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ASEAN Economic Community
 ASEAN Economic Community

A Model for Asia-wide Regional Integration?

Edited by Bruno Jetin and Mia Mikic

ASEAN ECONOMIC COMMUNITY
Selection and editorial content © Bruno Jetin and Mia Mikic 2016
Individual chapters © their respective contributors 2016
Softcover reprint of the hardcover 1st edition 2016 978-1-137-53710-2

All rights reserved. No reproduction, copy or transmission of this publication

may be made without written permission. No portion of this publication
may be reproduced, copied or transmitted save with written permission. In
accordance with the provisions of the Copyright, Designs and Patents Act
1988, or under the terms of any licence permitting limited copying issued by
the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London
EC1N 8TS.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
First published 2016 by
PALGRAVE MACMILLAN
The authors have asserted their rights to be identified as the authors of this
work in accordance with the Copyright, Designs and Patents Act 1988.
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills, Basingstoke,
Hampshire, RG21 6XS.
Palgrave Macmillan in the US is a division of Nature America, Inc., One
New York Plaza, Suite 4500, New York, NY 10004-1562.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
ISBN: 978–1–349–55385–3
E-PDF ISBN: 978–1–137–53508–5
DOI: 10.1057/9781137535085
Distribution in the UK, Europe and the rest of the world is by Palgrave
Macmillan®, a division of Macmillan Publishers Limited, registered in England,
company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS.
Library of Congress Cataloging-in-Publication Data
ASEAN Economic Community (Jetin and Mikic)
ASEAN Economic Community : a model for Asia-wide regional
integration? / edited by Bruno Jetin and Mia Mikic.
pages cm
Includes bibliographical references and index.

1. ASEAN Economic Community. 2. Southeast Asia—Economic

integration. 3. Southeast Asia—Commerce. I. Jetin, Bruno, editor.
II. Mikic, Mia, editor. III. Jones, Lee, 1981– ASEAN's imitation
economic community. Container of (work): IV. Title.
HC441.A8445 2016
337.1⬘59—dc23 2015022389
A catalogue record for the book is available from the British Library.
 Contents

List of Figures vii

List of Tables ix

Introduction 1
Bruno Jetin and Mia Mikic

Part I ASEAN Economic Integration in the Context

of East Asian Regionalism

1 ASEAN’s Imitation Economic Community: The Primacy

of Domestic Political Economy 11
David Martin Jones
2 By Chance or by Virtue? The Regional Economic Integration
Process in Southeast Asia 33
Jean-Raphaël Chaponnière and Marc Lautier
3 Trade Implications of the ASEAN+ Agreements for
Other Asian Countries 59
Mia Mikic
4 Southeast Asian Countries in Global Production Networks 79
Prema-chandra Athukorala
5 Impact of Monetary Regime and Exchange Rates
on ASEAN Economic Integration 101
Nabil Aflouk, Jacques Mazier, and Myoung Keun On
6 Global Value Chains and Competitiveness of the
Integrated Regions: Exchange Rate Issues 127
Witada Anukoonwattaka
7 Intra- and Extraregional Trade Costs of ASEAN Economies:
Implications for Asian Regional Integration 153
Yann Duval and Emilie Feyler
vi Contents

Part II Impact of Regional Integration on Structural Change,

Employment, and Inequalities
8 Regional Trade Agreements, Employment, and Inclusiveness 175
Kee Beom Kim, Fan Zhai, and Phu Huynh
9 Economic Development with Improved Conditions of
Employment and Reduced Inequality: What Choices
Does ASEAN Have in the Medium and Long Term? 197
Francis Cripps and Naret Khurasee
10 Does Outsourcing Enhance Skill Premiums in ASEAN? 217
Aekapol Chongvilaivan
11 Regional Integration and the Creative Economies of ASEAN:
Assessing the Potential for a Single ASEAN Creative Economy 231
Teemu Alexander Puutio

Part III Impact of Regional Integration on Poverty,

Inequalities, and Social Cohesion
12 Social Cohesion, Economic Resilience, and Long-Term Growth in
Southeast Asia and Developing Countries 243
Marc Lautier
13 Reduction of Absolute Poverty, Increase of Relative Poverty,
and Growing Inequalities: A Threat to Social Cohesion 267
Bruno Jetin
14 Investment in Infrastructure and Regional Integration:
Will Connectivity Reduce Inequalities? 291
Nathalie Fau
15 Within-Country Spatial Inequality and Local Governance
Capacity: The Case of Indonesia 311
Christine Cabasset
Conclusion 329
Mia Mikic and Bruno Jetin

List of Contributors 339

Index 345
 Figures

2.1 Intraregional trade as percent of total trade 34

2.2 Europe-Asia and Intra-Asia trade before World War II
as a percent of world trade 35
2.3 FDI inflows in ASEAN and China from 1980 to 2013
in US$ billion 39
2.4 Tariffs on CEPT product 40
2.5 Frequency of NTB by country 42
2.6 Average tariff rate (manufactured products), intra- and
extra-ASEAN imports 43
2.7 Intra-ASEAN and ASEAN-world manufactured
export growth rate 43
2.8 Intra-ASEAN trade as a percent of ASEAN trade 49
3.1 Cumulative number of preferential trade agreements 64
3.2 Share of exports and imports with FTA partners
in countries’ total trade 65
3.3 Existing and planned FTAs among RCEP negotiating parties 72
5.1 Actual and equilibrium real effective and bilateral
exchange rates of ASEAN+3 104
5.2 Loss of competitiveness of East Asia 1 against East Asia 2,
East Asia 1 GDP 119
5.3 Loss of competitiveness of East Asia 1 against East Asia 2,
EA1 currency/Rest of the World exchange rate E4 120
5.4 Loss of competitiveness of East Asia 1 against East Asia 2.
Impact on the share of intra-ASEAN trade in the total
trade of country EA1, in difference with the base line 121
5.5 Loss of competitiveness of ASEAN countries against China 122
5.6 Loss of competitiveness of ASEAN countries against China,
EA1 currency/Rest of the World exchange rate E4 122
5.7 Loss of competitiveness of East Asia against China. Impact
on the share of intra-ASEAN trade in the total trade
of country EA1, in difference with the base line 123
6.1 Exports of IPN-associated intermediate goods from Asia
and the Pacific to the world, 1992–2011 130
7.1 Contribution of export, import, and liner shipping connectivity
performance to international supply chain connectivity in 2014 162
viii Figures

7.2 Ease of doing business: 2015 ranking 164

7.3 Information and communication technology
usage in ASEAN 165
8.1 Ratio of labor productivity by subsector to
that of agriculture, 2012 178
8.2 Change in GDP relative to the baseline, 2015,
2020, and 2025 180
8.3 Change in consumption, investment, exports,
and imports relative to the baseline, 2025 181
10.1 A fitted plot of international outsourcing of materials
input and labor productivity in Singapore
manufacturing industries, 1995–2004 222
10.2 A fitted plot of international outsourcing of services
input and labor productivity in Singapore
manufacturing industries, 1995–2004 223
12.1 Economic resilience map 248
12.2 Resilience profiles in Asia 251
12.3 Resilience profiles in Africa 251
12.4 Relationship between the contribution of growth losses
to the growth gap and the indicator SC & SE 259
12.5 Relationship between growth losses and
the indicator SC & SE 259
12.6 Relationship between growth speed difference
and the indicator SC & SE 260
13.1 Convergence of living standards in the
Asia Pacific, 1970–2011 270
13.2 Between-country inequality of total ASEAN
and ASEAN founder countries, 1960–2011 271
13.3 Contribution to the Theil Index of ASEAN
real GDP, 1970–2011 271
13.4 Convergence of low and middle-income
ASEAN countries toward Thailand 272
13.5 Absolute and relative poverty in Southeast
Asia around 2009–2012 278
13.6 Objective poverty and dissatisfaction in ASEAN 279
13.7 Interpersonal trust: Can you rely on friends and
family for help?, average 2011–2012 281
13.8 Societal trust: Do you think that most people
can be trusted?, average 2011–2012 281
13.9 Participation: Have you volunteered your time in
past month?, average 2011–2012 282
13.10 Can people get ahead by working hard?, 2011–2012 283
 Tables

