|ADB’s Pan-Asian Regionalism Framework: A Critique|
|Written by Administrator|
|Thursday, 28 June 2012 16:33|
Asia Pacific Research Network
During the past half century the economic development experience of Asian countries especially the experiments with various models of Gandhi and Nehru, Mao Zedong and Deng Xiaoping, the East Asian tigers and dragons and the oil economies, the practice of planning and market reforms – all this presented unique experiences. As many Asian countries exhibited their self-confidence by their economic successes, political voice and highlighting their cultural and natural resources at the dawn of the twenty-first century, was the talk of an Asian century. No doubt, China’s economic success, the performance of ASEAN and Japan and other East Asian countries have made a major contribution to this new image of Asia.
It should be pointed out that most of the current initiatives at regional cooperation take the national governments as their units of cooperation. No doubt they are the most important agencies of cooperation but they often remain insensitive to the aspirations of autonomy struggles and people’s movements.[i]
An Overview of ADB’s Pan-Asian Regionalism Framework
Economic growth has made integration efforts increasingly popular in the region. In order to promote regional economic development, address the pressing issue of environmental degradation, reduce poverty and the growing disparities in incomes and living standards within developing member countries (DMCs), the Asian Development Bank (ADB) is promoting and developing Asian regionalism efforts. It has made three specific recommendations to put forth its agenda: (i) strengthening and rationalizing existing institutions for regional integration such as the Association of Southeast Asian Nations, the South Asian Association for Regional Cooperation, and the Pacific Islands Forum: (ii) further developing existing institutions to exploit functional opportunities; and (iii) establishing new pan-Asian institutions and empowering existing ones.[ii]
ADB’s Asian regionalism agenda is concretized in its Strategy 2020, which serves as the long-term strategic framework of ADB for shaping the region’s future. Under Strategy 2020, ADB’s corporate vision will continue to be ‘An Asia and Pacific Free of Poverty’, and its mission will be to help its Developing Member Countries (DMCs) reduce poverty and improve living conditions and quality of life. ADB will pursue its vision and mission by focusing on three complementary strategic agendas: inclusive growth, environmentally sustainable growth, and regional integration.
Aiming at economic development, ADB’s long-term vision is geared toward the establishment of ‘a single market, connected by integrated infrastructure networks, where trade, investment, and people could move along freely, along with closer economic, monetary, and financial cooperation and perhaps even, ultimately, a single currency.’ The integration framework advocates the development of a larger market base for goods, capital and services in order to raise efficiency of resource use and to contribute to the region’s global competitiveness.
ADB agenda also seeks coordination in policy making and regulatory design. Policy coordination expectedly elevates the overall quality of policy and reinforces the abilities of countries and regions to respond more effectively to sudden or unexpected changes in economic circumstances. Integration allows developing countries to establish stronger financial links with neighbors that are advancing more rapidly. This, in turn, would create opportunities for smaller slow-growth countries to speed their own expansion.
Central to ADB’s integration framework is the promotion of ‘open regionalism’ for Asia. Keeping trade and investment links open with the rest of the world is important in order to mitigate protectionism in other regions and pave the way for economic successes. Such initiatives will assist in the growth of DMCs by raising productivity and employment, accelerating economic growth, reducing economic disparities, and achieving closer policy coordination and collaboration in support of regional and global public goods, including work to combat climate change and HIV/AIDS.
Questioning the Operating Principles of ADB’s Asian Regionalism Framework
As highlighted in the above framework, ADB’s pan-Asian regionalism model is meant to alleviate poverty. Its ultimate objective is development, achieved through rapid economic growth. From this perspective, defining regionalism would necessarily involve international trade and investments, which are the areas most affected by regional integration, and advancement in information and technology. Regionalism is brought about by major political changes whereby highly centralized economies adopted market-oriented reforms. This means entering into bilateral and multi-lateral negotiations, which included liberalization of trade by reduction of tariff and non-tariff barriers to free trade, and the formation of regional trading arrangements and regional trading blocs.
It is significant to point out, however, that despite the proliferation of trading agreements, trade among Asian countries is minimal. In Southeast Asia, for instance, the reality is that trading between ASEAN countries themselves remains insignificant at 22.75% of the region’s total trade in 2001. ASEAN’s biggest export and import markets are still the US, EU, Japan, China and South Korea. ASEAN countries therefore compete with each other, weakening the foundation for cooperation and increasing the vulnerability of individual states to the crisis of over-production and volatility of the global market.
