/2021/09/ISEAS_Perspective_2021_134.pdf.

[25] Prime Minister’s Office, “Australia to pursue nuclear power submarines through new trilateral enhanced security partnership”, 16 September 2021, https://www.pm.gov.au/media/australia-pursue-nuclear-powered-submarines-through-new-trilateral-enhanced-security.

[26] See Nick Bisley “The East Asia Summit and ASEAN: Potential and Problems”, Contemporary Southeast Asia 39, no. 2 (2017): 265-72.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong  
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha.  
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2022/48 “Enhancing Regulatory Cooperation for Agricultural Trade in the Greater Mekong Subregion” by Sithanonxay Suvannaphakdy

 

This aerial photograph shows terraced rice fields in northern Vietnam’s Mu Cang Chai district on 18 September 2020. Manan VATSYAYANA/AFP.

EXECUTIVE SUMMARY

  • The intra-regional trade in agricultural products among six countries in the Greater Mekong Subregion (GMS), namely China, Cambodia, Laos, Myanmar, Thailand and Vietnam, recorded a robust growth of 10.3 percent per annum before the pandemic and 9.2 percent during the pandemic in 2020. Thailand is the largest exporter, and China is the largest importer in the GMS agricultural markets.
  • However, deepening the intra-GMS trade further has been impeded by the long regulatory distance regarding non-tariff measures (NTMs) due largely to the different structures of NTMs between China and other GMS countries. Producers and traders have to comply with the large number of NTMs on the import of agricultural products such as vegetables, ranging from 8 in Laos and Thailand to 11 in Vietnam and 24 in China.
  • Simulation results for reducing regulatory distance in the GMS reveal that a partial harmonization of NTMs would see an increase in the intensive margin (volume of existing products) of agricultural trade by 10.62-17.45 percent, while boosting the extensive margin (variety of products) by 5.05-8.16 percent. Such a reform would however only benefit trading pairs between China and other GMS countries.
  • In a more ambitious scenario of full harmonization of NTMs, the agricultural trade gains would be expanded to all trading pairs in the GMS and see an increase in the intensive margin of agricultural trade by 36.31-77.57 percent, while boosting its extensive margin by 16.32-32.34 percent.
  • Gaining increased agricultural trade integration, coupled with the potential benefits of NTM harmonization, highlight the importance of regulatory cooperation in the GMS. This could be strengthened under the Regional Comprehensive Economic Partnership which contains key regulatory cooperation instruments such as the promotion of transparency, the adoption of international standards and the mutual recognition of conformity assessment.

* Sithanonxay Suvannaphakdy is Lead Researcher at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute, where he undertakes policy-oriented research on ASEAN’s economic integration. He is grateful for valuable comments and suggestions from Jayant Menon. All remaining errors are his own.

ISEAS Perspective 2022/48, 6 May 2022

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INTRODUCTION

Despite progress in tariff liberalization over the past decade, agricultural producers and traders in the Greater Mekong Subregion (GMS) – including Cambodia, Laos, Myanmar, Thailand, Vietnam, and China (especially Yunnan Province and Guangxi Zhuang Autonomous Region) – still face deeply-rooted regulatory obstacles to achieve their full potential as beneficiaries of road transport corridors (see Annex 1). Two case studies of road projects—the East–West Corridor linking Laos and Vietnam and the Phnom Penh–Ho Chi Minh City Highway linking Cambodia and Vietnam—show that travel times after project completions are lower than those before project completion by more than 50 percent (Hettige, 2008, p. 29).[1]

While improved road connectivity has shortened travel times between the GMS countries, different market access conditions remain a key trade barrier between them. Govindaraju et al. (2021)[2] have calculated the regulatory distance and the differences in non-tariff measures (NTMs) imposed on imports in ASEAN+5 countries, i.e. the 10 ASEAN countries and Australia, China, India, Japan and New Zealand. They find that the NTMs imposed on imports by China are substantially different from those in ASEAN countries, and that the regulatory differences between them hampers trade. On average, a 10 percent increase in the regulatory distance between China and ASEAN countries reduces the intensive margin (reducing exports of existing products) by 2.38 percent and the extensive margin (reducing the variety of products in the export basket) by 0.65 percent.

The present study focuses on NTMs in the agricultural sector to present a subset of ASEAN+5 countries represented by the GMS countries. It explores the possibilities for enhancing regulatory cooperation for agricultural trade in the GMS, analyzing three indicators of trade integration, namely intra-GMS trade share and trade balance, incidence of NTMs on agricultural imports and exports, and simulation of agricultural trade gains under the partial and full harmonization in the GMS.

The GMS can be a good case study for NTM cooperation in agricultural trade. A large proportion of the labour force in the subregion is employed in the agriculture sector, ranging from 25 percent in China to 37 percent in Vietnam and 61 percent in Laos.[3] Reducing the diversity in NTMs saves costs and increases profits for producers and traders, while reducing prices and expanding choices of products for consumers. This should complement the role of road transport corridors in facilitating agricultural trade in the subregion.

REGIONALIZATION OF AGRICULTURAL TRADE

The intra-GMS trade (i.e. import plus export) in agricultural products among six countries, namely Cambodia, China, Laos, Myanmar, Thailand and Vietnam, has increased its importance in absolute terms and in relative importance to the extra-GMS trade. Before the COVID-19 pandemic, the value of intra-GMS trade had been rising by 41.2 percent or 10.3 percent per annum from US$37.3 billion in 2015 to US$52.6 billion in 2019. Such growth is twice that for extra-GMS trade which was recorded at 21.4 percent or 5.3 percent per annum for the period 2015-2019. This has increased the share of intra-GMS trade in GMS’s total agricultural trade from 14.3 percent in 2015 to 16.2 percent in 2019 (Figure 1a).

The same trend of agricultural trade growth continued during the pandemic. The intra-GMS trade grew at 9.2 percent in 2020, while the extra-GMS trade grew at 6.6 percent that same year (Figure 1a). The sustaining of agricultural production and the maintaining of an open agricultural trade policy in the subregion during the COVID-19 outbreak have been encouraging. It also highlights the importance of agricultural trade in ensuring food security in the subregion, and in providing essential income for farmers and traders in the exporting countries. 

The GMS countries are both exporters and importers of agricultural products in the sub-region. In 2019, intra-GMS export was recorded at US$32.5 billion, 87 percent of which was accounted for by Thailand (33 percent of total intra-GMS export), China (30 percent) and Vietnam (24 percent). The remaining 13 percent was accounted for by Myanmar (8 percent), Laos (4 percent) and Cambodia (1 percent). Countries with less productive capacity tend to export lower quantities of agricultural products than those with greater productive capacity. Nonetheless, agricultural export within the GMS markets accounted for 93 percent of total agricultural export in Laos, 59 percent in Myanmar, and 48 percent in Cambodia (Figure 1b). 

Figure 1b also shows China, Cambodia and Vietnam to be net importers of agricultural products in the GMS, while Laos, Myanmar and Thailand are net exporters. Values of agricultural export from China, Cambodia and Vietnam are lower than those of their agricultural import, resulting in trade deficit between these countries and other GMS countries. Meanwhile, values of agricultural export from Laos, Myanmar and Thailand are greater than those of their agricultural import, resulting in trade surplus between them and other GMS countries. The status of net importers or net exporters in the GMS suggests that any policy aimed at restricting agricultural trade reduces social wellbeing in the sub-region, and limits the variety of products available to the net importers, while destroying job opportunities and income sources among the net exporters.

DIVERSITY IN NON-TARIFF MEASURES

Agricultural exports in the GMS have been affected by NTMs imposed by their governments and their trading partners’ governments. On the export side, the coverage ratio in Figure 2a reveals that Cambodia, China, Laos, Myanmar and Vietnam have imposed NTMs on almost all their agricultural exports, especially vegetable and animal products. In contrast, agricultural exports from Thailand are less affected by NTMs imposed by its government.

In addition, the prevalence score in Figure 2b shows that the number of NTMs on agricultural exports is largest in China, followed by Laos, Myanmar and Vietnam. On average, China applies five NTMs on its exports of food and vegetable products, and six NTMs on its exports of animal products. In contrast, the average number of NTMs applied on agricultural exports in Thailand is almost zero. This suggests that Thai producers and exporters of agricultural products face less complex trade regulations than those in other GMS countries.