2.1 ASEAN economies in 2015 36

2.2 Tariffs and customs revenue in ASEAN countries 40
2.3 Distribution of tariff lines by program in 2010 41
2.4 European aid to ASEAN in million US$ 46
2.5 GL indicators in ASEAN 50
2.6 Degree of exports complementarities for total exports 51
3.1 Possible areas of negotiations under RCEP 68
3.2 Economic size of mega-regionals 74
4.1 Average annual compensation per production worker 83
4.2 Source-country composition of world manufacturing
exports, 1992–2003 and 2011–2012 85
4.3 Share of network products in manufacturing trade,
1992–1993 and 2011–2012 87
4.4 Composition of networks exports, 2011–2012 88
4.5 Share of parts and components in bilateral
trade flows, 2011–2012 92
4.6 Intraregional shares of manufacturing trade: Total, parts and
components, and final trade, 1992–1993 and 2011–2012 93
5.1 Alternative closures of each exchange rate regime 116
6.1 Shares of the Asia-Pacific region in global exports
of customized intermediate and final products
by subregion and selected economies, 2011 131
6.2 Partners in Asia-Pacific intermediate goods trading 132
6.3 Sources of IPN-associated intermediate imports
by select industries in China, 2011 133
6.4 Fixed-effects estimations of exchange rate effects
on intermediate electronics imports by China
from selected Asian countries, 1992–2011 141
6.5 Fixed-effects estimations of exchange rate effects
on intermediate apparel/footwear imports by
China from selected Asian countries, 1992–2011 142
6.6 Fixed-effects estimations of exchange rate effects
on intermediate automotive component imports
by China from selected Asian countries, 1992–2011 143
x Tables

6.7 Intensive-margin effects 143

6.8 Intensive-margin effects by country—electronics 144
6.9 Intensive-margin effects by country—apparel and footwear 145
6.10 Intensive-margin effects by country—automotive 146
7.1 Intra- and interregional trade costs of ASEAN
and other world regions 157
7.2 Bilateral trade costs among ASEAN countries
for manufacturing 159
7.3 Bilateral trade costs among ASEAN countries
for agriculture 160
7.4 Results of NT-CTC model estimations 167
7.5 Contribution of natural barriers, behind-the-border
facilitation and trade-related practice to nontariff trade costs 169
8.1 Employment by sector, ca. 1992, 2003, and 2013 177
8.2 Changes in employment in 2025 relative to
the baseline, by sector and sex 182
8.3 Employment in each sector as a share of total
employment under the baseline and AEC scenarios 184
8.4 Sensitivity to different labor market specifications 193
9.1 The world, East Asia, and ASEAN: Growth rates, 1970–2030 201
9.2 ASEAN’s sources of external income, 1970–2030 202
9.3 Economic growth in ASEAN member countries, 1970–2030 204
9.4 Balance of payments of ASEAN member countries
in the 2020s 205
9.5 Disparities between ASEAN member countries, 1970–2030 206
9.6 Cumulative net migration, 1970–2030 207
9.7 Agricultural gaps, 1970–2030 208
9.8 Government resource ratio, 1970–2030 209
9.9 GDP growth to 2030 with cohesion policies 210
9.10 Real exchange rates in 2030 with cohesion policies 211
9.11 Income from employment in 2030 with cohesion policies 212
9.12 Agricultural gap in 2030 with cohesion policies 213
9.13 Agricultural employment in 2030 with cohesion policies 214
9.14 Government resource ratio in 2030 with cohesion policies 214
10.1 Logistics Performance Index by subcategories, 2012 221
10.2 The impacts of international outsourcing on wage
inequality in Thailand’s manufacturing industries 225
11.1 Trade in creative goods and services in ASEAN
member states 235
12.1 Growth gaps structure 252
12.2 Comparative indicators 255
12.3 Correlation results 261
13.1 Theil index of between and within inequality in ASEAN 274
13.2 Within-country inequality indexes of ASEAN countries 274
 Tables xi

13.3 Absolute and relative poverty in ASEAN member countries

in percentage and thousands of individuals 278
15.1 Per capita gross domestic regional product at current market
prices 2012, minimum wage per month 2013, poverty rate,
life expectancy, and HDI 2013 per province 315
 Introduction
Bruno Jetin and Mia Mikic

Much research and media attention is focused on the progress of regional

integration among Southeast Asian countries.1 Back in 1967, five of them
formed the Association of Southeast Nations (ASEAN), and by 1999
the group was complete with ten ASEAN member states (AMS): Brunei
Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the
Philippines, Thailand, Singapore, and Viet Nam. Only one country from
this subregion is currently not a member of ASEAN; however, Timor-Leste
formally applied to accede in 2011.
While ASEAN had been labeled as a political association at the time of
its founding, it slowly but certainly developed interest in economic aspects
of integration. Most prominently, since the establishment of ASEAN Free
Trade Area (AFTA) back in 1992, much of the integration process revolved
around economic and trade issues. ASEAN’s financial crisis and its impact
on Asian countries contributed to AMS’s realization of the need for a
tighter regional entity to allow for the building of more resilient econo-
mies. Thus it was not surprising to see the proclamation of ASEAN 2020,
which was announced in 1997. Likewise, political and economic dynamics
in the region and globally were aligned with the ideas of ASEAN leaders
meeting at the ninth summit in 2003 to call for the creation of an ASEAN
community. Ultimately, this goal was advanced to be implemented in 2015
through the establishment of the ASEAN Economic Community (AEC) at
the twelfth ASEAN summit in 2007. The other two communities—ASEAN
Political-Security Community and ASEAN Socio-Cultural Community—
are still planned for full implementation at a later stage.
The AEC Blueprint was developed in 2007 to provide a roadmap for
government entities involved in AEC implementation. It has four pillars
driving the transformation of ASEAN into a single market and produc-
tion base, a highly competitive economic region of equitable economic
development, and a region that is fully integrated into the global economy
by the end of 2015. Each of the four pillars presents a demanding set of
challenges—with numerous individual actions to be taken by AMS by the
end of December 2015 and for the full realization of the AEC. In order to
2 Bruno Jetin and Mia Mikic

assist AMS in monitoring progress along the way, ASEAN has introduced
the so-called AEC scorecard, a self-assessment mechanism that tracks the
progress of each AMS in each pillar. The original unwillingness to publicly
reveal individual AMS scores has weakened but not disappeared, and thus
the public still has no access to the most recent status. Based on the data
available in the 2012 scorecard, ASEAN will be able to attain only 82 per-
cent of its final target in early 2015, and so a big push will be necessary to
improve this by the end of 2015. While some AMS are better positioned
than others in terms of ticking items off the scorecard, 2 the actual progress
will occur only when there is a critical mass of institutions to enforce these
legal and regulative measures. At present, many challenges still remain at
the implementation level of each pillar.
This book, ASEAN Economic Community: A Model for Asia-wide
Regional Integration?, brings together scholars and researchers who have
been studying ASEAN from close quarters or from a distance to provide
their assessment of the AEC process and progress from a perspective of
wider regional integration. While it was not possible to obtain a contribu-
tion for every aspect of the AEC process, we have tried to cover the most
important areas or those that are most relevant for the rest of Asia and
globally, either in terms of impacts or in terms of valuable lessons and prac-
tices that could be used by those who are pursuing any type of regional
integration. In what follows we provide the brief summary of the chapters.
As AEC pillars themselves are not perfectly balanced in terms of areas
they cover and policies they refer to in the blueprint, while not being fully
independent of each other, this book is also slightly asymmetric with a bit
more focus on pillars 1, 3, and 4. Chapters, however, often provide the
opportunity to a reader to make connections between the pillars and also
over time of integration process. A summary of chapters, under the three
part headings for ease of reference, is provided here.

