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For a multipolar world order. European Union’s relations with ASEAN.

29 June 2021

ASEAN, the Association of Southeast Asian Nations, is getting an increasingly important partner of the European Union, both due its dynamically growing economy and the size of the market (approx. 660 million people). Closer cooperation with the organization’s 10 member countries may also help Europe expand its political influence in the world’s strategic Indo-Pacific region which is struggling with the growing power and assertiveness of China. The challenge, however, is that ASEAN members also succumb to it and do not want to upset relations with their key neighbour.

The Covid-19 pandemic has accelerated the cooperation between the European Union and ASEAN countries. On December 1, 2020, the status of relations was raised to a “strategic partnership” level, and the EU allocated EUR 800 million to combating the economic effects of the pandemic in the Southeast Asian region under the so-called Team Europe.

The relations between both blocks date back to the beginnings of the Association of Southeast  Asian Nations, founded in 1967. The first ministerial contact took place in 1972, a formal dialogue was launched in 1977, and in 1980 a cooperation agreement was signed, including mutual granting of the most favored nation status. The next stage followed the transformation of the European Communities into the European Union (Maastricht Treaty, in force since 1993) and the “great enlargement” to the countries of Central and Eastern Europe (2004, 2007).

In 2007, an agreement was signed on broader political and economic cooperation, as well as in the area of security and development. In 2012, the EU joined the Treaty on Friendship and Cooperation in Southeast Asia, and after the establishment of the ASEAN Economic Community (2015), it opened its mission with this organization. The EU-ASEAN Action Plan for 2018-2022 was also soon adopted.


The “European Union” of Southeast Asia

For ASEAN, the European Union is a specific model of effective regional integration, although its member countries do not strive for such deep integration. Despite considerable cultural, linguistic, religious and historical differences, the EU is still incomparably more homogeneous than the countries of Southeast Asia. This applies in particular to the sphere of ruling-ruled relations, especially the approach to democratic standards, the rule of law and human rights.

One of the foundations of ASEAN is the principle of non-intervention and non-interference in the internal affairs of member states, derived from the Charter of the United Nations. It is interpreted very rigidly, which, of course, is not conducive to the unification of standards and the unification of the framework for action – which is so typical for the European project. This results, inter alia, in the bloc’s passive attitude in times of internal crises in any of the Member States.

A striking example of this passivity is the attitude towards the government in Burma/ Myanmar after the military coup on February 1, 2021. Apart from the strong reaction of the Malaysian and Indonesian leaders, the putsch has not been unequivocally condemned by the bloc. One of the reasons are problems with the rule of law and respect for human rights in most Member States. ASEAN has never had any ambitions to promote democracy, and in its beginnings it was a kind of “club of dictators”, established to defend itself against both spread of communism and excessive US interference.

It is worth noting that Lee Kuan Yew, the longtime prime minister of Singapore – one of the best-governed and richest ASEAN countries – was the main proponent, next to Malaysia’s longtime leader Mahathir Mohamad, of the “Asian values” concept. They are opposed to the individualistic values of the West and are based on social harmony, consensus, unity and community. Importantly, Chinese leaders also refer to them indirectly. [2]

The European Union, however, puts values first in international relations. It condemned the coup d’état in Myanmar, imposed sanctions on ten military persons responsible for “undermining democracy and the rule of law in Myanmar / Burma.” Two powerful conglomerates that provide a financial basis for the country’s military establishment were also struck, and financing of development projects in that country was suspended too.

The European Union also reacted strongly against human rights violations in Cambodia which became a one-party state in 2018. In August 2020, duty-free and quota-free access to the EU market was partially withdrawn which hit the production key to the country’s exports, including clothing and footwear. Thus, the Everything But Arms Agreement (EBA), ie EU’s special trade arrangement for least developed countries, was temporarily lifted for Cambodia.


Economic cooperation

ASEAN plays an increasingly important part in the European Union’s foreign trade. In 2018, 10 member states of the Association exported goods worth almost EUR 140 billion to the EU, and the EU  – goods worth EUR 97 billion to the ASEAN countries. [1]  In 2020, the trade in goods between Europe and the countries of Southeast Asia amounted to EUR 189.47 billion, and trade in services reached EUR 93.5 billion in 2019. The EU is also the largest investor in the ASEAN countries (EUR 313.6 billion in 2019 ).

The attempts to conclude a free trade agreement (FTA) between the two blocs failed although talks about it lasted for 3 years (2007-2009). Therefore, it was decided to conduct bilateral negotiations, which resulted in the signing of 2 agreements:

  1. EU-Singapore (EUSFTA) – entered into force in November 2019,
  2. EU-Vietnam – entered into force on August 1, 2020.

These agreements provide a solid basis for a future agreement with ASEAN as an organization. According to forecasts, around 2030 the ASEAN Economic Community will become the fourth largest market in the world. Already now, trade and investment cooperation is stimulated by the biennial ASEAN-EU Trade and Investment Work Program, under which dialogue takes place at the ministerial, expert and business group levels. It includes, among others the issues of mutual trade facilitation, customs integration, harmonization of standards, and monitoring of statistics and integration.

The relations between the EU and Indonesia are particularly noteworthy, the latter being the most populous member state (276 million people) and the largest economy of ASEAN, which traditionally has ambitions of leadership in the bloc. Negotiations on the creation of a free trade area have been underway since 2016, and the mutual relations gained an additional formal framework in 2014 when the comprehensive Partnership and Cooperation Agreement entered into force. The EU – Indonesia economic relations are not always straightforward, and the bone of contention (also in relations with Malaysia) is the issue of palm oil, 84% of which is produced in both countries of Southeast Asia. It helps reduce poverty but at the same time contributes greatly to deforestation in Indonesia and Malaysia.

Taking into account sustainable development and the fact that “biodiesel based on palm oil actually causes more greenhouse gas emissions than fossil fuels“, the European Union decided in 2018 to issue a directive that would de facto reduce the import of palm oil. The European Union countries are Indonesia’s second largest – after India – market for the export of palm oil. This situation led to a dispute between Indonesia, Malaysia and the European Union at the World Trade Organization (WTO).

Strategic Partnership and the European Strategy in the Indo-Pacific

The Strategic Partnership Agreement between the European Union and ASEAN was concluded just two weeks after the signing of the Regional Comprehensive Economic Partnership (RCEP) between 10 ASEAN countries and their largest economic partners: Australia, China, Japan, South Korea and New Zealand. RCEP is the largest trade agreement as of today, involving nearly 2.2 billion people and 30% of global GDP ($ 26.2 trillion). This agreement undoubtedly increases the potential and global attractiveness of ASEAN, giving that bloc a kind of ‘centrality’ in the Indo-Pacific region.

However, EU’s appetite for a more active presence in the Indo-Pacific means competing with China for influence – not just in economic terms, but in the sphere of politics as well. While Brussels would prefer to avoid taking part in the confrontation between Washington and Beijing, it clearly emphasizes that “Asian security is closely linked to European security” and that “The EU cannot allow countries to unilaterally undermine international law and maritime security in the South China Sea”. Although the name “China” does not appear anywhere, it is clear that it alludes to the Middle Kingdom’s ‘expansion’ at the expense of its neighbours, and the freedom of navigation issues in the basin through which goes around 30% of global trade. According to the official narrative of Brussels: “Neither ASEAN nor the EU are ready to become part of any ‘sphere of influence‘.

Author: dr Bruno Surdel, analyst, Centre for International Relations


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