OPINIONS

Date: 7 March 2022 Author: Wojciech Adamczyk

ASEAN’s Relations with the EU and Poland: An Analysis

International relations are a system of communicating vessels where individual subjects of international law are primarily the participants in the global economy. The Euro-Atlantic area, affected by numerous political and economic processes, originating both inside and outside its territory, cannot therefore be regarded as a completely isolated system, in which only NATO and its member states, or the European Union and the United States, would play a role. A good example of this is the recurring negative influence of the Russian Federation as a European security actor.

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Processes related to the rearrangement of international trade routes by China (the Belt and Road Policy) affect the need to build transport infrastructure, capable of serving long-range trade connections via new corridors. In the case of Poland, numerous investments were listed in this context, for instance, in railroad and logistics hubs, such as the Solidarity Transport Hub. These are not the only major infrastructure projects in Poland. Road infrastructure development projects (Via Baltica, Via Carpatia) and the expansion of Polish ports, related to the Three Seas Initiative, could serve as examples here.

Simultaneously, Poland is implementing projects related to the transshipment infrastructure, energy security, as well as local and regional investments. Similar processes are taking place in many other countries in our security area. Their future fate raises numerous questions concerning the full utilization of the infrastructure, which for one reason or another (the so-called “Polish roundabout,” the peculiar conservatism of the logistics sector, competition between countries, failures and delays in the construction of some links that hinder the use of the whole network, mistakes and inevitable changes in the vision of infrastructure development, political opposition of the US to the development of the Chinese logistics power in the face of the trade war, etc.) may turn out to be poorly used.

On the other hand, given the changes taking place in the European Union as well as strained relations between China and the US, the perspective of the decreasing significance of the US as the state that ensures the security of Europe is becoming clearer. It is therefore reasonable to look for new allies, if not military, then political and commercial ones, capable of strengthening the position of the European Union, meanwhile weakened by Brexit.

Poland, in accordance with the assumptions of the so-called “Morawiecki Plan” concerning expansion, has been looking for such partners in various regions of the world for several years (“Go Africa,” etc.). Apparently, the countries of the Association of Southeast Asian Nations (ASEAN) are among the promising directions.

The aim of this article is to analyze the Polish economic cooperation with ASEAN countries as well as to consider the perspectives and challenges of these relations.

The starting point is the event of December 8, 2015, when, in the first months of the current governing coalition’s rule, the Poland-ASEAN economic summit was held. It was the first event of this kind in the long-standing cooperation between the two sides, after which Mateusz Morawiecki, then Deputy Prime Minister, spoke enthusiastically about mutual trade relations: “We want Poland to become a hub for trade between Central Europe and countries of the Association of Southeast Asian Nations, and even ASEAN’s gateway to the EU” (Rzeczpospolita, 2015).

A few weeks later, on December 31, 2015, ASEAN member states formed the so-called ASEAN Economic Community (AEC) (ASEAN UP, 2016). The ending term of office is a period of more intensified efforts of the government to fulfill its intentions declared a few years ago.

After the visit of the former Polish Minister of Foreign Affairs Jacek Czaputowicz to Indonesia in 2018, during which he opened the Foreign Trade Office of the Polish Investment and Trade Agency (PAIH) in the country’s capital – Jakarta, or also thanks to the establishment of PAIH’s investment and trade program “GO ASEAN,” we can talk about a new opening in mutual relations (PAP, 2018).

In 2012, however, Poland was only the 59th trade partner for ASEAN, accounting for 0.1% of the trade with the 10 countries of that region (PISM, 2012).

Despite very bold policy declarations by the Polish side, the bright future of cooperation with ASEAN is not clear and obvious. It requires prudent and effective policies that do not deviate from relations in the broader EU-ASEAN context.

