Monday, April 30, 2012

New rules for the Asian Century?

No one now seriously doubts Australia’s interdependency with its Asian neighbours.

Our borders are porous, we are exposed to one another’s risk, and our trade, investment, economic and social development, political stability and regional security depend on mutual cooperation. Increasingly, the flashpoints in Australia’s Asian relationships, for example, are about who sets the rules and standards; who monitors them and how will they be enforced. 

Southern Ocean whaling by Japan, abattoirs in Indonesia, aviation industry standards in Vietnam, food safety in China, corruption in aid delivery in Afghanistan, and treatment of asylum seekers in Malaysia matter acutely to different constituencies in Australia.

In an information-saturated world they become media storms and then political liabilities. But governments are often stymied — these are not the kind of issues that you can legislate away or resolve quickly by reference to contract, bilateral trade agreement terms, or international adjudication. ‘Stop the boats’ is a great political sound bite, but a difficult promise to deliver when human trafficking is a regulatory whirlpool involving multiple public and private actors across so many countries in the region.

How should Australia respond to this kind of regulatory complexity in Asia?

We have a unique opportunity to help build Asia’s regulatory capacity. Australia’s experience of de- and re-regulation over the last 20 years saw it emerge as a world leader in the two dominant approaches to regulation: risk-based regulation and responsive regulation. We have our fair share of regulatory lapses and disasters, but the quality of our public service, our ability to forge effective public–private partnerships and our capacity for innovation in areas such as consumer protection; disaster management; food safety; financial services; healthcare financing; higher education quality and performance; land care; road safety and water management are the envy of many countries. The colonial era of telling people how to manage their own public and private regulation is over; but we have the opportunity to be an effective middle-level player by actively brokering knowledge and norms within the region and by developing new applications for knowledge through partnerships in Asia. Those opportunities will diminish if we fail to match them with accurate understanding of how Asia is changing.

Through the 1980s and 1990s Australia built world class research, training and professional services capacity in the fields of Asian law, economics and politics. In the recent acquisition of most of Australia’s large law firms by UK and US based multinational firms, our regional expertise was what they were buying. Sensibly, much of the recently increased development aid budget is also tagged for governance reform in the region. Where we have stumbled, however, is in translating our evidence-based knowledge of regulation into the professions that export services. To be sure, regulation is a more complex field than law or accounting — managing climate change requires blended knowledge from disciplines as diverse as physics, economics, psychology, anthropology and biology.

Politics is key to regulatory and institutional change in Asia. The essence of responsive regulation is shaping the flow of events to secure outcomes that are inclusive and democracy enhancing, as well as effective and efficient. When Indonesia democratized and decentralized legal authority regional governments were tempted into a regulatory ‘race to the bottom’ in income-producing sectors such as forests and fisheries. While Burma’s military leadership permits elections and raises citizen hopes for a functioning state, its bureaucracy lacks capacity in service delivery, transparency and routine modes of accountability. What role will Australia play? Having influence in these spaces means not simply technocratic knowledge but having credibility that comes from political understanding.

As China’s economy grows, and its outbound investment increases, China seeks to be a standard-maker in areas such as computer software and IT services, intellectual property enforcement, and the supply of Chinese-made products as a condition of Chinese investment. While ratifying a vast number of international treaties, China and its policymakers resist external regulatory actors such as international ratings agencies and NGOs. Just as we saw Japan’s ‘aggressive legalism’ in the 1990s as it actively used the machinery of international trade dispute resolution, we can anticipate that China will pick and choose between — and try to shape — domestic and international rules that help propel its commerce and trade abroad.

Asia should be blanketed in young Australian journalists, diplomats, lawyers, accountants, engineers, architects, aid professionals, police and intelligence officers who are deeply knowledgeable about one or a number of countries and fluent in at least one Asian language. They should be jostling with their Chinese and Japanese and Singaporean counterparts as they develop the interpersonal networks that will influence regulatory decision-making in the region. Where are they? We have plenty of Asia specialists cresting in their careers — a kind of national dividend from the Asia literacy push in the Hawke-Keating era. Within 10 years, however, our comparative advantage in Asian law and in Japanese and Indonesian politics, economics, law and regulation will be gone.

Asian language competence is no longer a national priority. We seem to have regressed from a ‘clever country’ expectation that an educated Australian should be fluent in an Asian (and preferably also a European) language, to a tacit acceptance that monolingualism is the new normal. That comforting, but false, story meshes neatly with choices not to go the hard route of becoming professionally fluent in an Asian language.

Language is not a substitute for knowledge and skills, but it is a tool for acquiring them. How can we understand — much less influence — China’s energy efficiency, Japan’s nuclear industry, Thailand’s political uncertainty, Burma’s healthcare, Indonesia’s human trafficking or Malaysia’s asylum policy without the benefit of deep local knowledge acquired though local languages?
Our regulatory future in Asia is more complex than we currently recognise. The only way to navigate this complexity is to move forward with Asian partners in dialogue and in collaborative shaping of regulatory institutions at the national and international level. A necessary first step in accomplishing this is to ensure that we have a generation of Australian professionals who can — literally — speak their language.

Veronica L. Taylor is Professor, Regulatory Institutions Network (RegNet), and Director, School of Regulation, Justice and Diplomacy, the Australian National University.
This post is part of the series on the Asian Century which feeds into the Australian government White Paper on Australia in the Asian Century.

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