International Journal of Multidisciplinary Thought,

CD-ROM. ISSN: 2156-6992 :: 06(01):227–238 (2017)

COMPARATIVE ANALYSIS BETWEEN THE ASEAN ECONOMIC

COMMUNITY AND EUROPEAN UNION IN THE FIRST STAGE

Caria Ningsih

Indonesia University of Education, Indonesia

ASEAN members have done efforts together to achieve an ASEAN Economic Community (AEC) by
2015. The goal is a single market and production base. In the other hand, as well known, European
Union (EU) has developed an internal single market through a standardized system of laws that apply in
all member states. This research aims to analyze the similarities and differences indicator between AEC
and EU in the first stage. Then, doing analysis on the possibilities of EAC becomes a single market in
the future. As a result of varieties factors, writer find that these blocs have different stages of market
integration moving towards very different final products, because they pursued the goals with extremely
different contexts shaping of their efforts. Hence, it may not be wrong to assert here that the AEC is
merely promoting market integration to improve the sales of products produced by the developed world.
However, the legacy of colonialism and the lack of domestic structures in East and Southeast Asia,
among other factors, will remain obstacles for AEC to promote a single market as EU-style economic
and political integration in the future.

Keywords: Comparative, AEC, EU, Single market.

Introduction

The ASEAN Free Trade Area (AFTA) agreement was signed in Singapore, 28 January 1992. Previously,
AFTA agreement was originally signed by ASEAN six members, namely, Indonesia, Brunei, Malaysia,
Philippines, Thailand and Singapore. Then, Vietnam joined in 1995, Laos and Myanmar in 1997 and
Cambodia in 1999. Recently AFTA is consist of the ASEAN ten countries. All the four late comers were
required to sign the AFTA agreement for joining ASEAN, but were given longer time frames to
implement AFTA’s tariff reduction obligations. The AFTA primary goals are to increase ASEAN’s
competitive edge as a production base in the world market through the tariffs and non-tariff barriers
elimination within ASEAN, and attract more foreign direct investment to ASEAN.
AFTA does not apply a common external tariff on imported goods. Each ASEAN member may
impose tariffs on goods entering from outside ASEAN based on its national schedules. However, for
goods originating within ASEAN, ASEAN members are to apply a tariff rate of 0-5 percent (the more
recent members of Cambodia, Laos, Myanmar and Vietnam, also known as CMLV countries, were given
additional time to implement the reduced tariff rates). This is known as the Common Effective
Preferential Tariff (CEPT) scheme. Furthermore, ASEAN members have worked together to achieve an
ASEAN Community by 2015. In January 2007, during the ASEAN Summit in Cebu, Philippines, the
deadline to realize the AEC was brought forward by five years to 2015 (ASEAN Secretariat, 1997; 2003a;
2007a). December 2015 was a milestone in the ASEAN economic cooperation history as the leaders of


227
228 Comparative Analysis Between the Asean Economic Community and European Union ...

the ten Southeast Asian, that economies announced the ASEAN Community formation. The idea of an
ASEAN Community was first conceptualized in 1997 as a part of ASEAN Vision 2020, which comprised
of the three pillars of the ASEAN Security Community (ASC) 1 , the ASEAN Economic Community
(AEC) and the ASEAN Socio-cultural Community (ASCC). The following in ASEAN Summit in Bali,
2003, ASEAN leaders declared the establishment of an AEC by 2020.2 The goal of the AEC, is a single
market and production base, in which there is a free flow of goods, services, investment, and skilled labor,
and a freer flow of capital, along with equitable economic development, and reduced poverty and socio-
economic disparities in year 2020.
In the other hand, the European Union (EU) has developed an internal single market through a
standardized system of laws that apply in all member states. The EU traces its origins from the European
Coal and Steel Community (ECSC) and the European Economic Community (EEC), formed by the Inner
six countries in 1951 and 1958, respectively. As custom union, EU applied a common external tariff on
imported goods. In the intervening years, the community and its successors have grown in size by the
joining of new member states, become 28 member countries and in power by the addition of policy areas
to its remit.
EU policies aim to ensure the free movement of people, goods, service and capital. Enact legislation
in justice and home affairs, and maintain common policies on trade, agriculture, fisheries and regional
development. The monetary union of EU was established in 1999 and came into full force in 2002. It is
currently composed of 19 member states that use the euro as their legal tender.
Tom Benner (2015) noted that Southeast Asia set to become a new EU, but skeptic said that
European Union-style economic integration will be difficult to achieve by ASEAN. Moreover, Michael G
Plummer (2006) mentioned that the economic integration in Europe stands in contrast to the ASEAN
process.
Based on the background issues that have been described, it is very interesting to do a Comparative
Analysis between ASEAN Economic Community (EAC) and European Union (EU) in the First
Stage.

