Three levels of economic integration

Global: trade

liberalization by GATT or WTO Regional: preferential treatment of member countries in the group Bilateral: preferential treatment between two countries

FTA (free trade area): No internal

Customs union: No internal tariffs

tariffs among members, but each and common external tariffs country imposes its own external tariffs Mercosur (Southern Common to the third country. Market), NAFTA (North America Free Trade CACM (Central American Common Agreement) Market) AFTA (ASEAN Free Trade Area) CARICOM (Caribbean Community EFTA (European Free Trade Area) and Common Market)
Common market: Free movement of products and factors (resources), which is customs union plus factor mobility EU (European Union previously EEC) Economic union: Common market plus common currency coordination of fiscal and monetary policy EMU (Economic and Monetary Union)

Static effects: Short-term effects (shift of production)

Trade creation: production shifts to more efficient member

Dynamic effects: Long-term effects

countries from inefficient domestic or outside countries. Trade diversion: production shift to inefficient member countries from more efficient outsiders.
Cost reduction due to economies of scale Cost reduction due to increased competition.

ASEAN aims include the acceleration of economic growth, social progress, cultural development among its members, the protection of the peace and stability of the region, and to provide opportunities for member countries to discuss differences peacefully

Population: 575.5 million Source:wikipedia

GDP(PPP): US$ 3,431.2 billion Per Capita US$ 5,962

GDP(nominal) US$ 1,281.9 billion Per Capita-- $2,227

The Association of Southeast Asian Nations A regionally-based international organization with ten members. Created in 1967 with five members: Thailand, Singapore, Malaysia, Indonesia and the Philippines Brunei joined in 1984, Vietnam in 1995, Laos and Myanmar (Burma) in 1997 and Cambodia in 1999.

Originally a security bloc to show solidarity against communist expansion. Therefore Bangkok Declaration on 8 August 1967 emphasized cooperation, amity and non-interference. Different instinct than Schumans supranational European Coal and Steel Commission. This resulted in the ASEAN Way. Bali Summit in 1976 put economics on the agenda. In 1992, idea of a regional bloc formed with the CEPT( Common Effective Preferential Tariff ) scheme and AFTA. In 2001, idea of a hub-spoke model for ASEAN and China, Japan and Korea(ASEAN +3) first enunciated. 2007 ASEAN Charter and ASEAN EC Blueprint.

Source: METI & MEC

ASEAN +3/+6

Canada

China
ASEAN+ 1

ROK
ASEAN+ 1 ASEAN+ 1 Thailand Malaysia Singapore

NAFTA
Japan Mexico

ASEAN
ASEAN+1

U.S.

India

ASEAN+1

Brunei

NZ Australia P4

Chile

The goal is to create a stable, prosperous and highly competitive ASEAN economic region in which there is a free flow of goods, services, investment and a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities in year 2020. The ASEAN Economic Community seeks to establish ASEAN as a single market and production base, so as to make ASEAN a more dynamic and stronger segment of the global supply chain. 3 Main Building Blocks AFTA, ASEAN Charter and AEC Blueprint

Launched in 1992, the ASEAN Free Trade Area (AFTA) is now in place. It aims to promote the regions competitive advantage as a single production unit. The elimination of tariff and non-tariff barriers among Member Countries is expected to promote greater economic efficiency, productivity, and competitiveness. Enabling Clause Notification.

Average tariff under AFTA

20
P 15 e r c 10 e n 5 t

12.76%

3.57%

0 1993 2002
11

Intra ASEAN trade vis--vis total trade

23.2% 12% 2002 1967

12

As of 1 January 2005, tariffs on almost 99 percent of the products in the Inclusion List of the ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) have been reduced to no more than 5 percent. More than 60 percent of these products have zero tariffs. Unlike the European Union, the ASEAN Free Trade Area (AFTA) does not apply a common external tariff on imported goods. Rather, each member may impose tariffs on goods entering from outside ASEAN based on its national schedules. The average tariff for ASEAN-6 has been brought down from more than 12 percent when AFTA started to 2 percent. For the newer Member Countries, namely, Cambodia, Lao PDR, Myanmar, and Viet Nam (CLMV), tariffs on about 81 percent of their Inclusion List have been brought down to within the 0-5 percent range.

Other major integration-related economic activities of ASEAN include the following:

Roadmap for Financial and Monetary Integration of ASEAN trans-ASEAN transportation network Roadmap for Integration of Air Travel Sector interoperability and interconnectivity of national telecommunications equipment and services, including the ASEAN Telecommunications Regulators Council Sectoral Mutual Recognition Arrangement (ATRC-MRA) on Conformity Assessment for Telecommunications Equipment; trans-ASEAN energy networks Initiative for ASEAN Integration (IAI) focusing on infrastructure, human resource development, information and communications technology, and regional economic integration primarily in the CLMV countries; Visit ASEAN Campaign and the private sector-led ASEAN Hip-Hop Pass to promote intra-ASEAN tourism Agreement on the ASEAN Food Security Reserve.

source: www.aseansec.org

15

ASEAN HIGHWAY NETWORK

CHINA INDIA
Ta m u Ru ili ib a w Mu s e Ma n d a la y Th Me iktila Loile m Pa ya g yi Da li Ku n m in g Jin g h on g Sh e n zh e n Sh a n g h a i Ch a n g sh a