Meanwhile, exporters have to comply with different market access conditions at destination markets, such as product standards for food safety and packaging and labelling requirements. NTMs on imports have greater coverage than those on exports. In Vietnam, the coverage ratio is 69 percent for food export, while it is 100 percent for food import. In Thailand, the coverage ratio is 19 percent for animal export, while it is 98 percent for animal import. China, Cambodia, Laos and Myanmar have maintained a relatively high coverage ratio of NTMs (Figure 3a).

The prevalence score of agricultural imports in Figure 3b shows that China applies 24 NTMs on imports of food and vegetable products. This is greater than those on its exports by almost four times. Similarly, Thailand’s imports of vegetables, animals and food face 8, 9 and 13 NTMs, respectively, which are significantly more than those imposed on its exports. The cost of regulatory compliance incurred by agricultural producers and exporters increases when they export products to two or more markets with different NTMs.

More than half of NTMs on agricultural imports are accounted for by the sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT). For example, the number of NTMs on import of vegetables (HS070960) ranges from 3 in Cambodia to 9 in Laos, 13 in Myanmar, 15 in Thailand and 20 in China and Vietnam. The share of SPS and TBT measures in total NTMs imposed on import of vegetables is  90 percent in Cambodia, 56 percent in Laos, 77 percent in Myanmar, 93 percent in Thailand, 90 percent in China and 85 percent in Vietnam.

The most frequently found SPS measures on agricultural imports in the GMS are the authorization requirement for SPS reasons, tolerance limits for residues of certain substances, product registration and approval requirement as well as testing, certification and inspection requirements. The most commonly found TBT measures on agricultural imports include product quality, safety or performance requirements as well as labelling and packaging requirements.

The SPS and TBT measures aim to reduce the impacts of perceived market imperfections such as risks for human, animal or plant health, or information asymmetries (Beghin et al., 2012).[4] The empirical evidence shows that import prices of agricultural products can increase by about 15 percent due to restriction or special authorization for TBT or SPS reasons and conformity assessment. At the same time, they can increase demand for agricultural imports by providing a positive signal to consumers that enhances confidence in imported products (Gordon et al., 2020).[5] When the quality of products is heterogeneous and unknown to buyers, SPS and TBT measures such as labelling and packaging requirements can overcome the information deficit and convey a signal that all producers conform to a certain standard, encouraging demand for such products.

POTENTIAL BENEFITS OF REGULATORY COOPERATION

This section assesses the extent to which a lower level of differences in NTMs between the importing country and the exporting country in the GMS increases the intensive margin  and the extensive margin of agricultural trade. This happens when NTMs imposed on an imported product by an importing country are significantly different from those applied in the exporting country. NTM-related costs for traders and producers include gathering information on regulatory requirements in different markets, adjusting the specification of goods and services to comply with different regulatory requirements of importing countries, and complying with different conformity assessment procedures across importing countries. The information and specification costs raise fixed costs, while the costs of conformity assessment increase variable costs for exports. Higher fixed and variable costs of NTMs discourage firms from scaling up their production and investing in the development of new products for exports. 

The regional cooperation on NTMs to reduce regulatory differences may be viewed as a gradual process involving the promotion of transparency, adoption of international standards and mutual recognition of conformity assessment procedures of GMS countries.

This study applies counterfactual simulations by conducting “what if” exercises based on the current reality of regulatory differences and two reform scenarios, namely partial and full harmonization of NTMs. The level of regulatory differences between the importing country and the exporting country is measured by the regulatory distance at the HS 6-digit product level. This is obtained from Govindaraju et al. (2021, pp. 42-44).

Table 1 reveals that the structure of NTMs on agricultural imports in China is substantially different from that in other GMS countries. The regulatory distance for bilateral trade between China and other GMS countries is greater than 0.35, while the regulatory distance for other country pairs is lower than 0.27. Among country pairs in the GMS, the regulatory distance is lowest at 0.21 for the bilateral trade between Cambodia and Laos, and highest at 0.39 for the bilateral trade between China and Myanmar. This confirms our findings in the last section on the diversity of NTMs in the GMS, where China imposes a greater number of NTMs than the other countries. A higher value of regulatory distance for a country pair means greater dissimilarity in NTMs between them.

The simulation results of agricultural trade gains under Scenario 1 in Table 2 reveal that the partial harmonization of NTMs in the GMS enhances the agricultural trade between China and other GMS countries. It increases the intensive margin of agricultural trade by 10.62-17.45 percent, and boosts its extensive margin by 5.05-8.16 percent. These findings suggest that reducing the regulatory differences would boost the agricultural trade largely by increasing the volume of existing products, and to a lesser extent by diversifying the export baskets.

The partial harmonization of NTMs in the GMS is represented by the reducing of the regulatory distance of all country pairs in Table 1 to the regional average of 0.283. This reduces the regulatory distance for country pairs between China and other GMS countries by 20-28 percent. The reduction of regulatory distance is then used to simulate the agricultural trade gains based on the estimated coefficients of regulatory distance on agricultural trade in Govindaraju et al. (2021, pp. 24-25). Govindaraju et al. (2021) find that the coefficient of regulatory distance is estimated at -1.461 for the log of  intensive margin and  at -0.713 for the log of extensive margin.

For example, the regulatory distance between China and Vietnam is 0.352. In Scenario 1, reducing the regulatory distance to the regional average of 0.283 means that the regulatory distance between China and Vietnam must be reduced by 20 percent from 0.352 to 0.283. The reduction in regulatory distance is -0.069 (0.283 – 0.352). The impact of the reduction in regulatory distance on the intensive margin is estimated at 10.62 percent with the formula: 100 x [exp(-1.461 x (-0.069)) – 1][6] Similarly, the impact of the reduction in regulatory distance on the extensive margin is estimated at 5.05 percent with the formula: 100 x [exp(-0.713  x (-0.069)) – 1]. The simulation result shows that a 20-percent reduction in regulatory distance between China and Vietnam enhances the bilateral trade by raising the volume of existing agricultural products by 10.62 percent and increasing the variety of agricultural products by 5.05 percent.

Full harmonization of NTMs is more ambitious and will result in larger and more inclusive trade gains than its partial harmonization in Scenario 1. In Scenario 2, the full harmonization of NTMs is represented by the reduction of existing regulatory distance to zero, indicating the regulatory convergence in the GMS. In this case, the regional average of the intensive margin of agricultural trade (all GMS countries) is around 52 percent of its baseline value. The range is wide, running from 36 percent for Cambodia-Laos trade to 48 percent for Thailand-Vietnam trade and 78 percent for China-Myanmar trade. The full harmonization of NTMs would also increase the extensive margin of agricultural trade, ranging from 16 percent for Cambodia-Laos trade to 18 percent for Thailand-Myanmar trade and 32 percent for China-Myanmar trade in agricultural products (Table 2). This suggests that greater harmonization of NTMs expands the benefits of agricultural trade for all GMS countries. 

CONCLUSION AND POLICY IMPLICATIONS

This study demonstrates the potential benefits of greater regulatory cooperation in agricultural trade in the GMS. The intra-GMS trade in agricultural products has grown by 10.3 percent per annum in the period 2015-2019 and shown a robust growth of 9.2 percent despite the COVID-19 outbreak in 2020. Thailand is the largest exporter, and China is the largest importer. While the transport distance between China and other GMS countries has been shortened by the road corridors, the regulatory distance for NTMs between them has not yet been streamlined. Producers and traders in the subregion face the challenge of complying with the diversity of NTMs, especially SPS and TBT, imposed on imports and exports by the GMS governments.

The simulation results in this study show that greater harmonization of NTMs results in larger and more inclusive gains in agricultural trade in the GMS. Partial harmonization of NTMs would see an increase in the intensive margin of agricultural trade between China and other GMS countries by 10.62-17.45 percent, and boost its extensive margin by 5.05-8.16 percent. Under a more ambitious scenario of full harmonization of NTMs, the trade gains would be expanded to all trading pairs in the GMS and be associated with an increase in the intensive margin of agricultural trade by 36.31-77.57 percent, while its extensive margin will be boosted by 16.32-32.34 percent. These findings suggest that reducing the regulatory differences would boost the agricultural trade largely by increasing the volume of existing products, and to a lesser extent by diversifying the export baskets.

