Integrating Regions

Asia in Comparative Context

Miles Kahler, Andrew MacIntyre, Miles Kahler, Andrew MacIntyre

• Verlag: Stanford University Press
• Jahr: 2013
• ISBN:
  9780804789301
• Auflage: 1
• Thema: Politik & Internationale Beziehungen
• Thema: Internationale Beziehungen

The proliferation of regional institutions and initiatives in Asia over the past decade is unmatched in any other region of the world. The authors in this collection explore the distinctive features of these institutions by comparing them for the first time to the experience of other regions; from the elaborate institution-building of Europe to the more modest regional projects of the Americas. It is an opportune moment for this reassessment, as the European regional model faces a sovereign debt crisis while Asian economies see more secure sources of growth from their immediate neighbors. Asia's regional institutions display a distinctive combination of decision rules, commitment devices, and membership practices, shaped by underlying features of the region, the dynamics of regional integration, and the availability of institutional substitutes. Within this context, the authors propose changes that will better sustain the prosperity and peace that have marked Asia in recent decades.

ONE

INTRODUCTION

1

Regional Institutions in an Era of Globalization and Crisis

MILES KAHLER

During three decades of globalization, regional integration and institutions have flourished.¹ In the 1990s, Europe embarked on the Economic and Monetary Union, the United States and its neighbors ratified the North American Free Trade Agreement (NAFTA), and the largest economies of South America founded the Common Market of the South (MERCOSUR). Asia seemed to stand apart, producing a trio of regional institutions that were far more modest in scope than their counterparts elsewhere—Asia-Pacific Economic Cooperation (APEC), the Free Trade Area (AFTA) of the Association of Southeast Asian Nations (ASEAN), and the ASEAN Regional Forum (ARF). The Asian financial crisis at the end of the 1990s appeared to mark a turning point, however, exposing the region’s vulnerabilities and the ineffectiveness of its institutions. The first decade of the new century produced three new institutional developments: region-wide economic arrangements, such as ASEAN Plus Three (APT), which were limited to Asian members; innovation in monetary and financial collaboration (APT’s Chiang Mai Initiative and Asian Bond Market Initiative—ABMI), and a proliferation of bilateral and plurilateral preferential trade agreements (PTAs).²

Despite this apparent catching-up in Asian institution building, many saw a mismatch between high levels of regional economic interdependence and formal region-wide institutions that continued to lag other regions. An organization gap persisted in Northeast Asia, where multilateral security structures were absent and three of Asia’s largest economies have failed to complete a free trade agreement that would deepen their existing economic links (Calder and Ye 2010). The wider gap between interdependence and institutions in Asia has “stubbornly refused to close, despite the recent proliferation of bilateral and minilateral PTAs and security dialogues” (Aggarwal and Koo 2008, 286, 288). The new Asian regionalism now confronts the aftershocks of the Great Recession of 2008–2009, a global economic crisis that hardly brushed the largest emerging economies in Asia and failed to set back the economic progress of the region. The crisis could increase incentives for defensive institution-building to safeguard against future shocks from the global economy; deeper regional economic integration may also provide the best prospects for high economic growth, as Asia’s export markets in North America and Europe enter a period of sluggish growth.

This volume explains and evaluates the new Asian regionalism and its institutions in the context of other regions and their institutional architecture.³ It is an opportune moment for such a reassessment, as the highly elaborated European regional model faces a sovereign debt crisis, and Asian economies seek more secure sources of growth among their immediate neighbors. The three sections of the volume investigate variation in regional institutions, comparing Asia to Europe, the Americas, and other regions. The first section outlines the key dimensions of institutional design and their implications for the performance of regional institutions, in Asia and elsewhere. A rigorous comparison is impossible without agreement on precisely defined features of the institutions that are to be compared. In the second section, the regional trajectories of Europe and the Americas are compared to Asia in an effort to explain their respective constellations of regional institutions. In light of these comparisons, in the third section and conclusion, Asia’s regional institutions are evaluated: have they contributed to regional integration and cooperative outcomes? Will the region sustain a different model of institutionalization, convergent on the rest of the world, given changes in the regional and global environments?

The Design of Regional Institutions

Three key dimensions of institutional design vary across regional institutions: decision rules; commitment devices, such as legalization and enfranchisement; and membership rules. These design features reflect regional characteristics, the dynamics of regional economic integration, and the interests of cooperating governments. They also influence the effectiveness of these institutions in forging and implementing cooperative bargains to promote regional economic integration.

