Accelerating Economic Integration: Asian Experiences

Mr. Chairman, Your Excellency Mr. Esen Aydogdyev,
Ambassador of Turkmenistan,

Mr. Sven Alkalaj, Executive Secretary,
UN Economic Commission for Europe (UNECE),

Excellencies,
Distinguished Delegates,
Ladies and Gentlemen,

Introduction

In much the same way that Central Asia and the Caucasus have always been a crossroads between continents, and a meeting place for diverse cultures, ESCAP has become the United Nations hub for the Asia-Pacific region.

It is, therefore, my very great pleasure to welcome you all to Thailand and to Bangkok. I am very specially pleased because this is the first time that the Economic Forum and Governing Council of SPECA are being held at ESCAP – long overdue, given the growing importance of the Central Asian subregion. So thank you Excellencies for accepting my invitation to attend.

I would like to extend a special welcome to Mr. Sven Alkalaj, the new Executive Secretary of the United Nations Economic Commission for Europe (ECE). This is his first SPECA event since assuming his duties in April, and is also his first visit to ESCAP in his new capacity. ESCAP and ECE share the responsibility for coordinating SPECA, precisely because of the strategic importance of Central Asia to both Europe and the counties of Asia-Pacific.

Excellencies, Ladies and Gentlemen,

Sharing Experiences – What Can Be Achieved

In March next year, SPECA will mark its 15th anniversary. I would like to suggest that this meeting of the Economic Forum, and the Governing Council, should take the opportunity to look at SPECA with new eyes. After almost a decade and a half of high-level meetings, policy dialogues, and program implementation, we need to make some frank assessments of what has been achieved, what worked, and what remains to be done for SPECA to truly come of age.

In particular, I would suggest that we return to the founding mandate of the Tashkent Declaration, which set as the objectives of the programme three things: support for the Central Asian States in “developing their cooperation; creating incentives for economic development; and integration into the economies of Europe and Asia”.

In this process of evaluation, we should also reaffirm the comparative advantages of SPECA: that it was initiated, established, and is governed by its member countries; that it enjoys the support and assistance of the two UN regional commissions; and that it offers a neutral intergovernmental platform, at the subregional level, to address issues of shared interest and concern for the counties of Central Asia.

Although some progress has been made on these fronts, it is clear that the journey towards closer Central Asian economic cooperation, and further economic integration with the rest of Europe and Asia, remains far from complete. That is why the theme of this year’s Forum is so important: “Strengthening Regional Economic Cooperation and Integration in Central Asia by Sharing the Asian Experience”.

The idea is for this meeting to review what I call both the building blocks and the stumbling blocks of regional economic integration across Asia, especially in terms of regional organizations – and to identify good practices, and lessons learned, that could be adapted to meet the challenges of Central Asia.

There are powerful justifications for doing so – preliminary economic modelling, prepared by an ESCAP consultant for this meeting has shown, for instance, that more comprehensive trade integration within Central Asia alone, could perhaps lead to as much as a 60-fold increase in trade volumes by 2030, and as much as a 125-fold increase under a Free-Trade-Agreement (FTA) with the South Asian region.

Excellencies, Ladies and Gentlemen,

‘New Regionalism’ in Asia-Pacific

Indeed, we are in a time of great transition, facing an ever-growing number of transboundary issues – from financial crises to food price volatility, energy and water insecurity, and climate change. Following the United Nations Rio+20 Conference on Sustainable Development there has been global acknowledgement that both our challenges and our opportunities have moved beyond the narrow confines of national boundaries – and so must we. This is why the focus on balancing sustainable development, and the post-2015 development agenda, has become so important. We hope that your perspectives on this agenda will be articulated at this Forum.

The world economy has entered a second stage of the financial crisis, with stalling growth in developed economies, high unemployment, volatile capital flows, and high and fluctuating commodity prices, what ESCAP has called the “new normal”.

