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Cablegate: Asean Meetings Highlight Challenges of Integration

VZCZCXRO0703
RR RUEHCHI RUEHDE RUEHDIR RUEHDT RUEHHM
DE RUEHJA #2350/01 2391018
ZNR UUUUU ZZH
R 271018Z AUG 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 5946
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 0697
RUEHBY/AMEMBASSY CANBERRA 1059
RUEHWL/AMEMBASSY WELLINGTON 1685
RUEHAK/AMEMBASSY ANKARA 0122
RUEHBS/USEU BRUSSELS
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/USDA FAS WASHDC
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 002350

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DEPT PASS USTR FOR KATZ AND BROOKS
DEPT FOR EAP/RSP and EAP/MTS
DEPT FOR EB/IFD/OMA
TREASURY FOR IA-SETH SEARLS
COMMERCE FOR 4430/[GOLIKE]

E.O. 12598: N/A
TAGS: ECON ETRD PHUM PREL PGOV SENV KDEM ID
SUBJECT: ASEAN MEETINGS HIGHLIGHT CHALLENGES OF INTEGRATION

1. (U) Summary. During a series of recent meetings and events at the
ASEAN Secretariat, ASEAN officials expressed cautious optimism about
economic integration and the draft ASEAN Charter despite continued
challenges. Senior Government of Indonesia (GOI) officials and
business leaders called for faster economic integration. Indonesian
President Susilo Bambang Yudhoyono challenged ASEAN countries to
embrace not only economic integration but also democratic values and
fundamental human rights for all its citizens. ASEAN officials noted
the USG's positive influence on the region and called for increased
cooperation and strengthened U.S.-ASEAN relations. End Summary.

ASEAN Rethinks ASEAN
--------------------

2. (U) On August 7, the ASEAN Secretariat hosted the ASEAN
Foundation forum "Rethinking ASEAN: Toward the ASEAN Community
2015." The event, which the ASEAN Foundation planned to commemorate
the 40th Anniversary of ASEAN, focused on the need for ASEAN to
respond to a changing political, economic and social landscape
across the region and the world. These challenges include the
emergence of economic competition from India and China, the need to
narrow the development gap among ASEAN countries, and the need to
strengthen ASEAN as an organization.

3. (U) Indonesian President Susilo Bambang Yudhoyono, who delivered
the keynote address, challenged ASEAN to embrace not only economic
integration but also democratic values and fundamental human rights
for all ASEAN citizens. He noted that, without a provision for the
establishment of a regional human rights body, the ASEAN Charter
will not be an affirmation of a vision and set of values that are
the hallmark of a caring community. He urged ASEAN leaders to draft
a Charter than not only has legal efficacy, but also inspires their
citizens.

4. (U) Secretary General Ong noted that the process of rethinking
ASEAN, which began in 2003, has generated three important
initiatives. First, ASEAN has placed increased importance on
building an integrated ASEAN Community. Second, the leaders of the
ten member countries have committed to giving ASEAN (and ASEAN
agreements) stronger legal standing through an ASEAN Charter.
Third, ASEAN has recognized the importance of strengthening
people-to-people ties in order to achieve an integrated ASEAN
Community.

Economic Integration: Moving from Talk to Reality
--------------------------------------------- ----

5. (U) Indonesian Trade Minister Mari Pangestu also spoke at the
forum. She admitted that the economic challenges to integration are
complex but emphasized that ASEAN is significantly weaker as ten
individual nations than as one integrated community. She urged ASEAN
leaders to dispel the notion that ASEAN is "all talk" and take
significant action to meet the goals of reducing trade barriers,
creating a more competitive region through investment in
infrastructure, and ensuring equitable development within ASEAN.


6. (U) The ASEAN Foundation invited Philip Kotler of the Kellogg
School of Management at Northwestern University to headline the
event. Dr. Kotler stressed the importance of developing business
strategies that fully exploit the size of the dynamic pan-ASEAN
market. Businesses should market products to ASEAN as a region
rather than separately to each component national market. Several
local and expatriate business leaders at the event urged ASEAN
leaders to move faster on regional integration to ease the flow of
goods and labor in the region.

