Advancing East Asian Regionalism by Melissa Curley Nicholas Thomas

Author:Melissa Curley, Nicholas Thomas [Melissa Curley, Nicholas Thomas]
Language: eng
Format: epub
ISBN: 9780415546874
Barnesnoble:
Publisher: Taylor & Francis
Published: 2009-05-21T00:00:00+00:00

Economic regionalism

At the conclusion of the 2003 Bali Summit, the leaders announced their intent to create an ASEAN community. One of the three pillars supporting this community is to be an ASEAN Economic Community (AEC). As the ASEAN Concord II (released at the 2003 summit) stated:

The ASEAN Economic Community is the realisation of the end-goal of economic integration as outlined in the ASEAN Vision 2020, 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 2020.3

In essence, the AEC is a combination of the ASEAN Free Trade Area (AFTA), the ASEAN Investment Area (AIA), and the ASEAN Framework Agreement on Services (AFAS), when they are all fully operational. Although the goal is a logical result of regional economic plans currently being implemented, these plans have a less than optimal history of delivering results on time or as envisaged. Despite this, there is a clear momentum towards the economic integration of the region, particularly in the area of free trade agreements, unified investment regimes, harmonisation of product lines and standards, as well as in the development of common financial and monetary policies.

AFTA is currently the only ‘regional’ free trade agreement in East Asia, although it focuses on the ASEAN group rather than on the broader ASEAN+3. AFTA was created in 1992 to promote intra-ASEAN trade. Indeed it was only following the establishment of AFTA that there was an ASEAN policy of promoting the free movement of capital for enhancing economic cooperation.4 Prior to this, ASEAN members made their own intra-regional agreements for capital flows.5 Following the crisis, AFTA was used to develop mechanisms to help restore stability by encouraging the use of ASEAN currencies for payment of traded goods and services.6 This enhanced interdependence on regional currencies was designed to boost the currencies’ demand, thereby reducing the impact of negative speculation. When examining the trade patterns of AFTA members it can be seen that intra-ASEAN trade has steadily increased since AFTA’s inception. In part that can be attributed to improved economic performance in the member countries, coupled with readily accessible markets in close geographic proximity, most notably China. Moreover, the regulatory aspects of AFTA provide an overarching framework that encourages trade with other Southeast Asian states.7

This is not to say that AFTA is not without its problems. Adherence to ASEAN’s principles of consensus and non-interference has meant that some countries have been able to retain preferential positions for selected domestic markets. However, as Southeast Asian countries fully accede to the World Trading Organisation (WTO) these trade barriers will be gradually removed.8 Indeed global efforts towards trade liberalisation offer an alternative option between balancing domestic imperatives and regional realities. Where regional and domestic concerns exist regarding market penetration by external actors, global frameworks for liberalisation offer a way to overcome these concerns without triggering national sensitivities.

Although AFTA came into force in January 2003

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