In the light of recent developments, it seems very likely that India, Australia and New Zealand will take part in the inaugural East Asian Summit (EAS) in Kuala Lumpur later this year. Australia and New Zealand are also considering signing ASEAN's Treaty of Amity and Cooperation (TAC), which will pave the way for their participation in the summit. India acceded to this non-aggression pact two years ago. Meanwhile, the ASEAN Plus Three countries, comprising all members of ASEAN, China, Japan and South Korea will definitely attend the EAS.

Among the issues that will be discussed at the EAS, economic integration with the aim of realizing a free trade area (FTA) in the near future would undoubtedly be in the agenda. This would potentially create the world's largest FTA. However, it would be hard to imagine seeing ASEAN in the driver's seat of the EAS - particularly in setting the economic agenda - given the inclusion of larger and more influential economies such as Japan, China, Australia and India in the summit.

Against this backdrop, it may be worth noting how ASEAN is doing with its own efforts towards achieving deeper economic integration. Two years ago at the ASEAN summit in Bali, ASEAN leaders agreed to integrate their economies and establish an ASEAN Economic Community (AEC) by the year 2020. They envisaged that by this time ASEAN would have become a single market and production base that would be a magnet for foreign direct investments.

Numerous economic initiatives have been introduced to kick-start this bold project, including the fast-track integration of 11 priority sectors. (These sectors are: electronics, e-ASEAN, healthcare, wood-based products, automotives, rubber-based products, textiles and apparels, agro-based products, fisheries, air travel as well as tourism).

It appears on the surface that ASEAN is well on its way towards achieving an economic community in 15 year's time. So, what are the stumbling blocks in the way?

At last year's ASEAN Summit in Vientiane, it was agreed that tariffs on these 11 priority sectors will be eliminated by 2007 for the ASEAN-6 countries and by 2012 for the CLMV countries (Cambodia, Laos, Myanmar and Vietnam). These deadlines are three years ahead of schedule. However, other than tariff cuts, there does not appear to be coherent framework in integrating these 11 priority sectors - this could result in the realization of 11 different goals instead of a single one.

One of the most important initiatives introduced in Bali was the creation of an enhanced dispute settlement mechanism (DSM) with more effective powers to resolve trade disputes among member states. This is clearly crucial to the success of the AEC as the number of trade disputes will definitely rise significantly as the region moves towards a higher level of economic integration.

However, without sufficient resources to enhance the DSM, it will remain an ineffective and unused mechanism. Moreover, the complete depoliticisation of the DSM - one the main aims of the new DSM - would be a difficult task to achieve. For instance, despite highly legalistic proceedings at the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), trade disputes among member states in both institutions continue to be politically charged.

A major stumbling block towards greater economic integration would be ASEAN's weak institutional structure. Many economists argue that ASEAN's slow progress in tackling non-tariff barriers is due to its weak institutions and lack of an effective enforcement mechanism. In this regard, the European Union (EU)'s experience is worth noting as institutional development started at an early stage of economic integration.

Dr Hadi Soesastro of the Centre for Strategic and International Studies (CSIS) in Jakarta, suggested that a major institutional innovation for ASEAN would be the creation of "regional units" staffed by professionals who are independent of governments to expedite the integration process. But, there doesn't appear to be any political will in ASEAN to carry out the necessary institutional reforms to expedite regional integration. The protection of national sovereignty is still used as an excuse for not doing anything significant in this area.

The AEC end-goal of a "single market" connotes an EU-type common market where there is complete freedom of internal trade and free mobility of capital and labour plus the harmonization of all laws, regulations and taxes. However, as it stands, ASEAN governments are not even prepared to establish a customs union let alone a common market. (Basically, a customs union is essentially a group of countries where trade barriers among member states are removed and a common external tariff policy is established with non-member states.) Hence, it remains conceptually unclear what kind of economic entity the AEC will be in 2020.

As ASEAN becomes increasingly preoccupied with its FTA arrangements with China, Japan, India, South Korea, Australia-New Zealand Closer Economic Relations (CER) grouping, there are concerns that the AEC project is losing its momentum. Furthermore, the current debate regarding Myanmar's chairmanship of ASEAN next year gives the impression that ASEAN isn't as cohesive as it should be.

Time is not on ASEAN's side. If it cannot overcome many of these stumbling blocks, the AEC may run the risk of being subsumed under the EAS economic agenda. If this happens, ASEAN may no longer have control of its economic future.