Professor Manick Supperamaniam is the former ambassador and the permanent representative of Malaysia to the WTO. During his visit in China, Liu Yue (LY), CSSN reporter from the Chinese Academy of Social Science Interview Program, has an interview with him. He made his comments on the future of the on-going economic cooperation in Asia and the ASEAN Free Trade Area, and how a single market, and a production base, which allows a seamless flow of goods, services and investment, would develop. — Interviewer: Liu Yue / Photography by Pang Junxi / Video Produced by Zhao Yue

LY: Welcome to the CASS Interview Program! Here with us today is Professor Manick Supperamaniam, who is the former ambassador and also the permanent representative of Malaysia to the WTO.

　　And welcome, Professor Supperamaniam. Thank you for join us. We are really honored to have you here to talk about cooperation in Asia. I want to start with the on-going economic cooperation in Asia right now? Do you think there are any difficulties we face in this cooperation, especially the difficulties in the trading system?

Manick Supperamaniam: Let me just focus just on East Asia. Which currently comprises the ASEAN countries and three northeast Asian countries, namely China, Korea, and Japan. As I mentioned in my presentation at the conference this morning, we have a very strong foundation already in terms of economic cooperation among the countries in East Asia. There are targets to be achieved. And this economic cooperation is all-breezing. It’s not just only in providing technical assistance or capacity-building initially, but there’s a lot of work in terms of trade and investment facilitation. We should all stimulate all customers’ procedures so on and so forth. All with the view to sort of promote intro-regional trade within the region without having to go through administrative procedures, you know which is the case in many countries today. So over the years, as a result of the cooperation between the countries within Asia, we have seen a lot of progress, but much more can be done and should be done. And I always maintain that we need to be more coordinated, in terms of the kind of cooperation that is taking place, especially in the area of trade and investment facilitation and other cooperation aspects. What we are seeing today is countries depending on the richer economies for assistance and this has been given on a bi-natural basis. And when you see assistance been given on a bi-natural basis, they are not coordinated. They are not focused. And there’s a lot of overlap. So, I would like to see, in this area of economic cooperation that we have a designated mechanism that can look at what the needs of the region are and to see how best these needs can be addressed to a definitive program of action. And we must have a mechanism to monitor this while it has been implemented and review whatever is appropriate. More importantly, there must be sources made available. I’m talking about even the possibility of having a fund, a common fund for facilitation and cooperation.

LY: Earlier, you mentioned several times one Asia, like a free trade agreement. What do you think of it? Is the one we are hunting right now a good foundation for the one we are going to have?

Manick Supperamaniam: Yes, of course. You know as I mentioned again in my statement, we have the basis to form what I call a region-wide East Asia free trade area. And I say this on the basis of economic integration that has already taken place within the East Asia region. Within ASEAN, you have what we called the ASEAN Free Trade Area, where there’s a free trade movement, you know, of groups among the ASEAN countries. We are trying to investigate the situation within the context of the ASEAN economic community we’d like to achieve by 2015. We want a single market, a production base which allows a seamless flow of goods, services and investment. So that is one area. And then you have ASEAN which has entered into FTA agreements with China, Korea and Japan. So, that again we are working towards reducing tax barriers, cooperating in the economic cooperation sector, so on and so forth. You already have it then. But the problem is as I mentioned in my presentation, these agreements are multi-layered. They are overlapping and then there are different standards to be followed in each of these countries. All these have what I called the “noodle bowl effect” which in a way raises the transaction cost in terms of cross-border flows, you know, in terms of goods and services. And one way to try to bring about the reduction in the transaction cost and promote the inter-regional trade and supply chain is to have a single region-wide FTA, comprising all those ASEAN plus One FTAs. I would call it consolidation of the ASEAN plus One FTAs into a region-wide free trade agreement. We can do it. But we should not go and start renegotiating what is already available. We just use the ASEAN plus One FTAs as a reference point, a starting point, and try to rectify some of the inconsistencies or anomalies and make them, you know, more uniform, more simple and facilitative of trade and investment plots. So that is the basis that we can work on. And there are a lot of benefits to be derived if you have a region-wide FTA.

LY: I imagine so!

Manick Supperamaniam: Yes? Tremendous! Studies have been conducted that this will lead to an increase in GDP of 2% or 3%.

LY: So, lots of countries are involved, do you think there’s going to be a lot of political difficulties?

Manick Supperamaniam: I think that’s a very pertinent observation. It’s not easy. There’ll be challenges because within the East Asia region, you have countries which are at a very low level of development. The diversity is there, the heterogeneity in terms of the economic development, the policies to restrain openness, market orientation, they are all quite different. And some of these economies, there’re sectors which are considered to be sensitive. They need to protect. So they will not want to legalize as fast as some other countries in the region would want to do it. So all these things would mean that we have to work in a very pragmatic and realistic way. And have an agreement where everyone is able to participate effectively and derive benefits from it. So we should start right from the beginning to have a very comprehensive, high quality region-wide FTA. We tried to do it in an incremental step by step approach. And as we go along, we build on it. So you provide more comforts for the countries politically and administratively.

LY: Yes, this makes great sense. What do you think about the on-going global economic crisis? Is it affecting Asian cooperation? Or it may be even a better opportunity for Asian cooperation, because we are getting closer and closer?

Manick Supperamaniam: Yes! This is exactly the point that I would like to highlight. We have learned some lessons from the global economic recession that hit all of us. I’m sure you have heard what I’ve said this morning. It negatively impacted on a lot of countries. What it means it that we now have to see what needs to be done in the region, to put the economy on a resilient basis and do things within the region which will continue to contribute towards the prosperity and stability of the region. So there’s a lot of room for cooperation. Right? This is what exactly we should be doing. You know, I think you see in one of the papers presented this morning, it was mentioned that there is a great deal of trade going on but on component parts, intermediate products. Now there’s a need for us to relook at the region and see how we can also promote or how to enhance domestic consumption, private investments. And how can we, sort of, rationalize the industrial structure within the region that would, sort of, result in countries producing parts, components as well as finishing products which will allow for domestic consumption, you know. But right now, the kind of situation we are seeing is that we deal with a lot of intermediate products, components and so on. Countries produce it strictly within the region, but, for example, say final products manufactured in China or Japan are exported out of the region. What I’d like to see as a result of global economics and put the region on a basis, were we can see some growth, but change the product end, supply chain network to allow for also, you know, production for finished products for consumption within the region. So that we are not so vulnerable to externalities, like what happened in the case of when the US came down and then you all have a problem that affected our part of the world. And we have had a positive growth rate every year but it affected us. So we have to learn lessons from that and see how we can safeguard these negative elements affecting our own growing strategy.

LY: Well. Thank you. Thank you for doing this interview again. It’s our honor to have you here today.

Manick Supperamaniam: Thank you very much for giving me the opportunity. I’m always very happy with being in Beijing you know.