The EU has been the center of more than its fair share of hype lately. The constitution drama hogged headlines for days on end in May and June, and then the subsequent (and consequent) swings in the Euro sparked business media frenzies that have been active for over a month. Now the budget stalemate is setting up to fuel another solid round of publicity.

America seems to love watching the world’s integration guinea pig trip up.

The EU has been trying to integrate its member nation states into a more unified economic and political block for decades now. The challenge is to get nation-states to give up some of their sovereignty to a supra-national body under the premise that the whole can be greater than the sum of its parts. Progress has been slow, but pretty much always present. The constitution, however, was like a brick wall compared to prior obstacles, and the Europeans smacked into it. Hard.

As a begrudging competitor might do when he sees his opponent fail, America snickered. The tone from our newspapers was one much less of objective analysis of the Europeans’ situation than that of “told ya so”. Headlines refer to the situation using words like “meltdown” or “crisis” and over-emphasize yokels’ statements that “the Germans want the Deutsch mark back!”, or “Italy wants out of Europe!”.

With the EU getting a bit too close for comfort as an economic competitor these last few years, Americans feel relief from this news and latch on to doubts that this economic giant (incidentally, the largest one in the world), was really going to provide all that much of a threat to us after all.

But with everyone looking east and musing at the recent EU-integration speed-bumps, not much attention has been paid to the other, quieter ASEAN block looming across the Pacific. The Association of Southeast Asian Nations consists of Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Laos, Myanmar and Cambodia. Together this coordinated block represents 500 million people, more than all of the EU member states combined.

On paper, ASEAN doesn’t look like much of a coordinated body when compared with the EU. But it has put the engine in place. The concept for such a regional alliance was developed over 30 years ago. Peace and security objectives have been formalized by way of treaties, making the region more stable. Free trade agreements abound, and the result has been an explosion in intra-Asian trade from just 20% back in the 80s to over 40% last year. The region is working on massive infrastructure projects to better unite the area, such as a behemoth power grid, a trans-regional gas pipeline network, and an enormous system of integrated highways.

Some might say that this is just scratching the surface. The free trade agreements lower tariffs, but do not create a Single Market like the EU has.

Well, not yet. ASEAN has committed itself to free flow of goods, services, and investment by 2020, and is well on its way to meeting its target.

And what about a common currency? Although an ASEAN currency is not on the agenda, certain steps have been taken to create the groundwork for such an objective. The region recently strengthened its Chiang Mai Initiative, a currency swap program that helps cash-strapped countries defend their currencies in times of crisis. Finance ministers have formally agreed to push the development of the region’s bond market. And the continuing increase in trade is putting pressure on countries to lower transaction costs. In other words, the more transactions you have across borders, the more of a pain in the neck it is to have to keep changing currencies. Maybe an ASEAN note is not all that far off....

Asean may not be attracting much attention lately, but it should be taken very seriously. Although the region has a long way to go before it integrates as closely as the EU countries have, it is on a similar path. And integration of this region may be less institutionalized and bureaucratic, which means that it might happen with less committees, treaty signings, and other media-grabbing events.

We should remember that ASEAN’s member country GDPs have grown by an average of over 5 percent a year for each of the past 35 years. With the balance of power shifting away from the U.S. both from an economic point of view and a political one, these Asian nations will become increasingly important. And if they join together in one force, that will be one mighty big gorilla to wrestle with during future negotiations.

Can we look far enough into the future and brace ourselves for the upcoming threats? Or will we be too busy laughing at the team tripping to see the group who’s ultimately going to win the race?

Posted by Michelle Smith on June 20, 2005 09:33 PM