There are legitimate reasons for different structures in NTMs on agricultural products across GMS countries. These include different perceptions of risk, income levels, cultures, or political and legal systems. To facilitate agricultural trade, however, the GMS governments should consider the impact of their NTMs beyond their domestic borders, incorporate the design and implementation of the existing and proposed NTMs of their trading partners into their NTMs, and cooperate with their trading partners in bilateral, regional or multilateral contexts to reduce unnecessary trade costs associated with the diversity of NTMs across countries.

The GMS countries should strengthen their cooperation on NTMs under the Regional Comprehensive Economic Partnership (RCEP) for three reasons. First, the GMS economic cooperation programme does not have a comprehensive legal framework for NTM cooperation. The key document on trade facilitation in the subregion is the Cross-Border Transport Agreement (CBTA) ratified by Laos, Thailand and Vietnam in 1999, Cambodia in 2001, China in 2002, and Myanmar in 2003,[7] which focuses on transport and trade facilitation rather than the harmonization of trade-related regulations.

Second, the RCEP provisions on SPS and TBT include the regulatory cooperation instruments commonly found in other regional trade agreements. These include the promotion of transparency, adoption of international standards, and mutual recognition of conformity assessment procedures. The provisions on transparency and adoption of international standards require regulators of RCEP partners to embed international best practices into their domestic rule-making procedures and prevent regulations creating unnecessary barriers to trade. In addition, mutual recognition of conformity assessment results between two or more RCEP partners will help ensure that traders do not face duplicative requirements or procedures when regulations differ across markets.

SPS cooperation under RCEP aims to protect human, animal or plant health; enhance the implementation of WTO SPS Agreement;[8] increase the transparency and understanding of the development and application of SPS measures; and encourage the adoption of international standards, guidelines and recommendations (Article 5.2). Chapter 5 in the document stresses compliance with the WTO SPS Agreement (Articles 5.5 and 5.7 of RCEP); encourages the use of international standards for SPS measures (Article 5.5); promotes mutual recognition and acceptance of SPS certificates issued by RCEP partners to prevent goods being tested by both exporting and importing countries (Article 5.5); and increases transparency through the notification of SPS measures with significant trade effects to WTO (Article 5.12) and the establishment of contact points to facilitate communication on SPS matters.

The TBT cooperation under the RCEP is covered in Chapter 6. It aims to reduce unnecessary trade costs associated with standards, technical regulations, and conformity assessment procedures; enhance the implementation of WTO TBT Agreement;[9] and strengthen information exchange and cooperation. It stresses compliance with the WTO TBT Agreement (Article 6.4 of RCEP); promotes the transparency through information exchange and cooperation (Articles 6.5 and 6.6) and establishment of contact points (Article 6.12); provides guidance on assessment procedures for conformity to technical standards and norms and how they should be implemented or accepted (Article 6.8); promotes mutual recognition of the conformity assessment procedures used by the RCEP partners to prevent goods being tested in both the exporting and importing countries (Article 6.8); and encourages the use of international standards and harmonization of technical regulations (Article 6.5).

Finally, all GMS countries are RCEP partners, and five GMS[10] have already ratified the agreement. By being early adopters of the SPS and TBT provisions in RCEP, they should be able to enhance intra-GMS agricultural trade. Subregional NTM cooperation among a small number of countries coupled with the possibility of technical and financial supports under the GMS programme should be effective in dealing with specific challenges such as building bridges with existing national regulatory systems, agreeing on common regulatory objectives, and domestic resistance to liberalize agricultural trade. The RCEP-based NTM reform in the GMS can be scaled up or linked to NTM reforms among other RCEP partners. In the long run, RCEP should consolidate the national regulatory reforms of its members, and reduce trade costs associated with the regulatory diversity.

The harmonization of NTMs should be complemented with a strict monitoring and evaluation mechanism. Part of NTM-related trade costs occurs during their implementation. Menon and Roth (2022)[11] find that NTMs in GMS countries are used in a discretionary fashion to protect domestic production whenever required and that this can be a moving target, i.e. a new NTM can morph and be a substitute for the original one after that has been identified and targeted for dismantling by the authorities. These are usually applied at the border with China, and other GMS countries can do little to address it, or seek compensation for losses incurred. While harmonization can go some way towards reducing its occurrence, it cannot overcome the problem entirely.

Annex 1: Economic Corridors in the Greater Mekong Subregion

Note:  SEC: Southern Economic Corridor; NSEC: North-South Economic Corridor; EWEC: East-West Economic Corridor

Source: Greater Mekong Subregion, GMS Economic Corridors, available at https://www.greatermekong.org/gms-economic-corridors-subcorridors; accessed March 15, 2021.

ENDNOTES


[1] Hettige, M. (2008). Greater Mekong Subregion: Maturing and Moving Forward. Manila: Asian Development Bank.

[2] Govindaraju, V.C., Foster-McGregor, N., and Devadason, E.S. (2021). Regulatory Distance, Margins of Trade, and Regional Integration: The Case of the ASEAN+5, ERIA Discussion Paper  Series, No. 403. Jakarta: Economic Research Institute for ASEAN and East Asia.

[3] World Bank’s World Development Indicators, available at https://databank.worldbank.org/source/world-development-indicators#. Accessed December 8, 2021.

[4] Beghin, J., Disdier, A.-C., Marette, S. and Tongeren, F. van (2012). Welfare Costs and Benefits of Nontariff Measures in Trade: A Conceptual Framework and Application. World Trade Review, 11(3), 356-375.

[5] Gourdon, J., Stone, S. and Tongeren, F. van (2020). Non-tariff Measures in Agriculture, OECD Food, Agriculture and Fisheries Papers, No. 147. Paris: OECD Publishing.

[6] The simulated intensive and extensive margins in Table 2 are calculated by the following formula: (please see endnote 6 of pdf document for actual notation), where is the exponential, (please see endnote 6 of pdf document for actual notation) is the estimated coefficient of regulatory distance on the intensive or extensive margin of agricultural trade, and (please see endnote 6 of pdf document for actual notation)  is the change in regulatory distance.

[7] http://www.gms-cbta.org/cross-border-transport-agreement

[8] WTO Website, available at https://www.wto.org/english/tratop_e/sps_e/spsagr_e.htm

[9] WTO Website, available at https://www.wto.org/english/docs_e/legal_e/17-tbt_e.htm

[10] As of 7 December 2021, the RCEP has been ratified by five GMS countries, namely Cambodia, China, Laos, Thailand and Vietnam.

[11] Menon, J. and Roth, V. (eds.) (2022). Agricultural Trade between China and the Greater Mekong Subregion Countries: A Value Chain Analysis. Singapore: ISEAS – Yusof Ishak Institute.

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2022/38 “What’s Next for ASEAN-UK Dialogue Relations?” by Joanne Lin

 

ASEAN and the United Kingdom reaffirmed their relationship through a “Joint Ministerial Declaration on Future Economic Cooperation between the Association of Southeast Asian Nations (ASEAN) and the United Kingdom of Great Britain and Northern Ireland (UK)” on 15 September 2021. Photo: ASEAN.ORG

EXECUTIVE SUMMARY

  • The United Kingdom (UK) was accorded the status of Dialogue Partnership by ASEAN on 2 August 2021. With the UK as ASEAN’s 11th Dialogue Partner, both the partners face the important task of establishing modalities of engagement and charting areas of cooperation across the three Community pillars.
  • Beyond practical cooperation, the UK may have a greater ambition to explore strategic engagement with ASEAN.
  • ‘Global Britain’ is the new identity that the UK post-Brexit seeks to assume on the global stage, and especially in Southeast Asia. The UK aims to raise its status in as many of the region’s multilateral platforms as possible, and is “upping its game” through its increasing political dialogues, military presence, and socio-economic initiatives with ASEAN.
  • While noting the UK’s security interest in the Indo-Pacific, ASEAN needs to continue serving as an anchor in the regional architecture through the ASEAN Outlook on the Indo-Pacific (AOIP) and to promote synergy through ASEAN-led mechanisms.