Part I: ASEAN Economic Integration in the

Context of East Asian Regionalism
All reliable indicators show that the ASEAN Economic Community will not
be fully completed by its 2015 deadline. David Martin Jones in chapter 1
asks if this outcome does not test the limit of ASEAN’s guiding propositions
and cooperative practices—noninterference principle and consensus build-
ing, and nonconfrontational bargaining—and their efficacy in integrating
AMS’s economies and facilitating its wider regional economic integration.
In the past, these principles and practices were sufficient to achieve the
main outcome to be credited to ASEAN: the achievement, until recently, of
regional security and political stability. This was a necessary condition for
the success of export-oriented growth and attraction of foreign investment.
But a single market and production base requires that all AMS have a com-
mon interest and accept a higher degree of cooperation. This is probably
 Introduction 3

what is lacking because the political elite of each AMS grants the monopoly
of decisive domestic sectors to the economic elite, and their interests are
so intertwined that they do not accept easily the direct competition from
neighboring firms. Jones also discusses what he calls the “sinification of
the ASEAN way” and how it has also profoundly changed the capacity of
ASEAN to deepen its integration. ASEAN’s connectivity master plan will
be funded in great part, directly or indirectly, by China to the extent that
these new infrastructures serve Chinese interests, which are not necessarily
those of ASEAN. Worse, ASEAN’s capacity to provide regional security
may be endangered by China’s attempt to establish its domination over the
South China Sea. The rise of China and the response of the other big pow-
ers in the region—the United States, Japan, India, and Australia—raise far
more critical issues than the AEC can resolve. These issues are analyzed in
deeper detail in the following chapters of the book.
Jean-Raphaël Chaponnière and Marc Lautier also question the nature of
ASEAN regional economic integration process in chapter 2 . They recall the
creation of ASEAN in 1967, after several failed attempts, to be associated
with the perception of rising communist threat. Twenty-five years later,
ASEAN launched AFTA, whose objective was not to promote intraregional
trade but to enhance ASEAN countries’ attractiveness for FDI. ASEAN
countries have reduced trade barriers and made significant progress toward
a de jure integration, while the process of de facto integration launched
by the relocation of Japanese manufacturing firms in the mid-1980s con-
tinued. If one excludes intrafirm transactions and exports from free trade
zones, AFTA would explain only one-fifth of the intraregional trade.
ASEAN members are now involved in two mega regional agreements—
one with a potential to protect ASEAN centrality, ASEAN+6 or Regional
Comprehensive Economic Partnership (RCEP); and another, the US-led
Trans-Pacific-Partnership Agreement.
In chapter 3 Mia Mikic addresses the issues stipulated under AEC pil-
lar 4 seeking deeper integration of ASEAN into the global economy with
emphasis on ASEAN centrality and improved coherence of various agree-
ments that may impact the operation of AEC. As of now, it appears that
RCEP might be the chosen path toward seeking a necessary consolidation
of all existing trade agreements of ASEAN. This will succeed only if RCEP
evolves into a high-standard trade agreement and allows for rationaliza-
tion of existing deals. Upon providing current FTA landscape in Asia, this
chapter examines the possible effects of the RCEP on trade not only of
ASEAN+6 but also other Asian countries, taking into account the fact
that all of the negotiating countries of the RCEP are already participants
in other trade agreements that are either under implementation or under
active negotiations.
Chapter 4 by Prema-chandra Athukorala examines emerging global
production sharing (GPS) and trade patterns in light of the experiences of
ASEAN countries that have been major and successful participants in GPS.
“Network products” (parts and components, and final assembly traded
4 Bruno Jetin and Mia Mikic

within production networks) constitute almost two-thirds of the merchan-

dise exports of Singapore, Malaysia, and the Philippines; almost half those
of Thailand; and a smaller but still significant share for Indonesia. GPS has
certainly strengthened economic interdependence among ASEAN coun-
tries, and between them and China and the other major economies in East
Asia, but this has not lessened the dependence on the global economy. The
operation of the regional cross-border production networks depends inexo-
rably on trade in final goods with the rest of the world. There is no evidence
to suggest that forming RCEP would help them to enhance gains from the
ongoing process of GPS fragmentation while reducing the dependence on
the Western markets. GPS strengthens the case for unilateral and/or multi-
lateral approach to trade reforms.
The ASEAN countries have experimented contrasted exchange rate
regimes since the 1990s. The financial crisis of 2008 has given new interest
to the question of monetary cooperation at the regional level. In chapter 5,
Jacques Mazier, Myoung Keun On, and Nabil Aflouk use a fundamental
equilibrium exchange rate (FEER) approach to estimate exchange rate mis-
alignments and link them to the external performances and growth of East
Asian countries. They find that exchange rate misalignments are more lim-
ited in the current period than in the 1990s, in clear contrast with what is
observed between European Union countries. The economic consequences
of alternative exchange rate regimes in East Asia are examined using a
four-country stock flow consistent model of East Asia. The configuration
of the 1990s and 2010s can be compared and alternative scenarios for the
future of ASEAN integration are discussed.
Exploring further the exchange rates issues, Witada Anukoonwattaka
connects those with the presence of global value chains (GVCs) in chapter 6.
The growing GVCs has changed ASEAN from exporting final goods to
intermediates, and from exporting directly to advanced markets to export-
ing via downstream countries, particularly China. This chapter looks at
how an analytical framework for evaluating the impacts of exchange rates
on export competitiveness has been changed by the GVC phenomenon.
Findings imply that entering to GVCs make a country prone to a change in
the exchange rate of other countries even if they are not their direct trading
partners. There seems to be compensating impacts on trade volume and
trade product range. The net impact then becomes ambiguous and sector-
and country- specific. For instance, a currency depreciation of the yuan
might reduce export product range from ASEAN, but export volume of
each product that remains might increase.
The final chapter under part I, chapter 7 by Yann Duval and Emilie
Feyler, takes stock of the progress made by ASEAN countries in reduc-
ing intra- and extraregional trade costs using various cross-country indi-
cators of trade facilitation performance and a new bilateral trade cost
dataset developed by ESCAP and the World Bank. Despite significant
improvements over time, trade costs other than tariffs among ASEAN
members remain relatively high, with a wide performance gap between
 Introduction 5

Cambodia-Lao PDR-Myanmar and other ASEAN members, in particu-

lar. ASEAN has lower trade costs with Northeast Asia than with itself.
Southeast Asian economies under the ASEAN Economic Community
would benefit from further intensifying trade facilitation reform, among
themselves but also with other Asian regions, keeping in mind that empha-
sis may best be placed on completing implementation of the many signed
but often delayed intra-ASEAN agreements.