The Origin of Poland’s Relations with the ASEAN Countries

The events described above undoubtedly prove the growing attractiveness of the ASEAN members for Poland and the European Union. The establishment of the AEC further explains Polish efforts to intensify its relations with the ASEAN countries. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam have many assets. ASEAN member states account for about 600 million people and their combined GDP is around USD 2.6 trillion. Thus, if they were one country, ASEAN would be the 9th largest economy worldwide. In recent years, the term “Asia’s third dragon” is often used to refer to this group of states (PAIH, 2019).

These states, however, are not one country. The limited degree of their political and economic integration, especially until 2015, allows for a reliable and full analysis of their relations with Poland, including the entire complexity of Poland’s bilateral relations with each of them.

In turn, Poland’s diplomatic relations with these countries have undergone numerous changes over the past decades, being shaped in accordance with the country’s relatively volatile foreign policy priorities. Poland has diplomatic missions in only six of all 10 ASEAN states: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Thus, bilateral relations with these ASEAN members require at least a brief description.

Poland (then the Polish People’s Republic) established its first diplomatic relations with Vietnam (then the Democratic Republic of Vietnam, or DRV) relatively late – on February 4, 1950. It is worth noting that the First Indochina War between the French army and the DRV played an important role in the first decade of bilateral relations. The defeat of France led to the so-called Geneva Accords, which in turn resulted in the unification of the country. The Polish People’s Republic played one of the key roles here as the member of the International Control Commission (ICC), which was tasked with overseeing compliance with the agreements made at the time. Consequently, the Polish embassy was opened in Hanoi in December 1954, while the Vietnamese opened their diplomatic mission in Warsaw on July 18, 1955. Over the decades, the Polish People’s Republic was actively involved in Vietnam’s turbulent history on multiple occasions. For instance, it acted as an intermediary between the rebellious Republic of Vietnam (RVN) and the DRV or took part in the transfer of Viet Cong communist guerrilla troops from the south to the north of the country, which was part of the Geneva Accords. The Polish steamer “Kiliński” took an active part in the whole operation, transporting about 85,000 Vietnamese in about a year. The role of the Polish People’s Republic during the communist period in providing assistance to the authorities in Hanoi should also not be forgotten. Despite permanent economic difficulties, the Polish People’s Republic, thanks to Władysław Gomułka and Edward Gierek, supported Vietnam, for instance, militarily, by donating off-road vehicles, pistols, and rifles, among others.

A country with comparably long bilateral relations is Indonesia. In 2015, we celebrated the 60th anniversary of the establishment of diplomatic relations between the two nations. The proclamation of Indonesian independence, recognized by the Polish People’s Republic on February 4, 1950, was the foundation of future relations. In 1954, the Polish government opened an office of the Ministry of Foreign Trade in Jakarta. However, official relations were not established until September 19, 1955. A year later, the first embassy of the Polish People’s Republic was established in the Indonesian capital and Włodzimierz Wink became its first diplomatic representative. Indonesia set up its embassy in Warsaw in 1960.

The third country where Poland has a firmly established position is Singapore. In the spring of 1969, the Polish Deputy Minister of Foreign Affairs visiting Singapore agreed to establish diplomatic relations. In the same year, on April 12, 1969, the two countries announced the official establishment of mutual relations at the embassy level. In 2019, the two countries celebrated 50 years of partnership.

Another state in which Poland has a diplomatic mission is Thailand. The Polish government established official diplomatic relations with this country in November 1972. Mutual relations are laid out in intergovernmental agreements, for instance, the oldest one (from 1976) that outlined the framework for cooperation in air transport, or the one from 1978, which waived visas for holders of diplomatic and service passports. These agreements also regulate cooperation in the field of combating drugs (1996), scientific and technical cooperation (1996), as well as concern the enforcement of decisions in criminal matters (1997).

Noteworthy is also the “Polish Aid” scheme, run by the Polish Ministry of Foreign Affairs, which brings together all of the Ministry’s assistance activities for developing countries and their populations. Its primary goal is to create conditions for their sustainable development, and the Kingdom of Thailand is included in these activities.

