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The 13th Summit of the 10-member Association of the Southeast Asian Nations (Asean), established in 1967, was high on rhetoric but disappointing as high expectations from the Summit are unlikely to be met.

In particular, the expectations were that the Asean Charter and the Asean Economic Community Blueprint (AECB) will represent a major break form the organisation’s past thinking and practices. A close reading of the two documents, however, reveals that Asean will essentially proceed on a “business as usual” basis.

While the rhetoric is of Asean as a “community,” the reality is that not only the political and social compacts, but also the interests of member states diverge markedly. These undermine both the professed goals, of the Charter and the AECB. The AECB aims to establish Asean as a single market and production base by 2015, with free movement of goods, services, investment, and capital.

The above is exemplified by the disproportionate energy and time devoted at the Summit to addressing political challenges posed by Myanmar.

Spirited defense by the political leaders and the media of Malaysia’s official policy of wide ranging and systematic discrimination against non-Malays also raises similar concerns about the Charter.

Policies being pursued by some Asean members, which are widely divergent from the professed goals of the Charter, may lead to severe difficulties in its ratification as Philippines has already emphasised.

A positive achievement of the Summit was that the Charter establishes Asean as a legal entity for the first time. It also expands the Secretariat, and establishes four Deputy Secretary-Generals, each from a different nationality. The political dynamics created by this arrangement may, however, create challenges for the Secretary-General, which may not always lead to smoother functioning of the organisation.

The Secretariat’s budget, however, will continue to be determined by equal annual contribution of each member state. This has meant an inadequate budget for the Secretariat to undertake tasks assigned without outside support, which in turn has impacted Asean’s agenda.

Unwillingness on the part of the more established, higher-income countries to contribute according to their capabilities suggests that external dependence of Asean is set to continue.

It also implies that the current official practice of meager adjustment assistance to less developed Asean members will continue. If the more developed members of Asean while benefiting from the region, continue to essentially look beyond the region, it is difficult to envisage the region as a community.

The retention of “Asean minus X” formula (so that two or more members can liberalise and undertake activity without others) is another signal of “business as usual.”

A major inconsistency is that while Asean has become a legal entity, the charter reaffirms the principle of non-interference in the internal affairs of member states. While the summit did reveal differing interpretations and nuances about application of this principle in Myammar’s case, they can not overcome the inherent limitations of this clause.

The main rationale for the AECB is that as globalisation has considerably increased locational elasticities for capital and labour, Asean can sustain competitiveness only though much greater economic integration, creating a “single market and production base.”

The AECB contains many useful suggestions for trade facilitation and customs integration. Much of the technical work involved in this area, such as the creation of a single window for harmonised trade and customs procedure will be beneficial for all member states.

Identifying certain sectors for accelerated integration is also a useful strategy. India must follow these developments to minimise its own transaction costs in dealing with Asean and in seeking business opportunities.

The blueprint does envisage free flow of skilled labour among Asean, though its effective implementation remains to be seen. The emphasis on skilled labour, however, does not address the issue of about two million lower-skilled foreign workers with little labour protection and rights in the Asean region, mostly from the member States.

There is considerable merit in the above as a general proposition. But, even after 40 years of existence, intra-Asean merchandise trade has been between a fifth and a quarter of the total trade and is declining.

If petroleum products and Singapore’s trans-shipment role are excluded, this proportion will be even smaller. The share of intra-Asean trade in services, in FDI, portfolio flows and technology transfers is even lower.

Only about 5% of Asean’s trade is effectively utilising the Asean Free Trade Agreement framework.

Unease about the investment activities of Singapore’s sovereign wealth funds, such as Temasek Holdings, in the region’s strategic industries; and deferring stages of development amongst the members requiring differing responses to managing globalisation also make achievement of AECB goals by 2015 an extremely ambitious task.

The commitment to implementing economic and other agreements in Asean has traditionally been low. With Asean as a legal entity, the lack of implementation integrity could be further barrier to implementing preferential trade agreements with the group. India should also take this factor into account when dealing with Asean.

The current favourable macroeconomic environment, including the boom in commodity and asset prices, appears to have created a degree of complacency in most countries around the world, including in Asean. The next downturn in the global business cycle is likely to be an important test of Asean’s integration plans.

The Summits’ reaffirmation of the Asean Plus Three (Japan, China and Korea) is a setback for the logical argument that Asean Plus Six (with India, Australia and New Zealand added) is more optimum in realising gains for economic cooperation, and for signalling to the rest of the world that Asia can create inclusive forums to enhance its voice in global affairs.

India will need to be much more strategic in dealing with Asean and its member states. Those countries, unwilling to respect India’s core interests and provide fair access to its businesses and professionals, must be countered in a forceful but constructive manner.

This will require deeper understanding of the dynamics of each of the Asean member states, and much greater strategic and tactical flexibility in achieving desired outcomes.