EU-style blocs still a long shot

Menon said it might take at least three generations before an integrated Asia moving close to a European Union style economic union.

"With the EU, we must always remind ourselves that it takes a long time for them to reach the point that they have arrived at today," Menon said. "In some senses, there are tendencies for them to eventually integrate because they have so much in common and there are so many economic forces pushing them together."

"But the situation in Asia is quite different and as there is too much diversity to easily form a sort of deep integration agreement like an economic union," he added.

Countries like Indonesia and Singapore and China are totally different economies in terms of population basis, economic structures, Menon said, adding that for example, labor mobility an important ingredient to any sort of economic union -- is a complicated issue in Asia and it is very hard to see it been addressed in any time soon.

He said moving towards the EU-style arrangement also has to do with the competitiveness of member countries. And unlike the EU where complementarities exist, Asian countries have similar capital and labor prices and it would take a long time for this to be changed.

Menon said that explains why the trade of intermediate goods, rather than final goods, dominates China-ASEAN trade despite the sharp increase in figures over the past few years.

An ADB study shows that 60 percent of the manufactured goods in the region eventually entered the Western market and China's role as an assembling hub for the region's goods has not changed.

Menon said as ASEAN countries developed and as China gets richer, there is still enough room for the increase of regional demand to sustain some of the growth, but substantive changes won't take place too soon. He said China can not move up the product value chain overnight to manufacturing hi-tech final goods that will meet the region's demands.

"We can't be too impatient about this type of integration process. It takes a very long time," Menon said.

(Xinhua News Agency December 28, 2009)