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Haze and Euro Show Limits of, and Needs for, Regionalism

Air pollution, after all, deters many foreign investors from setting up in major cities in China. The haze is the most visible sign of the limits of ASEAN regionalism

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During visits to Penang and KL, and at home in Singapore, the haze air pollution blocked out the sky on some days. Although the haze so far has not worsened to the point that it would affect the staging of next week’s Singapore F1 race, continuing and worsening haze would affect ASEAN’s economic competitiveness in the long run.

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Air pollution, after all, deters many foreign investors from setting up in major cities in China. The haze is the most visible sign of the limits of ASEAN regionalism. Indeed, the visible haze can be compared with the invisible Euro-related economic calamity currently afflicting EU regionalism. Both calamities result largely from man-made actions and inactions at the national level. In ASEAN, that would be the burn-clearing of forests in Indonesia, although other ASEAN nations share the blame for not controlling their own emissions.

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What is needed, therefore, is for the responsible parties in ASEAN and the EU to take charge of the situation and act for the regional interest.

In the EU, that would be currently be Greece, the profligate PIGS Portugal, Ireland, Greece and Spain EU member currently under the spotlight, although the other EU members share responsibility for the fiscal mess by allowing borderline cases to join the Euro in the first place and not enforcing proper fiscal oversight afterwards. Both calamities also could be remedied largely by actions at the national level.

Current ASEAN chair Indonesia has to lead any solution of the haze, both by finally ratifying the ASEAN Agreement on Transboundary Haze Pollution it is the only holdout and by better administration of forestry and fire prevention efforts on the ground. In the EU, Germany has to lead any solution of the Euro crisis, as it is the largest economy. Although in both situations regional institutions have an important role, ultimately it will be decisions made at the national level in Indonesia and Germany that affect how these regional problems are resolved.

Unfortunately both Indonesia and Germany have been hampered by domestic political factors that prevent them from freely responding to the situation. Increased political autonomy at the local level both encourages vested interests in Indonesia to fight ratification of the haze agreement and prevents more effective haze prevention. Tensions within the ruling coalition prevent the German government from advocating a more comprehensive approach to the Euro-zone problems.Thus, the haze and the Euro problem demonstrate the current limits of regionalism.

The ASEAN and EU institutions, by themselves, cannot resolve these regional problems. National governments still matter. On the other hand, that does not mean that the existing regional institutions in ASEAN and the EU are irrelevant. Without the peer pressure of its fellow ASEAN members, Indonesia would have even less incentive to curb the brush-clearing. Without the EU institutions, Greece and the other PIGS would be tempted to go it alone by leaving the Euro and drag the rest of Europe into the economic toilet.

Regionalism thus helps national governments more fully appreciate their role in dealing with regional issues.  Without the regional institutions, no one would speak for the regional interest. In fact, as I have argued before, these regional institutions need more authority to speak for the regional interest, if not to act for the regional interest.

What is needed, therefore, is for the responsible parties in ASEAN and the EU to take charge of the situation and act for the regional interest.
That means that the Indonesian government has to ratify the ASEAN haze agreement and improve haze prevention, despite the political costs.  If ratification is not done during its year as ASEAN chair, after its repeated public commitments to do so, the credibility of both ASEAN and Indonesia will suffer.

That means that Germany has to commit to saving the Euro, despite the political costs.   If Germany cannot muster sufficient courage to do so, the credibility of both the EU and Germany will suffer.  Such failure would also far-reaching ramifications for the global economy.

Hopefully both regional leaders will shoulder their burdens. Otherwise, their respective regions will feel the negative consequences.

Edmund Sim is a U.S. international trade lawyer at the Singapore office of Appleton Luff and adjunct associate professor of law at National University of Singapore. There, he teaches the first course developed on the law and policy of the ASEAN Economic Community (AEC). You can follow him via AEC Blog.

I am a U.S. international trade lawyer at the Singapore office of Appleton Luff and adjunct associate professor of law at National University of Singapore. There, I teach the first course developed on the law and policy of the ASEAN Economic Community (AEC). I have also advised the ASEAN Secretariat in an EU-funded assistance project on the ASEAN Trade in Goods Agreement (ATIGA), and represented companies in dealing with the ASEAN Industrial Cooperation (AICO) scheme, Common External Preferential Tariff (CEPT) program and other ASEAN economic integration

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