Research Objectives

Based on this background, the objectives to be achieved through research are:

1. What are the similarity and difference indicators between ASEAN Economic Community (AEC)
and European Union (EU) in the first stage?
2. Is AEC become a single market in the future?

Method

This study is based on previous research articles and secondary resources in order to identify those issues
and analyze their importance. Furthermore, this paper will focus on three major theoretical frameworks
which have been used to analyze both the EU and ASEAN; specifically theories that address institutional,
normative, and regional political differences in the two regions, according to Zoë Bollinger (2014, p. 13)
that are contained three aspects namely institutional structural; the role of regional politic; and the
dynamics of regional trade. SWOT analysis is used to measure the possibilities of AEC become a single
market in the future.


1
This pillar is later known as ASEAN Political and Security Community (APSC).
2
This is known as Declaration of ASEAN Concord II or Bali Concord I
 Caria Ningsih 229

Result of Aspects Analysis

The Institutional Structure in the EU and ASEAN

One of the main differences between the EU and ASEAN is their institutional structures. The European
Union has set up a unique institutional with supranational institutions empowered to set the agenda for the
Union, and in certain cases the institution authority over the governments of the member states
themselves. The EU has three core institutions that are: European Commission, European Parliament, and
European Union Council. The Commission is consist of 27 commissioners that representing the Union
interests as a whole, and originates all legislation of the EU. The European Parliament has a unique level
of supranational democracy, in which members of parliament directly elected every five years and the
position base on party rather than nationality. Finally there is the European Union Council which is
representative of the member states governments. It is consist of meetings of national ministers to discuss
relevant policy areas (Treaty of Lisbon, 2008, & TFEU, 2010). Beside these three core institutions, there
are two other European Institutions that task in terms of shaping the trajectory integration of European
regional. First, the European Council is compiled of the each EU country heads states, but has no formal
law making authority. Second, the European Court of Justice supervises the interpretation of EU law, its
enforcement, and settles inter-state disputes (TFEU, 2010). These institutions reflect an extensive degree
of supranational authority adequate to drive economic integration forward through a variety of
approaches.
European Parliament is rarely referred to as a major player in economic integration in Europe, a role
generally attributed by the commission and the court; it does have one very important effect, because. it is
a representative institution, incorporating the will of the citizens of European member states into the
decision making process for the future of Europe and economic integration in the EU.
On the other hand, ASEAN took a quite different institutional approach, specifically in promoting an
organizational structure based on informality and minimal institutionalization. The ASEAN institutional
structure centers have been built by a set of committee and summit meetings. At the core of the system is
the ASEAN Summit composed of the heads of state of all of the ASEAN governments who make key
decisions at bi-annual meetings. The ASEAN Summit is supported by the ASEAN Coordinating Council
made up of ASEAN Foreign Ministers and the ASEAN Community Councils that consist of three pillars
of ASEAN. The ASEAN Community Councils also supervise the ASEAN Sectorial Ministerial Bodies:
the ASEAN Political-Security Community Council, the ASEAN Economic Community Council, and the
ASEAN Socio-Cultural Community Council (Association of Southeast Asian Nations [ASEAN] Charter,
2007). These committees are supplemented by two permanent ASEAN bodies. First, the Committee of
Permanent Representatives based in Jakarta consists of appointed ambassadors from each country that
collaborate to implement the decisions of the Sectorial Ministerial Bodies. Finally, there is the ASEAN
Secretary General and Secretariat overseeing the administration and day to day work of ASEAN’s
programs and objectives (ASEAN Charter, 2007).
Base on the ASEAN structure, the citizenship is absent in the committee legitimization, in which
there is no representative body, where ministers and permanent representatives are government
appointees. Thus the legitimacy to alter national regulations based on supranational authority would be
quite difficult in ASEAN, and almost impossible to represent as the people aspiration. Given these widely
disparate approaches to institutional structures, ASEAN has produced different approaches to economic
integration.

