Brexit may reshape Asian regionalism

WHILE the United Kingdom's decision to leave the European Union will inevitably spark off economic and financial uncertainty, the true implications of this decision may be more profound and far-reaching than initially realised. In fact, it may resonate as far as Asia. Specifically, Brexit may compel Asian leaders to rethink their integration strategies.

Policymakers of Asia have often looked towards the EU in their quest for deeper regional integration. Indeed, the EU has been the epitome of institutionalised integration for several years now with several milestones including a single market and common currency along with the free movement of goods, labour and services. That the EU's financial and trade integration was accompanied by notions of shared sovereignty and efforts at collective institution- building only served to emphasise the allure of the EU model.

Unlike the EU, regionalism in Asia has largely been a market-driven affair, the onset of the 1997 Asian Financial Crisis providing a strong impetus for closer economic integration and policy coordination. A consequence of this was the consolidation of the 10-member Asean grouping, culminating in the implementation of the Asean Economic Community last year. However, disparities in socio-economic and political development among Asian states are much more stark than those in the EU.

There was hence only so much that economics could do to encourage Asian regional integration. To complicate matters, the rapid rise of China has laid the groundwork for the sort of conflicts and friction that historically have been associated with power transitions.

This was met with the Obama administration's "Asia pivot". As a consequence, Asian regionalism has become redefined by a complex interplay of politics and nationalist interests, giving rise to polarisation.

With Brexit sowing the divisive seeds, the EU's participation in Asian regionalism may be compromised. Interestingly, it is increasingly clear that there are two alternative visions of Asian regionalism. While the US-driven Trans-Pacific Partnership (TPP) excludes China and represents American efforts at alliance building, the Chinese-led Regional Comprehensive Economic Partnership (RCEP) excludes the US and seeks instead to build on its ties with Asean.

While both approaches do not have key EU participation, there will be concerns over the EU-Asean free trade agreement and the US-EU's ambitious Transatlantic Trade and Investment Partnership (TTIP) agreement.

With the exclusion of the UK, will Asean still find an FTA with the EU economically attractive? Or will it simply be an exercise in maintaining the ideological basis of regional integration?

MARITIME CONFRONTATION

Meanwhile the US, which was successful in concluding the TPP last year, is preoccupied with elections at home, and TTIP negotiations are likely to proceed differently. The UK may no longer have the economic teeth for bargaining a better deal outside of the EU as far as the TTIP is concerned.

In Asia, the cracks of polarisation are evident. China's rise as both an economic and regional security player (often viewed in the light of hegemonic overtures) is under scrutiny by Western allies and other emerging powers in Asia. The ongoing Shanghai Cooperation Organisation (SCO) summit in Uzbekistan has also put forth a new conundrum. India, which has been drumming up international support for its Nuclear Suppliers Group membership, has found Brazil, China and South Africa - three out of its four fellow member in BRICS - opposing its bid.

Even on the strategic front, China's maritime confrontation with Japan and Vietnam has proved to be a challenge and the possibility of maritime warfare has been discussed.

Asian leaders have looked towards the EU for guidance, and rightly so. As Kevin Rudd, former prime minister of Australia, notes: "The European community succeeded in its historic mission of eliminating centuries-old security dilemmas between France and Germany and making a modern war at the heart of Europe unthinkable, if not impossible."

Regional integration in a polarised world: Do you hear the people sing?

Issues of sovereignty and independence have become increasingly pronounced in recent years. In the South and East China seas, an increasingly aggressive China has sparked off territorial conflicts and maritime spats with both its South-east Asian neighbours and Japan. While these conflicts have been brewing for years, China's rapid militarisation has brought them to a head, sparking off a mini arms race in the South China Sea.

Even within China, calls for independence have become increasingly trenchant. Aside from Taiwan, which considers itself independent but which the Mainland sees as a rogue state, Hong Kong is also becoming increasingly vocal in its desire for independence and in some cases, a return to British rule. In some instances, this has sparked off violent clashes between the police and protesters.

As other European states, such as the Netherlands, toy with the idea of an exit from the EU, there are important implications, both financial and ideological, for Asia.

In both regions, growing rich-poor and urban-rural disparities as well as perceived policy failures in integrating or managing immigration have sparked off public discontent and emphasised the negative implications of globalisation.

UNEQUAL YOKING

In all cases, there has been a growing preference for nation-states rather than multilateralism. As nations, citizens and territories continue to assert their desire for autonomy and independence, we may well see a return of the Westphalian nation state and a decline in the globalisation narrative that has dominated the global economy over the past two decades.

For architects of Asian regionalism and integration, the UK's exit may raise a red flag concerning the challenges that could confront the region in the future. In particular, proponents of Asian regionalism will need to reconsider the policy implications of cross-border immigration and harmonised economic policies.

With regards to the latter, questions will inevitably arise over the unequal yoking of member states at different stages of economic development to a regional order that may already be skewed by political competition. Brexit will bring forth much uncertainty and soul-searching among the region's leaders as they mull over the future of Asian regionalism.

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