Interregionalism Matters: Why ASEAN Is the Key to EU Strategic Autonomy

Oscar Eggleton

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Since the signing of the Lisbon Treaty in 2007, the European Union has progressively developed a distinct foreign policy agenda with a principal ambition of “strategic autonomy”. This term refers to the EU’s desire to reduce its dependency on the trans-Atlantic alliance, as well as to diversify its diplomatic and economic relations in order to eliminate its vulnerability to particular shocks in the international system. Further, strategic autonomy entails the ability to act decisively and independently on foreign policy issues, and to leverage influence in global affairs. The notion of EU strategic autonomy, however, has been criticised on the grounds that the Union lacks the political unity and the military heft to act in the manner of an autonomous power. That is, strategic autonomy is impossible for an entity that remains an economic union first, and a political union second.

However, as this paper will argue, the EU is capable of realising strategic autonomy by leveraging its proven competencies in economic and trade negotiation. Particularly, this paper argues that strategic autonomy can be strengthened in the near term with an interregional Free Trade Agreement (FTA) with the Association of South-East Asian Nations (ASEAN). While negotiations for a comprehensive EU-ASEAN FTA initially reached a deadlock in 2009, the chaos of Brexit, the Trump presidency, and China’s rising assertiveness have galvanised the EU into seeking stable bilateral agreements with reliable partners in the region. As of writing, FTAs have now come into force with Singapore and Vietnam, and one with Thailand is on the horizon. In the context of an increasingly unpredictable and bipolar world order, however, an interregional FTA between the EU and ASEAN remains the key to ensuring the autonomy of both those organisations. The EU and ASEAN are two powerful regional groupings that are modern exemplars of intergovernmental cooperation. They are also key drivers of the multilateral, rules-based international order. In an era that is increasingly being characterised by the great power rivalry of the US and China, powerful regional organisations will be vital to ensuring that third powers retain their autonomy and do not necessarily become beholden to the interests of the two superpowers.

This is why interregionalism matters. As this paper shall demonstrate, an EU-ASEAN FTA will provide a powerful forum for the EU to build economic stability, exercise normative influence in world affairs and, in turn, contribute to achieving the strategic autonomy that it so desires. To do so, the paper will further delineate what strategic autonomy entails, as well as the impediments to achieving it. The bulk of the paper will then demonstrate how an EU-ASEAN FTA will fulfill the objectives of strategic autonomy; first by discussing how the FTA would build strategic stability through diversifying its economic dependencies and increasing its geopolitical security, and second by demonstrating how the FTA would ensure EU normative influence in the international system by promoting EU market standards and core values. In doing so, the paper will demonstrate that the EU-ASEAN relationship will be key to maintaining both these organisations’ autonomy in an increasingly bipolar international system. This relationship will ensure the endurance of some semblance of the multilateral rules-based international order and, in turn, soften the fallout of any new great-power rivalry. In short, the endurance of powerful intergovernmental organisations could be the key to avoiding the worst of a new Cold War.

Achieving Strategic Autonomy

In an academic sense, the concept of strategic autonomy is fairly self-explanatory. Lippert et al. describe it succinctly as “the ability to set one’s own priorities and make one’s own decisions in matters of foreign policy and security, together with the institutional, political and material wherewithal to carry these through” (Lippert at al. 2019, p. 5). Specifically, strategic autonomy describes the capacity of a power to act as a “rule-maker” – as opposed to a “rule-taker” – in international affairs, determining its own direction and distinct interests, “rather than copying the models of others” (De Graça 2020). It involves a power maintaining responsibility for its own security, as well as taking an active role in international peace and stability (Hwee 2017, p. 3). Strategic autonomy also involves exercising leadership in response to global challenges and emerging trends in geoeconomics (Dr Graça 2020). In this way, strategic autonomy encompasses diplomatic, political, economic, military and even geographic dimensions, and thus is seemingly at risk of “conceptual bloating” – to borrow from Mark Purcell (Purcell 2014, p. 141). Indeed, in the European context, the notion of strategic autonomy is often criticised as mere rhetoric, with no actual substance or achievable policy outcomes. Despite this criticism, the President of the European Council, Charles Michel, provided a fairly concrete definition of what “strategic autonomy” means for EU policy. To President Michel, achieving strategic autonomy involves pursuing three objectives: ensuring stability – physical, environmental, social and economic – for the Union, disseminating European standards, and promoting European values (Michel 2020b). Importantly, strategic autonomy is not protectionism, but instead involves “upholding and developing an international order that is at least rules-based, open and inclusive” (Lippert et al. 2019; Michel 2020b).

