Préface - Southeast Asia, a crossroads of geopolitical challenges

25/08/2021

Daniel Caspary, European Parliament, Chairman of the Delegation for relations with the countries of Southeast Asia and the Association of Southeast Asian Nations (ASEAN)


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Cette publication est la préface en libre-accès de la Revue Diplomatique n°14 de l'Institut d'Études de Géopolitique Appliquée (dir. Céline Clément), disponible à la commande ici.

Comment citer cette publication

Daniel Caspary, Southeast Asia, a crossroads of geopolitical challenges (pr.), Revue Diplomatique, N°14, Institut d'Études de Géopolitique Appliquée, Paris, Juillet 2021


Foreword

Southeast Asia has gained an increasing geopolitical importance over the last years. This concerns strategic and security aspects on the one side and geo-economic aspects on the other side. Obviously, both facets are linked to each other. Key question for the European Union remains how to react to these changes, if it wants to be a geopolitical Union with relevance in the region. In this foreword, I would like to present current positions, strategies and initiatives of the European Union, which I see as answers to cope with the latest developments.

Geopolitical state of play

When we talk about geopolitical challenges in Southeast Asia, the elephant in the room is the South China Sea dispute. I concentrate my considerations on this topic, as it has the greatest relevance from an EU perspective, both in economic and strategic terms. The area is characterised by a long-lasting dispute between China and some claimant countries, which are member states of the ASEAN Organisation, but also between several ASEAN member states. Moreover, it is a geographic zone where the increasing US-China rivalry becomes most evident.

The South China Sea has huge economic and strategic importance, representing about one third of the world's shipping traffic and containing rich fishing and energy resources. Freedom of navigation is vital for international trade. Situated at the shores of China, the country considers the region as its own courtyard. Therefore, China's growing assertiveness becomes most apparent here. China claims roughly 90 % of the South China Sea under the so-called nine-dash line. Over the last few years, China is constructing artificial land and building military facilities on the South China Sea's islands and reefs. Incidents increased and Southeast Asian countries have opposed China's territorial claims. The Philippines brought a case to The Hague Permanent Court of Arbitration, which ruled in July 2016, in a binding but non-enforceable decision, that China has no historic rights to many of the disputed areas and that its constructions and fishing activities are illegal. China denounced this ruling and ignored it.

The Association of Southeast Asian Nations (ASEAN), as a regional bloc with several member states as claimants, has repeatedly tried to bring the parties together in order to reach an agreement with China on a South China Sea binding Code of Conduct. China's preference, on the other hand, is to undertake bilateral negotiations in the context of its Belt and Road Initiative, thus rejecting a multilateral solution. The dispute is one the most worrying issues ASEAN countries are facing because of internal divergences. In August 2017, ASEAN and China adopted the framework for a South China Sea Code of Conduct that is expected to be finalized by 2021, focusing mainly on trust building and on managing tensions. Despite good will approaches and despite the ruling by the Permanent Court of Arbitration declaring most of China's artificial islands in the South China Sea illegal, Beijing continues to build facilities capable of hosting military installations in the disputed territories.

Other global powers are directly concerned. The US military presence in the disputed territory is a challenge for Beijing. The US administration made clear last that it is backed by the Philippines and Vietnam and would keep the Indo-Pacific region free and open. The Quadrilateral Security Dialogue (QSD, also known as the Quad) between the United States, Japan, Australia and India can be viewed as a response to China's increased economic and military power in the region. The Chinese government responded to this strategic dialogue by issuing formal diplomatic protests to its members. Australia and Japan also adopted Reciprocal Access Agreement allowing Japanese and Australian troops to visit each other's countries and to conduct training and joint operations, permitting rapid deployment of forces. Besides, the UK and France regularly conduct naval operations in the region to underline the freedom of navigation principle. Recently, also the German navy sent a frigate for the same purpose.

The EU promotes global governance and a multilateral cooperation approach towards the South China Sea dispute. The EU does not interfere in territorial claims and considers freedom of navigation and overflight as a major concern. Through peaceful negotiated solutions, the EU encourages the parties in dispute to abide by international law in line with the United Nations Convention on the Law of the Sea (UNCLOS).

Economic importance of Southeast Asia

Apart from these strategic and security aspects, Southeast Asia as a region is one of the world's largest economies. This explains why it is an essential part of China's Belt and Road Initiative, in particular its Maritime Silk Road, which constitutes the sea route 'corridor'.