Part II: Impact of Regional Integration on Structural

Change, Employment, and Inequalities
Using the fact that trade integration is a cornerstone of the ASEAN
Economic Community, Kee Beom Kim, Fan Zhai, and Phu Huynh review
the structural changes that have taken place in the past decades in ASEAN
member states in chapter 8. They use an innovative computable general
equilibrium model to assess the impact of ASEAN trade integration on
labor markets. The results show that trade liberalization contributes to
sizeable increases in output and employment in ASEAN member states, but
that the benefits tend to vary by country, sectors, and gender. The mixed
distributional effects point to the need for concerted employment and labor
market policies, including improving access to education and training for
vulnerable groups; strengthening the quality, coverage, and sustainability
of social protection systems; and monitoring and managing the gender
impacts of ASEAN trade integration
Francis Cripps and Naret Khurasee in turn use a macro model based
on historical series for the past four decades in chapter 9 to project trade
and GDP of ASEAN countries up to 2030 and confront the outcomes with
trends in population structure and employment under different assump-
tions about policies in member countries. The projections imply that gaps
in living standards will remain wide but suggest that exchange rate man-
agement, competition policy, agricultural policy, and targeted government
services and infrastructure could promote more inclusive growth and pro-
vide wider opportunities for provincial and rural populations left behind
by export-led industrialization and services concentrated in large cities. In
the context of the ASEAN Economic Community such policies may require
closer coordination than exists at present.
Outsourcing can be loosely defined as the extent to which production
activities are contracted out at arm’s length, as opposed to being performed
in-house. In the context of ASEAN, outsourcing has by and large been a
catalyst of impressive economic growth, yet the thorough understanding of
this issue remains limited. In chapter 10 Aekapol Chongvilaivan explores the
implications of burgeoning outsourcing activities in ASEAN on labor market
development, namely, the effects on labor productivity and skill premium.
The findings from this analysis yield policy implications regarding how to
utilize regional production networks as the impetus for labor development.
6 Bruno Jetin and Mia Mikic

Chapter 11 by Teemu Puutio draws attention to the importance of

creative economy for ASEAN. ASEAN has adopted a soft-regionalism
approach to its regional integration efforts, preferring flexibility, noninter-
ventionism, and consensus-based decision-making over sovereignty trans-
fers. As a result, the regional creative economy persists to resemble a loosely
knit patchwork of disparate national regimes for creativity and innova-
tion that interact only sporadically through non-ASEAN led developments
such as supply chains. Without decisive and centralized actions to harmo-
nize institutions and bridge the resource and capability gaps, the creative
economies of members with weak creative capacities and institutions will
be foreshadowed by those of which have more sophisticated labor forces,
stronger enabling legal frameworks, and a more comprehensive network
of supportive institutions. Consequently, weaker members may find them-
selves in “low-technology and creativity traps” with diminishing prospects
of taking the next step upward.

Part III: Impact of Regional Integration on Poverty,

Inequalities, and Social Cohesion
Turning to addressing issues under AEC pillar 3, Marc Lautier’s chapter 12
examines social cohesion, economic resilience, and prospects for long-
term growth. While structural change has been the main engine of long-
term catching-up processes, it increases the vulnerability of an economy to
shocks. The domestic aptitude to adjust to shocks and to minimize growth
losses is a major factor of development performance. Economic resilience
depends mainly on social cohesion and on a state’s effectiveness. Specific
indicators for these two notions are provided for a large sample of develop-
ing countries. The comparative analysis demonstrates that while Southeast
Asian economies are a diverse group, most of them have a strong ability to
sustain growth for long periods of time. As for development institutions
and growth performances, the proximity between Southeast and East Asia
is much stronger than between Southeast Asia and the rest of the develop-
ing world.
Bruno Jetin reminds us that the AEC is committed to poverty reduction
and to the well-being of its people thanks to inclusive growth and equitable
access to opportunity for human development. He assesses such a claim in
chapter 13 through the lens of social cohesion. A society is socially cohesive
when it combines three components: a low social exclusion and a high level
of trust and mobility. After a review of the long-term evolution of between-
and within-country inequality, he examines the recent evolution of absolute
and relative poverty in ASEAN countries. He then maps social cohesion
in ASEAN according to its three components, namely, exclusion, social
capital, and social mobility. It appears that convergence between ASEAN
countries is recent and limited and that within-country inequality is high
and sometimes growing. Relative poverty has substituted absolute poverty
 Introduction 7

in some countries putting social cohesion at risk. His chapter concludes by

delineating some country member profiles of social cohesion.
Nathalie Fau in turn examines the role of infrastructural investment in
reducing inequalities. According to ASEAN leaders, improved connectivity,
especially through transport links, is an essential condition for economic
growth in Southeast Asia. Furthermore, the upgrading and the construc-
tion of infrastructure and the harmonization of the regulatory framework
would significantly narrow the development gap within ASEAN. It is pre-
cisely this hypothesis that chapter 14 is questioning, by focusing especially
on the Master Plan on ASEAN Connectivity (MPAC) development projects
for land (road and rail) and sea transport infrastructures. After present-
ing the main directions taken by the MPAC and the tools used to decrease
territorial inequalities regarding provision of infrastructures, this chapter
attempts to assess on different scales (regional, subregional, and local) the
regions that have gained or lost since the MPAC was implemented and to
explain the reasons for these disparities.
The last chapter of part III, by Christine Cabasset, focuses on the rela-
tionship between local governance and inequality. Indonesia has consider-
ably improved its economic and socioeconomic performance at the national
level, especially since the 1997 Asian financial crisis. However, some inter-
nal weaknesses have proved to be obstacles for the country to achieve real
leadership in Southeast Asia and beyond. Spatial and social inequality not
only subsists, but it has increased since 2003, particularly within prov-
inces, within districts, and within urban as rural areas. This rise exposes
the archipelago to social risk at all administrative levels, including in the
“wealthiest” provinces. Chapter 15 highlights some of the main factors
explaining the difficulties that national and local governance face in tack-
ling poverty and inequality issues.
The concluding chapter proposes that the 2015 deadline for the estab-
lishment of AEC should only be seen as one more milestone in the long
journey toward an objective of deep economic integration not commonly
found among developing countries in Asia. It definitely should not be seen
as a final destination, because numerous challenges remain. Enforcement
of the AEC accord will require changes to domestic laws or even national
constitutions. These would be considerable challenges for ASEAN member
states beyond 2015. One of them is to maintain the purpose and central-
ity of ASEAN in Asia. During decades ASEAN has been the sole purely
Asian regional institution where not only Southeast Asia countries but also
the other big Asian players of the region (Japan, China, India, and South
Korea) could meet, agree, and take initiatives in the fields of trade and
finance. These big powers could not often engage directly due to political
discontent and rivalry, and ASEAN was the place where they could meet
and negotiate. ASEAN, a shallow institution, was for want of anything bet-
ter pivotal for Asia-wide integration. With the new round of negotiation of
the RCEP and the one for the Free Trade Area of the Asia-Pacific (FTAAP)
initiated in November 2014 at the APEC summit in Beijing, the big powers
8 Bruno Jetin and Mia Mikic

start negotiating directly calling into question the centrality of ASEAN and
its future raison d’être.