Decision Making Rules

Assigning the forward momentum and trajectory of regional integration is depending on decision for
making rules and norms. Both the EU and ASEAN began with decision rules based heavily on consensus.
For example, the Council of the European Union previously required unanimous voting for many of its
decisions, especially those relating to the Common Market (Treaty of Rome). However, in the beginning
230 Comparative Analysis Between the Asean Economic Community and European Union ...

the potential issues of unanimous decision making had confronted the EU. EU adopted The Single
European Act in 1986 to overcome this deadlock, moving from a system of unanimity to a system of
Qualified Majority Voting (QMV) with regards to many common market issues (Single European Act,
1986). Voting procedures have modified in all areas of EU governance with the Lisbon and Nice Treaties
adding additional measures to the list of issues to be determined by QMV. After the improvement of its
decision rules, European level institutions have become productive; it was making more than 1,000
decisions annually (Figure 1).

Figure 1.

ASEAN also began with a unanimity based approach for institutional decision making, mention to its
specific methodology as “consultation and consensus.” All member states completely support this system
and the minority view cannot be defeated by the majority. However, unlike the EU, ASEAN has not
moved radically away from unanimity, continuing to hold it as a heart value and essential part of the
‘ASEAN Way’. There have been some improvement and explanation to decision making procedures with
the implementation of the 2007 Charter. Chapter VII noted decision making and unanimity in Article 20
stating, “As a basic principle, decision-making in ASEAN shall be based on consultation and consensus”
(ASEAN Charter, 2007). However, the new Charter had produced the possibility of requiring decisions to
be made via other means adding, “Where consensus cannot be achieved, the ASEAN Summit may decide
how a specific decision can be made” (ASEAN Charter, 2007). The most important note was contained in
Article 21, paragraph 2, which implemented a new flexible participation procedure specifically for
economic commitments via the, “ASEAN minus X” formula. If there is consensus to utilize it, a portion
of ASEAN members can move forward with economic measures, while allowing others to implement
them more slowly (ASEAN Charter, 2007). It should be considered that the proposed ASEAN minus X
approach has similarities with differentiated approaches to integration seen in the EU, including proposals
for a “two-speed Europe” and the potential for states to choose membership to individual aspects such as
the Eurozone, or the Schengen Area (Dyson & Sepos, 2010).
The difference in decision making procedure is one of the core reason for the differences in progress
toward market integration. Because a consensus based system can be brought all progress to only by a
single participant. As the economic integration process is not mean an easy or comfortable one for
countries involved, requiring extensive and frequently radical improvement of existing policies and
economic systems, this is highly risky. If all improvement only by a single participant is faced with a
decision that they do not want to make, the progress will be slow at best and often non-running, it was
happened with the EU throughout the late 1960s and 70s. By maintaining its core values of consensus
based decision making, ASEAN has preferred to choice value of its normative identity and process based
approach of the ASEAN Way over more rapid progress towards integration. It is not to say that either
method is superior, but consensus based systems will make slower progress due to the time necessary to
reach agreement on each topic. As a result, when the EU moved away from consensus based decision
making, it could pursue more rapid integration compared with the approach maintained by ASEAN.
 Caria Ningsih 231

