Bumpy road ahead for Laos at the helm of ASEAN

With the arrival of 2016, Laos has officially begun its Chairmanship of the Association of Southeast Asian Nations (ASEAN). It is at a crucial moment too as it will be the first year of the ASEAN Community which was launched at the end of 2015. Despite its previous experience as Chair in 2004, doubts remain over whether the country can lead and keep up the momentum of regional integration.

Laos has experience hosting international events, having organised the 9^th Asia-Europe Meeting (ASEM) in 2012 in Vientiane attended by 49 Heads of State and Government of Asian and European countries and other leaders. Laos also chaired ASEAN in 2004, during which the Vientiane Action Plan for the ASEAN Communities was adopted. But at a time of geopolitical and economic vulnerability in the global economy, the task at hand is now more complex.

“As the chairman for 2016, leading the implementation of the Kuala Lumpur Declaration on ASEAN 2025 will be our top priority to move the region forward,” said Alounkeo Kittikhoun, Laos Vice-Minister of Foreign Affairs and the country’s ASEAN Senior Officials Meetings (SOM) Leader.

ASEAN leaders signed the Kuala Lumpur Declaration on ‘ASEAN 2025: For Forging Ahead Together’ at the 27^th ASEAN Summit held in Malaysia in November 2015. The document charts the way forward for further integration and strengthening community-building efforts over the next 10 years. While commitments are ambitious, the proof of the pudding is in the eating: how the plan is implemented. Under the theme ‘Turning Vision into Reality for a Dynamic ASEAN Community’, Laos is set to kick-start the process.

The ASEAN Economic Community (AEC), one of the three pillars of the ASEAN Community, took effect on December 31, paving the way to establish a single market across the region with a free flow of goods, capital and skilled labour. But despite the official launch having already taken place much remains to be done to realise this vision.

The ASEAN Political-Security Community and ASEAN Socio-Cultural Community are the two other pillars which comprise the ASEAN Community. Each pillar has its own Blueprint, and, together with the Initiative for ASEAN Integration (IAI) Strategic Framework and IAI Work Plan Phase II (2009-2015), they form the Roadmap for the ASEAN Community (2009-2015).

The ASEAN Economic Blueprint 2025 also signed in November highlights the urgency of reaching the remaining 2015 targets by the end of 2016. That said, businesses should not hold their breath for a radical change. The outstanding issues are the most disputed ones such as non-trade barriers, trade in services, customs harmonisation, financial services integration and the movement of labour. Laos’ leadership and consensus-builder skills to keep the wheel of economic cooperation in motion will surely be tested.

Whilst progress on these targets is likely to be slow, the expected signature of the ASEAN-Hong Kong Free Trade Agreement (FTA) and the conclusion of negotiations to establish the Regional Comprehensive Economic Partnership (RCEP) could make the headlines this year. The next round of RCEP negotiations will take place from 15 to 19 February in Brunei.

Bridging the development gap will also be high on Laos’ agenda. Both the revised Connectivity Master Plan (which aims to improve connectivity across the region) and the third Work Plan for the Initiative on ASEAN Integration (IAI) are set to be approved by ASEAN leaders when they meet in Vientiane later this year. Launched in 2000, the IAI aims to narrow the development gap providing support to Cambodia, Laos, Myanmar and Vietnam (CLMV), the least developed ASEAN members. As the Chair, Laos has pledged to push for an enhanced cooperation framework to ensure a more inclusive economic community.

Aside from facilitating intra-regional cooperation, Laos will need to prove itself as an effective interlocutor with global powers. Being in the spotlight will offer the country an excellent opportunity to enhance its international reputation and attract much-needed foreign investment. As the dispute over the South China Sea becomes more acute however, Laos will be under pressure from all sides.

The 28th and 29th ASEAN Summits are scheduled to be held back-to-back in Vientiane from 6-8 September 2016 due to logistical concerns. While the country may lack an experienced diplomatic cadre and the political clout to broker agreements, it is important that Laos avoids a 2012 Cambodia-like scenario and ensures a joint statement is not blocked and that ASEAN’s credibility is not put into question.

An unprecedented US-ASEAN Summit will take place at Sunnylands in Rancho Mirage, California on February 15-16, which follows the recent launch of a new Strategic Partnership. Other meetings to watch in the coming months include the ASEAN Foreign Ministers’ Meeting Retreat (AMM Retreat) scheduled for February 27 and the 20th ASEAN Finance Ministers’ Meeting (20th AFMM) on April 1-4.

Last year however brought a boost to ASEAN ties with Europe. Steps have been taken towards an EU-ASEAN Strategic Partnership. A Joint Communication was adopted by the European Commission last May titled “The EU and ASEAN: a Partnership with a Strategic Purpose” and the Foreign Affairs Council adopted the Conclusions of the Council of the European Union on EU-ASEAN relations the following month.

“We now have a mature view of each other,” said an EU official. “Taking the relationship forward will require a stronger response and commitment from ASEAN.” Membership of the East Asia Summit, a regional leaders’ forum for strategic dialogue and cooperation, remains a key strategic goal for the EU.

However the year ahead for EU-ASEAN relations looks less exciting.

With Laos at the helm preoccupied with fulfilling the basic expectations placed on the ASEAN chair and Thailand as the country coordinator for relations with the EU “the path to continue to scale up the partnership over the coming months is less clear”, noted an EU official. It may well be a low key yet a pragmatic year for the two regions.

Aviation ties between the two regions are set to be strengthened as the European Commission has adopted an ambitious package of proposals to negotiate a comprehensive aviation agreement with key partners including ASEAN. Trade relations should also move ahead, with the first round of negotiations on a free trade agreement with the Philippines expected to take place in the first half of the year in the Philippines.

As ASEAN turns its political vision of connectivity into concrete goals and objectives, the EU should not miss the opportunity to build on the 2014 EU-ASEAN Policy Dialogue on Connectivity, define a concrete framework for enhanced cooperation involving the business community and ride the momentum.

Laos’ 2016 ASEAN chairmanship will indeed prove challenging. Vientiane will face further criticism for deciding not to host the ASEAN Civil Society Conference and the ASEAN People’s Forum. Issues like terrorism, refugees and haze pollution will continue to demand ASEAN’s attention. Furthermore, given the “ASEAN way” favours consensus decision-making, Laos cannot deliver on ambitious reforms if other member states slow down or derail negotiations. And other states are likely to be distracted as political transitions loom. Talks on strengthening ASEAN’s institutional capacity, including reforming the Secretariat, should remain on the table.

Expectations are low, but therein lies the opportunity for Laos.

patricia.diaz@asiahouse.co.uk

The London embassy of the Lao People’s Democratic Republic (LDPR) was formally reopened at Asia House after a 29-year gap,  in 2014. It is now located at 49 Porchester Terrace in London. To read about the re-opening ceremony which took place at Asia House click here.

What is the The Economist’s Asia Editor Dominic Ziegler forecast for the ASEAN region? Read this fascinating piece here.

To discuss the development of the Asian Infrastructure Investment Bank (AIIB) and the UK’s role within it Mark Bowman, Director General, International Finance at HM Treasury, will join Asia House corporate members for a private briefing on Wenesday, 3 February. For more information click here.

Top image taken from Flickr here