Poland is also present in Malaysia with which it established diplomatic relations on June 21, 1971. A year later, a trade mission was opened in Kuala Lumpur, which was upgraded to embassy status in 1973. Interestingly enough, the Polish People’s Republic did not fill the position of ambassador in Kuala Lumpur between 1971 and 1978, and on August 24, 1982, the Polish government decided to suspend the activities of the political section of the embassy. This activity was reestablished in 1985. As far as the Malaysian government is concerned, Malaysian ambassadors to Poland were accredited in Moscow until 1977. The Malaysian embassy in Warsaw was opened on November 4, 1977.

The Philippines is the last country in the Southeast Asian region where the Republic of Poland has its embassy. It was opened on January 2, 2018 in Manila. It is the youngest diplomatic mission of this rank in the region, although the very establishment of diplomatic relations took place on September 22, 1973. Undoubtedly, the opening of the diplomatic post in Manila strengthens the Polish presence in the region. The Philippines, in turn, enjoys relatively high interest from Polish entrepreneurs.

Unfortunately, despite formal relations, there are no Polish diplomatic missions in other countries of the region.

Trade Relations

The EAC, established on December 31, 2015, is a great new opportunity for improving Polish relations with EAC’s member countries. Initiatives aiming to create the EAC began as early as 1992, when the ASEAN Free Trade Area (AFTA), which included all the member countries, was established. In 2003, ASEAN leaders agreed to deepen their relations, resulting in the Bali Concord II Declaration, in which the leaders committed to maximizing opportunities for joint regional integration and making a free trade area one of the pillars of ASEAN (ASEAN, 2019). During his official visit to Indonesia in 2018, former Polish Foreign Minister Jacek Czaputowicz noted that countries in the Southeast Asian region are interested in Polish investment, stressing that the priority of the Polish economic activity is the development of economic cooperation.

Poland seeks to increase trade turnover as well as the promotion of products and services of Polish companies. In this domain, as a member of the Asian Infrastructure Investment Bank (AIIB), it is trying to promote Polish entrepreneurs who could implement various infrastructure investments under AIIB’s auspices (WNP, 2018).

Individual ASEAN countries naturally differ in the size of their economies and investment attractiveness. Likewise, their trade exchange with Poland is different.

The first and most populous ASEAN country is Indonesia. A country of 262 million citizens and GDP exceeding USD 1 trillion has a strong positive trade balance. The value of Indonesian goods imported to Poland reaches PLN 2.79 billion, while Polish exports are worth PLN 441.4 million, which constitutes only 0.1% of the country’s total exports. It can be easily observed that Polish entrepreneurs have not yet discovered the potential of the Indonesian market, which is to be facilitated by the PAIH’s Foreign Trade Office (FTO) in Jakarta.

So far, Poland is importing large amounts of 1) machinery, mechanical and electrical appliances, and parts thereof, 2) textiles and textile articles (clothing), as well as 3) plastics and articles thereof. Products manufactured by the chemical sector, as well as live animals and animal products constitute the largest share of Polish exports. Poland also exports machinery and mechanical appliances.

Indonesia is an economy with great growth potential and one of the largest consumer markets in the world. The purchasing power of its citizens is constantly increasing. However, it seems that the distance from Poland is the main factor behind the low recognizability of Polish companies and goods (KUKE, 2019).

Another country with tremendous growth potential is Thailand. The economy twice the size of Indonesia (USD 455.4 billion) but with a population of almost 70 million, is relatively highly classified in the Doing Business (“DB”) report, ranked 27 among 190 countries (WTO, 2019). Poland has a negative trade balance with this state – imports reach PLN 3.28 billion, while exports are close to one billion (PLN 999.4 million). It is worth noting that Polish entrepreneurs export to Thailand mostly precious metals (for instance, silver produced by KGHM), machinery as well as mechanical and electrical appliances, in addition to chemical sector products. In turn, among goods imported from Thailand are optical instruments and apparatus, plastics, as well as machinery, mechanical or electrical appliances, and parts thereof. PAIH’s FTO in Bangkok also operates in this country (KUKE, 2019).