Depending on the elements of their design, institutions can contribute to at least three ends related to economic integration: consolidating existing liberalization gains, undertaken unilaterally or multilaterally; deepening integration, by expanding the scope of regional agreement, and particularly including the removal of barriers to exchange behind national borders; and widening economic integration, through the development of infrastructure or the incorporation of new members in existing or new regional regimes. Institutions with different decision rules, commitment devices, and membership rules will be more or less effective in the promotion of these ends.

Decision Rules: Winning Consent to Cooperative Agreements

Although the international legal regime posits the sovereign equality of states, any regional or global institution must contend with disparities in underlying bargaining power among its members. Decision rules reflect those disparities. A one country, one vote system, based on majoritarian decision rules, is unlikely to satisfy more powerful member states with significant outside options. One solution awards more powerful members greater influence over outcomes of particular interest to them through informal rules (Stone 2011). Another relies on consensus decision-making, which permits opposition from any member to defeat proposed actions or commitments.⁴ Even institutions that adopt formal majoritarian or qualified majoritarian decision rules are likely to introduce other mechanisms to produce de facto consensual outcomes. Among regional groupings, the European Union (EU) has ventured further than any other in adopting decision-making by qualified majority. As Hix (chapter 2) points out, however, national governments in Europe have carefully hedged those outcomes by requiring a unanimity rule for delegation of additional authority to European institutions, by insuring equal representation on the EU’s executive body, and by instituting checks and balances and high thresholds for decision.

Consensus decision rules guard against defection—from the organization or from its decision—on the part of discontented minorities. They also discourage backsliding, since cooperative commitments can only be modified through the same procedures. Consensus imposes a steep tradeoff between commitment and decisiveness, however. The prospect of an agreement that is difficult to change or one that will be effectively enforced may produce protracted bargaining and frequent failures of collective action (Fearon 1998). In the face of a crisis or a rapidly changing environment, institutions that strain for consensus may fail to produce timely changes of course. The disappointing record of Asian regional institutions during the Asian financial crisis has been attributed in part to the region’s attachment to consensus decision-making.

Commitment Devices: Political Engagement, Legalization, and Enfranchisement

The history of regional agreements is littered with ambitious commitments that are not implemented. Particularly when new commitments deepen economic integration, extending regional collaboration into domains of domestic sensitivity that arouse political opposition, current or future governments may renege on those agreements or slight their implementation. To counter such temptations, regional institutions often contain embedded commitment mechanisms and instruments for monitoring and enforcement.

The mobilization of high-level political commitment, particularly at the launch of new institutions and new national undertakings, is one such device. Involvement of top political leaders signals possible costs to those within the government who fail to implement the new agreement and engages the reputation of leaders in the success of the regional enterprise. Regional commitments are also reinforced if national political institutions, such as legislatures and bureaucracies, are part of the process of ratification and implementation, rendering regional institutions truly intergovernmental rather than “inter-executive” (Dominguez, chapter 5; Martin 2000). Successful regional institutions that affect significant national policy domains are seldom purely technocratic; visible domestic political commitments are required to sustain them.

Legalization is another institutional instrument for bolstering commitment. Legalization is measured on three dimensions: precision of international commitments; obligation or the degree to which those commitments are legally binding; and delegation of authority to third parties, such as global or regional institutions, to interpret, monitor, and enforce those commitments (Goldstein, Kahler, Keohane, and Slaughter 2001). Delegated authority is often interpreted as a marker of whether regional institutions are strong or weak. The other dimensions of legalization can substitute for delegation, however. Precise and binding commitments, such as those in NAFTA, may produce high levels of compliance without substantial delegation of authority to regional institutions. Delegation risks the creation of institutional agents who will pursue their own interests rather than those of the contracting governments. Member states of the EU, for example, have designed additional institutions and rules to hedge against such drift away from their preferences (Hix, chapter 2). Elaborate institutions do not always signify substantial delegation. Despite a proliferation of regional courts, Erik Voeten (chapter 3) confirms that they are rarely used to resolve interstate disputes. In Latin America, delegation to supranational regional institutions has been most helpful in specialized domains; ambitious region-wide institutions have often failed to exercise the powers awarded them on paper (Domínguez, chapter 5).

Enfranchisement of non-governmental actors, such as corporations or citizens, also serves as a commitment mechanism in regional governance. Compliance constituencies, mobilizing outside the self-protective cartel of national governments, use courts and other dispute settlement mechanisms to reactivate the integration process, to interpret agreements, and to prevent backsliding by governments. As Voeten (chapter 3) describes, rules for enfranchisement in regional courts contribute directly to their effectiveness. Commitments by governments are rendered more credible by the ability of non-state actors to participate in enforcement.