ISEAS Perspective 2022/38, 14 April 2022

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INTRODUCTION

The United Kingdom (UK) was accorded the status of Dialogue Partnership by ASEAN on 2 August 2021. Despite ASEAN having a moratorium in place on Dialogue Partnership since 1996, the decision was made given the UK’s relationship with ASEAN on its own merits as well as its past cooperation and engagement with ASEAN as a member of the European Union (EU).[1]

With the UK as the 11th Dialogue Partner of ASEAN, both the partners face the important task of establishing modalities of engagement and charting areas of cooperation across the three Community pillars. Beyond practical cooperation, the UK may wish to explore strategic engagement with ASEAN through ASEAN-led mechanisms, starting with an Observership status at the ASEAN Defence Ministers’ Meeting Plus. ASEAN will have to find ways to allow meaningful participation from the UK in these sought-after platforms without further exacerbating major power rivalry—especially between the US and China/Russia—within these platforms. At the same time, ASEAN has to find ways to engage the UK meaningfully in its tilt to the Indo-Pacific while cementing its central role in the region.

This paper will examine the various dimensions of the new ASEAN-UK Dialogue Partnership and explore ways in which both sides may cooperate substantively in areas of mutual interest and more strategically in the Indo-Pacific.

SUBSTANTIATING THE DIALOGUE PARTNERSHIP

In substantiating the new dialogue partnership, ASEAN Foreign Ministers agreed to establish dialogue and cooperation mechanisms, namely the ASEAN-UK Joint Cooperation Committee (JCC), the ASEAN-UK Senior Officials’ Meeting, and the ASEAN Post Ministerial Conference (PMC) Plus One Session with the UK, in accordance with the Guidelines for ASEAN’s External Relations. These mechanisms will meet once a year and will allow ASEAN and the UK to review current cooperation, explore future areas of cooperation in strengthening the partnership, and exchange views on regional and international issues.

It is important for ASEAN and the UK to carefully chart out practical cooperation over the next five years, by building on the foundations of the UK’s strong bilateral relations with ASEAN member states and in line with its priorities.

The Committee of Permanent Representatives to ASEAN (CPR) and the Ambassador of the UK to ASEAN have been tasked to draft a five-year ASEAN-UK Plan of Action (POA). The POA is expected to be adopted at the first Post Ministerial Conference Plus One session with the UK in August 2022.

ASEAN and the UK may consider some potential areas of cooperation in line with the UK’s priorities in the region and potential funding sources available including a £300 million Official Development Assistance to support economic and social development in Southeast Asia.[2] Available funding[3] includes the South East Asia Prosperity Fund,[4] the UK’s Newton Fund,[5] the Fleming Fund,[6] the International Partnership Programme, as well as specific programmes for ASEAN such as the ASEAN Economic Reform Programme (£19.7 million) and the ASEAN Low Carbon Energy Programme (£15 million).

Potential Political-Security Cooperation

The UK enjoys good diplomatic relations with all ASEAN member states. Having played a pivotal role in the establishment of many international organisations and being a member of the Group of 7 and Group of 20, the UK is well-positioned to work alongside ASEAN in promoting key values and principles such as a rules-based international order and multilateralism.[7]

As the highest defence spender in Europe coupled with longstanding bilateral defence relationships with most ASEAN Member States (including a support unit in Singapore and a military Garrison in Brunei), the UK is also well-suited to support capacity building and knowledge sharing in defence cooperation across the region.

The UK’s extensive experience in combating transnational crime and cybersecurity—being the 3rd most powerful cyber nation in the world[8] with an investment of over £1.9 billion through the UK’s National Cyber Security Centre—will allow ASEAN to tap into its expertise in areas such as cybercrime, money laundering, and trafficking in persons through regular consultation with the ASEAN Senior Officials’ Meeting on Transnational Crime (SOMTC).

Potential Economic Cooperation

The UK was the second-largest economy in the EU before Brexit. It is also an important economic partner of ASEAN; total trade between ASEAN and the UK amounted to £36.2 billion[9] in 2021 (to the end of Q3). Foreign Direct Investment to ASEAN stood at US$7.9 billion in 2019.[10]

With trade being at the heart of Global Britain, the UK is working towards replicating some of the over 40 FTAs that it was previously part of under the EU, and a future FTA between ASEAN and the UK cannot be ruled out—especially since the UK is currently negotiating FTAs with Singapore and Vietnam.[11] The UK has also launched negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—in which Brunei, Malaysia, Singapore and Viet Nam are members—and may consider acceding to ASEAN Plus FTA which has an accession clause, and the Regional Comprehensive Economic Partnership (RCEP) in the future. However, the likelihood of an ASEAN-UK FTA[12] will depend on whether the level of ambition of the UK aligns with what ASEAN can accommodate.

Apart from further boosting trade and investment ties, the Joint Ministerial Declaration on Future Economic Cooperation between ASEAN and the UK, adopted at the ASEAN Economic Ministers (AEM) – UK Consultation on 15 September 2021, has also identified several areas of cooperation such as (i) promoting economic recovery and supply chains resilience; (ii) promoting a multilateral trading system to strengthen commitments under the World Trade Organization (WTO); (iii) developing regulatory standards and systems; (iv) strengthening digital innovation, data governance and e-commerce under the ASEAN-UK Digital Innovation Partnership launched in September 2022; (v) financial technologies (FinTech) and green financing; and (vi) science, technology and innovation, among several others.

Potential Socio-Cultural Cooperation

As a global leader in diplomacy and development, the UK has established strong socio-economic and people-to-people ties with ASEAN member states through close historical links and various initiatives. This is particularly so in education with over 40,000 ASEAN students studying in the UK and over three million British visitors to the region annually. The State of Southeast Asia 2022 Survey[13] has also shown that the UK remains the region’s second top choice in tertiary education after the US.

The availability of various funding sources set aside by the UK Government will enable ASEAN and the UK to enhance cooperation on a few key fronts including: (i) education and scholarships such as the Chevening Scholarship Programme; (ii) skills development including Technical and Vocational Education and Training (TVET) and English language training; (iii) health including joint research on COVID-19 and vaccines production; (iv) climate change; (v) humanitarian assistance and disaster preparedness including support to the ASEAN Coordinating Centre for Humanitarian Assistance on Disaster Management (AHA Centre); and (vi) strengthening people-to-people exchanges through tourism, sporting and exchanges in the cultural and creative sectors.

EXPLORING STRATEGIC ENGAGEMENT

A Dialogue Partnership status with ASEAN will certainly be a stepping stone for the UK to seek membership in ASEAN-led mechanisms such as the East Asia Summit (EAS) and the ASEAN Defence Ministers’ Meeting Plus (ADMM-Plus).

With its global standing, the UK will most likely fulfil the membership criteria in all ASEAN-led mechanisms. The UK is a sovereign state (unlike the EU), a Dialogue Partner of ASEAN, and a High Contracting Party to the Treaty of Amity and Cooperation (TAC) since 2012. In addition, it has Embassies or High Commissions in all ten ASEAN member states and is able to contribute positively to regional peace, stability and prosperity.

However, the UK is aware that its membership in ASEAN-led mechanisms including the ASEAN Regional Forum (ARF) will not be automatic and requires separate requests to be made to the respective mechanisms. For over a decade, none of the ASEAN-led mechanisms has accepted new membership,[14] observing a de-facto moratorium to ensure the effectiveness of the mechanism.

Furthermore, the admittance of new members into these mechanisms, particularly the EAS may require consulting with non-ASEAN EAS members following ASEAN’s decision. The UK as a strong political ally of the US and a member of the trilateral security partnership between Australia, the UK and the US (AUKUS) could face some level of resistance from both China and Russia.

The challenge for the UK is further compounded by two longstanding Dialogue Partners—Canada and the EU—who have been requesting to join the EAS and the ADMM-Plus for several years, with no success.

However, despite these challenges, the UK has applied for an Observer Status[15] [16] for the ADMM-Plus Expert Working Groups (EWG) for Peacekeeping Operations and Military Medicine in 2018. The deliberation is ongoing with a decision expected to be reached in 2022.

While noting the UK’s strategic ambition in the region, a common understanding between ASEAN and UK is the importance of substantiating the new dialogue relations before seeking additional membership. However, being aware of the UK’s aspirations will help ASEAN prepare for future scenarios. ASEAN member states that have strong strategic and political linkages with the UK may also advance the lifting of moratoriums on these ASEAN-led mechanisms.