The viability of achieving strategic autonomy for the European Union, however, remains a point of contention. According to Leonard and Shapiro, the EU has relied on three pillars for its security and stability over the past several decades: first, the multilateral, rules-based order; second, the US security alliance; and third, free and fair global trade (Leonard and Shapiro 2019, p. 2). However, all three of these pillars are currently weakening. The first pillar – the multilateral, rules-based order – is progressively giving way to a bipolar world order characterised by the superpower rivalry of the US and China (Kim et al. 2019; Leonard and Shapiro 2019, p. 3). In such a system, the autonomy of third powers will be increasingly undermined by the interests of the hegemons, in much the same way that the US and USSR vied for influence in the “Third World” during the Cold War. The second pillar – the US security alliance – has become increasingly strained under the Bush and Trump administrations, with EU foreign policy interests often at odds with those of the United States (Leonard et al. 2019, p. 4–6). European strategic autonomy is thus increasingly understood to necessitate “decoupling” from the US alliance, with the EU taking on sole responsibility for its security and defence (Drent 2018, p. 3). Critics of the notion of European strategic autonomy, however, insist that the EU is incapable of satisfying its defence interests on its own, especially in the context of an increasingly belligerent Russia (Brattberg and Valášek 2019; Drent 2018; Fiott 2018; Howorth 2019). Strategic autonomy is thus seemingly a paradox, as it requires decoupling from the US alliance which, in turn, would undermine the EU’s autonomy and stability. In addition, there remains a high level of heterogeneity amongst EU member states on defence matters, with certain nations outright suspicious of suggestions of EU defence cooperation (Lippert et al. 2019, p. 16–22).

Finally, several issues emerge regarding the endurance of the third pillar – free and fair global trade – for achieving European strategic autonomy. First, there is the rising trend of protectionism and the weaponization of trade negotiation – exemplified in the increased tendency of the US and China to abuse their advantageous positions to extract economic or strategic gains via tariffs, sanctions or other mechanisms (Leonard and Shapiro 2019, p. 3; Leonard et al. 2019, p. 3–6). In addition, Europe maintains “harmful dependencies” on Russia, the US and China in its supply chains and economic connections, raising its vulnerability to market shocks or even targeted abuse (Fiott 2018, p. 8; Lippert et al. 2019, p. 24). Finally, the EU’s competition and anti-monopoly laws make many EU firms unable to compete with state-backed Chinese firms (Leonard and Shapiro 2019, p. 3). Chinese firms have more resources at their disposal and Beijing – which does not distinguish between economic and strategic ends – will increasingly use those to achieve political and strategic outcomes, where the EU is ideologically incapable of doing the same (Leonard et al. 2019, p. 3–4). In this way, the third pillar of “free and fair global trade” has seemingly become a point of vulnerability for the EU rather than a point of strength. Strategic autonomy, then, seems difficult to achieve with the continued decline of the rules-based, multilateral order, dependence on the US security alliance, and an uneven playing field in international trade.

