Lessons Learned from Regional Integration:
AFTA and Beyond

Dr. Kao Kim Hourn

Senior Fellow and Executive Director
Cambodian Institute for Cooperation and Peace

Introduction and Background

While much has been written about the regional integration in Southeast Asia from practically almost every dimension, this paper will attempt to examine the process of Cambodia's integration into the Association of South East Nations (ASEAN) and the ASEAN Free Trade Area (AFTA). However, it would be misleading and inappropriate if this paper were to look at Cambodia's integration into ASEAN only through the AFTA framework, given the complex process of integration. Although it is still too premature at this stage to identify the lessons learned from the regional integration thus far, given

Cambodia's full admission into the regional grouping only a little over two years, I will try to give my view of what I see as the major lessons learned from the regional integration for Cambodia.

Cambodia re-emerged on the regional and global stage only after the successful conclusion of the October 1991 Paris Peace Accord and the May 1993 elections, which brought about a newly elected democratic government for the first time in three long decades. Before that time, one could only remember that the country was very much preoccupied with the domestic issues- war, conflict and revolution. For Cambodia, one could argue that the process of integration has been very much both a daunting task and an imperative for the country in order to overcome the imposed isolation. For almost ten years, Cambodia has embarked on post-conflict peace building, national reconciliation and reconstruction.

Cambodia and ASEAN

In foreign policy, Cambodia adopted an integrationist policy, which meant that it wanted to be integrated into ASEAN and the international community. In both 1993 and 1994,

Cambodia was invited to attend the ASEAN Ministerial Meetings (AMM) in Singapore and Bangkok, respectively. In December 1994, Cambodia welcomed the first visit of the

ASEAN Secretary-General Dato' Ajit Singh to Phnom Penh, which was a fact-finding mission for this regional organization. At this point, Cambodia reconfirmed its early request to join ASEAN. By July 1995, after Cambodia's accession to the Treaty of Amity and Cooperation in Southeast Asia (TAC), Cambodia was admitted as an observer into ASEAN. For the next two years, Cambodia prepared itself to become a full member. But the attempt to become a full-fledged member did not materialize due to the July 1997 fighting, which prompted ASEAN to postpone the membership.  While Laos and

Myanmar were fully admitted into ASEAN, Cambodia was left out of the regional club.

For almost another two years, Cambodia's membership in ASEAN was lingering on as the regional organization continued to impose various hurdles, one after the other. Those hurdles constituted the membership barriers for Cambodia. It was not until April 30, 1999, was Cambodia able to finally become a full member in ASEAN, and thus completing the ASEAN-Ten. Since that historic day, Cambodia has been active in regional affairs, playing its role and engaging other members on equal basis.

Cambodia and AFTA

When Cambodia joined ASEAN as a full-fledged member in April 1999, Cambodia agreed to the terms of agreement that it had negotiated with ASEAN regarding AFTA.

According to the schedules of tariff rate below in Table 2, Cambodia will have to lower its tariff between 0 and 5 per cent for the 85 percent of its goods and services on the Inclusion List by 2007. By the following year, the percentage of goods and services on the Inclusion List will have to increase to 90 per cent. By 2009, 100 per cent of the percentage of goods and services on the Inclusion List will be between 0 and 5 per cent.

In 2010, 60 per cent of the goods and services on the Inclusion List will be reduced to 0 per cent. Finally, in 2015, 100 per cent of Cambodia's goods and services on the Inclusion List will be reduced to 0 per cent.

As of now, it appeared that there are no negative impacts from Cambodia's integration on the tariff rate of this country. This, however, will be changed as Cambodia moves closer to the target years.

Table 1: Schedules of Tariff Rate: The Original Members of ASEAN
(Indonesia, Malaysia, Philippines, Singapore, Thailand and Brunei)

Table 2: Schedules of Tariff Rate: The New Members of ASEAN

ASEAN, Report of the Fourteen Meeting of the Coordinating Committee on the Implementation of the CEPT Scheme for AFTA (Jakarta: ASEAN Secretariat, 24- 26 August 1999), "Chairman Press Statement of the ASEAN 3^rd Informal Summit," 28 November 1999, Manila; Department of ASEAN and Economic Integration of the Ministry of Economy and Finance, Cambodia.

Lessons Learned from Regional Integration

At this stage, I would argue that Cambodia has gained from some of the lessons that it has experienced through the process of its integration thus far.  The following are

Cambodia's tentative lessons learned from the regional integration:

1. Experience assisting Cambodia to prepare for the WTO.  In May 2001, Cambodia attended the “First Working Party Meeting” in Geneva where it was questioned with regard to its preparations to join the WTO. Cambodia's participation in AFTA has prepared its officials to deal with the WTO in a more constructive manner. ASEAN has not only showed its support for Cambodia's quest to join WTO but has also endorsed its approval for fast entry.  "Learning to swim in a small pond is the best strategy to prepare itself to swim in the bigger pond."

2. A catalyst for domestic reform: ASEAN and AFTA help Cambodia to develop a legal framework, an institutional mechanism, and human resource development. As one senior Cambodian official said: “What we don't have, we have to follow ASEAN. We have to run after ASEAN/AFTA in order to catch up with the region.”³ Through the ASEAN Vision 2020 and the Hanoi Plan of Action (HPA), Cambodia has many daunting tasks ahead.  These catching up activities will help apply pressure for domestic reform.

3. Benefits of the ASEAN training programs:  Through ASEAN, there have been various training programs, in which Cambodian officials have participated. Without ASEAN, some, if not all, of these training programs would not have been made available to Cambodia. In the process of integration, every new member as well as the old one (to a certain extent) would have to learn to adjust to the changes in the region and those outside of the region. In other words, Cambodia has to learn together, with other members. Cambodia could benefit from regional cooperation through the assistance of the various dialogue partners of this regional club, such as Japan, Canada, Australia, New Zealand, the European Union, and the UNDP.

4. Better positioning Cambodia in the region:  Through ASEAN membership, Cambodia has improved its image and legitimized its role regionally and internationally. By taking its place in the region, Cambodia is an equal member with both old and new members, and it can engage great power nations through the various ASEAN frameworks and arrangements. This does not limit Cambodia only to the political and security areas. Cambodia could do the same in the economic and financial areas, such as in the context of the ASEMN-Plus-Three process, where ASEAN is engaged with the three East Asian nations of China, Japan, and South Korea.

5. Increasing experience in dispute resolution and negotiations:  Through its participation in the various meetings, Cambodia has been exposed to the process of dispute resolution in trade and other issues. At the same time, it has been exposed to the ASEAN ways and styles of negotiations not only among its members but also between ASEAN and other external players.

6. Expanding AFTA and Cambodia:  Through the ASEAN-Plus-Three process, Cambodia will be able to participate in the activities of the newly established three working groups-one on ASEAN and China; one on ASEAN and Japan, and one on ASEAN and South Korea. In addition, Cambodia can play an active role in the four areas of regional integration through the following:

• ASEAN-CER

• ASEAN-China

• ASEAN-Japan

• ASEAN-South Korea

In sum, while Cambodia has only been a full member of ASEAN for a little over two years, its involvement and participation have been far-reaching – bringing more benefits than costs.  The only costs that Cambodia has been paying is the cost of participation in ASEAN meetings, the cost of hosting meetings, and the cost-sharing of the ASEAN Secretariat.  At the same time, Cambodia may have to lose US$6 million per year if the ICT products are to be completely liberalized by the year 2010.