Download Europe and Asia

Economic Relations between Europe
and Asia in the context of the ASEM
Paul Isbell
Senior Analyst
International Economy and Trade
“II Forum Asia” Casa Asia
Barcelona Nov. 22-23, 2004
Background to ASEM
End of Cold War (late 80s-early 90s)
Shift from bipolar to multipolar intl. system
Three principal pillars of world system (nearly
90% of world GDP)
United States (and increasingly the Americas)
Asia
Europe
Emergence of Regionalisms (EU, NAFTA,
ASEAN and broader Asian and American
integration processes)
Background to ASEM
Emergence of “inter-regionalisms”
Traditional: Transatlantic relationship, renewed in
1990 with the beginning of the Transatlantic
Dialogue (TAD) Goals: to eliminate non-tariff
barriers to trade and barriers to services trade
New forms: Asia Pacific Economic Forum
(APEC) beginning in 1989 and now with more
than 20 member states. Bogor Goals: to achieve
free and open trade by 2010 and 2025 in the
context of “open regionalism”
Background to ASEM
The Euro-Asian relationship: The “weak link” in
the new triangular core of the world system
Transatlantic and Transpacific links denser
No formal inter-regional dialogue or grouping between
Europe and Asia
Enormously growing potential
Economic emergence of Asia
Trend toward regionalisms in Asia
Potential for more efficient inter-regional dialogue
Potential Advantages: deeper economic links,
political dialogue to help other international fora,
mutually beneficially re-balancing of intl. system
The Birth of Asia Europe
Meeting
Bangkok Summit of Heads of States/Gov (1996)
15 member states of the EU + 7 members of ASEAN +
3 countries of Northeast Asia (China, Korea, Japan)
Goal: Strengthen the inter-regional relationship
Bases: Mutual respect and equal partnership
ASEM V at Hanoi: Official enlargement of ASEM
to include 10 new EU members states + 3 recent
entries into ASEAN (Cambodia, Laos, Myanmar)
Membership now at 38 states + EC (over 50% GDP and
international trade)
The ASEM Process
ASEM remains an “informal dialogue”
Multi-dimensional: political, economic, cultural dialogue
Common ground for non-binding, mutually beneficial
projects and goals (consistent with national sovereignty
and other international commitments)
Incremental in nature and complementary to work and
objectives of existing, more binding international fora
(WTO, Bretton Woods institutions, etc)
To improve efficient functioning of global governance
To facilitate further deepening and broadening of regional
integration in both regions
The ASEM Process
No permanent institutions
By choice, lacks a Secretariat (unlike APEC,
ASEAN)
Rotating national coordinators (existing state
officials)
Bi-annual Summits of Heads of State and Govt.
Annual Foreign Affairs, Finance and Economics
and Trade Ministerial Meetings
More frequent Senior Officials Meetings (SOMs)
ASEM has “come of age”
5 Summits (Bangkok, London, Seoul, Copenhagen,
Hanoi
Over 15 Ministerial meetings, numerous WGs, etc.
ASEM’s Economic Pillar
ASEM’s Economic Pillar
The terrain of the Finance and Economy & Trade
Ministers, and Senior Officials of Trade and
Investment (SOMTI)
Two traditional areas of activity:
Trade Facilitation Action Plan (TFAP) seeks
common ground on reducing non-tariff barriers to
trade by facilitating and streamlining:
-customs procedures, standards and conformity
assessment, public procurement, quarantine and
SPS procedures, intellectual property issues, the
mobility of business people, distribution issues,
and other trade facilitation issues
ASEM’s Economic Pillar
Investment Promotion Action Plan (IPAP)
Investment Promotion Activities
Investment Policies and Regulation
Activities related to the regulatory and legal framework governing
the investment environment
ASEM High Level Dialogue on Key Investment Issues
Investment Experts Group (IEG) have held numerous meetings
since the inception of the IPAP to monitor progress and set future
goals
Weaknesses of ASEM
Process Remains Informal (progress incremental)
Lacks Concrete Goals (undermines perceived
relevance, identity)
Lack of Institutional Infrastructure (lacks continuity)
“Summit Fatigue” (resource overstretch)
Still excludes large parts of Asia (South Asia, Central
Asia, lacks a “Eurasian continuity”)
Asymmetry in Objectives (deeper institutionalization
vs advocates of shallow informal dialogue
Lack of Symmetry in Interest
Between regions (EU vs Asia)
Within regions (France vs UK, EC vs members, SE Asia vs
NE Asia)
The Euro-Asian Economic
Relationship
Europe and Asia: each others’ second most
important inter-regional trade and investment
partner
In each case, some distance behind the United States
and its partners in the North American Free Trade
Association (NAFTA)
Since Asian crisis and emergence of the Euro,
the Euro-Asian economic relationship has