Rule of Law and the Judicial Remedy

The other key institutional difference between the EU and ASEAN is seen through rule of law and the
measures and institutions in place to supervise national implementation of supranational decisions.
The EU has established European Court of Justice (ECJ) with its task to ensure the implementation
of the treaties and directives, thus it created a judicial remedy for constitutional disobedience. The ECJ is
an influential and historically frequently overlooked institution, with a wide variety of functions that have
played a key role in shaping the process of economic integration in the European Union. In addition to
interpreting EU law and evaluating their suitability with the treaties, the ECJ is also tasked with
determining whether national governments have fulfilled their obligations under EU Law.
Schmidt, 2012, noted that the national governments of EU member states can be punished by a
supranational authority for constitutional disobedience is evidence of a level of delegation of authority. It
is far beyond with what ASEAN has decided to pursue. ASEAN has selected to emphasize a normative
value set and a process rather than the result, while the EU became increasingly result oriented as it
progressed.
Furthermore, Hew, et.al (2005) and Kawai (2005) mentioned that the ASEAN system based on non-
interference in the affairs of its member states prevent a judicial remedy that would require states to
change their behavior to come into line with supranational regulations. ASEAN is a regional organization
that avoids conflicts; economic cooperation is a means to achieve this objective. Moreover, the ASEAN
governments notice that the economic cooperation will be beneficial for individual member states with no
extra costs, especially in delegating sovereignty to supranational institution and the risk of interference in
domestic affairs. Being a part of ASEAN support the member states to pursue their national interests.
Some scholars impress that ASEAN’s decision to keep non-interference comes out of a history of
colonialism, which was not present for the EU. As nations that had once lost control of their national
decision making processes to a colonial power, they have been reluctant to delegate hard won sovereignty
to another supranational power, even one of their own creation. Mohamad Faisol Keling, 2011, noted that
ASEAN declared to create peace and political stability in Southeast Asia and avoid political and military
intervention from superpowers like the United State, China, and Russia in the region.
However, the set of decisions had a major effect on the speed progress of economic integration. In
Europe, the ECJ attack national barriers disturbing the implementation of the four freedoms. When such
measures must be negotiated on a case by case basis, the process is accordingly slower.
There is also the issue of supranational rule of law and its implementation through institutions. The
EU empowered the ECJ as a judicial remedy for constitutional disobedience and allowed it to set legal
precedent for the EU. As a result, progress towards a single market by the ECJ was able to act as the force
for further progress, because the ECJ required a significant delegation of authority to the supranational
level. In the other hand, ASEAN choose to take a different approach with a policy of non-intervention on
the national level, thus states cannot be held accountable by the power of supranational decisions. These
two approaches of the formulation of institutions and their capacities is one of the major contributing
factors the differences between the paths towards economic integration, and particularly the formulation
of a single market, pursued by the EU and ASEAN. (Zoë Bollinger, 2014).

The Role of Regional Hegemons

The external context regional also plays an important role for the formation internal dynamics. However
in this regard, the EU and ASEAN also developed in strikingly different regional contexts. The EU grew
on the foundation of the Franco-German axis designed to integrate a regional power that had been a past
source of contention. ASEAN, on the other hand, represented a small set of post-colonial nations uniting
in the face of major external powers. This contrast between internal and external hegemons has been
particularly important in shaping the directions of these two regions.
The roots of the European Union stretch out the European Coal and Steel Community and the idea of
regionalizing factors of production, firmly rooting Germany in a peaceful post-war Europe. These
232 Comparative Analysis Between the Asean Economic Community and European Union ...

