Globalisation, Domestic Politics and Regionalism Globalisation, Domestic Politics and Regionalism analyses the relationship between globalisation and regionalism through a detailed examination of the ASEAN Free Trade Area (AFTA) project. The book argues that AFTA encompasses the features of both open and developmental regionalism due to the political significance of foreign and domestic capital, illustrating the more general point that the domestic political economy, which mediates between globalisation and regionalism, can be used to explain the evolution of AFTA between 1991 and 2002. Despite being triggered by the pressures of globalisation, it was the tussle between the imperatives of growth and domestic distribution that shaped the way AFTA unfolded. Nesadurai’s concept of developmental regionalism breaks new ground, supplementing existing models of the globalisation-regionalism relationship. She also offers an account of how universal structural pressures arising from global capitalism are played out in different regional and country settings. It should appeal to all those interested in the manner in which the global and the local interact in processes of regionalism, particularly in settings outside North America and Western Europe. Helen E.S.Nesadurai is Assistant Professor at the Institute of Defence and Strategic Studies, Nanyang Technological University, Singapore. Routledge/Warwick Studies in Globalisation Edited by Richard Higgott and published in association with the Centre for the Study of Globalisation and Regionalisation, University of Warwick. What is globalisation and does it matter? How can we measure it? What are its policy implications? The Centre for the Study of Globalisation and Regionalisation at the University of Warwick is an international site for the study of key questions such as those in the theory and practice of globalisation and regionalisation. Its agenda is avowedly interdisciplinary. The work of the Centre will be showcased in this new series. This series comprises two strands: Warwick Studies in Globalisationaddresses the needs of students and teachers, and the titles will be published in hardback and paperback. Titles include: Globalisation and the Asia-Pacific Contested territories Edited by Kris Olds, Peter Dicken, Philip F.Kelly, Lily Kong and Henry Wai-chung Yeung Regulating the Global Information Society Edited by Christopher Marsden Banking on Knowledge The genesis of the global development network Edited by Diane Stone Historical Materialism and Globalisation Edited by Hazel Smith and Mark Rupert Civil Society and Global Finance Edited by Jan Aart Scholte with Albrecht Schnabel Towards a Global Polity Edited by Morten Ougaard and Richard Higgott New Regionalisms in the Global Political Economy Theories and Cases Edited by Shaun Breslin, Christopher W.Hughes, Nicola Phillips and Ben Rosamond Routledge/Warwick Studies in Globalisation is a forum for innovative new research intended for a high-level specialist readership, and the titles will be available in hardback only. Titles include: 1 Non-State Actors and Authority in the Global System Edited by Richard Higgott, Geoffrey Underbill and Andreas Bieler 2 Globalisation and Enlargement of the European Union Austrian and Swedish social forces in the struggle over membership Andreas Bieler 3 Rethinking Empowerment Gender and development in a global/local world Edited by Jane L.Parpart, Shirin M.Rai and Kathleen Staudt 4 Globalising Intellectual Property Rights The TRIPs Agreement Duncan Matthews 5 Globalisation, Domestic Politics and Regionalism The ASEAN Free Trade Area Helen E.S.Nesadurai For my parents, Esther and Victor Nesadurai Globalisation, Domestic Politics and Regionalism The ASEAN Free Trade Area Helen E.S.Nesadurai LONDON AND NEW YORK First published 2003 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge's collection of thousands of eBooks please go to w.w.w. eBookstore.tandf.co.uk.” © 2003 Helen E.S.Nesadurai All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Nesadurai, Helen Sharmini. Globalisation, domestic politics and regionalism: the ASEAN Free Trade Area/by Helen E.S.Nesadurai. p. cm. Includes bibliographical references and index. 1. Free trade—Asia, Southeastern. 2. Asia, Southeastern— Commercial policy. 3. Regionalism—Asia, Southeastern. 4. Globalization—Economic aspects—Asia, Southeastern. 5. Globalization—Political aspects—Asia, Southeastern. 6. Asia, Southeastern—Economic integration. 7. Asia, Southeastern— Foreign economic relations. 