Notes
1. Google reports about 1,330,000 results for the term “ASEAN Economic Community”
as on April 14, 2015.
2. For instance, recent political changes in Thailand resulted in a much smoother and
faster process of transforming AEC policies and measures into domestic laws, as a
first but necessary step of implementing AEC.
 Part I

ASEAN Economic Integration

in the Context of East Asian
Regionalism
 1
ASEAN’s Imitation Economic Community: The
Primacy of Domestic Political Economy
David Martin Jones

Introduction
In 1997, the thirtieth anniversary of the Association of South East Asian
Nations (ASEAN), the organization enunciated a vision of where it would
be in 2020. An integral part of that ASEAN Vision 2020 required the
creation of an ASEAN Economic Community (AEC), a single market and
production base affording a free flow of goods, services, investments, capi-
tal, and skilled labor. Six years later, in Bali, the Declaration of ASEAN
Concord 11 reaffirmed the commitment to the AEC and recognized it as
one of the three pillars of an evolving economic, security, and cultural com-
munity. In 2007, the Cebu Declaration brought the formation of the AEC
forward to January 2015 and introduced the AEC Blueprint (2008), which
developed into a roadmap in 2009, to drive the implementation of the AEC.
To track its progress, ASEAN also introduced regular “scorecards” from
2011 to assess implementation rates for the following parameters: estab-
lishing a single market; achieving a competitive market; promoting equi-
table economic development; and facilitating integration into the global
economy. Moreover, the first two scorecards ASEAN published indicated
that it “appeared to be on track” to achieve its 2015 goal (ASEAN, 2012a;
Ji, 2014, p 2). However, by December 2014 it was apparent that while
ASEAN had achieved some success in reducing intra-ASEAN tariff bar-
riers, nontariff barriers had actually grown, and the economic disparity
between the richest and poorest ASEAN states had also increased (Balboa
and Wignaraja, 2014; Das, 2015). Given that the AEC is unlikely to be
either a single market or production base by December 2015, what does
this tell us about the character of ASEAN as an economic and political
association?
12 David Martin Jones

In August 2015, the Association of Southeast Asian Nations celebrated

its forty-eighth anniversary as a regional security arrangement. Over this
period it has enjoyed a somewhat checkered history. In its first decade, its
founding members rarely met. In its second, it played a diplomatic role in
the resolution of the Indochinese conflict. In its third, it widened its embrace
to include the grouping’s former protagonist, Viet Nam, as well as Laos,
Cambodia, and Burma-Myanmar, and extended its diplomatic style into
Northeast Asia via an ASEAN Regional Forum (ARF). Its fourth decade
witnessed ASEAN extending its institutional reach. After 1997, ASEAN
held regular summits with China, Japan, and South Korea in an arrange-
ment termed “ASEAN Plus Three” (APT). This mechanism incubated an
embryonic East Asian Community that met annually from December 2005
onward.
This incremental evolution earned plaudits both from the region’s politi-
cal leaders, and from a wider scholarly community that had, through sec-
ond track fora, become increasingly involved in ASEAN’s self-definition.
More particularly, from a political economy perspective, the 1997 Asian
Financial Crisis (AFC) spurred the arrangement into both deepening its
economic integration into an AEC and projecting its socialization processes
into Northeast Asia.
Yet, it was not entirely clear whether this greater ASEAN-inspired com-
munity would constitute an “open region” that embraced a wide variety of
states in its vicinity, including Australia, New Zealand, and India as well
as, potentially, Canada, Russia, and the United States, or a more exclusively
East Asian arrangement—a caucus without Caucasians. This ambiguity
concerning the geographical extent of the proposed community reflected a
deeper, less-advertised ambivalence about the nature of ASEAN itself. The
Report of the Eminent Person’s Group on the ASEAN Charter, published
in December 2006, emphasized the fact that ASEAN’s traditional princi-
ples and objectives had to adapt to “the new realities confronting ASEAN,”
if it wished to remain in the “driving seat” of greater regional relations.
Indeed, given the generally positive evaluations of an expanded ASEAN
“to socialize the [East Asian] region with the same norms and values that
have proved successful in Southeast Asia” (ASEAN Secretariat, 2006), it
comes as something of a disappointment to find that both official state-
ments and the scholarship it generated after 1997 have exaggerated what
the association actually has achieved both in the area of intra-ASEAN trade,
development, and connectivity and in terms of ASEAN’s role in driving
wider East Asian economic integration, the precursor to any future politi-
cal integration. Having established ASEAN’s guiding propositions and the
cooperative practices they seek to instantiate, we shall, therefore, test their
efficacy in facilitating both ASEAN and wider regional economic integra-
tion. The Asian Financial Crisis (1997) and ASEAN’s economic response to
it illustrate the strengths and weaknesses of its process. ASEAN’s conduct
in this case, we shall argue, reveals that the absence of a supranational
authority to implement agreed rules together with its conflict avoidance
 ASEAN’s Imitation Economic Community 13

formula rather than facilitating a single economic market, in fact, lends

itself to more powerful actors in the Asia Pacific shaping ASEAN’s eco-
nomic destiny.

Norms, Processes, and the ASEAN Way

The defining ASEAN norm, identified in the Treaty of Amity and
Cooperation (TAC), requires noninterference in the affairs of member states.
All who conform to the ASEAN process, therefore, accept the nonnegotia-
ble inviolability of national sovereignty.1 Second, ASEAN eschews the use
of force. The organization resolves disputes peacefully. In 1971, ASEAN
declared itself a Zone of Peace, Freedom and Neutrality (ZOPFAN) and
subsequently a Nuclear Weapons Free Zone (NWFZ). These norms are by
no means unique. The United Nations Charter (1949) and the Non-Aligned
Movement at its Bandung meeting in 1955 had expounded them prior to
ASEAN’s formation. Nonintervention represented the core principle of
the Chinese Communist Party’s five principles of peaceful coexistence. The
language of both the ASEAN Declaration and the TAC, thus, reflects the
internationalist and postcolonial values of the postwar era.
What, in fact, distinguishes ASEAN’s norms is not their content, but
their implementation in a framework of regional interaction. The ASEAN
way, as Acharya (1997, p. 329) tells it, is “about the process through which
such interactions are carried out” (emphasis in the original). This process
requires the cultivation of certain habits, notably discreetness, informal-
ity, expediency, consensus building, and nonconfrontational bargaining.
Consequently, the ASEAN way contrasts vividly with the “adversarial pos-
turing” and “legalistic decision making procedures” found in multilateral
negotiations conducted according to “western” diplomatic criteria. A pre-
occupation with expediency and discreteness, itself a reflection of member
state weakness and insecurity, requires the practice of nonconfrontation
and sensitivity to the “comfort level” experienced by participants. The
effort to raise the comfort level entails the avoidance of open disagreement
between participants (ibid.).
The comfort process, therefore, means either evading the discussion of
bilateral disputes between member states, or addressing them obliquely in
nonbinding “workshops,” second track fora, and dialogue sessions. For
Michael Leifer (1998, p. 4), the cultivation of nonconfrontation defined the
ASEAN process, making it a “conflict avoidance and management” tool
rather than a conflict resolution mechanism. As Rudolfo Severino, a for-
mer ASEAN secretary-general, explained: “When ASEAN cannot solve a
problem what does it do? First, it may put the problem under the carpet and
not highlight it. What is a problem today may cease to be so in the future”
(cited in Acharya, 1998, p. 62). Rather than formal or legally binding rules,
the ASEAN process promotes instead the practice of consultation and
consensus. For ASEAN scholar diplomat Kishore Mahbubani consensus
14 David Martin Jones