Besides, after the US withdrew from TPP in 2017, the Regional Comprehensive Economic Partnership (RCEP) attracted renewed interest as a potential regional alternative to TPP. The RCEP was signed on 15 November 2020. It is a regional trade agreement between the ten ASEAN members and five of their individual FTA partners: Australia, China, Japan, New Zealand and South Korea. The pact will likely be implemented in the second half of 2021, following ratification by the signatories. RCEP is the world's largest regional trade agreement, covering about 30 % of the world's population, trade and GDP. RCEP has the potential to restructure some trade patterns and supply chains in Asia through lower trade costs and streamlined rules. Estimates suggest an overall elimination of 90 % of tariffs over 20 years, with broad carve outs for agriculture.

RCEP's economic significance would have been even larger with the participation of India, an original RCEP member before withdrawing in late 2019, due to concerns about increased competition with Chinese imports. Some RCEP members, especially Japan and Australia, remain worried that China could dominate the pact. They have agreed to work with India to build supply chains aimed at reducing trade dependence on China. Japan is also seeking deeper economic partnership with ASEAN states to diversify supply chains and cut reliance on Chinese manufacturing.

The EU-ASEAN relationship is particularly dominated by trade and economic relations, because free and fair trade is part of their identities. ASEAN offers also good opportunities for EU investors. The ASEAN region represents the EU's third largest trading partner outside Europe (after China and the US) with more than EUR 189.47 billion of trade in goods in 2020. Bilateral trade in services amounted to EUR 93.5 billion in 2019. The EU is ASEAN's third largest trading partner and biggest foreign investor with FDI stocks in 2019 amounting to EUR 313.6 bn. As around 40% of the EU trade passes through the South China Sea, peace and stability in the region is of utmost importance to the EU. The region is a big transit hub for European goods and a strategic place in the regional supply chain system.

ASEAN was identified as a priority region in the Global Europe Communication (2006) and talks for a bi-regional Free Trade Agreement (FTA) started in 2007. However, when talks on a bi-regional FTA stalled, the EU took instead a bilateral approach and signed FTAs with Singapore and Vietnam. Negotiations are ongoing with Indonesia, while talks with Malaysia and Thailand are on hold for technical and political reasons. The bilateral FTAs could pave the way for the establishment of a future region-to-region FTA that will reach a market of one billion people across both regions. Consequently, the European Parliament stated in a resolution adopted in 2020 that the bilateral FTAs constitute steps towards concluding a bi-regional EU-ASEAN FTA.

The EU's Connecting Europe and Asia Strategy (2018) focusses on deepening ties between Europe and Asia by enhancing transport, energy, digital, and human connectivity. In this context, ASEAN, the EU and its Member States concluded the negotiations on the ASEAN-EU Comprehensive Air Transport Agreement (AE CATA) on 2 June 2021. The AE CATA constitutes the world's first bloc-to-bloc air transport agreement. It will bolster connectivity and economic development among the 37 member states of ASEAN and the EU. Under the agreement, airlines of ASEAN and the EU will have greater opportunities to operate passenger and cargo services between and beyond both regions.

EU Strategy for Cooperation in the Indo-Pacific

The Council of the European Union adopted on 19 April 2021 conclusions on an EU strategy for cooperation in the Indo-Pacific, thus acknowledging the rise of geopolitical competition in the wider Indo-Pacific region with impact on trade and supply chains as well as on technological, political and security areas. The strategy is setting out the EU's intention to reinforce its strategic focus, presence and actions in this region of prime strategic importance for EU interests. The aim is to contribute to regional stability, security, prosperity and sustainable development, at a time of rising challenges and tensions in the region.

The renewed EU commitment to the Indo-Pacific, a region spanning from the east coast of Africa to the Pacific island states, will have a long-term focus and will be based on upholding democracy, human rights, the rule of law and respect for international law. Consequently, the EU's approach and engagement will look to foster a rules-based international order, a level playing field, as well as an open and fair environment for trade and investment, reciprocity, the strengthening of resilience, tackling climate change and supporting connectivity with the EU. Free and open maritime supply routes in full compliance with international law remain crucial. The EU will also continue to develop partnerships in the areas of security and defence, including addressing maritime security, malicious cyber activities, disinformation, emerging technologies, terrorism, and organised crime.

ASEAN is at the centre of the Indo-Pacific strategy. The EU and ASEAN have solid foundations and a distinguished record of accomplishment, built over 44 years of robust economic, political and development engagement that make the EU one of ASEAN's leading and most comprehensive partners. ASEAN has a special role in supporting stability of the Indo-Pacific, which has enabled strong economic growth of what is now widely recognised as an important engine of the global economy.

