The Philippines’ Relationship With ASEAN

Posted by Reading Time: 9 minutes

Op/Ed by Bob Shead

ASEAN, (the Association of South East Asian Nations), was founded in 1967 “to strengthen further the existing bonds of regional solidarity and cooperation.”  The Philippines was one of the founding member countries when ASEAN was set up in Jakarta, while the ASEAN Economic Community (AEC), which was implemented in December 2015, has a primary purpose to create one of the largest single market economies in the world, facilitating the free movement of goods, services, and professionals between the 10 member states.  As a result, the Philippines relationship and interaction with ASEAN and its members is of key importance to the bloc.

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ASEAN Philippines Links

ASEAN is one of the cornerstones of the Philippines’ foreign and trade policies.  This is manifested in the Philippines policy to promote a more peaceful, stable, and free South East Asia, through the pursuit of different initiatives, in the policy making, economic, trading and functional cooperation activities.  To illustrate, the Philippines actively participates in the shaping of ASEAN’s regional agenda that will ensure the bloc’s relevance and importance in the international arena.  More importantly, the Philippines has constantly affirmed that ASEAN centrality should be promoted at all times, both in the group’s internal and external dealings, and that ASEAN continues to remain as the driver of regionalism, and act as an interlocutor between competing regional powers.  The underlying agenda of this is the Philippines’ strong support to strengthen a regional order that promotes good behavior, international trade and which adheres to internationally accepted norms and rules for the benefit of the region.  This is in line with the development of the AESAN Economic Community (AEC).  

ASEAN is not a supranational organization but rather a regional association.  The member states remain as the reference point of a regional organization that aspires to be both a political and economic community.   ASEAN, as a bloc, does not have a common foreign policy but strives to achieve a common position in issues that affect the region. 

The policy direction taken by the respective member-states is shaped by and grounded on their national interests and agenda.  This has led to friction between countries in ASEAN.   Due to different political, economic, and sociocultural systems of the ten members, there are instances when the member-states take on varying and conflicting positions on issues.  Given this context, the Philippines has to maintain a delicate and diplomatic posture in its relations with other member states, in order to push forward its interest, in particular in sensitive issues like protection and promotion of human rights, democracy, economic and trading issues, territorial and maritime issues, plus other complicated relationship problems.  

There are instances where there is no alignment of interests and agenda, leading to the Philippines, along with other ASEAN member states, tend to take the lowest common denominator, in order to have consensus on issues so as to arrive at an agreement.   Additionally, the Philippines recognizes that there exist differences in the perception and threat analysis that confront the member states.   This was last exemplified in the 2012 ASEAN Foreign Ministers Meeting debacle, where there was a failure to issue a Joint Communique. 

Alongside the multilateral framework in the conduct of Philippine-ASEAN relations, there is also a strengthening of the bilateral and trading ties with fellow member states that happens in parallel.  There is a convergence of national interest, specifically in the traditional security issues, which could be brought about by perceived common threat in the regional environment.  For example, the Philippines and Vietnam have elevated their bilateral ties to that of a strategic partnership.  In a statement released by the Philippine Department of Foreign Affairs following the conclusion of the first meeting of Philippines-Vietnam Joint Commission on Concluding a Strategic Partnership, the two sides “on the basis of amity, mutual respect and cooperation, the bilateral relations are growing in various aspects, including in political, trade and investment, fisheries, marine and oceanic affairs, defense and security cooperation, among others.”   The improvement in the relations between the Philippines and Vietnam is worth noting, given the minimal interaction in the past.   This was originally due to the fact that both countries were members of ASEAN, with the same problems.  Consequently, trading relations between the two countries have also improved.

ASEAN-EU links

The ASEAN Economic Ministers (AEM) and the EU Trade Commissioner met on 10 March 2017 in Manila, for the 15th AEM-EU Trade Commissioner Consultations.  These Consultations were co-chaired by H.E. Ramon Lopez, Secretary of Trade and Industry, of the Philippines, and H.E. Cecilia Malmström, EU Trade Commissioner.  The AEM and the EU Trade Commissioner noted the strong trade and investment in 2016, and the EU remained the largest external source of Foreign Direct Investment (FDI) flows into ASEAN in 2015 with € 23.3 billion.

ASEAN-US links

Recently the US Ambassador to the Philippines, Ambassador Sung Kim hosted a dinner reception at the US Embassy Residence to celebrate 40 years of US-ASEAN relations.  In his address, these were the main points covered:

It all began in 1977 when the US started engaging with the Association of Southeast Asian Nations as a “dialogue partner” to explore areas of cooperation in terms of trade and investment, technology transfer and other areas for mutual economic growth and development.  The partnership is also focused on supporting economic integration, promoting opportunities for women and addressing transnational issues and challenges. 

The US, in fact, was the first non-ASEAN nation to name an ambassador to the regional bloc in 2008, after which a dedicated mission to ASEAN was established in Jakarta, Indonesia.  In the last five years, some $4 billion has been spent by the US on various development projects aimed at benefiting the constituencies of ASEAN member-nations.