THE UK IN THE INDO-PACIFIC

In February 2021, the UK Government published a policy paper on “Global Britain in a Competitive Age: the Integrated Review of Security, Defence, Development and Foreign Policy”[17] in a tilt to the Indo-Pacific.[18] The review noted the Indo-Pacific region as being at the “centre of intensifying geopolitical competition with multiple potential flashpoints” such as the South and the East China Sea, nuclear proliferation, climate change and transnational crimes.

As such, the UK has vested interests and is increasing its defence and security cooperation in the Indo-Pacific. Beyond the UK’s strong historical and naval ties with regional countries (including through the Five Power Defence Arrangement),[19] the UK has also taken a stronger stand on the South China Sea[20] with several Royal Navy warships conducting freedom of navigation operations[21] in recent years.

The UK’s Carrier Strike Group,[22] [23] led by HMS Queen Elizabeth has completed a series of engagements with several ASEAN member states, with more planned for the future. The UK has also deployed two Patrol Vessels (HMS Sprey and Tamar)[24] for a five-year Indo-Pacific Mission which can assist regional states (together with local navies) in addressing non-traditional security issues including drug smuggling and IUU fishing. A Littoral Response Group is also expected to operate in the Indo-Pacific from 2023.[25]

The UK has highlighted that its future prosperity and security are increasingly dependent on developments in the Indo-Pacific, and expressed commitment to building partnerships across the Indo-Pacific region including with ASEAN – as mentioned eight times in its policy paper.[26] The UK through various platforms (including at the ASEAN and G7 Foreign and Development Ministers meeting in December 2021) has reaffirmed its support for the ASEAN Outlook on the Indo-Pacific (AOIP), which envisages ASEAN centrality as the underlying principle for promoting cooperation in the Indo-Pacific region.

Apart from seeking closer relations with ASEAN, the UK has announced in September 2021 a new enhanced trilateral security partnership between Australia, the UK and the US (AUKUS) to help Australia acquire nuclear-powered submarines, and other security cooperation. While the initiative will help strengthen the UK’s defence credentials in the Indo-Pacific, mixed views have been recorded in the region. According to the State of Southeast Asia 2022 Survey Report,[27] 36.4% of respondents felt that the AUKUS arrangement will help balance China’s growing military power, 22.5% opined that it will escalate the regional arms race, while 18% are of the view that it will weaken ASEAN centrality.

The assessment of AUKUS may be premature, but UK’s resolve to work with allies and partners to build capacity and preserve maritime security in the region is clear. The UK’s credibility as a partner of ASEAN can be enhanced by involving ASEAN in some of its strategic engagements and activities in the region. A good starting point could be through the four key areas of cooperation in the AOIP, including maritime, economic, connectivity and sustainable development.

CONCLUSION – WAY FORWARD

‘Global Britain’ is a new identity that the UK post-Brexit seeks to assume on the global stage, especially in Southeast Asia – a region growing in economic and geopolitical significance. The UK aims to gain status in as many of the region’s multilateral platforms and at the highest level as possible. It is “upping its game” in the region by increasing political dialogues, military presence, and socio-economic initiatives with ASEAN.

ASEAN may tap into the strength and expertise of the UK in its integration and community building across all three Community pillars. The new Plan of Action between ASEAN and the UK, building on areas of mutual interest will further strengthen the Dialogue Partnership, once adopted in 2022. Strategically, noting the UK’s security interest in the Indo-Pacific, ASEAN needs to continue serving as an anchor in the regional architecture through the AOIP.

ASEAN may also need to find a roadmap to concretise the AOIP and substantiate key areas of cooperation that will allow like-minded partners such as the UK to meaningfully engage with ASEAN vis-à-vis their Indo-Pacific strategies. This will help cement ASEAN’s central role in the Indo-Pacific region and promote synergy through ASEAN led-mechanisms.

ENDNOTES


[1] ASEAN, Joint Communique of the 54th ASEAN Foreign Ministers’ Meeting, 2 August 2022, https://asean.org/wp-content/uploads/2021/08/Joint-Communique-of-the-54th-ASEAN-Foreign-Ministers-Meeting-FINAL.pdf

[2] UK Mission to ASEAN, https://www.gov.uk/world/organisations/uk-mission-to-asean

[3] UK Foreign and Commonwealth Office, UK-ASEAN factsheet (updated 11 February 2022), https://www.gov.uk/government/publications/uk-asean-factsheet/uk-asean-factsheet

[4] South East Asia Prosperity Fund, https://blogs.fcdo.gov.uk/southeastasiaprosperityfund/

[5] The Newton Fund builds outstanding research and innovation partnerships with countries in Asia, Africa and America. https://www.gov.uk/government/publications/newton-fund-building-science-and-innovation-capacity-in-developing-countries/newton-fund-building-science-and-innovation-capacity-in-developing-countries

[6] The Fleming Fund is UK’s aid programme supporting up to 24 countries across Asia and Africa to tackle antimicrobial resistance. https://www.flemingfund.org/

[7] The ASEAN-G7 Foreign Ministers’ Meeting on 12 December 2021 was an example of the UK’s role in bringing together like-minded partners to reaffirm key values.

[8] UK Cabinet Office, Policy Paper on Global Britain in a Competitive Age: the Integrated Review of Security, Defence, Development and Foreign Policy, 2 July 2021, https://www.gov.uk/government/publications/global-britain-in-a-competitive-age-the-integrated-review-of-security-defence-development-and-foreign-policy/global-britain-in-a-competitive-age-the-integrated-review-of-security-defence-development-and-foreign-policy

[9] UK Foreign and Commonwealth Office, UK-ASEAN Factsheet, updated on 11 February 2022, https://www.gov.uk/government/publications/uk-asean-factsheet/uk-asean-factsheet

[10] ASEAN, ASEAN Investment Report 2020-2021, September 2021, https://asean.org/wp-content/uploads/2021/09/AIR-2020-2021.pdf

[11] The Diplomat, Global Britain: Why the United Kingdom Needs ASEAN, 5 July 2021, https://thediplomat.com/2021/07/global-britain-why-the-united-kingdom-needs-asean/

[12] UK’s level of ambition in its potential FTA with ASEAN needs to be taken into consideration, particularly if it is ambitious and comprehensive. In addition to typical FTA clauses, the UK may be interested to include non-traditional value-based trade provisions such as human rights, labour rights, environment, fair and ethical trade, and sustainable development-related issues. ASEAN may prefer to keep these issues separate from FTA negotiations.

[13] Seah, S. et al., The State of Southeast Asia 2022 Survey Report, ISEAS-Yusof Ishak Institute, 2022, /wp-content/uploads/2022/02/The-State-of-SEA-2022_FA_Digital_FINAL.pdf

[14] EAS accepted the last two members, Russia and the U.S., in 2011. ADMM-Plus since its inauguration in October 2010 has not accepted any new members. Sri Lanka was the last member to join the ARF in 2007. A moratorium on accepting new states was adopted at the same time and sustained at the 15th ARF Ministerial Meeting in 2008.

[15] Since June 2021, the decision on new ADMM-Plus members or observers will be made solely by ADMM i.e. ASEAN member states, and not the plus-partners. Prior to this decision, the application of the UK, EU, Canada, and France has met some resistance from China and Russia.

[16] Ian Storey and Hoang Thi Ha, ‘Global Britain’ and Southeast Asia: Progress and Prospect, ISEAS Perspective Issue 2021 No. 130, 1 October 2021, /wp-content/uploads/2021/09/ISEAS_Perspective_2021_130.pdf

[17] UK Cabinet Office, Policy Paper on Global Britain in a Competitive Age: the Integrated Review of Security, Defence, Development and Foreign Policy, 2 July 2021, https://www.gov.uk/government/publications/global-britain-in-a-competitive-age-the-integrated-review-of-security-defence-development-and-foreign-policy/global-britain-in-a-competitive-age-the-integrated-review-of-security-defence-development-and-foreign-policy

[18] Lynn Kuok, From Withdrawal to Indo-Pacific ‘tilt’: Southeast Asia welcomes enhanced British security presence, International Institute for Strategic Studies (IISS), 11 August 2021, https://www.iiss.org/blogs/analysis/2021/08/southeast-asia-british-security-presence-indo-pacific-tilt

[19] Australia, Malaysia, New Zealand, Singapore and the UK.