Our flagship ESCAP publication – the 2012 Economic and Social Survey for Asia and the Pacific – made some very direct links between the external volatility and the economies of less-developed countries such as those of Central Asia. The commodity boom, for instance, is shown to present both risks and opportunities. The lesson from Asia is that price shifts will alter incentives, but such economies should resist the impulse towards commodity specialization, which in turn can delay industrialization, economic diversification, and the building of productive capacities for these countries.

Regional economic integration has therefore become ever more important in our quest to find new drivers of regional growth, in support of shared and sustained prosperity. National and even bilateral approaches alone are no longer sufficient to address these challenges. Regional solutions, through regional cooperation, can be the way for us to forge more sustainable economic growth, close development gaps, and lift tens of millions of people still in poverty.

In addressing the development needs of diverse countries, especially our least developed and landlocked countries, we need to build economic corridors that link these countries to high growth economies, and to build partnerships for development, including South-South and regional cooperation. This is what I call the ‘new regionalism’ which is in fact emerging to build more inclusive and sustainable prosperity for Central Asia and our region as a whole.

Excellencies, Ladies and Gentlemen,

Learning from Asian Integration Experiences

Let me share with you some learnings for Asian integration experiences. There are clearly no one-size-fits-all solutions to closer subregional and regional economic integration, but Asia has a wealth of experience on which to draw.

South-East Asia, for instance, is making great strides towards the achievement of the ASEAN Economic Community by 2015, which will see free movement of goods, services, investment, skilled labour and a freer flow of capital across the subregion. This progress led, just last week at the East Asia Summit in Cambodia that I attended, to the announcement by the ASEAN+6 dialogue partners to create the Regional Comprehensive Economic Partnership (RCEP) – one of the world’s largest trade pacts.

We should remember, however, that ASEAN started slowly. Until the 1990’s the achievements were limited to a preferential trade zone, with many exceptions, and a scarce list of mutual trade items. It was only in 1992, with the decision to create a free trade area by 2003, and with the adoption of its new Charter in 2008, that the process really accelerated – leading to the decision to pursue closer integration economically, socially and politically. ESCAP’s support to this process has focused on closing development gaps and strengthening trans-ASEAN transport and logistics networks, through development of initiatives such as the Master Plan on ASEAN Connectivity, which we do together with ADB and ASEAN, as well as on key strategies for trade facilitation and building lower-carbon, more resilient ASEAN societies.

The Asia-Pacific Economic Cooperation Forum (APEC) – represented here today by Ambassador Yacob – has taken a quite different approach of ‘soft’ integration. Less institutionalized, their approach has enabled cooperation on more flexible conditions, by adapting regional undertakings to the specific internal conditions of economies – with very clear relevance to many of Central Asia’s economic development challenges. In doing so, APEC today accounts for half of global goods and services, and nearly 45% of total foreign investments.

Similarly, initiatives like that of the Greater Mekong Subregion (GMS), point to models which approach closer integration and development on a more holistic basis – prioritizing the critical balance between the three pillars of sustainable development – economic, social and environmental. For more than two decades, ESCAP has fostered trade and investment in the GMS, through trade facilitation, foreign direct investment promotion, and capacity development – especially of small and medium size enterprises, and of course we have done this in partnership with the ADB. We have also assisted the GMS countries in transport facilitation, customs, and cross-border traffic and transport development.

Other Asian experiences of integration – like those of SAARC and ECO, have proceeded at a slower pace, but their approach to many of the major challenges of closer economic cooperation also warrant SPECA’s attention. I know that these, and many other examples will be the focus of this Forum.

Excellencies, Ladies and Gentlemen,

ESCAP & SPECA

I would like to touch briefly on four key areas of work which are both central to any subregional and regional integration for Central Asia, as well as critical to our ESCAP regional sustainable development efforts. These are: trade, transport, water and energy.