This year also happens to be the 50th year of ASEAN, with the Philippines holding the rotating chairmanship.  Certainly, a lot of interest and scrutiny is being placed on the relationship between the US and ASEAN considering recent developments such as the withdrawal of the US from the Trans-Pacific Partnership (TPP) trade deal.

Ambassador Kim also said that the US will continue to promote free trade and is looking at bilateral free trade agreements between member countries of ASEAN, including the Philippines.  

However, former Philippine Socio-Economic Planning Secretary Cielito Habito has suggested that a bilateral deal between the US and ASEAN as a “single party” may be preferable, since a number of the member nations do not have an FTA with the US.  Many are confident, however, that the relationship between ASEAN and the US will continue to flourish for continued peace and stability in the Asia-Pacific region.

Philippines and Indonesia relations – as the HQ for ASEAN

The Indonesia and Philippines relationship have been traditionally close for many years and this relationship has grown stronger during the history of ASEAN, and its established HQ in Jakarta. The two countries are very close allies, and both have supported each of their policies in the region such as democracy and the maritime law in the South China Sea.  Since diplomatic ties were officially established in 1949, Indonesia and Philippines enjoy a cordial bilateral relationship.  Both countries have established embassies in each capital, Indonesia has their embassy in Manila and consulate in Davao City, while Philippines has their embassy in Jakarta and consulate in Manado and Surabaya.  High rank stately visits have been conducted for years.

Additionally, both nations are the founders of ASEAN and the members of the Non-Aligned Movement and APEC.  Both countries are members of the East ASEAN Growth Triangle together with Brunei Darussalam and Malaysia in the BIMP-EAGA.  Both countries are mainly composed of islands.

Bilateral trade has trended positively in recent years.  According to the Indonesian Ministry of Trade, trade has increased from $1.12 billion in 2003 to $2.9 billion in 2009, and $3.89 billion in 2010.  Indonesia is currently the Philippines’ biggest supplier of coal, exporting about 70% of the Philippines’ coal imports.  Although as of June 2016, Indonesian coal exports to the Philippines are currently on a moratorium due to the growing concern of piracy in the Sulu Sea.

BIMP-EAGA

BIMP-EAGA (Brunei, Indonesia, Malaysia, and Philippines – East ASEAN Growth Area) was launched in 1994 as a co-operation initiative by Brunei Darussalam, Indonesia, Malaysia and the Philippines, all of which are member countries of the regional Association of Southeast Asian Nations (ASEAN).  The objective behind the creation of BIMP-EAGA is to accelerate economic development in the four countries’ “focus areas” which, although geographically distant from their national capitals, are in strategic proximity to each other, in one of the world’s most resource-rich regions.  The BIMP-EAGA initiative is market driven and operates through a decentralized organization structure involving the four governments and the private sector.

BIMP-EAGA co-operation aims to increase trade, tourism, and investments inside and outside the sub-region by:

Facilitating the free movement of people, goods, and services

Making the best use of common infrastructure and natural resources

Taking the fullest advantage of economic complementation  

BIMP-EAGA covers a land area of 1.6 million square kilometers and has a combined population of 57.5 million.

It comprises the following focus areas – the entire Sultanate of Brunei Darussalam,  the provinces of Kalimantan, Sulawesi, Maluku, West Papua and Papua in Indonesia; the states of Sabah and Sarawak, and the federal territory of Labuan in Malaysia; the island of Mindanao and the province of Palawan in the Philippines.

This sub-region has exceptional natural resources, encompassing two of the world’s largest rainforests (in Borneo and Papua), and biodiverse marine systems in the South China Sea, Celebes Sea, and, Sulu Sea.

BIMP-EAGA has a long history of participation in the global economy, stretching back to the silk route and spice trade between Europe, China and other parts of Asia.  EAGA supplies the export markets of ASEAN, North and South Asia, and the Middle East, following the expansion of its air, shipping, and land transport links, and the development of investment incentives.

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Conclusion

The Philippines remains a strong and founding member of the ASEAN grouping, however, the many differing political differences do create problems within the organization.  It would appear that trading relations will become the most important aspect of ASEAN and the Philippines relationship.

The group has spurred economic integration, signing six free-trade agreements with other regional economies.  Yet various experts say that ASEAN’s impact is limited by a lack of strategic vision, diverging national priorities, and weak leadership.  ASEAN’s biggest challenge is negotiating a unified approach to China, particularly in response to its widespread maritime claims in the South China Sea.  Another important aspect is the United States still sees ASEAN as vital to the success of its strategic rebalance and strategic relationship, both politically and economically with Asia.  Likewise, other trading groups and nations, the EU, Russia, Australia, Japan etc, also regard ASEAN as essential in maintaining the trading strength of the individual member states of ASEAN.

Foreign investors should especially be on the look out for infrastructure development projects further linking the Philippines to the rest of Asia, while the Philippines itself is positioning itself both as a BPO service center for ASEAN (and to some extent, China) and as a light manufacturing alternative to Chinese based production. 


About
 Us

Bob Shead is Asia Briefings Philippines Correspondent and is based in Manila. He has 25 years experience as a diplomat in Asia.

Asia Briefing is produced by Dezan Shira & Associates, a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing throughout Asia. For assistance with foreign investment matters in the Philippines, please email philippines@dezshira.com or visit www.dezshira.com.

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