[20] Ian Storey and Hoang Thi Ha, ‘Global Britain’ and Southeast Asia: Progress and Prospect, ISEAS Perspective Issue 2021 No. 130, 1 October 2021, /wp-content/uploads/2021/09/ISEAS_Perspective_2021_130.pdf

[21] East Asia Forum, Is ASEAN too ‘Far East’ or just right for Global Britain?, 4 June 2021, https://www.eastasiaforum.org/2021/06/04/is-asean-too-far-east-or-just-right-for-global-britain/

[22] Ian Storey and Hoang Thi Ha, ‘Global Britain’ and Southeast Asia: Progress and Prospect, ISEAS Perspective Issue 2021 No. 130, 1 October 2021, /wp-content/uploads/2021/09/ISEAS_Perspective_2021_130.pdf

[23] The carrier group included Type 45 destroyers and Type 23 anti-submarine frigates, support vessels, a submarine, plus a Dutch frigate and U.S. destroyer. Aircraft included a mix of RAF/Royal Navy and US Marine Corps F-35 Lightning combat aircraft, Wildcat and Merlin helicopters.

[24] Relatively small and lightly armed, the Offshore Patrol Vessels will be less controversial than larger warships and are better suited for working with the navies of ASEAN member states which mostly operate similar-sized vessels. Their small size will enable them to visit a larger number of regional ports. In an era of great power competition, this arrangement avoids the political sensitivities associated with permanently hosting foreign warships.

[25] East Asia Forum, The United Kingdom’s ‘tilt’ toward the Indo-Pacific, 18 June 2021, https://www.eastasiaforum.org/2021/06/18/the-united-kingdoms-tilt-toward-the-indo-pacific/

[26] UK Cabinet Office, Policy Paper on Global Britain in a Competitive Age: The Integrated Review of Security, Defence, Development and Foreign Policy, 2 July 2021.

[27] Seah, S. et al., The State of Southeast Asia 2022 Survey Report, ISEAS – Yusof Ishak Institute, 2022, /wp-content/uploads/2022/02/The-State-of-SEA-2022_FA_Digital_FINAL.pdf

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“ASEAN’s Newer Member Countries in Two Financial Crises: Impact, Response and Lessons” by Jayant Menon

 

 

2022/32 “Enabling Domestic Data Flows for E-Commerce in ASEAN Countries” by Sithanonxay Suvannaphakdy

 

Establishing open data policies serve as a stepping stone to enable value creation for boosting economic growth. Picture: Freepik. https://www.freepik.com/free-vector/blue-gradient-futuristic-technology-background_18952566.htm.

EXECUTIVE SUMMARY

  • Establishing a comprehensive regulatory framework to build trust in data sharing between stakeholders and to enhance domestic data flows in ASEAN countries are urgent concerns. This is a precondition for enhancing cross-border data flows and promoting e-commerce in the region.
  • An analysis of 14 regulatory elements using data from the World Bank’s Global Data Regulation Diagnostic Survey in 2021 reveals that regulatory frameworks to enable domestic data flows are unevenly developed across different enablers and ASEAN countries. These divergences may be exacerbated by different degrees of enforcement of laws and regulations.
  • E-commerce and e-transactions-related laws and regulations are the only area in which all ASEAN countries are doing relatively well. Enabling reuse of public intent data is moderately developed, while enabling reuse of private intent data is the weakest area of performance in most ASEAN countries.
  • Limited reuse of public and private intent data means that e-commerce firms and consumers in ASEAN have not yet reaped the full benefits of data flows. Unlocking domestic data flows requires a two-pronged approach, i.e. enabling reuse of public intent data and enabling reuse of private intent data.
  • The reuse of public intent data should be enhanced by adopting regulatory frameworks of common technical standards and open licensing regime for data; allowing individuals and firms to access public sector data that have not been published on an open data platform; and establishing policies on open data and data classification.
  • The reuse of private intent data should be enhanced by encouraging open data licenses among private firms, promoting data portability right for individuals, and strengthening public-private partnership to utilize the digital identification system.

* Sithanonxay Suvannaphakdy is Lead Researcher at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute, where he undertakes policy-oriented research on ASEAN’s economic integration. He is grateful to valuable comments and suggestions from Tham Siew Yean and Sharon Seah. All remaining errors are his own.

ISEAS Perspective 2022/32, 4 April 2022

* Sithanonxay Suvannaphakdy is Lead Researcher at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute, where he undertakes policy-oriented research on ASEAN’s economic integration. He is grateful to valuable comments and suggestions from Tham Siew Yean and Sharon Seah. All remaining errors are his own.

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INTRODUCTION

The rapid growth of electronic commerce (e-commerce) and availability of digital platforms (e.g. social networks, e-commerce marketplaces) present an opportunity for small and medium-sized enterprises (SMEs) in ASEAN to increase their participation in domestic and international markets. E-commerce is defined as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders.[1] Global retail e-commerce sales have been estimated to grow by 14.3 percent, from US$4.28 trillion in 2020 to about US$4.89 trillion in 2021.[2] About 50 million SMEs use Facebook to find customers; 70 percent of their fans are domestic, and 30 percent are from outside the country.[3] Retail e-commerce sales in ASEAN are estimated to grow faster than those in the world, with a growth rate of 26.1 percent from US$59 billion in 2020 to US$74.4 billion in 2021.[4] 

One key towards enabling e-commerce is the enhancement of data flows. The free flow of data reduces transaction costs, accelerates the spread of ideas, and allows users to make use of new research and technologies. This is particularly important for ASEAN, where the e-commerce chapter under the Regional Comprehensive Economic Partnership (RCEP) Agreement aims to create a conducive environment for e-commerce through protection of online consumers and online personal data as well as facilitating cross-border data flows. However, ASEAN countries tend to allow different degrees of domestic data flows, which restrict cross-border data flows in the region. Data flow restrictions can impose costs on local firms as they are not free to use the most convenient data processing provider, and may have to pay for more expensive services when transferring data.           

The present study investigates the extent to which regulatory frameworks in ASEAN countries have allowed the use, reuse or sharing of domestic data by the government, e-commerce firms, and e-commerce consumers. Domestic regulatory frameworks serve as a basis to promote regional regulatory cooperation on data. The RCEP provisions on e-commerce may offer an important signal to ASEAN’s e-commerce markets on the future of cross-border data flows. Yet, until policy makers have the confidence that allowing data to leave their borders will not undermine domestic regulatory goals, there will remain a strong incentive to restrict cross-border data flows.

Following the World Bank (2021),[5] regulatory frameworks for data sharing are assessed against three enablers, namely electronic transactions (e-transactions), public intent data, and private intent data. Public intent data refers to data collected with the intent of serving the public good by informing the design, execution, monitoring, and evaluation of public programmes and policies. Such data include administrative, census and survey data produced by government agencies, citizen-generated data produced by individuals, and machine-generated data produced without human interactions.[6] Private intent data refers to data collected by the private sector as part of routine business processes. Such data include transaction and browsing histories, mode of payments, internet protocol (IP) addresses, and smartphone app logs. These three enablers aim to capture policies, laws, regulations, and standards that facilitate the use, reuse, and sharing of data within and between stakeholder groups through openness, interoperability, and portability.

The enablers of domestic data flows are further broken down into 14 regulatory elements. Enabling e-transactions involves four elements, namely legal basis for e-commerce or e-transactions, legal equivalence, legal recognition of electronic signatures, and digital identification (ID) system for online service access. Enabling public intent data consists of six elements, namely mandatory use of common technical standards for data, open data policies, data classification policy, mandatory use of common data classification, individuals’ right to access government data, and adoption of open licensing regime. Enabling private intent data consists of four elements, namely individuals’ right for data portability, individuals’ right to obtain machine-readable data, private sector’s ability to digitally verify ID, and mandatory licensing of essential data.

This study focuses on nine ASEAN countries, namely Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and utilizes the World Bank’s Global Data Regulation Diagnostic Survey in 2021.[7] The survey collected information on attributes of the regulatory framework in 80 countries, which provides details on regulatory status of data-related laws and regulations in sample countries as of June 1, 2020. This study does not include Brunei because of data unavailability; that country was not included in the survey.