ASEAN Secretariat Staff Gear Up for Larger Mandate
--------------------------------------------- -----

7. (SBU) On August 10, Embassy met with Director of External Affairs
Dhannan Sunoto and Director of Economic Integration Bureau S.
Pushpanathan to discuss progress on drafting ASEAN's charter and
economic integration blueprint. Both officials expressed optimism

JAKARTA 00002350 002 OF 002


about achieving a single unified market by 2015 and about progress
on the ASEAN Charter, but underscored the need for ASEAN to create
enforceable agreements going forward. Sunoto noted, however, that
ASEAN would not include a provision for making decisions by a vote
of member states in the Charter. Nevertheless, he believed that
given the importance of making and enforcing decisions as ASEAN
moves toward integration, ASEAN will use pressure on member
countries with dissenting views to reach decisions on important
issues.

8. (SBU) Pushpanathan revealed how this might work in practice,
saying that ASEAN's Economic Ministers have requested that the
Charter include an "ASEAN minus X" formula that would allow a
majority to pass and implement an agreement without the dissenting
minority. In addition, ASEAN plans to formalize its dispute
settlement mechanism in the ASEAN Charter in order to strengthen
ASEAN's ability to deal with conflicting views. ASEAN also plans to
set up a scorecard system similar to that used in the EU to gauge
progress on the blueprint and focus technical assistance efforts.
Sunoto noted that ASEAN is moving away from the uniform approach to
technical assistance that the association has employed in the past.


More FTAs, More Donor Coordination
----------------------------------

9. (SBU) Pushpanathan expressed optimism that the economic blueprint
for integration would provide a meaningful roadmap to integration
over the next four years. Sunoto and Pushpanathan both indicated
that ASEAN plans to have a briefing for major donors immediately
following the announcement of the blueprint at the ASEAN Summit in
Singapore in November. (Note: The European Commission and AusAid
have recently expressed a desire to coordinate more closely on ASEAN
assistance. End note.)

10. (SBU) Pushpanathan also discussed ASEAN's progress on
negotiating free trade agreements (FTA). He remarked that ASEAN and
the EU would engage in preliminary discussions over the next year to
identify potential hurdles in the free trade agreement negotiations
before commencing formal negotiations. He anticipated issues in the
areas of intellectual property rights, government procurement, and
agriculture. Pushpanathan noted that ASEAN is relatively close to
concluding FTAs with Japan, Australia and New Zealand, and said that
Turkey and the Gulf Cooperation Council both want to discuss
possible FTAs with ASEAN.

U.S. Engagement Welcome, Has Influence
--------------------------------------

11. (SBU) Post discussed cooperation between Embassy Jakarta and the
ASEAN Secretariat. ASEAN officials expressed a desire to work
closely with the USG on issues of mutual interest. Director
Pushpanathan urged closer coordination on economic and trade issues.
Director Sunoto reiterated their disappointment that Secretary Rice
could not attend the ASEAN Post-Ministerial Conference and ASEAN
Regional Forum in Manila and over the postponement of the U.S.-ASEAN
Commemorative Summit planned for September. He emphasized the value
ASEAN places on such events for relationship building and urged that
a new date for the Summit be set as soon as possible.

12. (SBU) Sunoto contrasted the positive influence of the U.S. on
ASEAN integration with the influence China exerts over its bordering
ASEAN states. The ASEAN members bordering China, he claimed, do not
feel as threatened by China's economic power as the remaining ASEAN
members. As a result, the border and non-border members of ASEAN
have had, at times, divergent views on the need for rapid economic
integration. U.S. engagement, he suggested, keeps ASEAN as a whole
closer to its non-aligned heritage and less intimate with China. As
an example of U.S. influence, Sunoto remarked how the U.S.
initiative to name an Ambassador for ASEAN directly prompted a
provision in the draft ASEAN Charter for permanent representatives
from each ASEAN member to the Secretariat.

HUME

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