Membership Rules and the Widening of Regional Institutions

Judith Kelley (chapter 4) describes two membership models that dominate the universe of regional institutions. The club model imposes strict admission criteria based on prior policy change and thereby awards leverage to existing members over the candidate member’s policies. The convoy model is more permissive, basing membership on geographical proximity (ASEAN) or on ad hoc and flexible rules (APEC). Policy change is rarely required in advance of institutional membership. As regional institutions contemplate admission of new members, both models may have strengths. Convoy membership organizations rely on socialization to shape the behavior of members after they are admitted; Acharya (chapter 9) argues that socialization has succeeded in key Asian cases. The effectiveness of convoy membership rules appears to be greatest in the domain of security, where inclusiveness often has positive effects. The EU is a notable example of the club model of membership, in which a wider array of tools can be deployed before membership to change the policies of a national candidate (Kelley 2004 and chapter 4).

Manipulation of membership rules is an important means of introducing flexibility into regional institutions when some members wish to pursue new and more ambitious cooperative bargains (Kelley, chapter 4). New institutions may be spun off by the “cooperators,” or the existing organization may adopt different categories of membership. If members agree on integration goals but disagree on timing, multi-speed integration will allow transitional periods for new members. If disagreement over the aims of integration is more profound, variable geometry or à la carte regionalism may be introduced. Under those membership rules, a single institution recognizes different “integration spaces.” For example, some members of the EU have opted out of monetary union indefinitely (variable geometry); new members must fulfill policy requirements before adopting the Euro (multi-speed membership). A risk of fragmentation lies in such flexibility, undermining institutional goals of policy harmonization and economic integration.

Widening, which may produce a larger membership with more heterogeneous preferences, might also appear to undermine future deepening of regional cooperative bargains. That tradeoff is dependent on membership rules, however: regional organizations with club membership rules can wield those rules to exclude members who have not signaled their cooperative intent and harmonized their policy preferences with those of incumbent members. Institutional devices, such as the introduction of new decision rules, may also offset some of the effects of widening. In Europe, an extension of qualified majority voting served to enhance decision-making efficiency as membership grew. Finally, new members may be the most enthusiastic cooperators in certain policy domains. The EU’s newest members in central and east Europe were eager to join its monetary union, despite demanding entry conditions. In Asia, India has backed regional agreements that liberalize trade in services and establish rules governing foreign direct investment, two areas of deeper integration that existing Asian trade agreements have often excluded (Debroy 2009).

The Distinctive Design of Asia Regional Institutions

Although Asian regional institutions have increased in number during the latest wave of regional institution building, they have remained, in the eyes of observers outside the region, “shallow” or “thin” (Haggard, chapter 8). The preceding review of the dimensions that define such institutions permits a more precise description of their common institutional design.

Although Asia’s regional institutions are hardly uniform, certain characteristics define an “Asian way” of institution building. Decision rules emphasize building consensus, a process that emphasizes persuasion and deliberation rather than decisiveness. Regional arrangements are rarely legalized through precise and binding obligations, and governments are reluctant to delegate substantial authority to regional institutions. As a result, the monitoring and enforcement powers of most regional institutions are limited. The Asian Development Bank (ADB) is a rare regional example of consequential delegation to an Asian institution. ASEAN has a small secretariat whose operational autonomy has been carefully circumscribed by member governments. The leadership of APEC’s secretariat, which is even smaller than ASEAN’s, is seconded from member governments. Despite its economic importance, Asia has no regional courts (Voeten, chapter 3). Asian regional institutions are also exclusively intergovernmental: non-state actors, whether individuals, corporations, or non-governmental organizations (NGOs) are not formally enfranchised in regional institutions. Finally, Asian regional organizations have adopted a model of membership that produces heterogeneous convoys rather than homogeneous clubs. In all of these characteristics, Asian regional institutions emphasize preservation rather than pooling of sovereignty; regional institutions avoid intrusions into domestic politics and policy.⁵

Regional Comparisons: Europe, Latin America, and Asia

Whether this institutional syndrome is a complex that is distinctively Asia requires careful cross-regional comparison. Certainly, each of the enumerated features of Asian institutions can be found in other regions. Contemporary Europe has too often served as the benchmark for Asian institutions. As Kevin O’Rourke (chapter 6) describes, however, Europe of the 1950s and 1960s provides a more satisfactory benchmark for comparison. It was in those decades that Europe took the key decisions that directed its future away from free trade agreements—the most common regional economic arrangement in Asia and elsewhere—and toward the more elaborate institutions of today’s EU. Jorge Domínguez (chapter 5) provides an equally illuminating comparison, juxtaposing Asia and the Americas. Like Asia, the Americas combine a major industrialized economy with middle-income developing countries. The Americas, however, have both a longer post-colonial history than Asia and a record of more institutional experiments. Three clusters of variables provide candidate explanations for contrasting institutiona...