Economic union, sea row and terrorism top agenda in Asean summit

KUALA LUMPUR, Malaysia — Leaders of Southeast Asia will formally declare their diverse region is now an economic community that in some ways resembles the European Union, but they have a long way to go before the project becomes fully functional. The declaration will be made at a weekend summit that will also focus on the long-seething maritime rifts in the South China Sea and terrorism.

The 10 leaders of the Association of Southeast Asian Nations, or Asean, will also hold talks with their counterparts from eight other countries, including President Barack Obama. A look at the key topics in the meetings:

Asean community

Asean leaders will on Sunday formally launch the Asean Community that has been 10 years in the making, encompassing three key pillars: economic, political-security and socio-cultural. It will become a formal entity on Dec. 31.

The transformation of the disparate region into a unified market forms the core of the community. The Asean Economic Community, or the AEC as it is known, is aimed at bolstering the region’s economic clout and counterbalance a rising China and an America that is increasingly assertive in Asia. It goes beyond liberalizing trade in goods. Services, investment, skilled labor and capital will also be allowed to move across borders more freely, a landmark step in economic cooperation for the region.

In one key development, easing restrictions on work visas will make it easier for people from one country to seek employment in another, but so far it applies only to eight professions, including medical, accounting, engineering and tourism.

READ: US bank believes in ‘soundness’ of Asean unification

Who are in the community?

Its members are the 10 Asean countries with a total population of more than 600 million people, larger than either the European Union or North America. Asean was set up in 1967 as a bulwark against communism in the Cold War era but it was only in the last two decades that attention shifted to economic integration. A wide economic gulf divides Southeast Asia’s rich and middle income economies — Malaysia, Indonesia, Singapore, Brunei, Thailand and the Philippines — and its four less developed members, communist Vietnam and Laos, Myanmar and Cambodia.

Fundamentals

Unlike the European Union, the 10 members will maintain their economic and financial independence. There will be no central agencies such as a common central bank, parliament or court as in Europe, and no common currency. The AEC is based more on consensus than creating overarching institutions that take on some of the powers of member governments.

Changes will not be abrupt because many of the targets have been implemented gradually over the last five years. While tariff on most goods traded in the region have been largely eliminated, Asean still falls short on more politically sensitive areas of reform such as opening up protected sectors like agriculture, steel and motor vehicles. Intra-regional trade has remained at around 24 percent for the last decade, far lower than 60 percent in the EU.

Challenges

The Asian Development Bank in a research paper earlier this year warned that creating a fully functional economic community by Dec. 31 is impossible. Southeast Asian officials however, stress that the formation of the AEC is not the destination but a journey to deeper integration. They say more work is required on domestic reforms, infrastructure and strengthening skills. Efforts must also be made to address trade and investment impediments, non-tariff barriers and other regulatory hindrances that are increasingly replacing tariffs as protective measures for some industries. At the same time, government corruption and unreliable courts in the region also create roadblocks to trade because they make contracts hard to enforce.

South China Sea

The maritime conflict in one of the world’s busiest waterways has long been a sore point in the region. China claims most of the South China Sea, creating a fault-line in relations with its regional neighbors. Taiwan and Asean members Brunei, Malaysia, the Philippines and Vietnam also have overlapping claims across the sea. The Philippines and Vietnam in particular have been at odds with China over the region in recent years, with diplomatic squabbles erupting over oil and gas exploration and fishing rights.

READ: Obama ups pressure on China | PH, US defense chiefs discuss sea row at Asean meeting

Through land reclamation, China has created artificial islands from reefs to bolster its claims. Earlier this week, Obama renewed calls for China to halt land reclamation, construction and militarization in the disputed area, and is expected to repeat the same message at the Kuala Lumpur meetings.

Fight against terror

Asean and its partners are expected to increase commitment and cooperation in the war against terrorism following last Friday’s deadly attacks by the Islamic State extremist group in Paris, which killed at least 129 people and wounded hundreds.

READ: PH backs Asean efforts against extremism

Malaysian Deputy Prime Minister Zahid Hamidi this week voiced concerns that the simultaneous bombings at a stadium, concert hall and cafes in Paris could spark copycats in the region. Security measures have been enhanced for the regional summits in Kuala Lumpur, with checks stepped up at all entry and exit points to the country. Some 10,000 police and army personnel have been deployed at the meeting venue, hotels and other strategic locations in the city. The US, China and Russia have been given permission to bring their own armed security teams.

Real threat

Zahid said a leaked police circular outlined the presence of a regional terrorist network, Daulah Nusantara, that aims to take over Southeast Asia. It involves two Philippines Muslim rebel groups and the Islamic State.

Zahid, who is also home minister, said Malaysian authorities have detected their plans earlier and taken action to prevent the group from carrying out any attacks. Police in Malaysia, Indonesia, Thailand and several other countries are working together to thwart the group, he added.

National Police Chief Khalid Abu Bakar said in a statement late Thursday that reports of imminent terrorist threats in Malaysia have yet to be confirmed but security forces are taking all possible precautions.