ASEAN-EU FTA: Why Restart Negotiations Now?

(Photo: European External Action Service, flickr.com)

Nanthini Sambanthan – Regional Content Writer, Southeast Asia

On July 14 2018, Singapore Prime Minister Lee Hsien Loong announced that the EU and ASEAN had agreed to restart the processes of establishing a Free Trade Agreement (FTA) between the two regional organisations. Although negotiations between the two to revive the long-stalled FTA began in 2017 during the 2017 ASEAN Economic Ministers-EU Trade Commissioner Consultations, it was uncertain that these negotiations would bear fruit. This was due in part to difficulties such as the sheer heterogeneity of the ASEAN states and their human rights problems, which had led to the original ASEAN-EU FTA negotiations being abandoned in the first place. However, judging by the resumption of the negotiations, the benefits of having an ASEAN-EU FTA now seem to outweigh these difficulties.

Launched in 2007, the ASEAN-EU FTA was intended to be the crown jewel of the region-to-region integration effort between two of the oldest regional organisations and a proof of the success of multilateralism. However, after 2 years of unfruitful negotiations, the process was deemed futile, at least on the side of the EU, and abandoned in favour of engaging in bilateral FTA negotiations. Out of these negotiations, the EU-Singapore FTA (EUSFTA) and EU-Vietnam FTA have been concluded as of October 2018, with the rest still in progress. These more symmetrical ‘new-generation’ FTAs seem to have achieved, or at least re-opened, a path in which both the EU and ASEAN see the potential of a successful conclusion to a region-to-region free trade agreement.

The question is, why? Why restart a process that was stalled for nearly 10 years, and more importantly, why now? To this question, the most glaring, and perhaps most obvious, answer that might come to mind is Brexit and that which made it possible. In other words, the rising tide of nationalist and anti-globalist sentiment that seems to have taken root in the world may have prompted the EU and ASEAN, both shining beacons in the pro-multilateralism camp, to attempt to form a bulwark against such sentiments. These populist, nationalist movements exist not just in the Western world, where they are very much publicised, but also in Asia, albeit in a more contained form. As such, an FTA between these two regional organisations would act as proof of the advantages of multilateralism, and therefore globalism.

The benefits to having an ASEAN-EU FTA are numerous and advantageous to both sides. For ASEAN, the EU is still the region’s largest investor and its 2ndlargest trading partner. For the EU, ASEAN is the world’s 7th biggest economy with more than 622 million people and a rapidly expanding middle-class consumer base. ASEAN states will gain an additional foothold in the world’s 2nd largest economy, and EU transnational companies will have increased opportunity to invest in a region with a worth of more than $2.6 trillion. Of course, this is if the negotiations between the 28-, soon to be 27-member state EU and the extremely heterogeneous 10-member ASEAN is successful.

Several obstacles stand in the way of successful negotiations for an ASEAN-EU FTA, chief of which is the issue of human rights. The EU is known not just for its trade prowess, but also for its promotion of human rights globally, especially in the last two or three decades. With the adoption of the Lisbon Treaty, the EU also has a legal obligation to consider human rights and other ‘social policies’ while deciding on trade policy, not just a moral obligation to do so. However, human rights have continued to be an issue for several ASEAN states such as Myanmar, Malaysia and Thailand. Recent high-profile human rights cases in the news include the caning of two women alleged to have been caught having ‘homosexual intercourse’ and the cases of ethnic violence against the Rohingya peoples as well as the people of Myanmar’s Karen state. However, this issue of human rights may not be the death-blow to the current ASEAN-EU FTA negotiations that it might previously have been due to changes in certain circumstances. For one, the ASEAN states are no longer dismissive of the entire concept of human rights. They have begun to acknowledge the importance of human rights for the long-term progress and prosperity of the region, as can be seen with the creation of the ASEAN Intergovernmental Commission of Human Rights (AICHR). Although this may be dismissed as simply ‘lip-service’, it is nevertheless an encouraging sign in a region which has long held the view that human rights are a Western construct and thus, not relevant to them.

Moreover, these more symmetrical ‘new-generation’ FTAs that the EU has concluded with Singapore and Vietnam, and is still negotiating with other ASEAN states, are perhaps more suited to dealing with an entity such as ASEAN. These bilateral FTAs could be viewed as practice rounds for the end goal of an ASEAN-EU FTA. The process of negotiating with each other would enable both sides to get an idea of the nuances of each of the countries involved, an issue particularly important when one looks at the extremely heterogeneous nature of almost every aspect of the ASEAN states and how that heterogeneity was a key factor in the failure of the previous FTA negotiations. These new-generation FTAs would also allow the EU to deal with the human rights issue in a manner that would not affect its trade interests. The previous FTAs contained strong conditionalities, which emphasised human rights and democratic practices, and allowed for the EU to unilaterally suspend trade privileges should they not be met. On the other hand, the current FTAs such as the EUSFTA and the EU-Vietnam FTA tend to be much more collaborative. For example, unlike with previous FTAs, the EU no longer has the right to unilaterally revoke trade privileges. Moreover, both parties to the FTA, not just the EU, will decide upon the definitions of certain key terms in the contracts such as ‘civil society’. Considering that ASEAN is a consensus-based organisation made up of states that are extremely protective of their sovereignty, these new-generations FTAs, in which both parties are seen as equals, seem much more likely to succeed.

Bilateralism is a not an effective enough solution in a world so beset by transnational problems. This was a founding principle of both ASEAN and the EU, and one that continues to hold true today. This ‘reboot’ of the ASEAN-EU negotiations is simply a new way of upholding this principle, despite, or perhaps in spite of, the current anti-globalist sentiments that are rocking the West. As the power balance between the two regions slowly equalises, they are more likely to be able to reach a conclusion in this collaboration without compromising on certain core values—ASEAN and its sovereignty, the EU and its balancing of trade policy and moral obligations. The difficulties which effectively derailed the FTA negotiations in 2009 seem to be less of an impediment in 2018, not just due to this global context, but also due to the amendments that have been made in the trade instrument itself, such as the ‘new-generation’ EU FTAs which have already proven successful with more than one ASEAN member state. Although these changes may not be enough to overcome the difficulties of negotiations held between very heterogeneous countries, regions and organisations, they are nevertheless an encouraging sign of the willingness of both parties to compromise in order to succeed.