Accelerating Regional Economic Integration for the Future We Want in Asia and the Pacific

Opening Statement as Delivered by Dr. Noeleen Heyzer
United Nations Under-Secretary-General, Executive Secretary of
the Economic and Social Commission for Asia and the Pacific, and Special Adviser of the United Nations Secretary-General for Timor-Leste

Ministerial Conference on
Regional Economic Cooperation and Integration in Asia and the Pacific
Bangkok, 19 December 2013

Your Excellency, Mr. Kay Rala Xanana Gusmão,
Prime Minister of Timor-Leste and Chair of the 69th session of the Commission,

Your Excellency, Mr. Toke Talagi, Premier of Niue,

Honorable Ministers,
Ladies and Gentlemen,

I am very pleased to welcome you to the Ministerial Conference on Regional Economic Cooperation and Integration in Asia and the Pacific. This is an historic and defining moment in the history of ESCAP, as we take new steps with our member States to deepen and broaden the process of regional economic cooperation and integration, and as we work even more closely together to ensure that this will truly be the Asia-Pacific century.

Excellencies, Ladies and Gentlemen,

The global financial crisis which started in 2008 has proven to be a watershed event - having changed many assumptions about the way the global economy has functioned in the past. In particular, it has become clear that the advanced economies of the world will find it difficult to play the role of growth poles for the developing countries of Asia and the Pacific, as they did in the past, given their priority of unwinding their high levels of debt.

In that context, ESCAP has provided focused advice to our member States about the importance of rebalancing patterns of economic growth in favour of domestic and regional sources to sustain their dynamism.

In the ESCAP 2010 Economic and Social Survey, for instance, we encouraged member States to focus on generating new aggregate demand through increasing the purchasing power of our ‘bottom billion’, as well as through greater focus on social protection, employment guarantee programmes, and other poverty reduction initiatives. The policies to lift the ‘bottom billion’ out of poverty, and to allow them to join the mainstream of the region’s consumers, can contribute to sustaining the region’s economic dynamism for decades to come.

Another key message for sustaining the dynamism of the region in the aftermath of the global financial crisis, also highlighted in the 2010 Survey, was to tap the potential of regional economic integration. In view of the importance of the message on the potential of regional economic integration, and its relevance to ESCAP’s work, a full chapter was also devoted to regional economic integration and connectivity in the 2011 Survey.

The Survey’s analysis in 2011, supported member States adoption of regional economic integration as the theme for the 68th session of the Commission, held in 2012. To inform and assist the discussions at this Session, the theme study Growing Together: Economic Integration for an Inclusive and Sustainable Asia-Pacific Century was prepared by the secretariat. Our member States then adopted resolution 68/10, seeking a ministerial conference to review and take forward the findings of that theme study.

Against this background, I am gratified and honoured that so many senior regional leaders and policy-makers are participating in this Ministerial Conference, which is really a culmination of our efforts to institutionalize the process of gradual deepening and broadening of the agenda of regional economic cooperation and integration – laying the foundations of an economic community of Asia and the Pacific. This may indeed be a milestone reminiscent of the process that led to the birth of the Asian Development Bank, through a similar Ministerial meeting in 1963, held under the auspices of ECAFE, as ESCAP was then known.

Excellencies, Ladies and Gentlemen,

Accelerating regional cooperation and integration initiatives provide us with the opportunity to make real progress in reducing poverty and disparities across countries in Asia and the Pacific. Capacities and resources vary across countries, giving rise to complementarities and opportunities for mutually beneficial exchanges, which could be unlocked by enhancing regional economic integration.

Since the 1990s, regional economic integration has become a dominant trend in the world economy, with the rise of regional groupings such as the European Union (EU) and the North American Free Trade Agreement (NAFTA), among others that pursue deeper forms of regional economic integration. APEC was formed in 1989 as part of this global trend, that now combines 21 members from the Pacific Rim.

In the ESCAP region, ASEAN has led its 10 member countries in the process of economic integration towards the ASEAN Economic Community (AEC) by 2015. ASEAN has also brought together countries in the neighbourhood through its dialogue partnership process, which is now moving towards the creation of an integrated market of ASEAN+6 countries in what is called the Regional Comprehensive Economic Partnership (RCEP).

In other subregions, groupings such as SAARC, BIMSTEC, the Economic Cooperation Organization (ECO), and the Pacific Islands Forum, in addition to numerous bilateral free trade agreements, are promoting regional cooperation and integration. One lesson that emerges from these experiences of regionalism, including that of ASEAN, is the potential for fostering more balanced and equitable development – with least-developed economies converging with more-developed ones.

