An integrated Asian economic community will be an `arch of advantage' across which there would be large-scale movement of people, capital and ideas. This could be an anchor of stability and development for Asia and the world.

Our Bureau

New Delhi, Nov. 18

THE East Asia summit next month in Kuala Lumpur (Malaysia) might be a harbinger for Asia to take its first step in the long journey towards broader regional economic integration in the form of an Asian Economic Community (AEC) as envisaged by the Prime Minister, Dr Manmohan Singh.

This is what most scholars speaking at a high-level Conference on Asian Economic Integration here hoped for, stating that the process of formation of an AEC combining major Asian economies could be a crucial step in the direction of broader pan-Asian regional economic integration.

Inaugurating the two-day conference, jointly organised by the Research & Information System (RIS) with the Institute of South East Asian Studies (ISEAS), Singapore, and supported by the SasakawaPeace Foundation, Japan and UNDP, the Minister without Portfolio Mr K. Natwar Singh, said there was an amazing web of bilateral, sub-regional and regional Comprehensive Economic Cooperation Agreements (CECAs), free trade areas (FTAs) and regional trading arrangements (RTAs) as well as sub-regional and regional mechanisms that remainedunder construction. But the objective of all these is integration, he said, adding "we are at the beginning of a process" in translating the AEC into a reality.

Mr Singh said that such a Community would constitute an `arch of advantage' across which there would be large-scale movement of people, capital and ideas. This could be an anchor of stability and development for Asia and the world, he said.

In his presentation, the Director-General, RIS, Dr Nagesh Kumar, highlighted the limitations of sub-regional cooperation and emphasised the need for an overarching, broader pan-Asian framework to facilitate exploitation of considerable synergy for mutual benefits. He saidthe opportunity cost of not integrating was very high and drew attention to the fact that the potential of investment of Asian savings for Asian development remainedunexploited.

The Malaysian Institute of Economic Research's Executive Director, Dr Mohamed Ariff, said that even as globalisation had heightened competition by enabling companies to cross borders through mergers and acquisitions (M&As), countries in Asia could come closer through integration. He said that in the welter of so many RTAs and FTAs, even rules of origin evolved by one country could confuse manufacturers as to how to differentiate the third country import from piggybacking on the preferential route. It is far easier to evolve an arrangement subsuming the different FTAs into a single Asian Economic Community. He said market forces hadalready driven integration in Asia with intra-Asian trading climbing up steadily in recent years.

Mr Soogil Young, President, National Strategy Forum, South Korea, said the most serious threat to the continuation of Asian dynamism stemmed from proliferation of FTAs with the spaghetti bowl effect, failure of the Doha Round of trade negotiations, and continued stalemate over the global payments imbalances. He said the East Asian summit should play the role of coordinating the various prevailing schemes in the management of the global development process.

Mr Yao Chao Cheng, of China's Shanxi University of Finance & Economics, regretted that among all Asian nations, social and civilian exchanges were too little. Asians should rediscover their common cultural identity by repairing the "cultural fault lines" by managing the internal disputes and conflicts. As a strategic approach, Governments of the Asian nations should take effective steps to encourage and promote the mass flow of people, scholars, particularly the younger generation, to improve understanding and minimise misunderstanding among Asian people.

(This article was published in the Business Line print edition dated November 19, 2005)
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