become more significant
In last 25 years, the share of EU imports coming
from the economies of Asian ASEM has risen from
less than 10% to nearly 25%
Euro-Asian Economic
Relationship
Share of EU exports to Asian ASEM has
also increased from less than 7% to nearly
15%
In last 10 years, Euro-Asian merchandise
trade flows have nearly doubled in both
directions, from a combined total of
US$377bn in 1994 to US$567bn in 2003
Euro-Asian Economic
Relationship
From perspective of Asian ASEM, the
relative importance of Europe has declined
somewhat relative to the US since creation of
APEC
Still, on average some 15% of A.ASEM
exports go to EU while on average some 10%
to 15% of imports come from EU
Excluding intra-Asian ASEM trade, these EU
shares would increase to approximately 30%
and 25%, respectively
Euro-Asian Economic
Relationship
Despite recent gains in Euro-Asian trade,
the Euro-Asian economic link remains the
weakest of the three major legs of the
Transatlantic-transpacific-Euro-Asian geoeconomic triangle
Transpacific Asian-North American
merchandise trade is the most significant
(US$647bn combined trade 2003 vs EuroAsian link with US$567bn)
Euro-Asian Economic
Relationship
Transatlantic economic link appears weakest – in
merchandise trade terms – with only US$478bn
combined trade flows 2003
Predominance of transatlantic economy in services
trade and FDI - most important world link
Asian ASEM FDI stock in EU nearly €70bn
EU FDI stock in Asian ASEM members totals some
€110bn
EU stock levels in the US are now approaching
US$1trillion
US FDI stocks in Europe are about US$700bn
EU-US services trade comes to some €225bn, while EUAsian ASEM services trade sums to only €75bn
ASEM Attempts to Deepen
Economic Relationship
Asian Crisis and Creation of Euro: catalysts
London Summit (1998)-Seoul Summit (2000) –
ASEM Vision Group
Headed by South Korean economist Il Sakong, along with
25 experts
A Strategic Vision Report with Recommendations for the
Future of ASEM (over 10 major recommendations)
Free Trade in Goods and Services by 2025
Macroeconomic policy coordination and reform of intl financial
system
Institutional recommendations, including an ASEM secretariat and
a number of theme-specific ASEM centers
Results disappointing, little concrete action taken,
diversions of 9-11 and initiation of Doha Round
ASEM Attempts to Deepen
Economic Relationship
Copenhagen Summit (Sept. 2002)
Preparations overshadowed by sense of drift
Yet optimistic over successful launch of euro
Creation of the ASEM Task Force for Closer
Economic Partnership between Asia and Europe
10 Asian and 7 European independent experts
Tasked to present concrete action-oriented
recommendations for closer economic partnership to
Hanoi Summit
Role of Spain: Rodrigo Rato, European Secretariat
(Elcano Royal Institute, Alfredo Pastor Task Force
Member
ASEM Task Force for Closer
Economic Partnership
Nearly two years of discussions and debate
Revisited many of the themes of the Vision
Group (free trade goal, institutional issues)
Concentrated on Themes referred to in the
Copenhagen Chair’s Statement (wider use of euro
in Asia, further development of Asian bond
markets)
Ambitious concrete recommendations in finance
Broader recommendations aimed at capitalizing on
the Euro-Asian strategic potential
Insistence on institutional dimension
ASEM Task Force for Closer
Economic Partnership
General Recommendations
Goal of Free Trade by 2025
Inclusion of discussions of energy issues as a priority
within the Economic Pillar
Adoption of a common strategic agenda to promote
stability and prosperity in the Euro-Asian landbridge
Concrete, Action-Oriented Recommendations
ASEM Secretariat (even if “virtual”)
ASEM Trade, Investment and Tourism Promotion Center
(even if virtual, to be hosted by Vietnam)
ASEM Business Advisory Council (to increase ASEM’s
relevance to business communities)
ASEM “Yes” Bond Market and Fund
ASEM Task Force for Closer
Economic Partnership
At the Hanoi Summit, ASEM “Yes” Bond Fund and
ASEM Promotion Center captured most attention
of leaders, along with the new proposed energy and
Euro-Asian landbridge priorities.
Task Force Recommendations now in hands of the
Finance and Economy Ministers
The Task Force conceived of European Asian
economic relations in broader terms, beyond flows
of trade and investment, to commonly-held strategic
interests
Future of ASEM
Common Interests, Complementary Needs
Asia: development, stability, more efficient use of Asian
savings, facilitation of SME activity
Europe: broader use of the euro in Asia, development of
SMEs, continued opening of world trade and investment
markets
Energy Issues, Prosperity of Central Asia
Reform in Europe, integration in Asia
ASEM link relevant for international stability and
balance, for strengthening global governance and
multilateralism