Drawing inspiration from the global Millennium Development Compact proposed in the 2003 Human Development Report (HDR), participants in a Regional Workshop on “ASEAN Cooperation on Poverty Reduction and Millennium Development Goals (MDGs)” agreed to initiate a process leading to the adoption of an ASEAN Millennium Development Compact (AMDC). The workshop was held in Jakarta on 1-2 August, right before the Asia Pacific Ministerial Meeting on MDGs on 3-5 August.
The 2003 HDR advanced the notion of a global compact among nations, especially between the poor and the rich, whereby the former will mobilize and allocate domestic resources and apply good governance principles to realize the MDGs while the latter will provide more aid and debt relief and open up its market to exports from poor countries.
The 10 targets relating to poverty reduction and other MDGs (Goals 1 through 7) are quantitative, time-bound, measurable, internationally comparable and monitorable. Unfortunately, the same can not be said for the 8 targets under Goal 8 – Develop a global partnership for development – particularly those relating to aid, debt relief and free trade. In the absence of quantitative targets, it is as if they were to be realized on a best effort basis. One wonders then how progress towards realization of Goal 8 is to be assessed at the Asia Pacific ministerial meeting in Jakarta and at the forthcoming MDG + 5 review in New York in September 2005.
While a number of poor ASEAN Member Countries (AMCs) still receive considerable aid from rich countries, the extent to which it could be used to directly support MDGs is limited by the conditions attached to its disbursement. It is heartening that G8 countries recently announced debt forgiveness for poor countries amounting to USD 40 billion. But much to the chagrin of Asians, eligibility is confined to African countries. With respect to trade, markets for exports of poor countries remain highly protected by the huge agriculture subsidies provided by rich countries to their farmers. And the prospects of concluding the so-called Doha Development Round of multilateral trade liberalization in Hong Kong by the end of the year remain dim.
Instead of market opening, the opposite seems to be happening, given the reaction of rich countries, particularly the U.S and EU to the “surge” of Chinese exports following termination of the global quota arrangement. This reaction is particularly disturbing as the rich countries were the original proponents of free trade. They put pressure on poor countries to liberalize trade regime through loan conditionality imposed by multilateral financial institutions as early as the 60s. Unilateral trade liberalization by poor countries started with substitution of tariff to quotas, otherwise known as “tarrification”, followed by tariff simplification, and then tariff reduction.
It was known to every country well in advance that the quota arrangement was expiring. There was adequate time therefore to make the necessary domestic adjustments in anticipation of removal of this impediment to free trade. Under a free trade regime, exports of countries like China with a comparative advantage in labor-intensive products covered by the quota arrangement would naturally increase in a big way if and when the quota is lifted. While the protectionist reaction of rich countries through imposition of quota to the surge in Chinese exports may be legal in the context of WTO rules, one wonders whether it is fair.
Southeast Asia as a sub-region was assessed by the UN Millennium Project to be on track with respect to poverty reduction and many other MDGs. However, the huge development gap across and within AMCs that persists in terms of poverty incidence, per capita GDP, and other human development indicators was noted by the workshop participants. At one extreme are Brunei and Singapore, which have joined the high human development league. These two countries do not even have a definition of poverty. By non-definition, they have no poor people, although Singapore concedes that it has a number of programs to help the “needy”. At the other extreme are the least developed CLMV countries. At the upper middle are Malaysia and Thailand, which have already met most of the targets and are referred to as MDG + countries. At the lower middle are Indonesia and the Philippines with a national poverty incidence rate still as high as 18 and 30 percent, respectively.
Disparity in poverty incidence is even more serious within a number of AMCs, particularly between the capital and the rest of the country. For instance, poverty incidence is already at single digit level in Bangkok, Jakarta and Metro-Manila, but it is as high as 26, 42, and 66 in Pattani (Thailand), Papua, and the Autonomous Region of Muslim Mindanao.
Given the uncertainties relating to aid, debt relief, and trade, along with the socio-economic disparities constraining ASEAN economic integration, it seems logical for AMCs to rely more on each other than on rich countries from the northern hemisphere in realizing their MDG targets.
A broad AMDC framework was adopted by the workshop participants as a starting point for elaboration into a fully documented compact. The long-term objective of the compact would be to help narrow the development gap across and within AMCs. The need to narrow this gap was seen as urgent both as an end in itself and as a means to facilitate integration of ASEAN into a single market and production base. The intention is to use the MDGs as planning framework for reducing the development gap. The compact’s guiding principle and strategy would be for AMCs to support each other as members of one family of nations to realize their localized MDG targets.
The cooperation modalities would go beyond the usual sharing of experiences, learning and good practices on various aspects of MDG processes. They would look into the possibility of sharing expertise and resources as well. The MDG + countries appeared favorably disposed to consider this modality. The Philippines offered to take the lead in developing the compact and getting it adopted by an appropriate ASEAN body. In taking this bold initiative, ASEAN signals that it is beginning to act like what it is aiming to be – one community, ten nations.