8. ASEAN Free Trade Area. I. Title. HF2330.8.Z7 N47 2003 337.1′5–dc21 2002153797 ISBN 0-203-13088-X Master e-book ISBN ISBN 0-203-33968-1 (Adobe e-Reader Format) ISBN 0-415-30800-3 (Print Edition) Contents List of illustrations viii Acknowledgements ix List of abbreviations xi Introduction 1 1 Globalisation and economic regionalism 21 2 The unfolding of a regional economic cooperation project: AFTA, 1991– 44 2002 3 Foreign capital and open regionalism 70 4 Domestic capital and developmental regionalism 89 5 Re-negotiating AFTA commitments 114 6 Implementation as a political process 134 Conclusion 152 Notes 166 References 185 Index 200 Illustrations Figure 1.1 The role of growth and distribution in elite governance political systems 39 Tables 1.1 Four models of the globalisation-regionalism relationship 41 2.1 Three phases of the AFTA project, 1991–2002 45 2.2 Implementation details (1992) of the CEPT scheme 49 2.3 AFTA tariff reduction start dates (adopted December 1992) 50 2.4 Most prevalent non-tariff barriers in ASEAN 51 2.5 Revised (1994/95) implementation details of the CEPT scheme 52 2.6 Short-term investment incentives offered in December 1998 56 2.7 CEPT implementation package for 2001 (submitted in 2000) 58 2.8 Number of tariff lines at 0 per cent by 2003 (based on 2001 CEPT package) 58 2.9 Average CEPT tariff rates (per cent) 60 2.10 Number of tariff lines with rates of 0–5 per cent at 2001 60 2.11 MFN-CEPT tariff differentials, 2001 61 2.12 Status of unprocessed agricultural products in AFTA, 1994 63 2.13 Temporary Exclusion List and Sensitive List, manufacturing sector 67 3.1 Flows of FDI to host region/economy, 1983–98 (US$ million) 72 6.1 A framework of institutionalisation 141 6.2 Nature of the constitutional documents 145 Acknowledgements Many people and institutions have made possible the completion of this book, which is based on my doctoral dissertation completed in 2001 at the Department of Politics and International Studies at the University of Warwick, UK. I am deeply grateful to my dissertation supervisor, Richard Higgott for his encouragement, support and guidance throughout the PhD. I especially appreciate his understanding and patience in allowing me the intellectual space to explore varied lines of research, and for wisely guiding me back whenever I strayed too far. To him I owe my most sincere thanks. My research also benefited enormously from my affiliation as ASEM/ Chevening Fellow at the Warwick/ESRC Centre for the Study of Globalisation and Regionalisation (CSGR). The Centre offered a stimulating intellectual environment in which to work, and a friendly and lively atmosphere as well that made writing the dissertation that much more enjoyable. Additionally, I wish to express my gratitude to the UK Foreign and Commonwealth Office, which, through its Chevening Award provided full funding for my three years of PhD research. I would also like to record my appreciation to the Institute of Strategic and International Studies (ISIS) in Malaysia for granting me leave from work to read for the PhD. The final draft of this book was completed at the Institute of Defence and Strategic Studies (IDSS), Nanyang Technological University, Singapore where I am currently based. For his support and encouragement to complete the book manuscript, I would like to thank Barry Desker, Director of IDSS. A number of research institutes in Southeast Asia also greatly facilitated my field research in the region. ISIS Malaysia in Kuala Lumpur and the Centre for Strategic and International Studies (CSIS) in Jakarta kindly hosted my research visits to Malaysia and Indonesia respectively during July-September 2000. My thanks, too, to the Library of the Institute of Southeast Asian Studies (ISEAS) in Singapore for its welcome and the help extended to me. I am also indebted to Mushahid Ali, then with the Ministry of Foreign Affairs, Singapore and currently my colleague at IDSS, for his help in securing appointments with Singapore government officials. To the more than 30 people who graciously consented to be interviewed for this project, I would like to extend my gratitude. Their patient and candid responses to my myriad questions helped me considerably in interpreting the dynamics of AFTA, although they may not fully agree with the views expressed in this book, which are, of course, entirely my own. Shaun Breslin and David Camroux, my dissertation examiners, offered valuable suggestions on converting the dissertation into a book, for which I am grateful, as I am to the two anonymous reviewers for their constructive feedback on the book proposal. At Warwick, I benefited from the discussions with Chris Hughes, while Diane Stone helped me gain better insights into my own research by inviting me to collaborate with her in writing on Southeast Asian think tanks and regional cooperation. Participants at the May 2000 Graduate Students’ Workshop at the University of California, San Diego provided