Monday, July 7, 2014

ASEAN Secretary General reacts favorably to Russia’s Asian pivot

Russia Direct
Jun 30, 2014 Eugene Nikitskiy

RD Exclusive: The Secretary General of ASEAN, H.E. Le Luong Minh, comments on Russia’s growing aspirations for the Asia-Pacific region, including the prospects for closer collaboration with ASEAN Member States and the formation of new economic relationships.

Secretary General of ASEAN H.E. Le Luong Minh (pictured) welcomes Russia as a key partner in the Asia-Pacific. Photo: AFP/East News

Much has been made of Russia’s pivot to Asia in recent months, including the signing of a 30-year, $400 billion gas deal with China during Vladimir Putin’s state visit to Shanghai. Given Russia’s public statements about the need to develop its Far East as well as establish closer economic relations with Asia, Russia Direct recently interviewed H.E. Le Luong Minh, the Secretary General of ASEAN, to get an inside look at Russia’s growing willingness to become part of economic and trading relationships in Southeast Asia.

Russia Direct: Russia has been trying to play a more active role in the Asia-Pacific lately. How would you assess Russia’s prospects in the region? 

H.E. Le Luong Minh: ASEAN welcomes the active participation of Russia in the Asia-Pacific region, especially through ASEAN-led mechanisms such as the East Asia Summit (EAS), ASEAN Regional Forum (ARF), and ASEAN Defense Ministers’ Meeting-Plus (ADMM-Plus).

We acknowledge that Russia has the capability and potential to make significant contributions to the promotion of peace, stability and prosperity of the region.

We also appreciate Russia’s support for ASEAN’s central role in those regional mechanisms. 

ASEAN appreciates Russia’s efforts in coming up with the proposal on a security architecture for the Asia-Pacific region. This proposal, together with several similar proposals – such as Indonesia’s proposal to conclude a treaty of friendship and cooperation in the Indo-Pacific region, need to be further discussed to ascertain their merits.

This is currently being done through a series of workshops. Two workshops have been held and the third one is planned for next month in Indonesia. 

While discussions of these proposals are ongoing, it is important for countries in the region, including Russia, to continue to utilize existing mechanisms to promote cooperation with a view to enhancing peace, stability and prosperity in the region.

RD: In view of the current international situation and its consequences, couldWestern-led sanctions against Russia affect Russia's cooperation with ASEAN countries? 

LLM: ASEAN-Russia cooperation has been expanding since Russia became a Dialogue Partner of ASEAN in 1996, and we will continue to work closely to further deepen the relations. We will work with Russia through all established mechanisms to bring the partnership to a higher level.

RD: How would you characterize the current state of Russia-ASEAN relations? What are the prospects for the future? 

LLM: ASEAN-Russia relations and cooperation have expanded and deepened, especially after the signing of the ASEAN-Russia Joint Declaration on Progressive and Comprehensive Partnership at the first ASEAN-Russia Summit in December 2005 in Kuala Lumpur.

Over the past 18 years, ever since Russia became a Dialogue Partner of ASEAN, cooperation has expanded to cover key areas of collaboration such as science and technology, education, food security, agriculture, energy, tourism, transport and disaster management. 

As ASEAN and Russia enter their second decade of partnership, both sides need to look into ways to further substantiate their collaboration.

It is important that new and promising areas of collaboration are identified for inclusion in the new ASEAN-Russia plan of action after the current ASEAN-Russia Comprehensive Program of Action (CPA) to Promote Cooperation expires at the end of next year.

With its immense potential as a great power, as a Permanent Member of the United Nations Security Council having significant responsibility for the Asia-Pacific region as well as global peace and security, we also expect Russia to play a more proactive role in regional mechanisms such as the ARF, ADMM-Plus and EAS with a view to further contributing to the region’s peace, security and stability.

RD: Great international projects, such as free trade zones, manifest themselves in the form of new orders and patterns of international affairs. How do you see the prospects of Russia participating in the formation of new economic relationships, such as free trade zones? 

LLM: The ASEAN+1 free trade agreements (FTAs) – or ASEAN’s free trade agreements with China, Japan, Korea, India, Australia and New Zealand – are part of efforts to integrate ASEAN into the global economy consistent with Pillar 4 of the Blueprint for the ASEAN Economic Community (AEC).

ASEAN continues to focus its integration into the global economy with the implementation of the ASEAN+1 FTAs, the on-going negotiations for the Regional Comprehensive Economic Partnership (RCEP) and preparations for the ASEAN-Hong Kong Free Trade Area (AHKFTA) negotiations. 

Meanwhile, Russia currently has implemented bilateral FTAs with several countries (Azerbaijan, Moldova, Serbia, Tajikistan, Turkmenistan and Uzbekistan) and formed aCustoms Union with Belarus and Kazakhstan.

Russia and its Customs Union partners commenced negotiations for a FTA with New Zealand in 2011 and with Vietnam in 2013. In June 2014, Russia and India agreed to set up a joint study group to look at the feasibility of a FTA between the Customs Union and India.

ASEAN attaches great importance to its economic relations with Russia.

ASEAN-Russia trade and investment has been growing at a robust pace. Total trade between ASEAN-Russia grew by 9.9 percent from $18.2 billion in 2012 to $19.9 billion in 2013.

