ASEAN FTAs with the EU and Southeast Asian approaches to services for development

FDI in service industries will feature prominently in the EU's bilateral FTA negotiations with ASEAN countries. The EU is particularly interested in liberalizing such FDI in Southeast Asia, as this would go some way to compensating for the EU deficit in goods trade with the ASEAN countries. This article argues that contrary to EU statements, ASEAN countries do recognize that services are essential to development, but that they adopt a combination of two approaches that were first developed in urban contexts in developed countries: development and growth management. The first approach entails a greater role of the state in the promotion of service industries: financial services in Singapore and ICT in Malaysia. The second approach, illustrated by the experience of Malaysia and Thailand in the retail sector, seeks to mitigate the adverse economic and social effects of the growth of service industries. If EU FTA negotiations with individual ASEAN members are to have any chance of success, the EU must recognize the legitimacy of the specific approaches to service industries adopted by Southeast Asian countries.