Climate Action in Policy Options and FTAs in South East Asia

South-East Asia (SEA) includes some of the most climate-vulnerable countries suffering from extreme weather conditions. Not only that, SEA exports its pollution to other countries. For example, data published by the Organisation of Economic Cooperation and Development (OECD) shows net carbon di-oxide emissions embodied in exports of the Association of South East Asian Nations (ASEAN) to the European Union (EU) and China have increased between 2005 and 2018. It is not surprising therefore that climate change issues have been dealt with at different levels of governance and policy-making in this region. Overall regulatory and policy direction in SEA is determined by decisions taken through mechanisms at the behest of the ASEAN Secretariat including in strategic and vision documents, ministerial and senior officials’ engagements, and so on. These are complemented by national strategies by the ASEAN Member States (AMS). There have been two issues with such initiatives 1) actions adopted at the ASEAN or AMS levels are seen as not going further enough to make necessary impacts, and 2) cross-border initiatives are usually on best endeavours basis and thus left for countries to be taken up to any extent. This, in turn, reduces their effectiveness as countries often balance policymaking using different considerations.    

In comparison to other modes, incorporating climate action provisions in FTAs should be a preferred one because FTAs present opportunities to bind country level commitments and thus having the potential to be more effective. Most ASEAN’s FTAs (FTAs signed either at the ASEAN level or by individual AMS), however, do not include deep explicit provisions but set up cooperation mechanisms as part of their work programmes to deal with climate action. In terms of effectiveness, actions through such cooperation frameworks usually work in the same way as measures adopted at ASEAN and AMS levels. A further analysis of the ASEAN’s FTAs shows: 1) the FTAs with the EU include chapters on sustainable development including dispute settlement, applicable for some of the chapters, 2) the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) –a mega regional FTA of which three AMS are a member of – has an environment chapter with similar provisions as the EU FTAs, 3) the FTAs with the United States have chapters on environment that tend to be comparably lighter than those of EU’s, and 4) lastly, the Regional Comprehensive Economic Cooperation Partnership (RCEP) agreement – the mega-FTA which has all the AMS as a party – does not contain explicit provisions though it has established a Committee on Sustainable Growth, which may take up some climate change-related issues in near future. Therefore, there is a possibility yet, that the ASEAN FTAs could make an impact in this respect, but these may not be sufficient to reverse the impact of climate change. 

Corporate initiatives too make an impact on climate change. Among all corporate arrangements, regional value chains (RVCs) have proved to be among the most effective in bringing about wide-spread community impacts. On this metric, too, the possibility of large-scale impacts is limited as the ASEAN countries are quite connected to each other through RVCs but lie at a lower value-added scale. This implies lead firms which are instrumental in effecting substantial changes in corporate networks are usually based outside the ASEAN.

Given the situation, it is imperative SEA focuses on these aspects of climate action as soon as possible: 1) undertake measures by paying specific attention to sectoral and country-level differences including on greenhouse gas emissions and other measurements of climate change, 2) take steps to move up along regional value chains e.g. by encouraging growth of lead firms, and 3) bind substantive commitments on climate action as part of their FTAs.