developments were taped with the 1963 Elyse Treaty or Treaty of Friendship between France and
Germany. Paterson, 2011, noted that the development of the EU has been remained at the heart of the
Franco-German Axis. Many claim that in a union where all members are supposed to be equal, the French
and German presence as internal hegemons gives them influence on shaping the path of the union,
especially in the crisis with Germany’s increasingly central role. But it should be noted the partnership of
Franco-German Axis has had its ups and downs. The partnership began with the founding fathers of the
European project, Jean Monnet and Robert Schuman for France, Konrad Adenauer for Germany. The
relationship continued through the 1970s with the close cooperation of President Giscard d`Estaing and
Chancellor Schmidt leading to the creation of the European Council in 1974 and the European Monetary
System (EMS) in 1979. The next leadership couple appeared in the 1980s with Mitterrand and Kohl
ushering in the Single European Act in 1986. The relationship, with a few hitches, has continued in the
current crisis under the leadership first of Chancellor Merkel and first President Sarkozy and then
President Holland. The partnership has been crucial in EU attempts to address the sovereign debt crisis
for example with Merkel and Sarkozy using their 2010 show of public alliance during the Deauville
promenade to underlie their joint effort to push through the European Stability Mechanism (ESM).
Going back to ASEAN’s history, it is important to note the crucial strategic that pushed the ASEAN
leaders to decide on an AEC. These were the financial crisis of 1997-98, proliferation of FTAs elsewhere
in the world; China’s membership in WTO; fear of investment diversion to bigger and emerging markets
of China and India; importance with linkages with East Asian countries and the desire to play the role of a
‘hub’ in the broader Asian region (ASEAN Secretariat 2003b, Kawai 2005, Sally and Sen2005, Hew et al
2005, Soesastro 2005, Kawai and Wignaraja 2008).
This development of external economic powers could affect ASEAN in two different ways. In one
hand, it reinforces the need for ASEAN countries to act as a bloc in the face of growing larger external
competition. On the other hand, if these external hegemons are viewed as a threat to ASEAN, they are
problematic for two reasons. Different faced by the EU, even with growing euro skepticism, Europe has
not seen the growth of a comparable major external hegemon to be viewed as either a real threat or
alternative to the EU. As a result, ASEAN has not seen the same momentum towards market integration
as was provided for the EU by internal hegemons. In fact, the contrary external hegemons can at worst
directly threaten ASEAN and at best.

Multitude Forum

The next difference in regional political context of the EU and ASEAN is the existence of forum. Basu
Das, 2014, noted that in Asia, there are a variety of regional forums on free trade agreements with many
benefits that could be derived through ASEAN integration. These have been giving member states in the
region the option to choose among forums. Perhaps the greatest threat to ASEAN comes from Asia-
Pacific Economic Cooperation (APEC), which includes 21 Pacific Rim countries including many of the
members of ASEAN. However, the new Trans-Pacific Partnership being negotiated between Australia,
Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States,
again including several ASEAN members, is also a growing viable alternative to ASEAN in terms of
routes for economic integration. Added to that are additional choices including the Comprehensive
Economic Partnership for East Asia (CEPEA) proposed by The East Asia Summit (EAS) and the 2005
Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) between Brunei, Chile, New
Zealand, and Singapore. Moreover, Asia, in this twenty-first century contain group of big powers,
including China, India, Russia and Japan (with the US playing role from across the Pacific) and several
smaller ones, all capable of bringing in instability. Lately, the region has seen competition of mega-
regionals like the China-led East Asia FTA, Japan-led Comprehensive Economic Partnership for East
Asia and the US-led Trans-Pacific Partnership, each of them trying to economically influence the Asia-
Pacific region. This was felt to be threatening the ASEAN ‘centrality’, which assumed that ASEAN
instead of the bigger economies like those of China, Japan, the U.S. or India, should be the hub of
developing a wider Asia-Pacific regional architecture.
 Caria Ningsih 233

Importantly nations can forum shop for the best deal on economic integration. Appendix 3 contains a
list of trade agreements that can serve as alternatives to integration through ASEAN. This multitude of
alternatives leaves ASEAN competing with other regional organizations to prove itself as a worthwhile
channel for economic integration.
In Europe, the EU is the only viable regional organization for economic integration, thus when EU
progress has slowed, members have not looked to alternative integration schemes. However, it is not
entirely without competition. The EU faces two similarities to ASEAN’s situation. The first is in the area
of security. The North Atlantic Treaty Organization (NATO) remains at the core of European security and
the Organization for Security and Cooperation in Europe (OSCE) also plays a key role, so there is
competition for the EU’s Common Security and Defense Policy (CSDP). However, it should be noted that
they do not compete directly with EU economic integration. These levels offer opportunities for non-
members to join and also exclude some EU members who have opted-out. There is not a non-EU
alternative viable scheme for regional economic integration available within Europe. In the other hand,
nations in Asia have the very real option of forum shopping.