An increase in the entry of foreign direct investments (FDI) in the region is another supposed effect of regional integration. Rightly so, there has been a significant increase in foreign investment, including to developing countries, in recent years. Since the early 1990s, FDI flows to developing countries have risen relatively, averaging 32 per cent of the total in 1991-1995 compared with 17 per cent in 1981-1990. This coincides with the recent liberalization of foreign investment policies in most developing countries. However, there is a high concentration of these FDI flows to developing countries: much of the FDI is centered in only a few countries. LDCs in particular are receiving only very small FDI flows, despite having liberalized their policies. Thus, FDI is insignificant as a source of external finance to most developing countries, and is likely to remain so in the next several years.
The Implications of Asian Countries’ Asymmetrical Development
Regional diversity constitutes one of the biggest challenges to Asian regional integration. The region is socially, politically and economically diverse. Existing developmental gaps among Asian countries are manifest of the disparities in the level of economic, politico-military, and socio-cultural development. Looking at the GNP per capita of Asian countries alone, it can readily be observed how it is four or five times larger for developed countries (Japan, South Korea) and emerging economies (China, India) as compared to Least Developed Countries (LDCs), which constitute Asia’s great majority.
East Asia holds the largest share of GDP for obvious reasons. The region is home to economic giants like China, Japan and South Korea. In terms of international reserves, East Asia continues to fare better than other regions. It has the second largest external debt in Asia, and the highest share of international reserves. The amount of East Asia’s international reserves is thrice the amount of its external debt, demonstrating the capacity of these countries to liquidate its foreign debts any time.
Discrepancy in economic development continues to manifest in the countries’ poverty rate. The peoples of the Northeast Asian countries like Japan and South Korea are significantly above the poverty threshold, while majority of the population in West, Central, and South Asia are living in dire poverty. Put simply, Asian countries vary in their national power attributes, be it the size of population, land area, size of economy, natural resources, quality and form of government, ethnic composition, religion, rate of industrialization, quality of education, and others. Unlike the European Union, Asia is comprised of countries with no common history or shared ethnic origins. These factors make it increasingly difficult for the Asian countries to integrate into one regional bloc.
Gamani Corea, the former Secretary-General of UNCTAD, pointed out several years ago, that problems arise when regional groupings are not confined to developing countries:
Recent years have witnessed the emergence of cooperation groupings that link up the major industrialized countries of the world with some, but not all, developing countries. Such ‘mega blocs’ as the European Union, NAFTA and APEC include developing countries either as members or as partners enjoying special relationships. They aim at preferential or free trade arrangements among the participants that overlap or cut across the arrangement of South-South groupings. This development, whatever its merits, runs counter to the concept of ’generalized’ preferences for all developing countries that won acceptance as far back as 1964 at UNCTAD I and that came, since then, to be incorporated, as the Generalized System of Preferences – the GSP – into the tariff regimes of the developed countries. It raised the problem of the exclusion or discriminatory treatment of non-members of these groupings by their members, be they developed or developing countries, as well as of ‘patron-client’ relationships among the members themselves. Issues such as these are made even more complex by the membership of individual countries in multiple cooperation groupings and arrangements.[iii]
Such regional groupings will result only in the fragmentation of the South and will slowly undermine the whole concept of South-South cooperation. Developing countries are left with no choice but to participate in such arrangements, presumably because they have fear losing out altogether if they do not join the bandwagon. Clearly, the United States, along with other industrialized group of nations, would dominate negotiations and the entire regional process. This makes the development agenda of these regional institutions questionable at the onset.
ADB’s Asian Regionalism Framework and its Real Implications for DMCs and their Peoples
A common Asian market and free trade area could force LDCs, regardless of level of development, to adopt policies consonant with economic liberalization (e.g. eliminating tariffs and quotas and other non-tariff barriers to trade, reducing government support for domestic industries, reducing protectionist measures), which will have harmful effects on the vulnerable sectors of society.