This trend is attributed to two factors: the 7.5 percent increase in ASEAN exports to Russia, from $4.9 billion in 2012 to $5.2 billion in 2013; and the 10.7 percent increase in ASEAN imports from Russia, from $13.3 billion in 2012 to $14.7 billion in 2013.

The foreign direct investment (FDI) flows from Russia to ASEAN have surged significantly in two years, by 369.2 percent in 2012 ($180 million) and 194 percent in 2013 ($542 million). 

In August 2012, Russia became the 156th Member of the WTO after 19 years of negotiations. ASEAN welcomed Russia’s accession to the WTO, as this can mean greater trade between Russia and ASEAN members states, primarily since the WTO regime would lessen the cost of business transactions and provide a reliable forum for any trade disputes that may arise.

With ASEAN maintaining its centrality in the regional economic architecture and intensifying its integration into the global economy, it would be advantageous for Russia, as it seeks to participate in the global process, to explore an economic partnership with ASEAN. 

The high growth rates of ASEAN Member States mean greater demand for imports.

ASEAN imports high-tech machinery, military equipment, chemical products, fuel and energy, all of which Russia can provide. While Russia exports fuel and energy, ASEAN countries export mostly manufactured goods and agricultural produce.

Russia and ASEAN may benefit from this complementarity. Russia and ASEAN can be partners in joint infrastructure and high-tech projects. 

As an important dialogue and trading partner of ASEAN, it is logical for ASEAN to engage Russia for an FTA, similar to the FTAs that ASEAN has with other leading economies in the world, such as China, India and Japan.

Of course, what has to be taken into account is the fact that Russia is in a Customs Union together with Belarus and Kazakhstan.

Any FTA with Russia would have to involve Belarus and Kazakhstan. ASEAN is in the thick of consolidating its Plus 1 FTAs to form the Regional Comprehensive Economic Partnership (RCEP). One of the major principles of RCEP is “open accession,” which would allow countries outside ASEAN and its FTA partners to accede to the RCEP once negotiations have been completed.

RD: What are the prospects of partnership between the Eurasian Economic Unionand the ASEAN Economic Community?

LLM: The Eurasian Economic Union (EEU) and the ASEAN Economic Community (AEC) are different regional trading arrangements characterized by the depth and breadth of the type of economic integration they are respectively pursuing.

For the AEC, the immediate objective is to transform the region into a single market and production base where there is free flow of goods, services, investment, skilled labor and freer flow of capital.

The AEC is not a Customs Union, which means that, while goods can move freely within the 10 Member States, each Member State determines its external tariff policy vis-à-vis non-Member States. So far, ASEAN Member States have no common external tariffs.

The Customs Union, on the other hand, is a single customs territory where countries in the group – Russia, Belarus and Kazakhstan – have a Common Customs Code and a common trade regime with third-party countries.

This is not to say, however, that a partnership between the EEU and the AEC is unlikely. What may be difficult to pursue at this point in time could be a region-to-region economic partnership between the two regional groupings.

A possible partnership may cover economic and technical cooperation, particularly in areas of mutual interest to the two groups.

This would include, but not be limited to, exchanging information and experiences in integrating economies in their respective groupings; putting in place a mechanism for regular dialogue to enhance bilateral trade and investment through facilitation measures and joint promotion activities; promoting business-to-business dialogue; and other activities that would build confidence not only among the governments, but also the business community as well.

RD: Business-to-Business (B2B) relations between Russia and ASEAN have been intensifying for more than the past decade. In your opinion, what are the most promising spheres of economic, social and cultural cooperation?

LLM: ASEAN-Russia trade and investment has been growing at a robust pace, as I mentioned above. However, trade and investment relations between ASEAN and Russia have been deemed modest vis-à-vis the potential existing in both regions.

With regard to investment, ASEAN connectivity projects provide good opportunities for Public Private Partnership (PPP) collaboration.

Russian investors may be keen on ASEAN’s infrastructure projects in roads and railways. The Russian business community can collaborate with the ASEAN business community in areas such as infrastructure development; Russian investors may participate in the PPP projects identified under the Master Plan on ASEAN Connectivity. 

Russia might be a good source of technical assistance in the form of contractor/consultant relationships to improve ASEAN connectivity, such as the Singapore-Kunming Rail Link (SKRL) and the remaining 11 inter-connections under the ASEAN Power Grid. The potential for enhanced cooperation also exists in areas where Russia has comparative advantages such as energy, information and communication technology (ICT), and electronic trading platforms.

RD: The Soviet Union had tight links with ASEAN countries. What impact does this legacy have on our current relations?

LLM: The USSR had good, friendly and multi-faceted relations with a number of ASEAN Member States.

Many students from ASEAN countries pursued their education in the USSR and upon return to their own countries they joined the civil service and contributed to the deepening of the relations and friendship. Many of them would hold leadership positions and pursued policies to promote friendly relations with the USSR.

Best practices and experiences of the USSR were brought back to these countries to strengthen their capacity and capability. When Russia became a Dialogue Partner of ASEAN in 1996, these countries facilitated greater cooperation and engagement between ASEAN and Russia.

That historical foundation has contributed to the current state of our relations.

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