The meeting yesterday, of the Project Working Group on Trade, has already addressed issues of tariffs, trade facilitation and the multilateral trading system. Trade integration is also the logical and natural first step towards broader regional economic integration. I have already mentioned the research that ESCAP has undertaken on the scope of trade opportunities for Central Asia, but would like to reemphasize the importance for SPECA to also consider the exceptional trade opportunities and complementarities with the South Asia subregion. ESCAP and our subregional offices stand ready to further assist in the process of forging closer regional trade ties.

Sustainable transport connectivity is also essential to closer economic integration. This year marks the 20th anniversary of the Asian Land Transport Infrastructure Development project – initiated by ESCAP. As many of you already know, the intergovernmental agreements on the Asian Highway and Trans-Asian Railway, have become leading examples of how shared, cross-border challenges can best be addressed by regional solutions. The next critical step will be our Intergovernmental Agreement on Dry Ports – linking landlocked developing countries, like those of SPECA, to our more prosperous coastal regions. I look forward to the support of all your countries for the Dry Ports initiative, and in implementing our ESCAP Resolutions on paperless trade and the Ministerial Declaration on Transport Development – two key elements of the regional connectivity agenda. Given my comments about trade opportunities with South Asia, I would also like to mention our new initiative, funded under the UN Development Account, and working with ECE, ADB, SAARC and ECO, to improve trade and transport corridors between Central and South Asia.

The food-water-energy nexus is another key focus for ESCAP in working with SPECA, which is why we have coordinated regional studies, such as the one on “Water Resources in Central Asia” – to help to review the links between water, energy, food and security. Our experience in establishing the Mekong River Basin Commission, for instance, offers practical and innovative solutions for closer intra-regional cooperation. I would also like to take this opportunity to invite the countries of SPECA to participate in the Second Asia-Pacific Water Summit, being hosted in Thailand from 19-20 May next year.

ESCAP has also been closely involved in supporting the enhancement of energy security in North and Central Asia through regional cooperation, and improving access to clean and efficient energy for sustainable and inclusive growth. This is in line with our Commission Resolution in 2011, on promoting regional cooperation for enhanced energy security and the sustainable use of energy in the region, which also requested me to convene the Asian and Pacific Energy Forum in 2013. We have already held subregional consultations for North and Central Asia in Moscow last month, and have just last week concluded our Expert Group Meeting in Bangkok, to discuss the framework of the Ministerial Declaration and a Regional Action Plan. In response to a further Resolution on energy security this year, ESCAP is assisting our member States to investigate opportunities for an integrated regional power grid – in effect an Asian Energy Highway, promoting access, efficiency, and a greater share of renewables in the energy mix, through regional energy trade and connectivity, and we are committed to these efforts. These efforts will inform the Ministerial meeting of the Asian and Pacific Energy Forum, in Vladivostok in May next year, and I would like to thank the Russian Federation for its support of these efforts. Given the immense energy resources of SPECA countries – in both fossil fuel and renewable sources like hydro, solar and wind power – I would again urge your full participation in these processes for the energy security of our future.

Excellencies, Ladies and Gentlemen,

Conclusion

In conclusion, I would like to assure you of ESCAP’s support for SPECA, for the countries of Central Asia, and for closer regional and subregional economic integration.

We have established our ESCAP Subregional Office for North and Central Asia in Almaty, to enhance our ability to deliver this support and our services – and I wish to again express our thanks to the Government of Kazakhstan for its support of this office. I am pleased that this office also serves as the joint SPECA office – supported by both ESCAP and ECE – and it is now fully operational.

This meeting of the SPECA Economic Forum and the Governing Council provides an important platform for us to jointly assess the progress of SPECA, accelerate delivery on its core mandates, and to increase its relevance and alignment with the regional and global sustainable development agenda.

Ultimately however, SPECA belongs to its member countries – you lead it and must take full ownership of the progress. If the 15th year of SPECA is indeed to be a turning point, then it will require a renewed commitment to action. I wish you every success for these meetings.

I thank you.