Over the years, the ASEAN-led regional architecture has provided a space for dialogue and trust building across the Indo-Pacific and among countries that see each other as adversaries. With geopolitical tensions in the region on the rise, this special space for dialogue must continue to be utilised to ensure stability, peaceful coexistence, and cooperation. The Indo-Pacific Strategy thus commits the EU to further support this regional architecture and ASEAN's centrality within it. Over the coming months, the EU aims to elaborate the Indo-Pacific strategy into a cooperation policy with concrete action lines after intense consultations with stakeholders, to be adopted in September. Given its political and economic weight and its G-20 membership, Indonesia will have a prominent place in this outreach.

EU-ASEAN Strategic Partnership

On 1 December 2020, the European Union and ASEAN upgraded their relations to a Strategic Partnership. This landmark in the EU-ASEAN relationship recognises ASEAN's central role in the Indo-Pacific. The Strategic Partnership constitutes a consolidation of the current range of cooperative arrangements and shared objectives, which is broader compared to earlier phases of the relationship. It will facilitate a higher level of diplomatic engagement by hosting regular summits at leaders' level to enhance economic and security cooperation, as well as relations in areas such as connectivity and development. The new partnership provides also a multilateral forum to deal with global issues such as COVID-19, climate change, sustainable development, overfishing, forestry, urbanization and other environmental issues.

The EU contributes to security and defence related fora led by ASEAN, such as the ASEAN Regional Forum and the ASEAN Defence Ministers' Meeting-Plus. The EU co-chairs a number of initiatives in the ASEAN Regional Forum framework, including meetings on counterterrorism, transnational crime and on maritime security. Moreover, the EU and ASEAN have an enhanced cooperation in the field of crisis response and disaster management, including through EU support to the ASEAN Centre for Humanitarian Assistance.

The two partners also cooperate on the Human Rights Policy Dialogue, a forum established in 2015 through which they have agreed to promote respect for human rights and the rule of law. The respect for human rights and the ideals of democracy and the rule of law lie at the core of the European Union, notably of the European Parliament. Therefore, we are much worried about some trends in the ASEAN region, such as the latest developments in Myanmar. For this reason, the European Parliament passes repeatedly resolutions on human rights violations in ASEAN countries.

Promoting connectivity is a core part of the EU-ASEAN upgraded relations, in areas such as transport, energy, digital and people to people contacts. Both parts are exploring a possible connectivity partnership, with due consideration to the EU Strategy Connecting Europe and Asia and the Master Plan on ASEAN Connectivity (MPAC) 2025. The ASEAN approach to connectivity, which uses a context of community building and specifically the objective of a well-connected ASEAN, is compatible with the EU's approach. In this regard, the EU and ASEAN agreed to develop quality infrastructure investment to contribute to affordable, reliable and sustainable connectivity.

Learned from 2019, where the talk of upgrading the status was stalled due to the issue of palm oil, both sides agreed to launch a joint working group between the EU and relevant ASEAN Member States to address the challenge towards reaching the Sustainable Development Goals in the vegetable oil sector. The EU and ASEAN also committed to stepping up efforts to create a practical framework for a region-to-region Free Trade Agreement (FTA).

In the European Union, we believe that the potential for greater engagement is enormous. Together, we can strengthen our two regions and make a difference with global impact. Further enhancing our relations based on common interests and shared values is therefore a priority for the European Union.

Strengthening the EU-ASEAN parliamentary dimension

Since the Treaty of Lisbon in 2009, the European Parliament has gained several competences within the architecture of the EU institutions. Amongst others, it has increased its powers in the field of foreign affairs, mainly regarding international agreements, thus becoming a co-legislator on an equal footstep with the Council of the European Union. As a budgetary authority, the European Parliament can influence international partnership programmes.

Moreover, the European Parliament is convinced that parliamentary diplomacy constitutes an important tool in international politics, next to the classical diplomacy. In the last 40 years, the EU and ASEAN have made a lot of headway and progress in their cooperation, mostly at executive level. We in the European Parliament believe that further developing the inter-parliamentary relations with the parliaments of the ASEAN region through the ASEAN Inter-Parliamentary Assembly (AIPA) should reflect this future agenda of broader and deeper EU-ASEAN to the benefit of both sides.

I am glad that we kicked off this process by conducting an EP-AIPA Parliamentary Dialogue on 22 June 2021, where we discussed the negative effects of the pandemic and the future of EU-ASEAN trade relations. I am looking forward to continue this process with the ASEAN Inter-Parliamentary Assembly by meeting regularly in order to discuss issues of joint interest and concern.