The Dynamics of Regional Trade

1. Inter versus Intra-Regional Trade

In addition, regional trade flows are another differentiating factor that has contributed to the direction of
economic integration in the two regions. The first effect stems from patterns of intra-regional versus inter-
regional trade.
The European Union has been accounting for more than half of all EU trade extensive intra-regional
trade. It can be seen at figure 2 that intra-EU trade in services made up 56.1% of exported services and
58.4% of imported services in 2010, while internal trade in goods was 63.7% of EU trade in goods
(Eurostat, 2012). This trend also occurs to EU foreign direct investment (FDI). FDI by EU member states
in 2010, 56.1% of total EU-27 outward FDI was to other member states (Eurostat, 2012). This high
concentration of internal trade has had an effect on EU market integration in two ways. First, markets
integration will be easier to where the goods being produced are in demand within the internal market.
Markets integration creates a type of cycle, thus it makes easier and cheaper to internally trade. The
internally trade will increase the incentives, thus further increasing incentives to make trade even easier
and deepen integration.

Figure 2.
234 Comparative Analysis Between the Asean Economic Community and European Union ...

In the other hand, intra-ASEAN trade statistics are much lower than those observed in the EU. In
2010, Intra-ASEAN trade made up only 25.4% of total trade as compared to above 50% for both goods
and services in the EU (ASEAN, 2011). Given these conditions, the remaining barriers to trade in
ASEAN have less negative externalities affecting overall ASEAN trade than similar barriers would have
in the EU at this point, leaving ASEAN with less incentive to pursue deeper integration. It can be seen at
table 1 and figure 3.

Table 1. ASEAN Intra-Regional Trade Levels

2006 2007 2008 2009 2010 2011

Intra-regional Trade Share 27.10% 29.90% 26.70% 25.90% 26.30% 25.90%
Source : ASEAN Merchandise Trade Statistics Database

Figure 3.

2. The Role of Regional Trade Agreements

The second key difference between regional trade dynamics in the EU and ASEAN is the type and
quantity of trade agreements made by the two organizations and their member states.
The EU is party to a wide variety of trade agreements with different countries and regional blocs
around the world, but the EU has structured all of these agreements as a bloc, including all member states
and the other negotiating party. Individual EU member states are not allowed to make agreements
separately from the Union as under EU law such agreements would be considered discriminatory and
anti-competitive. Any agreements between individual member states and other states would be contrary to
the single market tenets and provide an unfair advantage in trade to those states involved. Therefore, all
new free trade agreements would affect the whole bloc trade equally and the benefits would be shared for
all members share.
In contrast, there are no such prohibitions against individual bilateral agreements in ASEAN. In fact,
the number of bilateral trade agreements entered into by Asian nations over the last decade, both inside
and outside of ASEAN, has gone off. The complex system of bilateral trade negotiations have resulted
“noodle bowl” in the region. Between 2001 and 2006 alone, more than fifty trade agreements between
ASEAN members and other countries were being proposed or negotiated (Sen & Srivastava, 2012).
However, the freedom for individual governments to make bilateral trade agreements has not fostered the
increasing of regional trade or economic integration in Southeast Asia. These alternative FTAs cannot be
viewed without considering potential effects on ASEAN economic integration. Thus, the regional trade
environment faced by ASEAN is grossly different from the environment fostering deeper integration in
Europe.
 Caria Ningsih 235