MYANMAR Ke n g Tu n g

Ch ia n gRa i Ta k Na kh o n Sa w a n

LAO S h VIENTIANE Vin

Na kh o n Ra tch a s im a

La oCa i Lu a n g Na m th a Ud om xa y

HANO I

Ha ip h on g

HO NGKO NG
La oa g

YANGO N
Ta vo y Me rg u i Ka w th ou n g

THAILAND

Ba n La o u Th a kh e k Ud on Th a n i Sa va n n a kh e t Pa kse

Da Na n g Qu a n g Ng a i

MANILA
Ma tn o g

BANGKO K

CAMBO DIA
PHNOM PENH

Ba n g sa p h a n Sih a n ou k Ville

VIETNAM

Ho Ch i Min h Vu n g Ta o

PHILIPPINES
DARUSSALAM Sabah BANDAR SERI BEGAW AN

Su rig a o City

Ba n d a Ace h

Ha t Ya i Kota Ba h a ru Ip oh Me d a n

Min d a n a o

MALAYSIA
Ku a n ta n

BRUNEI
Sa ra w a k

Za m b oa n g a

KUALA LUMPUR
Du m a i

Pa d a n g

SINGAPO RE
Pa le m b a n g

Ku ch in g

Pon tia n a k

Ka lim a n ta n Ba n ja rm a s in

Ba ka h u n i

JAKARTA
Ba n d u n g

INDO NESIA
Su ra ka rta Su ra b a ya De n p a s a r

Cika m p e k

SYMBO L:

Planning Bureau

ASEAN Hig h w a y

DOH
16

source: www.aseansec.org

17

source: www.aseansec.org

The charter's aims included:

"Respect for the independence, sovereignty and territorial

integrity of member states". "Peaceful settlement of disputes". "Non-interference in member states internal affairs". "Right to live without external interference

However, the ongoing global financial crisis was stated as being a threat to the goals envisioned by the charter and also set forth the idea of a proposed human rights body to be discussed at a future summit in February 2009. This proposition caused controversy, as the body would not have the power to impose sanctions or punish countries who violate citizens' rights and would therefore be limited in effectiveness

An ASEAN single market and production base shall comprise five core elements: (i) free flow of goods (tariffs/NTBs eliminated & ROOs and TF improved to create single production base); (ii) free flow of services (particularly air transport, e-ASEAN, heath care and tourism / MRAs); (iii) free flow of investment (ASEAN Investment Area and ASEAN IGA); (iv) freer flow of capital (ASEAN Capital Market Development and Integration); and (v) free flow of skilled labor (visas and employment passes for professionals and skilled labor and ASEAN University Network).
In addition, the single market and production base also include two important components, namely, the priority integration sectors, and food, agriculture and forestry.

source: www.aseansec.org

20

Cambodia Brunei Darussalam

Canada China
DPRK

Australia

Vietnam

European Union

United States

India

Thailand

ASEAN Regional Forum (ARF)

Indonesia

Singapore

Japan

Russia

Laos

Rep. of Korea Philippines Papua New Guinea Myanmar New Zealand

Mongolia

Malaysia

source: www.aseansec.org

21

Confidence-building Preventive diplomacy Conflict resolution

(The Republic of China (also known as Taiwan) has been excluded since the establishment of the ARF, and issues regarding the Taiwan Strait is neither discussed at the ARF meetings nor stated in the ARF Chairman's Statements.)

22

EXTERNAL RELATIONS Inter-regional cooperation

23

Aimed at promoting security, economic and transboundary concerns Create an East Asian Free Trade Zone in long term vision The Chiang Mai Initiative
An expanded ASEAN Swap Arrangement to help

countries meet temporary liquidity problems

The Asian Currency Unit (ACU) is a proposed weighted index of currencies

NEXTERNAL RELATIONS Inter-regional cooperation

25

Established 1989 Forum for 21 Pacific Rim countries or regions to discuss the regional economy, cooperation, trade and investment. 41% of the world's population 56% of world GDP and 49% of world trade Free Trade Area of the Asia-Pacific Region (FTAAP)

EXTERNAL RELATIONS Inter-regional cooperation

27

45 partners; Established in 1996 Representing half of the worlds GDP, almost 60% of the worlds population and 60% of global trade
key achievement of ASEM is TEIN (Trans-Eurasia Information Network), the first large-scale research and education network connecting regional researchers in Asia with their counterparts in Europe. Over 60 million users now have access to improved network performance providing mutually beneficial global research collaboration between Asia and Europe.

EXTERNAL RELATIONS Inter-regional cooperation

29

Established Sept 1999 30 member countries The Forum includes a political track, an economic track and an academic track which can involve both the public and private sectors. Purpose -- By the principle of mutually respecting for sovereignty and territorial integrity, non-inference into each other's internal affairs, equality and mutual benefit and reaching unanimity through consultation, EALAF would provide a broader platform for political, business and other leaders to exchange views , and to promote better understanding, and political, economic and cultural cooperation between countries in the two regions.

Became a sectoral dialogue partner of ASEAN in 1992 Become a full dialogue partner of ASEAN in 1995 and a member of the ASEAN Regional Forum (ARF) in 1996 India signed an agreement in October 2003 for a free trade area (FTA) with Thailand Sub-regional cooperation has accelerated too - The MekongGanga Cooperation (MGC) and the BIMST-EC In 2003, India acceded to the Treaty of Amity and Cooperation (TAC) in South-East Asia

India's total global trade 114,131.56 Indias total global export 52,719.43 Indias total global import 61,412.13

India's total trade with ASEAN 9,768.71

Percentage share of India's trade with ASEAN 8.56%

Indias total export to ASEAN 8.76% 4618.54 Indias total import to ASEAN 8.39% 5150.17

Economic Boom
Massive Investment Inflows Regional Stability