Philippine President Joseph Estrada opened the talks by saying, "If we persevere and work harder, maybe the promise we fulfill will realize...an East Asian common market, one East Asian currency and one East Asian community." What are the chances that ASEAN could form an economic union similar to that of the European Union, or a currency like the Euro? And would such a development be desirable at this point in the development of Southeast Asia?
In theory, economic union isn't a bad idea. The ASEAN countries realize that their cooperation is going to become more important as free-trade blocs form in the rest of the world. The European Union and the North American Free Trade Association (NAFTA) form powerful blocs, and China's accession to the World Trade Organization (WTO) leads that Asian power closer to free trade, erasing some of the advantage that ASEAN's WTO members currently hold. East Asia (including Japan) comprises over two billion people, and about $7.75 trillion in economic output. If that raw economic power could be harnessed, it could rival the United States and European Union.
But the countries in that grouping are far-flung in their variety. ASEAN alone houses oil-rich Brunei, business-rich Singapore, relatively closed and state-controlled Myanmar, Vietnam, and Laos, politically fragile Cambodia and Indonesia, and emerging but fractious democracies in the Philippines and Thailand. It might seem that adding the guidance and leadership of economically advanced Japan and South Korea would help, but such diverse starting positions will only make initial agreement harder.
For example, the initial requirements to join the European monetary union were fairly strict, including caps on budget deficits and inflation. Few of the ASEAN countries could clear the European bars, and even much looser requirements would be troublesome for many. And the looser the requirements, the more dangerous a union it seems to those nations who would be called upon to lead it. China, whose currency is presently convertible only in very limited ways, has already voiced concerns over the common currency idea. Japan may support the idea of a common currency in principle, but would likely insist that common currency be the yen.
