WASHINGTON, May 24 (IPS) - This year the Association of Southeast Asian Nations celebrates its 40th birthday, and it has big plans. After four decades of being largely a political and security alliance, ASEAN is accelerating its plans for economic integration.

ASEAN leaders are so eager to pull together into an economic community that they recently decided to move the goalposts. The economic benchmarks originally planned for 2020 have been moved up to 2015.

"The mission of this economic community is to develop a single market that is competitive, equitably developed, and well integrated in the global economy," says Worapot Manupipatpong, principal economist and director of the office of the Secretary-General in the ASEAN Secretariat. He was speaking last week at an Asian Voices seminar in Washington, DC, sponsored by the Sasakawa Peace Foundation.

The single market of 2015 would encompass all ten members of ASEAN: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Philippines, Singapore, Thailand, and Vietnam. According to the projections of the ASEAN Secretariat, the single market will be accomplished by removing all barriers to the free flow of goods, services, capital, and skilled labor. Rules and regulations will be simplified and harmonised. Member countries will benefit from improved economies of scale. Common investment projects, such as a highway network and the Singapore--Kunming rail link, will facilitate greater trade.

Although there will not be a single currency like the European Union's euro, the ASEAN countries will nevertheless aim for greater currency cooperation.

"ASEAN's process of economic integration was market-driven," says Soedradjad Djiwandono former governor of Bank Indonesia, and it was influenced by the "Washington consensus" favoring increased liberalisation. "It is a very different framework from the closed regionalism of the Latin American model," he continues. With multilateral talks on trade liberalisation stalled, efforts have largely shifted to bilateral negotiations. "There has been a proliferation of bilateral agreements that developed countries use as a way to push a program for liberalising different sectors," Djiwandono concludes.

So far, ASEAN points to increased trade within the ten-member community as an early sign of success. But, overall trade share -- 25 percent -- pales in comparison to the 46 percent share of the North American Free Trade Agreement countries or the 68 percent share of EU countries. And with intra-ASEAN foreign direct investment rather low -- only 6 percent in 2005 -- financial integration lags behind trade integration.

The ASEAN approach differs in several key respects from the EU model, which originated in a 1951 coal and steel agreement among six European nations. ASEAN's origins, in contrast, have been primarily political and security-oriented, observes Donald Emmerson, director of the South-east Asia Forum at the Shorenstein Asia-Pacific Research Center at Stanford. "The success attributed to ASEAN is that it presided over an inter-state peace ever since it was formed. There's never been a war fought between ASEAN members."

Also distinguishing ASEAN from EU is the latter's institutionalisation. "ASEAN is radically different," Emmerson continues. "The much discussed ASEAN way is consultation, not even voting, since if they vote, someone will lose. Sometimes the consultation goes on without result. Sometimes decisions are reduced to the lowest common denominator. It also means that rhetoric predominates." This consultative process will be tested in November, when ASEAN leaders gather to adopt a charter, something that the EU has so far failed to accomplish.

Another difference with Europe is the enormous economic disparities among the ASEAN members, with Singapore and Brunei among the richest countries in the world and Laos among the poorest. These economic disparities are reproduced within the countries as well.

Worapot Manupipatpong points to two ASEAN initiatives for closing the gap. There is help for small and medium-sized enterprises. And the Initiative for ASEAN Integration,"basically provides technical assistance to Cambodia, Laos, and Myanmar so that they can catch up with the rest of the ASEAN members," he says. "Attention will be paid to where these countries can participate in the regional networks, what comparative advantage they have, and how to enhance their capacities to participate in the regional development and supply chain."

Then there are ASEAN's efforts to address "public bads," according to Soedradjad Djiwandono. "When there is a tsunami or a pandemic," he argues, "the worst victims are the marginalised or the poor. Addressing that kind of issue has some positive impact on reducing inequality."

"The gap between the early joiners and the later joiners will continue to be substantial because ASEAN has always been more of a forum and less of a problem-solving organisation," observes Karl Jackson, director of the Asian Studies Program at the School for Advanced International Studies at Johns Hopkins University. "As a result one would expect that these gaps would be closed only as individual countries increase their rates of growth." He attributes the inequality within countries to the middle stage of growth experienced by almost all societies: "Inequality increases before the state becomes strong enough to redivide some of the pie and take care of the gross inequalities caused by rapid economic growth."

ASEAN is banking on financial and trade liberalisation increasing the overall regional pie. On paper it is an ambitious project. But "the low hanging fruit have been plucked," says Donald Emmerson. Tariffs on the "easy commodities" have already been reduced to less than 5 percent. But non-tariff barriers to trade remain, and member countries are very protective of certain sectors.

Also tempering the region's optimism is the memory of the Asian financial crisis. The crisis began in Thailand in 1997 and spread rapidly to other countries in the region. One school of thinking holds that capital mobility -- "hot money" -- either caused or considerably aggravated the crisis. Since the ASEAN integration promises greater capital mobility, will the region be at greater risk of another such crisis?