building represents the key to ASEAN’s “unique corporate culture” (ibid.,

p. 55; Mahbubani, 2008, p. 12).
Given the nonbinding character of ASEAN agreements, those who dis-
sent are rarely discomforted. The ASEAN process “is about agreeing to
disagree rather than allowing disagreement to cloud and undermine the
spirit of regionalism” (Acharya, 1998, p. 62). This apparent informality
further entails that close interpersonal ties between leaders and senior gov-
ernmental figures trump official rules and bureaucratic mechanisms. As
Acharya explains: “whilst ASEAN is not lacking regularized ministerial
and bureaucratic consultations, it has not embraced the idea of a centralized
permanent bureaucracy with decision making authority” (p. 63). Indeed,
ASEAN possesses no clear format for decision-making and meetings “often
lack a formal agenda” (p. 59). The cumulative effect of these processes is
ASEAN’s weak or “soft” institutionalism.
Nevertheless, a structure of a distinctively intergovernmental kind
has evolved incrementally over time. Since the fourth ASEAN summit
held in Singapore in 1992, and given additional momentum by the APT,
ASEAN has developed a complicated framework of meetings and for-
mal and informal summits both to discuss and agree on policy. As one
analyst notes, “Since 1992 the ASEAN Heads of Government meetings
have been regularized,” meeting initially biennially with “informal”
summits occurring in between and since 2008 annually as part of wider
discussions with a variety of dialogue partners culminating in the East
Asian summit (Chin, 2003, p. 36). Below this level, the annual ASEAN
ministers’ meeting of foreign ministers constitutes the intergovernmen-
tal “receptacle” of the “political sovereignties of the regional arrange-
ment” (ibid.). The annual meetings of ASEAN economic and finance
ministers evolved to complement this format, which dates from ASEAN’s
founding. Since 1977, the ASEAN economic ministers (AEM) and, in
the aftermath of the AFC, the ASEAN finance ministers have also met
annually. The ASEAN Standing Committee coordinates the work of the
association between these annual meetings, while the ASEAN chair and
vice chair rotate on an annual basis between member states. The ASEAN
Secretariat, headed by the secretary-general of ASEAN, manages this
increasingly complex arrangement of formal and informal summits, dia-
logues, meetings, and standing committee (ASEAN Secretariat, 2013a).
From 2013 the secretary-general holds office for a five-year nonrenew-
able term and is chosen from candidates proposed by member states.
In order to improve the organization’s efficiency in the aftermath of
the financial crisis and implement the postcrisis Hanoi Plan of Action
(1998), Vientiane Action Program (2003), and the roadmap for the AEC
(2009), the ASEAN secretary-general received “an enlarged mandate to
initiate, advise, coordinate and implement ASEAN activities” (ASEAN
Secretariat, 2009).
This enlarged mandate responded to the fact that ASEAN policymak-
ing accelerated dramatically after the AFC. After 1997, ASEAN summits
 ASEAN’s Imitation Economic Community 15

agreed on a plethora of protocols and plans designed both to increase

Southeast Asian integration and to establish a regional leadership role
for the organization. By 2012 the Table of ASEAN Treaties, Agreements
and Ratification ran to 98 pages and 359 treaties or agreements. 2 They
embrace a prospectus ranging from relatively technical sectoral proto-
cols to declarations that refine and develop the character of the organiza-
tion like the Declaration of ASEAN Concord 11 (Bali Concord 11) that
established a framework to achieve an integrated ASEAN Economic
Community, along with the two other pillars of ASEAN community in
the security and cultural realms, and the Kuala Lumpur Declaration on
the Establishment of the ASEAN Charter (2007) that endowed the orga-
nization with a legal personality. They also cover Framework Agreements,
like those establishing an ASEAN Investment Area (AIA) (1998) and an
ASEAN Development Fund (2005), that sought to give substance to the
organization’s Vision 2020 (1997), revealed at the informal Kuala Lumpur
Summit 1997 (ASEAN Secretariat, 1997). Both the Hanoi Plan of Action
and Vientiane Action Program sought to strengthen macroeconomic and
financial cooperation, enhance greater economic integration, and pro-
mote the development of science and technology. Subsequently the deci-
sion to bring forward the completion of the AEC to 2015 and the various
scorecards and roadmaps after 2009 to measure its implantation together
with the Master Plan for ASEAN Connectivity (MPAC 2010) to connect
ASEAN’s economies “to each other and the world” reinforced the vision
(ADB, 2009).
After 1997, the ASEAN process also established a structure governing
ASEAN’s external trade via Framework Agreements on economic part-
nership with Japan and India and a Strategic Partnership for Peace and
Prosperity with China (2003). By 2012, ASEAN had concluded trade agree-
ments, covering goods and services, with Japan, China, Australia, and New
Zealand (2008), the Republic of Korea (2009), and a comprehensive India-
ASEAN FTA in 2014.
In this context of constructing a normative order via the process of dia-
logue and trust building, ASEAN scholars consider particularly influential
the role that Track Two meetings and workshops—involving both diplo-
mats and scholars—play an important role in clarifying the evolving char-
acter of the organization and extending its processes into the ARF and the
APT. Acharya (1998, p. 75) considers, “An important feature of regional
security debates in ASEAN is the role of think tanks specializing in interna-
tional relations and security studies in sponsoring what has (sic) been called
second track dialogues and discussions on regional security issues.”
Thus, ASEAN’s Vision 2020 foresees Southeast Asia “bound by a
common regional identity” (ASEAN Secretariat 1997). Meanwhile, the
Kuala Lumpur Declaration on the Establishment of the ASEAN Charter,
December 2005, desired “to realize an ASEAN Community, as envisaged
in the Declaration of ASEAN Concord 11 . . . and the ASEAN Vision 2020
which envision ASEAN as ‘a concert of Southeast Asian nations; outward
16 David Martin Jones

looking; living together in peace, stability and prosperity, bonded together

in partnership in . . . a community of caring societies’” (ASEAN Secretariat,
2005).
However, discursive constructivism notwithstanding, words are not
deeds. Central to the case for ASEAN transforming both its member states
and the wider region is the contention that the process of meeting and
dialogue in an atmosphere of unstructured informality over time promotes
trust, creates shared norms, and induces a shared identity. This should be
observable both in the changing practice of the organization and in its
manner of addressing a range of regional economic, political, and security
problems. In the economic arena in particular, the publication of score-
cards after 2011 assessing the implementation of an ASEAN single market,
common production base, and the extent of the free flow in goods, ser-
vices, investments, capital, and skilled labor afforded a tool for measuring
compliance and effecting the connectivity central to an integrated market
(Balboa and Wignaraja, 2014; Larkin, 2015(b), p. 5).
One difficulty with this transformation appears almost immediately,
when we examine the actual administrative practice of the organization,
which despite the enhanced mandate of the ASEAN secretariat, under the
2007 ASEAN charter, lacks any supranational capacity (Ji, 2014, p. 3). In
other words, despite the proliferation of meetings, declarations, protocols,
blueprints, scorecards, and master plans the structure of ASEAN remains
determinedly intergovernmental.
This pattern of state-driven interaction is evident in the areas of eco-
nomic cooperation within ASEAN. In fact, it is the staff of each member
state’s ASEAN National Secretariat (ANS), housed in their respective for-
eign ministries, that proposes and, once accepted at a Heads of Government
meeting, disposes policy. As Zakaria Haji Ahmad (1986, pp. 192–212; Ji,
2014) explains, it is the ANS that “coordinates” each country’s position
at ASEAN meetings. Eighty percent of ASEAN business conducted by the
ANS machinery concerns fairly mundane technical and economic matters.
The press and ASEAN scholarship, by contrast, glamorize ASEAN’s politi-
cal role. The ANS forms the actual bureaucracy of ASEAN. Moreover, at
this level, what distinguishes the ASEAN process is not informality, but a
high degree of formality and hierarchy. In fact, the actual implementation
of ASEAN policy across member states is “structured in terms of collabora-
tion not cooperation” (Ahmad, 1986, p. 212).
The dissonance between an official declaratory intent of deepening
ASEAN integration and extending its nonbinding processes to the wider
region, and the actual intra-ASEAN policy practice that remains intergov-
ernmental and bureaucratic has important implications not only for how
ASEAN functions, but also the extent to which its aspiration to build a
common regional identity based on shared norms can be realized. In order
to explore this dissonance, let us examine ASEAN’s rhetorical and practi-
cal response to its first economic crisis.
 ASEAN’s Imitation Economic Community 17