The Possibilities of AEC to become Single Market in the Future

Economic cooperation and integration of ASEAN has begun modestly in 1977 with the Preferential
Trading Arrangement and a number of industrial cooperation schemes. Economic integration has started
by the 1992 ASEAN Free Trade Area (AFTA) that covers trade in goods, complemented by the 1995
ASEAN Framework Agreement on Services (AFAS) and the 1998 ASEAN Investment Area (AIA)
agreement. In 2003 it was agreed to deepen economic integration with the formation of the ASEAN
Economic Community (AEC), to create a unified market and production base via a free flow of goods,
3
services, foreign direct investment, skilled labor, and a freer flow of capital. In going forward, a SWOT
analysis of ASEAN’s current strengths, weaknesses, opportunities, and threats are shown below:
ASEAN strengths. Strategically located in dynamic Asian region; generally robust economic growth;
good macroeconomic fundamentals (especially among Indonesia, Malaysia, Philippines, Singapore,
Thailand and Viet Nam, known as ASEAN6); market of 600 million people; abundance of natural
resources and biodiversity; wide-ranging productive capabilities (in agriculture, manufacturing, and
services); diversified exports by destination and product; mostly young, growing populations and
expanding middle class; strong foreign direct investment (FDI) with strong production networks;
progressive open trade and investment regimes; strong track record of regional cooperation.
ASEAN weaknesses. Development gaps between and within members in income, human capital,
institutions, and infrastructure and the absence of regional distributive mechanisms; disparities in
good governance and the rule of law; disparities in population growth and population aging, that
together with disparities in economic growth lead to large labor deficits and surpluses among
countries that spurred cross-border illegal migration; slow decision making and even slower
implementation of AEC commitments due to need for consensus building and slow progress in
domestic reforms; weak ASEAN Secretariat with inadequate human and financial resources; weak
links between ASEAN and sub-regional programs such as the Greater Mekong Sub region (GMS)
and ASEAN growth triangles; political economy challenges to the next step of economic
integration, i.e. towards an ASEAN Customs Union (ACU) post-2015.
ASEAN opportunities. Central strategic location, with high market potential in the PRC and India;
strong historical, cultural links throughout Asia; strong economic links with ASEAN+1 FTA
markets in Australia, New Zealand, the PRC, India, Japan and the Republic of Korea; potential
development of region-wide FTA with the PRC, Japan, the Republic of Korea, India, Australia and
New Zealand (RCEP); and rapidly rising middle class; deep manufacturing and technology links
with Northeast Asia; financial cooperation with PRC–Japan–Republic of Korea in reserve pooling
through the multilateral Chiang Mai Initiative (CMIM); and surveillance through ASEAN+3
Macroeconomic Research Office (AMRO).
ASEAN threats. Political–security conflicts in Asian region arising from unresolved intra- and extra-
regional territorial disputes; vulnerability of export dependent economies to external shocks from
US and Europe; rise of the PRC and India overshadow ASEAN relevance; lack of effective
regional cooperation on climate change, water-energy-food security, and disaster management
(drought, floods, earthquakes, volcanic eruptions).
Particularly, for deeping its economic integration, AEC faces to its political economy challenges in
the feasibility of the ASEAN Economic Community (AEC) moving forward to the next step of economic
integration, i.e. towards an ASEAN Customs Union (ACU) post-2015. Effectively, the way to progress
towards an ASEAN custom Union is by forming it among ASEAN-9 members with Singapore
maintaining its existing zero tariffs against non-members, thereby creating a Partial ACU. Moreover,
institutionalization of regional market integration projects of ASEAN, that only base on a unanimity
approach to institutional decision making, referring to its specific methodology as “consultation and
consensus”, will make slowly moving for AEC to become a single market.

3
The AEC was complemented by the ASEAN Political–Security Community and the ASEAN Socio–Cultural
Community.
236 Comparative Analysis Between the Asean Economic Community and European Union ...

Conclusions

The European Union and ASEAN both set out with markedly similar goals to create a single regional
bloc. Both organizations were formed in the wake of the extended violence of WWII, and in ASEAN’s
case colonialism as well, and were aimed at creating peace in their respective regions through regional
interconnectedness. Both blocs also chose to pursue market integration to improve economic
competitiveness vis-à-vis their neighbors and other regional and global hegemons. They set out the same
long term goals, including freedom of movement for goods, services, capital and labor.
However, they pursued these goals with extremely different contexts shaping their efforts. As a
result of a variety of factors, writer now find these blocs in different stages of market integration moving
towards very different final products. The goal of this paper is not to pass judgment upon either region or
to rank their efforts or successes, but rather to analyze the factors that affect how regional market
integration is achieved and consider their effects in shaping the trajectories of these two cases. The
institutionalization of regional market integration projects is a core factor in shaping their long term
prospects. In this area, the EU and ASEAN made vastly different choices.

Acknowledgement

The authors wish to acknowledge the guidance of Associate Professor Mason Richey.

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