"One consequence of the economic dynamism of the Asia-Pacific region," notes Donald Emmerson, "is that the accumulation of vast foreign exchange reserves -- obviously in China, but in other countries too -- more than anything else represents an asset that can be brought into the equation as a stabilising factor in the event of a financial crisis." Also, he continues, as a result of the ASEAN plus Three network, which adds China, South Korea, and Japan to the mix, the 13 countries have "made serious headway toward establishing currency swap arrangements that would come into play in an emergency on the scale of an Asian financial crisis."

Karl Jackson also looks to currency reforms as a hedge against future crisis. The Thai baht and the Indonesian rupiah are now unpegged currencies. "You will not have a situation in which the central bank of Thailand loses 34 billion US dollars defending the baht," Jackson argues. "Instead, the baht will appreciate or depreciate according to market forces."

But Jackson still remains cautious about the future. He points to the large number of non-performing loans in the Chinese banking sector. Also, there is "this anomaly of the U.S. absorbing two-thirds of the savings coming out of Asia, plugging it mostly into consumption rather than direct investment," he observes. "Eventually there has to be some kind of readjustment. The real value of the dollar must fall." (END/2007)

Reprinted by permission from IPS Asia-Pacific.

A new study published May 8th in the Proceedings of the National Academy of Sciences (PNAS) finds that Indonesian rice agriculture is greatly affected by short-run climate variability, and could be significantly harmed by long-run climate change. Indonesia is the fourth most populous country in the world, one of the world's largest producers and consumers of rice, and is characterized by a population of rural poor who depend on rice agriculture for their livelihood.

"Agriculture is central to human survival, and is probably the human enterprise most vulnerable to changes in climate", notes lead author Rosamond Naylor, Director of the Program on Food Security and the Environment at Stanford. "This is particularly true in countries such as Indonesia, with large populations of rural poor. Understanding the current and future effects of changes in climate on Indonesian rice agriculture will be crucial for improving the welfare of the country's poor".

Rice growers facing shortened rainy season

The PNAS study, entitled 'Assessing the risks of climate variability and climate change for Indonesian rice agriculture', was a joint effort among a team of scientists at Stanford University, the University of Washington, and the University of Wisconsin. The study finds that rice production in Indonesia is greatly affected by year-to-year climate variability -- in particular the variability caused by El Nino/Southern Oscillation (ENSO) events in the Pacific Ocean. During a warm ENSO event (or 'El Nino'), the arrival of the monsoon rains is delayed, disrupting the planting of the main rice crop and prolonging the 'hungry season' in Indonesia. "During a bad El Nino event, farmers literally wait months before they can plant their crop, resulting in a harvest that is months late and often much smaller in size", says Naylor.

The authors then analyzed how climate change could effect rainfall and agriculture in Indonesia. Using output from 20 global climate models (GCMs), running two emissions scenarios, and tailoring the GCM projections to the complex local topography of the Indonesian archipelago, the authors found that the probability of experiencing a harmful delay in monsoon rains could more than double in some of the most important rice growing regions in Indonesia.

"Most models predict that the rains will come later in Indonesia, it will rain a little harder once the monsoon begins, and then it will really dry up during the summer months," says David Battisti, co-author and atmospheric scientist at the University of Washington. "So Indonesia could be looking at a much shorter rainy season, with an almost rainless dry season in some areas, squeezing rice farmers on both ends".

While the study cannot directly address changes in the frequency or intensity of ENSO events under future climate change -- still an area of active research -- the authors conclude that even if there were no changes in the basic pattern of ENSO, Indonesian rice growers will be facing a significantly shortened rainy season. In the absence of adaptive measures, these growers could suffer greatly.

Adapting for change

What adaptive measures could be taken in the face of harmful short-run variability and long-run change in climate? In the short run, the science of ENSO prediction has advanced to the point that reasonably high-confidence ENSO forecasts are available at least two seasons in advance. A forecasting model developed by the authors is now being used to by the Indonesian Agricultural Ministry to anticipate and plan for ENSO events and their effects on agriculture. The authors are also working with Indonesian officials to develop longer-run strategies which address the anticipated effects of climate change on agriculture in the country. Such strategies could include investments in water storage, development of drought-tolerant crops, and crop diversification for those farmers at greatest risk.

Along with its important findings for Indonesian policy-makers, the study design itself is a novel contribution to the literature. "To our knowledge, our study is the first climate-agriculture study that uses projections from all available GCMs to look at climate effects in a specific region", explains Battisti. "Thus more than past efforts, our study captures the range of uncertainty across different projections of future climate, knowledge which will be crucial for long-run thinking about how to respond."

Battisti also notes that the use of empirical downscaling models in the study, which translate GCM output into useable regional forecasts of changes in climate, is a technique missing from most other studies of climate and agriculture in the tropics, an omission that could render their regional climate projections untrustworthy. Naylor adds: "From a scientific perspective, its imperative that we now replicate this kind of study elsewhere, in order to start building a more complete picture of the effects of climate change on agriculture." The team has begun a similar study in China this spring.