Findings in this study reveal that regulatory frameworks to enable data flows in ASEAN are unevenly developed across different enablers and countries. These divergences may be exacerbated by different degrees of enforcement of laws and regulations. E-commerce and e-transactions-related laws and regulations are the only area in which all ASEAN countries are doing relatively well. Enabling reuse of public intent data is moderately developed. Enabling reuse of private intent data is the weakest area of performance in ASEAN countries, except in Malaysia and the Philippines (Table 1).      

ENABLING ELECTRONIC TRANSACTIONS

Data are used or transferred via electronic transactions. Laws and regulations governing e-commerce and e-transactions create trust in both public and private sectors that engage in online data transactions. Adoption of e-commerce and related legislation is widespread across ASEAN countries. Indonesia, Malaysia, Singapore and Thailand have constituted all e-commerce and related legislation. Cambodia, Laos, Myanmar, and Vietnam have not yet established government-recognized digital ID systems that enable people to remotely authenticate themselves to access online services. The Philippines have not yet established the government-recognized digital ID system and legal recognition of e-signatures (Table 2). 

Establishing e-commerce laws and legal equivalence of paper-based and electronic communications

All nine ASEAN countries in this study have constituted their e-commerce laws, which is an essential condition to enable e-commerce. They have also established legal equivalence of paper-based and electronic communications (Table 2). Such legal equivalence allows the online transaction, contract, or communication to have the same legal value to physical transactions such as a signature on a paper contract or physical evidence.

Establishing legal recognition of electronic signatures

E-signatures are signatures that are expressed in an electronic form. Fully recognized and enforced e-signatures are essential to allow for remote electronic contracts and transactions as businesses engaged in e-commerce expand their network of clients and suppliers both within and across borders. Some examples of e-signatures include clicking the ‘Agree’ button of a website’s Terms and Conditions, a scanned image of a handwritten signature, a tick-box at the end of an online form, and a drawn signature using mobile device.[8] Except for the Philippines, ASEAN countries have established the legal recognition of e-signatures (Table 2).

Introducing digital identification system

The digital ID system provides reliable authentication and enables delivery of a range of services via web or mobile applications that require proof of identity. It collects and validates attributes to establish a person’s identity, which can be used by identity-holders to prove their identity, for example to employers, financial institutions or government agencies. 

Four of nine ASEAN countries included in the survey have established government-recognized digital ID systems that enable people to remotely authenticate themselves to access online services. They are Indonesia, Malaysia, Singapore, and Thailand. The remaining five countries, namely Cambodia, Laos, Myanmar, the Philippines, and Vietnam, do not have such systems (Table 2).

In e-commerce, the use of digital ID reduces time and costs for business transactions by securing digital payments and streamlining processes of registration, authentication, corporate registrations, permits, and authorizations. An empirical study by McKinsey Global Institute[9] reveals that  countries implementing full digital ID coverage, namely Brazil, China, Ethiopia, India, Nigeria, the United Kingdom and the United States, could create economic value equivalent to 3 to 6 percent of GDP by 2030. ASEAN countries should also gain from the digital ID system if they fully implement and interoperate it across private and public service providers both within and across countries. 

ENABLING REUSE OF PUBLIC INTENT DATA

Regulations enabling access and reuse of public intent data are unevenly developed across ASEAN countries. Indonesia and Thailand have established all necessary regulations to enhance access and reuse of public intent data, while Cambodia and Laos have not yet established any of them. The Philippines needs to constitute the mandatory use of common technical standards for exchanging data across governments’ entities. Malaysia needs to introduce regulatory frameworks on the mandatory use of common data classification and individuals’ right to access government data. Singapore needs to establish regulatory frameworks on data classification, mandatory use of common technical standards, and individuals’ right to access government data. Vietnam needs to constitute regulatory frameworks on open data, mandatory use of common technical standards, and open licensing regime for data (Table 3).  

Establishing open data policies

A country’s public sector data being prepared for publication can be classified on a spectrum from closed to open. The degree of data openness depends on four factors, namely accessibility, machine readability, cost and rights for reuse and redistribution.[10] According to Open Knowledge Foundation,[11] a piece of data is open if anyone is free to use, reuse, or redistribute it – subject only, at most, to the requirement to attribute and share-alike. Using this definition, five out of nine ASEAN countries have established an open data act or open data policy applicable across the entire public sector. They are Indonesia, Malaysia, the Philippines, Singapore, and Thailand. The remaining four countries, namely Cambodia, Laos, Myanmar, and Vietnam, have not yet done so (Table 3).

Establishing open data policies serve as a stepping stone to enable value creation for boosting economic growth. Such value benefits governments, firms and consumers in three channels, including decision making, new products and services, and transparency. Open data enables decision makers to use a fact base for making more informed and objective choices using information that is often available in real time. It also enables firms to better understand potential markets and to design new data-driven products. Moreover, it enables citizens to monitor government activities such as tracking public expenditures and impacts. An empirical study by McKinsey Global Institute[12] reveals that the combination of three value channels of open data – decision making, new products and services, and transparency – can generate more than US$3 trillion annually for the global economy.

Ensuring unified data classification standards

Data classification policies typically require the classification of data based on their sensitivity such as classified, confidential, or business use only. In ASEAN, six out of nine countries have established policies or directives on government data classification. These include Indonesia, Malaysia, Myanmar, the Philippines, Thailand, and Vietnam. The practical effect of data classification policies in some countries such as Malaysia tends to be limited because it is not mandatory to use the common data classification categories across all government database applications or document management systems. The remaining three countries, namely Cambodia, Laos and Singapore, have not yet established data classification policies (Table 3).

Allowing access to information

Access to information (ATI) legislation enables individuals or firms to access public sector data that have not been published on an open data platform. The degree of the ATI legislation for enabling public data access depends on the scope of the exemption categories for disclosure. Greater scope of the exemption categories reduces the degree of public data access.

In ASEAN, four out of nine countries have established ATI legislation that grants individuals the right to access government records or data. These include Indonesia, the Philippines, Thailand, and Vietnam. However, these countries have placed significant exceptions on an individual’s rights to access public information under such legislation. These exceptions include sensitive information on national security, defence, or foreign policy grounds; trade secrets or other commercial interests; personal data; law enforcement; and privileged information. The remaining five countries, namely Cambodia, Laos, Malaysia, Myanmar, and Singapore, have not yet established ATI legislation to allow public data access (Table 3).

Adopting an open licensing regime for data

An open license for data grants rights to anyone and is subject to certain minimal conditions like attribution of the data’s owner. If data is not licensed legally, it cannot be used by anyone else. In ASEAN, five out of nine countries have adopted some forms of open licensing regime for public intent data. They are Indonesia, Malaysia, the Philippines, Singapore, and Thailand (Table 3).

The Government of Singapore, for example, launched the one-stop portal called ‘data.gov.sg’ in 2011 to communicate government data and analysis through visualizations and articles, and to facilitate analysis and research. Such a portal contains publicly-available datasets from 70 public agencies and more than 100 apps created by the use of government’s open data.[13] By accepting the license, users can use, access, download, copy, distribute, transmit, modify and adapt the datasets, or any derived analyses or applications.

Adopting a legal framework of common technical standards for data

According to the Federal Enterprise Data Resources of the United States,[14] a technical standard for data refers to a specification that describes the way in which data should be stored or exchanged for the consistent collection and interoperability of that data across different systems, sources and users. The legal framework of common technical standards for data aims to ensure that all government entities connect to and use the government’s interoperability platform as a vehicle for exchanging data.

In ASEAN, three out of nine countries have adopted a full range of common technical standards, such as the principles of FAIR (findable, accessible, interoperable, and reusable), that enable the interoperability of systems, registries, and databases. These include Indonesia, Malaysia, and Thailand (Table 3). Malaysia and Thailand have established standards for open application programming interfaces (APIs) for government to government (G2G), government to business (G2B), and government to consumer (G2C) services; standardized communications protocols for accessing metadata; and developed semantic catalogues for data and metadata. Indonesia has standardized communications protocols for accessing metadata; and developed semantic catalogues for data and metadata.