The third, very dynamic trade partner for Poland is Vietnam. Its economy is much less developed than that of the two countries described above, with a GDP of only USD 220 billion. Yet, at the same time, it is one of the most populous countries in the region with 92.6 million citizens. Vietnam is noteworthy for its high GDP growth rate, which has even reached 7% in recent years and currently stands at 6.8%. Simultaneously, Vietnam is by far the largest trading partner of ASEAN countries for Poland. With a negative trade balance, Poland imports goods worth PLN 7.68 billion, which constitutes a 0.9% share in total Polish imports, while exports reach PLN 1.53 billion. Imports to Poland include mostly footwear, headwear, umbrellas, feathers, or artificial flowers, as well as textiles and textile products. However, machinery, mechanical and electrical appliances, and parts thereof constitute the largest part of goods imported to Poland from this country.

In turn, Polish entrepreneurs export live animals and animal products, products manufactured by the chemical sector, in addition to machinery, mechanical and electrical appliances, and parts thereof. Moreover, in comparison to Thailand and Indonesia, Polish entrepreneurs have very little knowledge of the specifics of this market. Likewise, they are concerned about the political situation in this country. However, the barriers related to political and cultural differences can be overcome over time, therefore, Vietnam may benefit from being the destination of Polish exports. Particularly favorable factors include the large Vietnamese diaspora in Poland, which might facilitate the establishment of trade contacts, and the fact that Poland as well as Polish goods are much more recognizable in Vietnam than in other ASEAN countries (KUKE, 2019).

With regard to Vietnam, Poland seems to have recognized its opportunities related to export. In this context it should be pointed out that the Polish Ministry of Development identified Vietnam as one of five perspective markets in the coming years where promotional programs will be implemented. On the other hand, when evaluating the prospects for the development of further economic cooperation, attention should be paid to the low purchasing power of consumers in Vietnam, which may limit the sales of Polish companies.

Another important market is Malaysia. With a population of over 31 million, it economy is one of the most developed ones within ASEAN. In 2017, Malaysia’s GDP reached USD 314.5 billion. Poland, also in this case, has a negative trade balance, importing the equivalent of almost PLN 3 billion (PLN 2.99 billion) and exporting PLN 530 million worth of goods (Trading Economics, 2019). The investment cooperation can be described as very modest. Polish goods exported to Malaysia include mainly the products that fall under the following categories: defense (Poland exported a small batch of “PT-91 Twardy” tanks between 2007 and 2009), metallurgy, chemicals, and furniture (COI, 2015).

Significant interest of Polish companies in this country can be observed since 2015. The activity of Polish companies in sectors such as IT, medicine, green technologies, or food industry, may facilitate the prospect of improving economic relations. However, the specificity of the Malaysian market is a major obstacle. Local customers are very attached to the brands and products they know. As a result, they are reluctant to make alternative choices. Therefore, when deciding to invest in Malaysia, Polish entrepreneurs should be determined and prepared for a long-term commitment (Business Guide, 2016).

The fifth country that stands out the most among ASEAN countries is Singapore. The tiny city-state of 5.6 million citizens has an economy worth a whopping USD 324 billion. It is one of the largest financial centers not only on the continent, but also globally.

This country is special in many ways. Singapore is ranked 2nd in the “Doing Business” ranking. It is also ranked among the states with the lowest risk of undertaken investments by the OECD. As usual, Poland has a negative trade balance with this country, exporting only PLN 923.3 million worth of goods and imports exceeding PLN 2 billion (PLN 2,25 billion to be precise). It is interesting to note that among the goods exported to this country are vehicles, aircraft, ships, and other means of transport, followed by machinery, mechanical and electrical appliances, and parts thereof, as well as base metals and goods made of them. On the other hand, Poland imports mostly machinery, mechanical and electrical appliances, and parts thereof, products manufactured by the chemical sector, as well as vehicles, airplanes, ships, and other means of transport. Singapore’s strategic location and its political stability should allow the Polish innovative sector to expand on this market.