Yet strategic autonomy remains realisable for the European Union. While it cannot do much to make up for its defence shortfalls in the near-term, the EU can leverage its proven competency in diplomatic and trade negotiation to preserve the rules-based order and to strengthen its economic security. One way to achieve these objectives would be to negotiate a Free Trade Agreement (FTA) with ASEAN. A common theme across the literature is that European strategic autonomy is predicated upon the preservation of the multilateral order Anghel et al. 2020, p. 29; Lippert et al. 2019, p. 23). An EU-ASEAN FTA would go a long way in strengthening this order. The EU and ASEAN are both dependent on a rules-based international system, are united in their anti-protectionist stances, and share key security concerns regarding climate change, migration and terrorism (Hwee 2017, p. 3–4). The EU also has shared interests with ASEAN in regard to sustainable development, poverty eradication and pandemic response (European Commission 2015, p. 14; European External Action Service [EEAS] 2020, p. 20). An FTA between the two organisations would reaffirm their regional identities as well as giving more weight – or “strategic relevance” – to their actions on the international stage, providing a strong platform for multilateral responses to these shared concerns (Anghel et al. 2020, p. 30; Hwee 2017, p. 6). Indeed, the EU has long desired a “strategic partnership” with ASEAN and regards an interregional FTA as the primary vehicle for achieving this (European Commission 2015, p. 14). Moreover, in negotiating an EU-ASEAN FTA, the EU can focus on what it is good at and leverage the “power resource” that is the European Economic Area (Lippert et al. 2019, p. 24). An interregional FTA would strengthen EU strategic autonomy without needing to develop “hard” military capabilities,. As long as the international system does not devolve into a shooting war, the fact that the EU is likely be unable of stopping a Russian offensive has little bearing on whether or not it can exercise strategic autonomy. If the multilateral, rules-based order is preserved, then the EU can continue to exercise autonomy via diplomatic and economic means. As the rest of this paper will demonstrate, an EU-ASEAN FTA provides a first step to developing EU Strategic Autonomy in this way. Specifically, an interregional agreement would both ensure stability and contribute to disseminating European standards and values, fulfilling the objectives outlined by President Michel.

Autonomy in Stability

The first way that an EU-ASEAN FTA contributes to EU strategic autonomy is by building stability. Particularly, an interregional FTA builds economic, geopolitical and physical stability for the EU. In regard to economic stability, the FTA would diversify the EU’s trade relations, reducing its “harmful dependencies” on the US and China (Paderon 2020, p. 797). Currently, EU-ASEAN trade is well below potential, and the EU actually runs a trade deficit with ASEAN (Allison-Reumann 2019, p. 8; EEAS 2020, p. 28). This deficit is despite the fact that the EU is ASEAN’s second largest trade partner, and ASEAN is the EU’s third largest non-European partner (EEAS 2020, p. 28). According to the European External Action Service (EEAS), there remain numerous non-tariff barriers to EU-ASEAN trade, including regulations, capability limitations in customs and transport and certain protected markets (EEAS 2020, p. 36). An interregional FTA would reduce these barriers by standardising customs and transport procedures, as well as competition laws. In doing so, it would exploit that fact that the EU and ASEAN are “natural trading partners”, who export numerous complementary goods and services, filling the gaps in each other’s markets (Paderon 2020, p. 797). This could reduce both regions dependence on Chinese and American goods and services, building autonomy in both directions (Chirathivat and Langhammer 2020; Hwee 2017). In addition, an EU-ASEAN FTA would diversify the EU’s energy relations and reduce its awkward dependency on Russian natural gas (Indio 2019). ASEAN nations, collectively, are the fourth largest exporters of natural gas – only behind Russia, Qatar and Norway. An interregional FTA would allow the EU to capture more of these exports, increasing stability in its energy supply chains.