Explaining the 1997 Financial Crisis and

Its Strategic Implications
Prior to the financial crisis of 1997, those enamored of the region at the
expense of the state envisaged polymorphous economic and security arrange-
ments, like ASEAN, together with the economic and security arrangements
it spawned, like the ARF, ASEAN Free Trade Area (AFTA), and ASEAN
Plus Three, as the necessary mechanisms for building what many, at that
time, considered to be a new, multilateral, regional order. Yet ASEAN, as
a regional economic grouping, was far from integrated. The structure of
the more dynamic ASEAN economies was export oriented. They competed
among themselves both for foreign direct investment (FDI) and as low-cost
manufacturing bases for Northeast Asian, European, or North American
multinational corporations. Only in 1989 did some ASEAN states establish
cross-border economic growth zones.3 These growth triangles relied upon
FDI from Northeast Asia, and with the onset of the financial crisis, fell into
desuetude.
Unlike increasingly economically integrated regions such as the
European Union (EU) where intra-European trade, among the core econo-
mies, accounted for over 60 percent of total EU trade by the mid-1990s,
intra-ASEAN trade represented a mere 20 percent of total ASEAN trade
at the time of AFTA’s formation in 1992 (Herschede, 1991, pp. 181–2).
Indeed, continuing dependence on external markets made the notion of a
“customs union unacceptable to ASEAN members” (Bowles, 1997, p. 222).
As Andrew MacIntyre (1997, p. 239) observed in 1997, despite the rhetoric
of ASEAN economic cooperation, “the bound tariff levels of the ASEAN
countries are among the very highest in the world.”
The financial meltdown of 1997 subsequently devastated the individual
economies of a number of ASEAN states. Moving from the boundless opti-
mism of the Asian miracle to financial crisis within a year constituted a
shock to the Asian model of economic development, undermining previous
certainties, and leaving both regional politicians and academics flounder-
ing for explanations and solutions. In this context, the ASEAN orthodoxy
holds that even if attempts at economic integration had been largely rhe-
torical prior to the crisis, its consequence encouraged both a deepening of
ASEAN integration and a widening of its processes to embrace Northeast
Asia (Higgott, 1998, p. 6). The 1997 financial crisis thus offers an excel-
lent case for testing claims about the role of ASEAN and its capacity to
build an integrated economic community, one of the pillars of the enhanced
Declaration of ASEAN Concord (2003).
The crisis, which began in Thailand in June 1997, spawned two con-
tested understandings. The prevailing economic orthodoxy maintained that
the structural features of the Asian economic model comprised the efficient
cause of meltdown. By contrast, the market unfriendly school, led by then
Malaysian premier Mahathir Mohammad, and abetted by a curious group
18 David Martin Jones