On Agriculture and Food Sovereignty
The agriculture sector of developing countries would suffer the heaviest blows. The crops and produce of the farmers in developing countries will not have the capacity to compete with the entry of cheaper genetically modified (GMO) products in the market. Consequently, the earnings of the farmers will be reduced further. More so, peasants would mostly suffer as a result of expropriation of land for industrial farming, high production costs, decreased agricultural subsidies, and low market price of goods. Below are the detailed accounts of the impact of economic liberalization on agriculture in some developing countries:
Cambodia. Agriculture is the main economic activity in Cambodia, employing 85% if the people and contributing 37% to the GNP. Rice is the basic commodity. Currently, the Government of Cambodia is in the application process for WTO membership. The WTO accession agreement will require the reduction of tariffs on all agricultural products and the elimination of all domestic support for farmers. The only subsidies that would be available to Cambodia are those under the Green Box provision for non trade-distorting support, for example for training or research. There has been no consultation between the government and civil society during the accession process. The reduction of tariffs on rice will certainly result in lower prices which is good for urban centers, but it will put Cambodian farmers out of business. In order to reduce production costs and raise productivity to improve competitiveness, there must be investment in basic infrastructure such as roads. But Cambodia does not have the resources for such projects and the provision of resources does not factor into the WTO accession process.[iv]
Thailand. In addition to being a member of ASEAN, Thailand has entered into ten bilateral trade agreements, including agreements with China and Australia. There are negotiations ongoing with India and the United States. As a result of these agreements, Thailand has eliminated tariffs on fruit, vegetables and dairy. The United States is pressing for the opening of Thailand’s agricultural sector to genetically-modified food. One third of Thailand’s garlic and onion producers have already lost their livelihoods; an estimated 100,000 dairy farms will close within ten years and more than 2 million corn and soy farmers are expected to lose their livelihoods to cheap GMO grain imports from the US.[v]
Philippines. Liberalization of the agriculture sector has led to the loss of close to one million jobs in the poultry sector alone. Indigenous people have been pushed off their land by the influx of foreign mining and going corporations.[vi]
Food sovereignty, or the right of people to feed themselves and to determine the nature of the food they eat, is put to risk by economic integration models that mostly espouse free trade and liberalization. The latter only encouraged the unregulated entry of genetically-modified food and the use of pesticides which have resulted in 35 million poisonings a year, mostly in Asia.[vii] The Food and Agriculture Organization make recommendations that governments invest more in such technology as a solution to the rampant food crises in their countries. The only beneficiaries to these policies are the TNCs which develop, control and promote the use of these products.
Because of liberalization, government procurement of grain has been decreasing and imported products are replacing those produced locally. Monsanto is currently engaged in 370 court cases in which they are suing farmers for using the very seeds they have used for generations. Despite a number of efforts to regulate the activities of TNCs via legally binding international agreements, we are faced instead with a situation in which TNCs and investors are winning rights within institutions such as the World Trade Organization.
Proponents of the economic growth model of development argue that the gains from an open market shall have a ripple effect and shall trickle down to the lowest strata of society. Since globalization involved the efficient distribution and utilization of the factors of production, it necessarily impacts on labor, particularly on labor standards, and especially on the vulnerable sections of society.
Global competitiveness is actually the process whereby “labor is pitted against each other to push the wage down” thereby minimizing cost of production. To attain global competitiveness, casualization or contingent employment has been a major trend in hiring labor, thereby eroding labor standards, security of tenure and trade union rights, especially in export-processing zones.[viii] It will encourage casualization as a hiring policy not only in export-oriented industries, but also among local employers.
On Indigenous People and Local Communities
Massive investments by reason of industrialization have displaced communities in the form of demolitions of “squatters”, uprooting indigenous peoples from their ancestral domains and depriving subsistence farmers of genuine agrarian reform in favor of industrial or development sites. The move toward rapid industrialization will only result in massive land conversions from irrigated agricultural lands to industrial zones, land reclamation, an utilization of agricultural lands to crops meant for exports (which displaces traditional and staple produce), to accommodate foreign investors. These investor-oriented policies impose a heavy toll on the environment and the ecosystem itself, thereby endangering food security, not only of the nation but the family that depends on the production of agricultural products, mainly the subsistence of farmers and fisherfolks.[ix]
Acknowledging that poverty is “the greatest challenge in the region”, the ADB describes itself as an agent of change in Asia. The ADB asserts that poverty, disparities in well-being within and between nations as well as environmental degradation will be addressed under the Asian regionalism framework. But ADB’s Asian regionalism model contains the same tired developmental models of economic liberalization. With privatization, industrialization and economic liberalization as its operating principles, ADB’s Asian regionalism framework ended up promoting further the interests of multinational firms and providing leeway for state governments to neglect its responsibility in bringing about democratic development and addressing the root causes of poverty.
[i] Manoranjan Mohanty (2004), Unfolding the Asian Visions Regional Cooperation in the Asian Context, Regional Economic Cooperation and Human Rights in Asia, Manila: Asia Pacific Research Network, p. 31
[ii] Institutions for Regional Integration: Towards an Asian Economic Community (2010), Manila: Asian Development Bank, Retrieved from http://www.adb.org/documents/books/institutions-regional-integration/institutions-regional-integration.pdf
[iii] Regional Economic Cooperation and Human Rights in Asia: Seminar Report, Regional Economic Cooperation and Human Rights in Asia, Manila: Asia Pacific Research Network, pp. 27-28
[iv] Regional Economic Cooperation, p. 14
[v] Regional Economic Cooperation, p. 15
[vi] Regional Economic Cooperation, pp. 16-17
[vii] Regional Economic Cooperation, p. 10
[viii] Glenda Litong (2004), Making a case for human rights in the context of globalization or vice versa?, Regional Economic Cooperation and Human Rights in Asia, Manila: Asia Pacific Research Network, p. 54
[ix] Litong, p. 54-55
|Last Updated on Thursday, 28 June 2012 16:42|