Our member States, through discussions in two preparatory conferences and at the senior officials meeting concluded yesterday, have discussed and agreed to advance the agenda of regional economic integration in a comprehensive manner, and have adopted a four-pillared approach, as recommended by the theme study Growing Together, covering movement towards an integrated regional market, seamless connectivity for goods, energy and people, financial cooperation to facilitate closing of infrastructure gaps, and cooperation for addressing shared vulnerabilities and risks. This is an agenda which is both comprehensive and indeed timely.

First, an integrated regional market, bringing together high- and low-growth countries in a single grouping, could act as an economic ‘corridor of prosperity’, spreading the benefits of regional growth more widely, helping to exploit valuable efficiency gains, and building productive capacities in poorer economies through regional production networks.

A regional market of over 4 billion people with rising incomes, would decisively shift the centre of economic gravity to our region. The movement towards such an integrated market would also enable the region to harness the synergies between the subregions, which are often substantial and which cannot be harnessed by subregional groupings alone.

Second, the countries of Asia and the Pacific are still better connected with the advanced countries of the West than they are with most of their own regional neighbours. Hence, strengthening connectivity is of critical importance. ESCAP has, over the years, facilitated connectivity through international agreements on the Asian Highway and the Trans-Asian Railway. A new agreement on Dry Ports has recently been opened for signature, and is part of our vision of an international, integrated, intermodal transport and logistics system.

Similarly, considering the uneven distribution of energy resources across the region, ‘Asian Energy Highways’ are needed, in the form of regional pipelines, to transport gas and oil, as are smart power grids to strengthen regional energy security. Connecting the region through ‘information super-highways’ could also contribute greatly to reducing the digital divide and to ensuring that the businesses and people of Asia and the Pacific make the most of the opportunities offered by the new information and communications technologies (ICT).

The third element is further developing regional financial architecture, to better deploy the region’s savings – including excess foreign exchange reserves and private savings – for productive purposes, and to close the gaps in the region’s infrastructure. Financial and monetary cooperation can also help strengthen the resilience of this region to economic shocks, by providing balance of payment support in crises, as demonstrated by the Chiang Mai Initiative Multilateralization, which covers the ASEAN+3 countries, with a US$240 billion pool to provide member countries short-term liquidity support.

The fourth element is to provide a coordinated regional response to shared vulnerabilities. Beyond the most obvious of these, such as food and energy security, natural disasters, pressures on natural resources, and a shrinking carbon space, Asia will need to invest in joint research to develop new development pathways that are low on carbon, but high on prosperity, high on poverty reduction, and high on human security. This could be fostered through new regional centres of excellence established to find fresh solutions to persistent problems through research, innovation, and technological development – unleashing the creativity and entrepreneurship of our people.

Possibilities in each of these four broad areas are immense, which is why, I believe, the creation of four expert working groups being considered is such a positive development. These groups will be able to advance this agenda and to make specific and workable proposals for deepening regional cooperation, building on existing initiatives in each of the four areas. I am also pleased to note the acceptance of the proposal for ESCAP to create a consultative forum of subregional groupings of Asia and the Pacific, to regularly meet and share good practices. In this vein, I would like to thank His Excellency the Premier of Niue, who this morning suggested that it would be a good idea for ESCAP to participate in the next Pacific Island Forum to present these issues, and to further link the Pacific with Asia in even more constructive ways.

Excellencies, Ladies and Gentlemen,

In conclusion, the Bangkok Declaration on Regional Economic Cooperation and Integration, which is before us today for further discussion and adoption, represents a very important step towards accelerating regional economic integration. I wish to commend the hard work of our senior officials, not only at their meetings of the past two days, but also through the preparatory meetings held in August and in November. Let me use this opportunity to recognise and thank His Excellency, the Ambassador of Bangladesh, for his very successful Chairing of our Senior Officials Segment of this Conference.

Asia and the Pacific has the historic opportunity to rebalance its economic structure in favour of itself, to sustain its dynamism with strengthened connectivity and balanced regional development. This Conference is an important step towards that end. In this journey, ESCAP, as the largest and most inclusive intergovernmental forum for the region, stands ready to assist our member States in advancing this agenda – deepening regional economic cooperation and integration, as a key tool towards reducing poverty, sustaining growth, and making inclusive and sustainable development a reality for all.

I thank you.