of cheerleaders that ranged from Paul Krugman to Jeffrey Sachs, Joseph

Stiglitz, and President Suharto, maintained that the crisis was an effect of
deregulated global capitalism.
Ultimately the crisis stimulated the desire to do something collectively to
counter regional vulnerability. Here, Mahathir’s diagnosis achieved increas-
ing traction. As the meltdown spread from Southeast Asia to Northeast
Asia, most notably South Korea, it induced a sense of regional humiliation.
Shame induced resentment as Western institutions like the IMF appeared
to punish East Asia (Lewis, 1999, p. 1).
Consequently, designing Asian solutions for Asian problems would
engender both a greater sense of East Asian independence and strengthen
regional economies against further externally induced shocks. The years
following the crisis therefore witnessed an upsurge in the rhetoric of pan-
Asian economic renewal (Koh, 2001, p. 1). The Sixth ASEAN summit in
Hanoi, in December 1998, committed its members to “a higher plane of
regional cooperation in order to strengthen ASEAN’s effectiveness in deal-
ing with the challenges of growing interdependence within ASEAN and
of its integration into the global economy” (ASEAN Secretariat Point 5,
1998).
The years following the crisis therefore witnessed an upsurge in the rhet-
oric of pan-Asian economic renewal. Thus, Singapore ambassador-at-large
Tommy Koh (2001, p. 1) argued that the economic crisis had “stimulated
a new sense of East Asian regionalism and brought the countries closer
together.” A feeling of shared destiny and a commitment to renewal gal-
vanized ASEAN. In the months following the outbreak of the economic
crisis ASEAN sought to institute a dialogue partnership with the Northeast
Asian states, China, South Korea, and Japan, through an East Asian
Summit (EAS), the first of which met in Kuala Lumpur in December 1997.
The Sixth ASEAN summit in Hanoi, in December 1998, committed its
members to “a higher plane of regional cooperation in order to strengthen
ASEAN’s effectiveness in dealing with the challenges of growing interde-
pendence within ASEAN and of its integration into the global economy”
(ASEAN Secretariat, 1998).
The same summit further agreed to formalize these meetings into the
arrangement known as ASEAN Plus Three, subsequently extended further
into a nebulous East Asian Community, including Australia, New Zealand,
and India, in a subsidiary “Asian” category after 2007, and by 2013 includ-
ing both Russia and the United States. The push for greater East Asian
institutionalization also produced a number of “visions” to reinforce eco-
nomic cooperation. South Korean president Kim Dae-jung proposed an
“East Asia Vision Group” that would report on proposals to deepen long-
term cooperation among members of the APT grouping (Korea Institute
for Economic Policy, 2001, p. 1). Not to be outdone, the Japanese sug-
gested creating an Asian Monetary Fund specifically to address regional
needs in a more effective and sensitive manner than the IMF (Johnstone,
1999, p. 125). Even more grandiose visions were floated including an Asian
Another Random Scribd Document
with Unrelated Content
dogs and huntsmen had covered fifty leagues at least. When, at last, after
circling round by Manereux and Oigny, the black wolf reached the borders
of the heath by the lane of Ham, the sun was already beginning to sink, and
shedding a dazzling light over the flowery plain; the little white and pink
flowers scented the breeze that played caressingly around them; the
grasshopper was singing in its little house of moss, and the lark was soaring
up towards heaven, saluting the eve with its song, as twelve hours before it
had saluted the morn. The peaceful beauty of nature had a strange effect on
Thibault. It seemed enigmatical to him that nature could be so smiling and
beautiful, while anguish such as his was devouring his soul. He saw the
flowers, and heard the insects and the birds, and he compared the quiet joy
of this innocent world with the horrible pangs he was enduring, and asked
himself, whether after all, notwithstanding all the new promises that had
been made him by the devil’s envoy, he had acted any more wisely in
making this second compact than he had in making the first. He began to
doubt whether he might not find himself deceived in the one as he had been
in the other.
As he went along a little footpath nearly hidden under the golden broom,
he suddenly remembered that it was by this very path that he had taken
Agnelette home on the first day of their acquaintance; the day, when
inspired by his good angel, he had asked her to be his wife. The thought
that, thanks to this new compact, he might be able to recover Agnelette’s
love, revived his spirits, which had been saddened and depressed by the
sight of the universal happiness around him. He heard the church bells at
Préciamont ringing in the valley below; its solemn, monotonous tones
recalled the thought of his fellow men to the black wolf, and of all he had to
fear from them. So he ran boldly on, across the fields, to the village, where
he hoped to find a refuge in some empty building. As he was skirting the
little stone wall of the village cemetery, he heard a sound of voices,
approaching along the road he was in. He could not fail to meet whoever
they might be who were coming towards him, if he himself went on; it was
not safe to turn back, as he would have to cross some rising ground whence
he might easily be seen; so there was nothing left for it but to jump over the
wall of the cemetery, and with a bound he was on the other side. This
graveyard as usual adjoined the church; it was uncared for, and overgrown
with tall grass, while brambles and thorns grew rankly in places. The wolf
made for the thickest of these bramble bushes; he found a sort of ruined
vault, whence he could look out without being seen, and he crept under the
branches and hid himself inside. A few yards away from him was a newly-
dug grave; within the church could be heard the chanting of the priests, the
more distinctly that the vault must at one time have communicated by a
passage with the crypt. Presently the chanting ceased, and the black wolf,
who did not feel quite at ease in the neighbourhood of a church, and thought
that the road must now be clear, decided that it was time to start off again
and to find a safer retreat than the one he had fled to in his haste.
But he had scarcely got his nose outside the bramble bush when the gate
of the cemetery opened, and he quickly retreated again to his hole, in great
trepidation as to who might now be approaching. The first person he saw
was a child dressed in a white alb and carrying a vessel of holy water; he
was followed by a man in a surplice, bearing a silver cross, and after the
latter came a priest, chanting the psalms for the dead.
Behind these were four peasants carrying a bier covered with a white pall
over which were scattered green branches and flowers, and beneath the
sheet could be seen the outline of a coffin; a few villagers from Préciamont
wound up this little procession. Although there was nothing unusual in such
a sight as this, seeing that he was in a cemetery, and that the newly-dug
grave must have prepared him for it, Thibault, nevertheless, felt strangely
moved as he looked on. Although the slightest movement might betray his
presence and bring destruction upon him, he anxiously watched every detail
of the ceremony.
The priest having blessed the newly-made grave, the peasants laid down
their burden on an adjoining hillock. It is the custom in our country when a
young girl, or young married woman, dies in the fullness of her youth and
beauty, to carry her to the grave-yard in an open coffin, with only a pall
over her, so that her friends may bid her a last farewell, her relations give
her a last kiss. Then the coffin is nailed down, and all is over. An old
woman, led by some kind hand, for she was apparently blind, went up to the
coffin to give the dead one a last kiss; the peasants lifted the pall from the
still face, and there lay Agnelette. A low groan escaped from Thibault’s
agonised breast, and mingled with the tears and sobs of those present.
Agnelette, as she lay there so pale in death, wrapped in an ineffable calm,
appeared more beautiful than when in life, beneath her wreath of forget-me-
nots and daisies. As Thibault looked upon the poor dead girl, his heart
seemed suddenly to melt within him. It was he, as he had truly realised,
who had really killed her, and he experienced a genuine and overpowering
sorrow, the more poignant since for the first time for many long months he
forgot to think of himself, and thought only of the dead woman, now lost to
him for ever.
As he heard the blows of the hammer knocking the nails into the coffin,
as he heard the earth and stones being shovelled into the grave and falling
with a dull thud on to the body of the only woman he had ever loved, a
feeling of giddiness came over him. The hard stones he thought must be
bruising Agnelette’s tender flesh, so fresh and sweet but a few days ago, and
only yesterday still throbbing with life, and he made a movement as if to
rush out on the assailants and snatch away the body, which dead, must
surely belong to him, since, living, it had belonged to another.
But the grief of the man overcame this instinct of the wild beast at bay; a
shudder passed through the body hidden beneath its wolf skin; tears fell
from the fierce blood-red eyes, and the unhappy man cried out: “O God!
take my life, I give it gladly, if only by my death I may give back life to her
whom I have killed!”
The words were followed by such an appalling howl, that all who were in
the cemetery fled, and the place was left utterly deserted. Almost at the
same moment, the hounds, having recovered the scent, came leaping in over
the wall, followed by the Baron, streaming with sweat as he rode his horse,
which was covered with foam and blood.
The dogs made straight for the bramble bush, and began worrying
something hidden there.
“Halloo! halloo!! halloo!!!” cried the Lord of Vez, in a voice of thunder,
as he leapt from his horse, not caring if there was anyone or not to look
after it, and drawing out his hunting-knife, he dashed towards the vault,
forcing his way through the hounds. He found them fighting over a fresh
and bleeding wolf-skin, but the body had disappeared.
There was no mistake as to its being the skin of the were-wolf that they
had been hunting, for with the exception of one white hair, it was entirely
black.
What had become of the body? No one ever knew. Only as from this time
forth Thibault was never seen again, it was generally believed that the
former sabot-maker and no other was the were-wolf.
 Furthermore, as the skin had been found without the body, and, as, from
the spot where it was found a peasant reported to have heard someone speak
the words: “O God! take my life! I give it gladly, if only by my death I may
give back life to her whom I have killed,” the priest declared openly that
Thibault, by reason of his sacrifice and repentance, had been saved!
And what added to the consistency of belief in this tradition was, that
every year on the anniversary of Agnelette’s death, up to the time when the
Monasteries were all abolished at the Revolution, a monk from the Abbey
of the Premonstratensians at Bourg-Fontaine, which stands half a league
from Préciamont, was seen to come and pray beside her grave.
. . . . . .
Such is the history of the black wolf, as it was told me by old Mocquet,
my father’s keeper.

THE END.
Printed by Gilbert & Rivington, Ltd., St. John’s House, Clerkenwell,
London, E.C.

Typographical errors corrected by the etext transcriber:

Abencerages=> Abencerrages {pg 14}
whip the exorcisims=> whip the exorcisms {pg 20}
earnest supplicacation=> earnest supplication {pg 23}
How should I know who your were=> How should I know who you
were {pg 29}
In the the midst=> In the midst {pg 34}
Angelette’s=> Agnelette’s {pg 35, 114}
Angelette=> {pg 35}
Nethertheless=> Nevertheless {pg 39}
shook her her head=> shook her head {pg 46}
remainder of lis life=> remainder of his life {pg 58}
since he had been at tale=> since he had been at table {pg 58}
See arranged the folds of her dress=> She arranged the folds of her
dress {pg 65}
boat-spear in the bush=> boar-spear in the bush {pg 76}
 similiar to that=> similar to that {pg 84}
gropped about=> groped about {pg 81}
king’s ramsom=> king’s ransom {pg 85}
from his legthargy=> from his lethargy {pg 89}
Thibaubt, pushed him away=> Thibault, pushed him away {pg 90}
the lord of Vex=> the lord of Vez {pg 91}
let us be of!=> let us be off! {pg 91}
and making for for=> and making for {pg 99}
less than the Barons’ profound knowledge=> less than the Baron’s
profound knowledge {pg 100}
the people of Péciamont=> the people of Préciamont {pg 107}
two unfortunate youg creatures=> two unfortunate young creatures {pg
107}
Grimaucourt=> Grimancourt {pg 111}
Lisart l’Abbesse=> Lessart-l’Abbesse {pg 111}
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