ENABLING REUSE OF PRIVATE INTENT DATA

Regulations enabling access and reuse of private intent data are lagging those for public intent data across ASEAN countries. Four out of nine ASEAN countries have not yet established any necessary regulations to enable access and reuse of private intent data. These include Cambodia, Laos, Myanmar, and Thailand. Malaysia has not yet established a regulatory framework to allow individuals to access data portability, while the Philippines needs to constitute a regulatory framework on mandatory licensing of essential data. Indonesia, Singapore and Vietnam need to establish regulatory frameworks on mandatory licensing of essential data, individuals’ right for data portability, and individuals’ right to obtain portable data in a machine-readable format (Table 4). 

Mandatory licensing of essential data

Open data licenses allow users to freely share, modify, and use a database without regard to copyright or other intellectual property rights (IPR) or limitations around data ownership. Open licenses of non-personal data could be done voluntarily by IPR holders, or implemented on a compulsory basis by regulators to avoid market distortions. In ASEAN, only Malaysia (e.g. standard-setting organizations) has mandated IPR holders to provide voluntary licensing access to critical data or applications based on FRAND (fair, reasonable, and non-discriminatory) terms. Other ASEAN countries have not yet done so (Table 4).

Promoting open data licenses based on FRAND terms can be a useful mechanism in enhancing technological innovation such as development of e-commerce platforms or websites in ASEAN. IPR holders do not necessarily share their data or applications for free, but they should offer them on reasonable and non-discriminatory terms. This means that they can control access to licensed products and receive returns on their investments. This should reduce costs of access to licensed products of dominant platforms incurred by micro, small, and medium-sized enterprises (MSMEs), and hence promote more inclusive growth of e-commerce in the region.    

Promoting data portability right for individuals

According to the Information Commissioner’s Office of the United Kingdom,[15] the right to data portability allows individuals to obtain and reuse their personal data provided to data controllers (e.g. e-commerce stores) for their own purposes across different services. This facilitates the movement or transfer of personal data from one e-commerce store to another in a safe and secure way. In ASEAN, only the Philippines has allowed individuals to request the transfer of their personal data from one data controller to another service or product provider. The remaining ASEAN countries have not yet done so (Table 4).

Accessing a machine-readable format of data portability

Transferring personal or nonpersonal data from one e-commerce firm to another requires the use of a standard machine-readable format. In ASEAN, only Malaysia and the Philippines have granted the right of individuals to access their data processed by data controllers in a machine-readable format. The remaining seven ASEAN countries have not yet done so (Table 4). The lack of standard data format restricts the potential benefits of data portability right for individuals as data provided in one e-commerce firm may not be compatible with those of other firms. 

Strengthening public-private partnership to utilize the digital ID system

Digital ID systems play an important role in promoting e-commerce development. Firms — including banking and financial services, mobile operators and e-commerce platforms — must verify and authenticate the identities of their users at various points in the customer lifecycle. The key data source to validate customer identity is typically a government-provided or recognized credential, such as national ID or passport. Lack of authoritative proof of identity reduces customer pools and increases administrative overhead and risks of fraud for e-commerce firms.

In ASEAN, only four out of nine countries have allowed private sector service providers to digitally verify or authenticate the identity of a person against data stored in the ID system. These include Indonesia, Malaysia, Singapore, and Vietnam. The remaining five countries have not yet done so (Table 4).

CONCLUSION AND POLICY IMPLICATIONS

The findings in this study confirm that establishing a comprehensive regulatory framework to increase trust on data sharing between stakeholders is an urgent priority to enhance domestic data flows in ASEAN countries. This is a precondition to enhance cross-border data flows and to promote e-commerce in the region. Regulatory frameworks to enable data flows are unevenly developed across different enablers and countries. These divergences may be exacerbated by different degrees of enforcement of laws and regulations. E-commerce and e-transactions-related laws and regulations are the only area in which all ASEAN countries are doing relatively well. Enabling reuse of public intent data is moderately developed, while enabling reuse of private intent data is the weakest area of performance in most ASEAN countries.

At the domestic level, limited reuse of public and private intent data means that e-commerce firms and consumers in ASEAN countries have not yet reaped full benefits of data flows. Unlocking potential benefits of data flows requires a two-pronged approach, including enabling reuse of public intent data on the one hand and enabling reuse of private intent data on the other. Reuse of public intent data should be enhanced by adopting a legal framework of common technical standards and an open licensing regime for data; allowing individuals or firms access to public sector data that have not been published on an open data platform; and establishing open data policies as well as policies or directives on government data classification. Reuse of private intent data should be improved by encouraging open data licenses between private firms, promoting data portability right for individuals, and strengthening public-private partnership to utilize the digital ID system.

At the regional level, there are a number of multilateral arrangements to facilitate cross-border data flows. These include the RCEP provisions on e-commerce and the ASEAN e-Commerce Agreement. The effectiveness of these arrangements depends on the extent to which regulatory frameworks on data sharing are coherent across countries. Regulatory divergence reduces cross-border data flows, while regulatory convergence increases them. Since ASEAN countries are in the early stage of developing their regulatory frameworks for sharing public and private intent data, policymakers and regulators should embed international best practices into their domestic rule-making procedures and prevent regulations creating unnecessary barriers to cross-border data flows in the future. Meanwhile, ASEAN countries should explore the possibility to establish mutual recognition arrangements and/or harmonize their data-related regulations both within and outside the region. Greater coherent data-related policies should boost e-commerce in regional and international markets.

A key limitation in the present study is that it focuses only on the regulatory frameworks of data enablers to promote trust on data sharing between stakeholders. There are other factors that affect trust on data sharing such as regulatory frameworks of data safeguards. Data safeguards promote trust in the data governance and data management ecosystem by avoiding and limiting harm arising from the misuse of data or breaches affecting their security and integrity. Building safeguards for trusted data use in ASEAN will be a subject for future research. 

ENDNOTES

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[2] eMarketer, Global E-commerce Update 2021: https://www.emarketer.com/content/global-ecommerce-update-2021. Accessed February 25, 2022.

[3] McKinsey Global Institute. 2016. Digital Globalization: The New Era of Global Flows. McKinsey & Company.

[4] eMarketer: https://www.emarketer.com/content/southeast-asia-ecommerce-forecast-2022. Accessed March 3, 2022.

[5] World Development Report. 2021. World Development Report 2021: Data for Better Lives. Washington, DC: World Bank.

[6] World Bank, Data as a Force for Public Good: https://wdr2021.worldbank.org/stories/data-as-a-force-for-public-good. Accessed March 6, 2022.

[7] World Bank, Global Data Regulation Diagnostic Survey Dataset 2021: https://microdata.worldbank.org/index.php/catalog/3866. Accessed February 20, 2022.

[8] Sleek: https://sleek.com/sg/resources/electronic-signatures-are-legal-in-singapore. Accessed February 20, 2022.

[9] McKinsey Global Institute. 2019. Digital Identification: A Key to Inclusive Growth. https://www.mckinsey.com/~/media/mckinsey/business%20functions/mckinsey%20digital/our%20insights/digital%20identification%20a%20key%20to%20inclusive%20growth/mgi-digital-identification-executive-summary.pdf

[10] Chui, M., Farrell, D., Jackson, K. 2014. How Government Can Promote Open Data. McKinsey Global Institute. https://www.mckinsey.com/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/how%20government%20can%20promote%20open%20data/how_govt_can_promote_open_data_and_help_unleash_over_$3_trillion_in_economic_value.pdf

[11] Open Knowledge Foundation, Open Data Handbook: http://opendatahandbook.org/guide/en/what-is-open-data. Accessed February 20, 2022.

[12] Chui, M., Farrell, D., Jackson, K. 2014. How Government Can Promote Open Data. McKinsey Global Institute. https://www.mckinsey.com/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/how%20government%20can%20promote%20open%20data/how_govt_can_promote_open_data_and_help_unleash_over_$3_trillion_in_economic_value.pdf

[13] Government of Singapore: https://data.gov.sg/about. Accessed February 20, 2022.

[14] Federal Enterprise Data Resources of the United States: https://resources.data.gov/standards/concepts/. Accessed on February 23, 2022.

[15] Information Commissioner’s Office of the United Kingdom, Right to Data Portability: https://ico.org.uk/for-organisations/guide-to-data-protection/guide-to-the-general-data-protection-regulation-gdpr/individual-rights/right-to-data-portability. Accessed on February 23, 2022.

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