The remaining five countries, i.e., Brunei, Cambodia, Myanmar, Laos, and the Philippines, may be considered as yet untapped markets where Polish entrepreneurs are not as eager to establish trade relations as in the case of the five ASEAN member states described earlier. The Philippines, where the Polish Foreign Ministry opened its embassy in 2018, is a country with great potential. Its economic performance is one of the highest in the region – annual GDP growth reaches 6.7% and the economy is worth USD 313.6 billion. Trade between the two countries is relatively low, and Poland has maintained a negative trade balance for many years. When it comes to statistics, there are large differences between those reported by Polish and Filipino statistical offices. For example, according to Philippine data, in 2015 “there was a nearly 12% increase in imports from Poland to the Philippines, to USD 24.70 million” (Polish Ministry of Foreign Affairs, 2016), while according to Polish statistics, exports of Polish goods to the Philippines decreased to USD 60.4 million. However, it can be established that Poland exports mainly dairy products, electrical appliances, and medicines (top 3). On the other hand, Polish entrepreneurs are keen to import data processing machinery (semiconductors), electrical transformers, as well as photocopiers (top 3) (Polish MFA, 2016). Poland has very limited economic activity with countries such as Brunei, the smallest ASEAN member state with an economy size of USD 12.13 billion, and Laos (GDP of USD 16.85 billion). In the case of Brunei, Poland imports goods worth nearly PLN 2 million, and exports PLN 6.7 million worth of goods. In turn, Polish exports to Laos amount to PLN 16 million, while imports are worth around PLN 77.5 million. In contrast, trade relations with the last two partners – Cambodia and Myanmar are somewhat more intense. The Kingdom of Cambodia, with a GDP of only USD 22.15 billion (2017), has been growing at an annual rate of at least 7% of GDP in recent years. Exports of Polish goods to this country amount to PLN 111.5 million, while imports reach as much as PLN 1.2 billion. In this case, customs barriers are one of the main reasons for the low activity of Polish companies (RIG, 2012). The last country is Myanmar. A state with an economy comparable to that of Croatia, with a GDP worth USD 69.32 billion (Croatia’s GDP is USD 54.85 billion), is following the regional trend and experiencing tremendous economic growth, which reached 8% in 2017. Trade growth, despite its low level, is excitingly high. It reached 310% between 2013 and 2014, while several tens of percent is the norm. Polish companies mainly export products of chemical sector as well as related industries. Myanmar, on the other hand, exports mostly textile materials and products to Poland (46% of total exports of these goods go to Poland) (Economic Guide, 2015).

Conclusions

Many decades have passed since the establishment of first diplomatic relations between the then Polish People’s Republic and the countries that later became ASEAN members. However, since the establishment of the AEC in 2015, we can definitely talk about the revival of Poland’s relations with the countries of the region. The apparent trend of very fast economic growth of ASEAN countries convinces the Polish government to open new diplomatic missions in the countries that belong to ASEAN, with a focus on intensifying economic relations through PAIH’s FTOs.

Despite the big distance between Poland and ASEAN countries, Polish companies should look for opportunities in modern technology sectors, such as ecology, renewable energy, and agriculture. Additionally, Poland has the advantage of being a member of the AIIB as well as being involved in the New Silk Road project, both of which are Chinese initiatives. Due to its limited size, this analysis practically neglects the role of the European Union, of which Poland is a member, in relations with ASEAN countries. The prospect of signing a bilateral free trade agreement between these two organizations would certainly make it easier for Polish entrepreneurs to enter the less popular ASEAN markets. Leaving aside the ongoing negotiations in this matter, Poland, as an increasingly mature economy, can and should make the most of the growing trends in the region.

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