An EU-ASEAN FTA would also build geopolitical stability. Closer EU-ASEAN relations, facilitated by an FTA, would affirm their regional identities and help “explain” the role of regional governance in a complex global landscape (Gilson 2020). Particularly, an interregional FTA would provide a counterweight to the dominance of US and China, who both have attempted to use “Divide and Rule” strategies in Europe and Asia, by courting individual member states with economic incentives into diverging from their respective regional groups on political matters (Chirathivat and Langhammer 2020, p. 659–670). Such strategies are especially apparent in US trade negotiations under Trump, as well as Chinese investment under the Belt and Road Initiative (BRI) (Geeraerts 2019, p. 2). For example, in Europe, Chinese investment has successfully incentivised Greece and Hungary to block EU critique of Chinese activity in the South China Sea, as well as a condemnation of crackdowns on Chinese activists, while China itself has promoted non-EU positions in regard to Kosovo and North Macedonia (Brattberg and Etienn 2018, p. 2; Rrustemi et al. 2019, p. 99–102). There is thus concern that both Eastern European countries and vulnerable Southeast Asian economies could pose long-term “backdoor” impediments to the integration of the EU and ASEAN in a similar manner (Chirathivat and Langhammer 2020; Geeraerts 2019, p. 2). Further, there is concern that BRI engagement could be used as a “bargaining chip” by China in other negotiations, “offering less intensive [BRI] engagement in return for political support on other portfolios” (Gehrke 2019, p. 4). According to Biscop (2020, p. 6), expanding the EU’s multilateral partnerships is key to countering these practices. By diversifying the EU’s economic relations, the Union will be less susceptible to such geopolitical leveraging, increasing its stability, unity and hence strategic autonomy. The EU’s membership in the Asian Infrastructure Investment Bank (AIIB) and bilateral FTAs with Japan and South Korea are steps in the right direction, but a comprehensive interregional FTA between the EU and ASEAN would stabilise the EU’s geopolitical connections more than anything else (Biscop 2020, p. 2; Geeraerts 2019, p. 4). Indeed, such connections will be particularly necessary for preserving a system of multilateral global governance in the wake of the COVID-19 pandemic – with a weakened and increasingly insular US, and a more assertive China. Welfens (2020, p. 570) argues that without a coherent multilateral response to the economic fallout of the pandemic, the EU is at risk of experiencing a “Euro Crisis 2.0”. An EU-ASEAN FTA would provide an effective platform for such a response, facilitating the sort of intergovernmental cooperation that the pandemic crises necessitates. Thus, not only does an interregional FTA give the EU the geopolitical stability to avoid being subjected to the interests of the global hegemons, it also provides a platform for countering the fallout of the COVID-19 crisis – ensuring that the EU is able to remain a stable and autonomous actor in the international system.

Finally, an interregional FTA builds stability by facilitating the EU’s and ASEAN’s responses to shared security concerns. As discussed above, the EU-ASEAN FTA acts as a counterweight to harmful dependencies that the two organisations have with the Great Powers. Beyond the economic and strategic dimensions, however, there is a specific security dimension to the two organisations’ relationships with the hegemons. Particularly, both the EU – in the case of Ukraine and Eastern Europe – and ASEAN – in the case of the South China Sea – have outstanding territorial disputes with the Great Powers (Michel 2020a). The economic and geopolitical stability gained from an EU-ASEAN FTA would allow a more decisive response to these security concerns. Specifically, in the EU’s case, economic sanctions levelled against Russia in response to the Ukraine crisis cost European economies some €100 billion, and the EU has been reluctant to follow the US in imposing sanctions on Russian oil and gas, as this would threaten Europe’s energy supply (Heller and Carbonnel 2017; Sharkov 2015). Under an EU-ASEAN FTA, by contrast, the EU would have the stability in its economic and energy relations to implement a more decisive sanctions regime in response to any future Russian expansionism.

In addition, an interregional FTA would facilitate the EU’s and ASEAN’s responses to the non-traditional security concerns relating to anthropogenic climate change. The fallout of climate change is the most crucial security concern of modern times and developing comprehensive policy responses to “green” our economies and reduce the environmental impact of economic development will be the defining challenge of this generation (Barnett and Adger 2007). The EU is already planning to invest €1.2 billion in the ASEAN Catalytic Green Finance Facility of the Asian Development Bank (Michel 2020a). This facility will assist ASEAN in fulfilling the sustainable development goals and transitioning to a green economy (Asian Development Bank 2020; Wu and Gaenssmantel 2020). Not only would an EU-ASEAN FTA increase such investment, it would allow for two-way capacity building in solar and wind power, technology transfer and best-practice sharing, ensuring that both regions meet the standards for a green transition (Indio 2019). In addition, an EU-ASEAN FTA could serve as a vehicle for spreading European Green Deal standards and policies in transport, emissions and, importantly, plastics production – as ASEAN remains a major source of the world’s plastics supply (EEAS 2020, p. 42). Indeed, President Michel recognises the capacity for EU and ASEAN to “[join] forces on renewable energy, biodiversity, and climate” and ultimately envisages an “EU-ASEAN Green Deal” (Michel 2020a). The EU-ASEAN FTA thus emerges as a forum not only for building physical security, but also for coordinating an intergovernmental response to anthropogenic climate change and for facilitating the green transition.

