In 2019, the EU was ASEAN's third largest trading partner after China and the United States, with US$ 280.6 billion of total trade, accounting for 10% of ASEAN's total trade. Since 1998, ASEAN has consistently registered a trade surplus with the EU, peaking at US$ 54.6 billion in 2017. The EU was also the third largest provider of Foreign Direct Investment (FDI) in ASEAN in 2019, with US$ 16.2 billion in FDI inflows from the EU, accounting for 10.1% of ASEAN's total FDI.
EU-ASEAN Relations: The Political Dimension
In dealing with the countries of ASEAN, the European Union has had to deal with an ambiguous colonial heritage. While the independence of the nations of Southeast Asia is over fifty years old, in terms of the millennial history of these countries, this is only yesterday. Except for Siam (Thailand), all of the countries of Southeast Asia were colonized and, in all cases, by Europeans. Five of the present twenty-seven members of the European Union were involved in annexing territory: chronologically Portugal, Spain, the Netherlands, Britain, and France (to which should be added, in terms of regional perceptions, another "Western" power, the United States in the Philippines). The colonial interruption – except for Spain in the Philippines and, incidentally, Portugal in East Timor – may have been relatively short-lived, dating from the last quarter of the nineteenth century to the end of the first half of the twentieth, yet it had a profound impact. The borders, administrative and political structures, education systems, and modern economic networks of the countries of Southeast Asia date from that period. Nevertheless, it would be misleading to suggest that these were merely imposed. On the contrary, it would be more appropriate to indicate a symbiosis in which the assimilation of what would be described today as globalized norms were reinterpreted in local circumstances.
Another element in the EU-ASEAN relationship, previously referred to, is the Cold War context. With Communist insurgencies within their borders and Communist victories in Indochina more than a distinct possibility, the founding of ASEAN in 1967 was designed to create a bulwark against communism in Southeast Asia. It was also meant as a confidence-building initiative among the first five members, all of whom had territorial claims over others. For ASEAN to function, it required legitimacy and encouragement from the ultimate guarantor of security in the region, namely the United States and other external actors. With the end of the war in Vietnam and the later Vietnamese occupation of Cambodia on the borders of an ASEAN member, the need for recognition from the European community became greater. Meetings between EU and ASEAN foreign ministers began in 1978, and two years later, a cooperation agreement between the EEC and ASEAN was signed. The 1980s were a critical period in ASEAN's development for its members until the peace agreement of 1990 was able to coalesce around a common enemy, namely Vietnam. European support in defending ASEAN's position, particularly in the United Nations, provided a valuable fillip to the Association. However, with the end of the Cold War in Southeast Asia and the Vietnamese withdrawal from Cambodia, ASEAN's need for external approbation diminished. Concomitantly European concern with insecurity in the region as a distant threat to a peaceful world order reduced. Without a shared adversary, causes of friction in the EU-ASEAN relationship came to the surface.
EU-ASEAN Relations: the Economic Dimension
For the European Union as a whole and the 27 member countries, the economic dimension of relations with Southeast Asia overshadows the political dimension, even if the latter is given the most incredible visibility in the media. For example, the consensual ASEAN-EU Vision Group (2006) report jointly compiled by eminent persons from Europe and Southeast Asia has its central focus on promoting economic prosperity. In 2006 the European Union exported €48.2 billion of merchandise to the ASEAN countries while importing €78.2 billion of merchandise from them. The result was a €29.8 billion trade deficit in that year. In percentage terms, in 2006, the ten ASEAN member countries together accounted for 5.79% of the EU's 25 merchandise imports and 4.15% of exports from the EU. Trade in services worth €13.5 billion of imports and €14.7 billion of exports for the EU-25, resulting in a €1.2 billion surplus, were more favorable to the EU. By comparison, the EU-25 exported €63.4 billion of merchandise to China and imported €191.8 billion resulting in a monumental €128.4 billion trade deficit. As for Japan, the figures for the same year are €44.7 billion in exports from the EU-25 and €76.5 billion in Japanese imports, resulting in a similar merchandise trade deficit as with ASEAN, namely €31.8 billion.
In July 2007, negotiations for an ASEAN-EU FTA were launched. However, in March 2009, after seven negotiating rounds, both sides agreed to pause negotiations. At the 15th AEM-EU Trade Commissioner Consultations on 10 March 2017, the AEM and EU Trade Commissioner decided to launch formal region-to-region talks to develop a framework setting out the parameters of a future ASEAN-EU Free Trade Zone.
Priority Areas of Cooperation
ASEAN-EU Trade and Investment Work Programme. To enhance economic cooperation in addressing emerging challenges and opportunities for trade and investment between ASEAN and the EU, the AEM and the EU Trade Commissioner adopted the ASEAN-EU Trade and Investment Programme. At the 15th AEM-EU Trade Commissioner Consultations in March 2017, AEM and the EU Trade Commissioner endorsed the ASEAN-EU Trade and Investment Work Programme for 2017–2018, which built upon the successful initiatives under the 2015–2016 Work Programme. Five areas were covered in the Work Programme for 2017–2018: high-level policy dialogue; consultation at the Senior Economic Officials level; enhancing dialogue with business; experts' dialogues; and cooperation activities that include various projects. In July 2020, the 28th SEOM-EU Consultations finalized the ASEAN-EU Trade and Investment Work Programme for 2020-2021, which focuses on developing the framework and parameters of a future ASEAN-EU FTA.
ASEAN Regional Integration Support from the EU Plus (ARISE Plus). The ARISE Plus program provides and funds ASEAN capacity building over six years (2017-2022). The Programme aims to support ASEAN economic integration by implementing the AEC Blueprint 2025 and strengthening institutional capacity. It is a follow-up from four previous programs, namely: ASEAN Regional Integration Support from the EU (ARISE – ended in 2016), Institutional Capacity Building for ASEAN Monitoring and Statistics (COMPASS – ongoing), ASEAN Project on the Protection of Intellectual Property Rights (ECAP III – completed in 2017), and ASEAN Air Transport Integration Project (AATIP – completed in 2016). ARISE-Plus is implemented at both regional and national levels.
EU-ASEAN Capacity Building Project for Monitoring Integration Progress and Statistics (COMPASS). The EU-ASEAN COMPASS Project aims to support ASEAN integration through the availability and utilization of more timely, comparable, and relevant information to facilitate monitoring and decision-making, notably by ASEAN Member States' governments acting individually and at the ASEAN level. It consists of two main ideas: to support the development of the ASEAN Community Statistical System and to build the capacity of AIMD. The project covered June 2014-December 2018 and has since wrapped up. Some of the activities under COMPASS will now continue under ARISE Plus.
Enhanced-Regional EU-ASEAN Dialogue Instrument (E-READI Facility). The Enhanced-Regional EU-ASEAN Dialogue Instrument (E-READI Facility) was developed based on the successful completion of the READI Facility, which covered ten areas. E-READI will now be expanded to support jointly developed projects and activities under all ASEAN pillars, i.e., economic, political security, and socio-cultural. The overall objective of E-READI is to support ASEAN integration and to reduce poverty through inclusive and sustainable growth. Drawing on European experiences and know-how, E-READI aims to support the implementation of the ASEAN Community blueprints through sectoral policy dialogues.
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