Regional Cooperation and Integration in Asia and the Pacific: Your Questions Answered
Ronald Antonio Butiong, Chief of ADB’s Regional Cooperation and Integration Thematic Group, discusses regional cooperation and integration challenges in developing Asia and how ADB is helping through financing and knowledge sharing.
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How have regional and subregional cooperation impacted on economic growth in Asia and the Pacific?
ADB supports strengthening infrastructure connectivity between countries, enhancing trade, finance, and investment links. These have all had a major impact on economic development in the region. The bank also works to foster collective regional action on public health, environment, and climate change.
Cross-border infrastructure, along with roads, railways, and airports, have enabled faster and more efficient movement of goods, services, and people across borders. Simplifying trade policies and border procedures have also boosted growth. The integration of financial markets and financial cooperation have helped countries reduce financial contagion and contributed to regional financial stability.
Collective action has helped countries address transnational challenges, such as climate and disaster risks, environmental pollution, and the spread of HIV/AIDS, malaria, and COVID-19. This collective approach contributes to more sustainable economic growth. Economic cooperation has also had a peace dividend, which is crucial for sustainable economic growth and development.
What are the three proven strategies for boosting regional cooperation?
The first is the creation of institutions or mechanisms that bring countries together to formulate common visions, strategies, and plans. Examples are the Greater Mekong Subregion (GMS), Central Asia Regional Economic Cooperation (CAREC), and South Asia Subregional Economic Cooperation (SASEC) programs. ADB has facilitated the creation of these cooperation programs and continues to support them by acting as financier, honest broker, and knowledge provider/capacity builder.
The second ingredient is the formulation of free trade and other types of regional, subregional, or cross-country agreements. A good example is the Regional Comprehensive Economic Partnership Agreement (RCEP). These agreements promote trade liberalization through lower tariff and non-tariff barriers (NTBs). They also establish common rules on issues such as e-commerce and intellectual property. Transport agreements, such as the Bangladesh, Bhutan, India, Nepal Motor Vehicles Agreement, foster cross-border movement of goods and people.
Thirdly, the establishment of regional or subregional institutions that act as honest brokers is important, building trust between countries and enabling them to achieve common goals. The Asian Development Bank and the Inter-American Development Bank are examples.
Give an example of an ADB regional cooperation and integration (RCI) project that has had a substantial impact on people’s lives.
The PRC Inner Mongolia Sustainable Cross-Border Development Investment Program promotes cooperation between the People’s Republic of China’s (PRC) Inner Mongolia Autonomous Region (IMAR) and Mongolia. The program boosts economic inclusion, ecosystems, and crucial services in IMAR’s five border communities and surrounding areas on the 3,200-km PRC-Mongolia border. The program costs $888 million, of which $420 million will be financed by ADB.
A related program is the Mongolia Developing the Economic Cooperation Zone Project, aiming to diversify Mongolia’s economy, integrating it into regional and global value chains. The focus is Zamyn-Uud City, the busiest border point between Mongolia and PRC, where the population relies heavily on cross-border transport and trade. The $36 million project is expected to be completed by December 2025.
Tariff barriers are relatively easy to deal with, but what about non-tariff barriers (NTBs)?
Boosting trade requires reducing tariffs as well as NTBs. Trade facilitation addressing NTBs—both at and behind the border—is an ADB priority. NTBs can be both physical and non-physical. Common bottlenecks include inadequate border infrastructure and excessive, unharmonized customs procedures. A lack of common technical regulations, standards, and compliance procedures, along with poor use of ICT, also hinder trade.
ADB works with its DMCs to improve trade facilitation by implementing the WTO Trade Facilitation Agreement, the Kyoto Protocol, and WTO SPS Agreement. Priorities include developing single windows for trade, promoting coordinated borders, and improving infrastructure at key border crossing points along major transport corridors. ADB also promotes private sector participation in trade facilitation.
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Closer regional trade and financial integration in Asia and the Pacific has huge benefits that drive economic growth and development.
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Asia and the Pacific is stronger and more resilient when it works collectively to address challenges such as climate change, pandemics, and financial shocks.
What are the most important lessons ADB has learnt in fostering regional cooperation and integration (RCI)?
RCI generates an important peace dividend which, though unquantifiable, is critical for economic and social development. Given the current increased global risks and uncertainties, maintaining a stable and peaceful Asia and the Pacific remains critical to sustainable growth and prosperity.
Building consensus in the form of regional strategies and action plans is critical for successful RCI. ADB has been acting as an honest broker to bring together countries to debate, discuss and agree on strategic directions. The bank’s long experience in RCI suggests that flexibility, pragmatism, and a phased approach are key to proper implementation.
RCI is most successful when it is initiated, driven, and backed by participating countries. To strengthen country ownership, it is important that ADB and development partners provide demand-driven and well-targeted capacity building support.
Lastly, technical assistance and investment support need to go hand in hand. Policy and strategic recommendations from technical assistance should be followed up, wherever possible, by concrete investment projects for piloting and replication.
Along with financing roads, power lines and cross-border infrastructure, does ADB work to develop trade deals, treaties, and laws to facilitate regional cooperation?
ADB is not directly involved in negotiations to develop trade deals, treaties, and laws. However, ADB provides extensive support to our DMCs to help them implement, and benefit from, such trade arrangements. Examples include WTO membership and implementation of the WTO Trade Facilitation Agreement.
ADB, as secretariat for key subregional programs, has been helping provide the ‘software’ that is often needed to make the ‘hardware’ of cross-border infrastructure work properly. For example, ADB has helped formulate, broker, and finalize the Greater Mekong Subregion (GMS) Cross-Border Transport Facilitation Agreement (CBTA). The CBTA, when fully implemented, will allow goods, vehicles, and people to easily cross GMS international borders.
As a regional economic bloc, the EU has been very successful, are there any subregions in Asia likely to replicate EU institutions, like a common currency and a regional legal authority?
ADB is not aware of any currently. Although ASEAN is developing an economic community, it does not come close to the EU, its common currency, or its legal authority. ADB promotes project-based, market-driven, and mutually beneficial economic cooperation. This is consistent with its mandate. ADB-supported economic cooperation programs are institution light, but project heavy.
How does ADB work to promote regional cooperation in a territory as vast as the Pacific?
Given the remoteness and dispersion of the Pacific islands, there’s a clear need for RCI tailored to the specific challenges of the Pacific. ADB prioritizes maritime connectivity, such as this project in the Solomon Islands improving port facilities. Support for improved air connectivity in the Pacific is also critical for high value trade and the tourism industry.
ADB financing for submarine cable projects, such as this project linking Tonga with Fiji, has helped bring cyber connectivity to the majority of its Pacific DMCs. ADB is a partner in the Pacific Regional Infrastructure Facility (PRIF) which focuses on improving the quality and coverage of infrastructure in the Pacific and serves as a regional knowledge hub.