Promoting European Values and Standards

An EU-ASEAN FTA further develops EU strategic autonomy by expanding on President Michel’s second and third objects – the proliferation of European standards and values – as well as more generally increasing the EU’s diplomatic reach in the region. The EU has repeatedly demonstrated its ability to export its market and regulatory standards via its trade relations: the so-called “Brussels effect” (Bradford 2019, p. 4–5). This term refers to a “race to the top” trend whereby firms find it more economically and legally viable to adopt whatever regulatory standards are strictest amongst the countries that they operate in (Bradford 2019, p. 4–5). For example, if a major company wants to access both the American and European markets, they are obliged – in the latter case – to adopt Brussels’ standards when operating in the European Economic Area. It then makes business sense to simply apply these standards across their entire enterprise, operating according to European standards even in the more regulatorily lax USA. An EU-ASEAN FTA would act as a catalyst for the proliferation of European standards into emerging Asian economies in a similar way, as Asian companies would be inclined to adopt European standards in order to increase their competitiveness (Paderon 2020, p. 797). This, in turn, would ensure that a major emerging region, encompassing ten member states and almost 650 million people, would follow Europe’s high standards on environment, data privacy, labour relations and competition law (Kiron et al. 2016, p. 71; Michel 2020a). Yet while the EU has been negotiating bilateral FTAs in the region with this goal in mind, it is at risk of falling behind the hegemons if an interregional FTA is not negotiated soon. ASEAN is already engaged in FTAs with almost every other major power except the EU – including China, the US, Japan, India and Australia (Paderon 2020, p. 798). As such, there is the risk that the regulatory standards of these major powers will began to shape markets before the EU has a chance to break into the region (Meissner 2016, p. 333–334). If this is the case, the “Brussels effect” risks being stymied indefinitely, as the EU will be unable to exercise influence in a region that will play a pivotal role what is already being acknowledged as the “Asian century” (Deng 2020, p. 118). For the EU to exercise strategic autonomy, it needs to play a meaningful role in the emerging Asia-centric order (Deng 2020, p. 119). An interregional FTA with ASEAN provides a clear way forward for ensuring the EU has a regulatory foothold in this crucial part of the world.

Similarly, achieving EU strategic autonomy in the Asian century also requires the continued promotion of European values. The EU has increasingly sought to link its diplomatic and economic efforts to the promotion of “European values” such as democracy, the rule of law, transparency and equal opportunity (EEAS 2020, p. 20). To President Michel, this practice is an essential part of strategic autonomy, as it ensures that the EU is able to operate in a “respectful, more ethical, and more just” world where “sovereignty, independence, empowerment” are upheld (Michel 2020b). Indeed, Lippert et al. (2020, p. 32) describe an essential aspect of European strategic autonomy as the ability “to participate in shaping the international environment on the basis of European values and interests, rather than accepting a role as the recipient of strategic decisions made by others”. An EU-ASEAN FTA would provide a powerful forum for achieving this. Initially, early analysis of EU-ASEAN FTA negotiation suggested that either human rights and democracy promotion were not being pursued by the EU in their trade negotiations, or that ASEAN was not receptive to such practices (Pinhão 2009, p. 3–4; Alfredo and Robles 2014, p. 1324). Moreover, several ASEAN member-states have historically had troubled relationships with democracy as well as questionable human rights records (Alfredo and Robles 2014).However, more recent research has demonstrated that ASEAN countries have been more open to democracy promotion and social liberalisation in order to reap the economic benefits of increased engagement with wealthy democracies (Lim 2011, p. 859–692; Bae 2018, p. 33–35). According to Lim (2011, p. 821), ASEAN’s experience of bilateral FTAs – including the Trans-Pacific Strategic Economic Partnership as well as the ASEAN-Australia-New Zealand FTA – have demonstrated that East Asian nations can be influenced normatively by their trading partners. Bae (2018, p. 33–35) notes that value-promoting countries have earned recognition as reliable and competent from the sustained interaction with ASEAN stakeholders provided by an FTA. This positive image has, in turn, increased the receptiveness of ASEAN business and political leaders to policies of social and political liberalisation. Much as is the case with the promotion of European market standards – as discussed above – the EU needs a way to effectively promote its particular values and model of governance before the interests of China and the US dominant the socio-political landscapes of the region. As demonstrated by the ASEAN’s experiences under its numerous other FTAs, an interregional FTA with the EU would effectively achieve this goal.

