If Asia wants its own EU, it will have to bite the bullet of pooled sovereignty

Europe's World

Asia, Africa & Emerging Economies

Picture of Mark Corner
Mark Corner

Back in 2008, Kevin Rudd, then Prime Minister of Australia, proposed an initiative to create an Asia-Pacific community by 2020.

He told the Asia Society in Sydney that he aimed to bring together countries as disparate as the United States, China, Japan, India, Indonesia and Australia – a community of about three-and-a-half billion people or half the inhabitants of the planet.

By his side was Richard Woolcott, the Australian envoy who had negotiated the formation of APEC, the Asia-Pacific Economic Community, in 1989. With ambitious talk of security pacts and free-trade agreements, Rudd announced he was recalling Woolcott – at the tender age of 80 – to persuade other countries to set up the new community that would cement the region’s position “at the centre of global affairs”.

The feature that makes the EU stand out amongst the alphabet soup of regional organisations around the world is the fact that European law is binding upon the member states

Reading Rudd’s recent article in Europe’s World, ‘Asia needs its own EU more than ever’, it is difficult to avoid the impression that seven years on nothing much has been achieved.

A lot of consultations, a ‘high level’ of interest and (of course) a Policy Commission, but a limited appetite for new institutions and, despite the title of Rudd’s article, a definite reluctance to have anything like the EU.

Partly this is for the perfectly valid reason that Asia’s history and traditions are very different from those of Europe. It is also because Rudd doesn’t want anything that smacks of pooled sovereignty – and the pooling of sovereignty is the one necessary condition for any grouping of nations that aspires to be more than a talking shop.

The feature that makes the EU stand out amongst the alphabet soup of regional organisations around the world – ASEAN, MERCOSUR, SICA, ECOWAS, SADC and so on – is the fact that European law is binding upon the member states. Member states who infringe this law are subject to sanctions, usually in the form of fines that increase until it is in their overwhelming economic interest to pay them. This has been an essential condition of the development of an effective single market.

In the early days, when there were just six member states, it was soon recognised that barriers to the free movement of goods between members of the European Economic Community (as it was then called) could easily be maintained even after customs duties had been abolished. You could deem the products of your neighbour unacceptable on your own market on the basis of technical considerations. These disputes could only be resolved if there was a judicial body whose decisions could be binding on all concerned. Here the role of the European Court of Justice was crucial. The binding nature of its decisions could certainly be controversial but without them the achievement of the free movement of goods would face insuperable national obstacles.

Rudd wants a ‘free-trade area’ in Asia, but one of the well-known paradoxes of economics is that you don’t get free trade without regulation. Some judicial body has to ensure that market forces are not being interfered with. It can only do so effectively if its decisions are binding upon everyone involved. Attempts to create single markets elsewhere in the world have shown that nothing else will be effective.

Of course Rudd faces a problem. If he really wants to begin with China, India and the US all inside the same regional organisation, he clearly can’t even whisper the phrase ‘pooling of sovereignty’. The Americans and the Chinese would walk away at the very mention of such an idea.

It was possible in Europe amid the ruins left by the Second World War. For defeated Germany, shared sovereignty appeared better than none at all. For France it was harder to accept, but Paris recognised it was the only way to recover economically. In the UK, which emerged from the war victorious and retained delusions of grandeur, the system took much longer to accept. Once the Common Market was in place and the UK recognised it might be missing out on something interesting, the country took the plunge and joined. A degree of reluctance never went away and will be tested again soon in a referendum, but it is likely that the economic arguments will prevail. Does the UK want to be outside the most powerful trading bloc in the world? Does it want to have the sort of deal with the EU that Norway has, signing up to the single market and even contributing to the EU budget without having any influence on the way the single market operates? It’s unlikely it will vote to leave – though referendums are unpredictable things.

When it started, the EU was a modest affair. It had a limited number of members and of policies in which they were prepared to pool sovereignty – initially it was just a Coal and Steel Community. Only gradually did it bring in more members and expand its remit to include a broad range of economic activities.

This gradualist, one-step-at-a-time approach contrasts with Rudd’s ambition which appears to want half the world involved from the start discussing everything from a comprehensive free-trade pact to security and foreign policy – including holding ASEAN defence ministers’ meetings under the umbrella of the future Asia-Pacific Community.

This approach is unlikely to succeed. It would be better to do something of real substance within a smaller range of policies and a more limited number of countries. That however would involve a pooling of sovereignty in some areas. If that is successful with a small grouping of nations, it can attract more hesitant – and perhaps larger and more powerful – neighbours.

The European Economic Community was the sprat to catch the British mackerel and the same would be true for Asia. Let Australia, New Zealand, Singapore and Malaysia, for instance, agree to pool sovereignty and create an Asian Economic Community. After some time, as it began to work effectively and produce economic results, China and India might be enticed to join.

Europeans are in no way superior to others around the world, but they happen through adversity to have tripped over the right way of ordering their relations

Perhaps Australia, an agricultural powerhouse, could help to build an Asian Food Security Community running a regional food reserve. The idea would be to moderate the natural price volatility of agricultural markets. It could prevent farm prices falling to catastrophic levels, threatening the livelihoods of Australian and other farmers. It could prevent food prices becoming unaffordable to millions of Asians who live on or close to the poverty line. That could be a modest beginning, requiring a very modest sharing of sovereignty. If it worked, it could lead to the broader and deeper Community Rudd argues for.

Kevin Rudd’s idealism is to be applauded, but there is a reason why it has not yielded results after seven years of hard work and endless meetings. What he calls the ‘EU model’ is a model of sovereignty-pooling which took hold in Europe because a shattered continent needed to find its way back after two horrendous world wars.

The situation in Asia is different, but the EU model remains appropriate. A form of binding law above the level of the nation-state is the one and only method of ensuring a peaceful and prosperous future for any region of the world, or indeed for the world itself (since the UN is certainly not modelled in this way and as a result has had very little success). Europeans are in no way superior to others around the world, but they happen through adversity to have tripped over the right way of ordering their relations. It is a model that other regions might well adopt, but not if they reject the very engine that makes effective regional governance possible.

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