VZCZCXRO0703
RR RUEHCHI RUEHDE RUEHDIR RUEHDT RUEHHM
DE RUEHJA #2350/01 2391018
ZNR UUUUU ZZH
R 271018Z AUG 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 5946
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 0697
RUEHBY/AMEMBASSY CANBERRA 1059
RUEHWL/AMEMBASSY WELLINGTON 1685
RUEHAK/AMEMBASSY ANKARA 0122
RUEHBS/USEU BRUSSELS
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/USDA FAS WASHDC
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 002350 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT PASS USTR FOR KATZ AND BROOKS 
DEPT FOR EAP/RSP and EAP/MTS 
DEPT FOR EB/IFD/OMA 
TREASURY FOR IA-SETH SEARLS 
COMMERCE FOR 4430/[GOLIKE] 
 
E.O. 12598: N/A 
TAGS: ECON ETRD PHUM PREL PGOV SENV KDEM ID
SUBJECT: ASEAN MEETINGS HIGHLIGHT CHALLENGES OF INTEGRATION 
 
¶1. (U) Summary. During a series of recent meetings and events at the 
ASEAN Secretariat, ASEAN officials expressed cautious optimism about 
economic integration and the draft ASEAN Charter despite continued 
challenges. Senior Government of Indonesia (GOI) officials and 
business leaders called for faster economic integration. Indonesian 
President Susilo Bambang Yudhoyono challenged ASEAN countries to 
embrace not only economic integration but also democratic values and 
fundamental human rights for all its citizens. ASEAN officials noted 
the USG's positive influence on the region and called for increased 
cooperation and strengthened U.S.-ASEAN relations. End Summary. 
 
ASEAN Rethinks ASEAN 
-------------------- 
 
¶2. (U) On August 7, the ASEAN Secretariat hosted the ASEAN 
Foundation forum "Rethinking ASEAN: Toward the ASEAN Community 
2015." The event, which the ASEAN Foundation planned to commemorate 
the 40th Anniversary of ASEAN, focused on the need for ASEAN to 
respond to a changing political, economic and social landscape 
across the region and the world. These challenges include the 
emergence of economic competition from India and China, the need to 
narrow the development gap among ASEAN countries, and the need to 
strengthen ASEAN as an organization. 
 
¶3. (U) Indonesian President Susilo Bambang Yudhoyono, who delivered 
the keynote address, challenged ASEAN to embrace not only economic 
integration but also democratic values and fundamental human rights 
for all ASEAN citizens. He noted that, without a provision for the 
establishment of a regional human rights body, the ASEAN Charter 
will not be an affirmation of a vision and set of values that are 
the hallmark of a caring community. He urged ASEAN leaders to draft 
a Charter than not only has legal efficacy, but also inspires their 
citizens. 
 
¶4. (U) Secretary General Ong noted that the process of rethinking 
ASEAN, which began in 2003, has generated three important 
initiatives.  First, ASEAN has placed increased importance on 
building an integrated ASEAN Community.  Second, the leaders of the 
ten member countries have committed to giving ASEAN (and ASEAN 
agreements) stronger legal standing through an ASEAN Charter. 
Third, ASEAN has recognized the importance of strengthening 
people-to-people ties in order to achieve an integrated ASEAN 
Community. 
 
Economic Integration: Moving from Talk to Reality 
--------------------------------------------- ---- 
 
¶5. (U) Indonesian Trade Minister Mari Pangestu also spoke at the 
forum. She admitted that the economic challenges to integration are 
complex but emphasized that ASEAN is significantly weaker as ten 
individual nations than as one integrated community. She urged ASEAN 
leaders to dispel the notion that ASEAN is "all talk" and take 
significant action to meet the goals of reducing trade barriers, 
creating a more competitive region through investment in 
infrastructure, and ensuring equitable development within ASEAN. 
 
 
¶6. (U) The ASEAN Foundation invited Philip Kotler of the Kellogg 
School of Management at Northwestern University to headline the 
event. Dr. Kotler stressed the importance of developing business 
strategies that fully exploit the size of the dynamic pan-ASEAN 
market. Businesses should market products to ASEAN as a region 
rather than separately to each component national market. Several 
local and expatriate business leaders at the event urged ASEAN 
leaders to move faster on regional integration to ease the flow of 
goods and labor in the region. 
 