Receptiveness to European standards and values in the region is also dependent on the continued projection of EU soft power. Soft power is famously described by Joseph Nye (2004) as the art of “seduction” in international politics; the ability to influence the affairs of other nations via charm rather than coercion. Soft power is realised in positive perceptions of a nation’s culture, values, people and reliability. A key driver of such perceptions is foreign direct investment (FDI). In bringing goods and services into a recipient nation, FDI effectively increases the “brand awareness” of the source country, promoting its values and adding to its soft power influence (Anguelov and Kaschel 2017, p. 5). Currently, the EU is ASEAN’s largest single source of FDI – totalling a third of capital flow into the region (Gilson 2020). The EU thus seems well placed to exercise soft power influence in the region. However, China has been rapidly increasing its direct investment in ASEAN as part of its Belt and Road strategy (Ujvari 2019, p. 1–2). This investment has created intense friction between member states “even more so” than it has in Europe in the cases of Greece and Hungary (Ujvari 2019, p. 1–2). If ASEAN members become divided in their China relations and become increasingly dependent on investment from Beijing, then the EU loses its chance to build a strong interregional relationship and exercise soft power influence in the region, which subsequently undermines its efforts to build strategic autonomy. An EU-ASEAN FTA, on the other hand, would facilitate – and, indeed, increase – the EU’s lead in FDI flows into the region, ensuring that ASEAN nations remain more receptive to Brussels than they do to Beijing (Leonard et al. 2019, p. 14; Paderion 2020, p. 797). The interregional FTA would thus build strategic autonomy not only by proliferating EU standards and values, but also by ensuring the exercise of EU soft power in the most important region of this century.

Conclusion

Strategic autonomy is achievable. While the concept was initially critiqued as vague and undefined, it has developed into a coherent set of foreign policy objectives under the Von der Leyen Commission. Further, while doubts about the EU’s capacity to exercise autonomy in military matters are well-founded, such criticism fails to appreciate the EU’s proven ability to further its interests via diplomatic and economic means. As this paper has demonstrated, the EU’s strategic autonomy is vested in the preservation of the multilateral, rules-based order. As long as this order is maintained, questions of military capacity are irrelevant. An interregional EU-ASEAN FTA provides a clear vehicle both for preserving this order and, accordingly, for achieving strategic autonomy.

First, an interregional FTA would build economic stability by diversifying the EU’s dependencies, and build geopolitical stability by counter-weighting the influence of the US and China. In addition, the FTA would facilitate multilateral responses to shared traditional and non-traditional security concerns of the two organisations. An interregional FTA would also enable the proliferation of the EU’s high market standards – extending the so-called “Brussels effect”, as well as the promotion of European values of democracy and social liberalism. Finally, the FTA ensures that the EU will maintain the necessary soft power reach in such a pivotal region and thus remain a meaningful actor in the international system.

Indeed – more than anything else – this centrality of South East Asia in the emerging Asia-centric world order is the reason why ASEAN is the key to EU strategic autonomy. The ability to exercise influence and shape market standards in this region will be the determinant of an autonomous power in much the same way as European influence determined the Great Powers of the nineteenth and twentieth centuries. If European interests are sidelined, if ASEAN fragments, and if the US and China are allowed to shape and define the region, then the multilateral order will give way to one that is firmly bipolar, and any notion of strategic autonomy will become the fantasy of a forgotten era. An interregional FTA is the key to avoiding such a world. The EU-ASEAN FTA would facilitate the existence of at least two more major powers in the international order, preserve some semblance of a multilateral system, and strengthen the strategic autonomy of both organisations. In this way, beyond finally achieving the elusive notion of autonomy, interregionalism could be the key to avoiding the worst of a new Cold War.