ASEAN Secretariat Staff Gear Up for Larger Mandate 
--------------------------------------------- ----- 
 
¶7. (SBU) On August 10, Embassy met with Director of External Affairs 
Dhannan Sunoto and Director of Economic Integration Bureau S. 
Pushpanathan to discuss progress on drafting ASEAN's charter and 
economic integration blueprint.  Both officials expressed optimism 
 
JAKARTA 00002350  002 OF 002 
 
 
about achieving a single unified market by 2015 and about progress 
on the ASEAN Charter, but underscored the need for ASEAN to create 
enforceable agreements going forward. Sunoto noted, however, that 
ASEAN would not include a provision for making decisions by a vote 
of member states in the Charter. Nevertheless, he believed that 
given the importance of making and enforcing decisions as ASEAN 
moves toward integration, ASEAN will use pressure on member 
countries with dissenting views to reach decisions on important 
issues. 
 
¶8. (SBU) Pushpanathan revealed how this might work in practice, 
saying that ASEAN's Economic Ministers have requested that the 
Charter include an "ASEAN minus X" formula that would allow a 
majority to pass and implement an agreement without the dissenting 
minority.  In addition, ASEAN plans to formalize its dispute 
settlement mechanism in the ASEAN Charter in order to strengthen 
ASEAN's ability to deal with conflicting views.  ASEAN also plans to 
set up a scorecard system similar to that used in the EU to gauge 
progress on the blueprint and focus technical assistance efforts. 
Sunoto noted that ASEAN is moving away from the uniform approach to 
technical assistance that the association has employed in the past. 
 
 
More FTAs, More Donor Coordination 
---------------------------------- 
 
¶9. (SBU) Pushpanathan expressed optimism that the economic blueprint 
for integration would provide a meaningful roadmap to integration 
over the next four years. Sunoto and Pushpanathan both indicated 
that ASEAN plans to have a briefing for major donors immediately 
following the announcement of the blueprint at the ASEAN Summit in 
Singapore in November. (Note: The European Commission and AusAid 
have recently expressed a desire to coordinate more closely on ASEAN 
assistance. End note.) 
 
¶10. (SBU) Pushpanathan also discussed ASEAN's progress on 
negotiating free trade agreements (FTA). He remarked that ASEAN and 
the EU would engage in preliminary discussions over the next year to 
identify potential hurdles in the free trade agreement negotiations 
before commencing formal negotiations.  He anticipated issues in the 
areas of intellectual property rights, government procurement, and 
agriculture.  Pushpanathan noted that ASEAN is relatively close to 
concluding FTAs with Japan, Australia and New Zealand, and said that 
Turkey and the Gulf Cooperation Council both want to discuss 
possible FTAs with ASEAN. 
 
U.S. Engagement Welcome, Has Influence 
-------------------------------------- 
 
¶11. (SBU) Post discussed cooperation between Embassy Jakarta and the 
ASEAN Secretariat. ASEAN officials expressed a desire to work 
closely with the USG on issues of mutual interest. Director 
Pushpanathan urged closer coordination on economic and trade issues. 
Director Sunoto reiterated their disappointment that Secretary Rice 
could not attend the ASEAN Post-Ministerial Conference and ASEAN 
Regional Forum in Manila and over the postponement of the U.S.-ASEAN 
Commemorative Summit planned for September. He emphasized the value 
ASEAN places on such events for relationship building and urged that 
a new date for the Summit be set as soon as possible. 
 
¶12. (SBU) Sunoto contrasted the positive influence of the U.S. on 
ASEAN integration with the influence China exerts over its bordering 
ASEAN states. The ASEAN members bordering China, he claimed, do not 
feel as threatened by China's economic power as the remaining ASEAN 
members.  As a result, the border and non-border members of ASEAN 
have had, at times, divergent views on the need for rapid economic 
integration.  U.S. engagement, he suggested, keeps ASEAN as a whole 
closer to its non-aligned heritage and less intimate with China. As 
an example of U.S. influence, Sunoto remarked how the U.S. 
initiative to name an Ambassador for ASEAN directly prompted a 
provision in the draft ASEAN Charter for permanent representatives 
from each ASEAN member to the Secretariat. 
 
HUME