Asean Trading Bloc

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    Three levels ofeconomic integration

    Global: trade

    liberalization by GATTor WTO

    Regional: preferential

    treatment of member

    countries in the group

    Bilateral: preferentialtreatment between

    two countries

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    FTA (free trade area): No internaltariffs among members, but eachcountry imposes its own external tariffsto the third country.

    NAFTA (North America Free Trade

    Agreement)AFTA (ASEAN Free Trade Area)EFTA (European Free Trade Area)

    Customs union: No internal tariffsand common external tariffs

    Mercosur (Southern CommonMarket),CACM (Central American Common

    Market)CARICOM (Caribbean Communityand Common Market)

    Common market: Free movement ofproducts and factors (resources), which

    is customs union plus factor mobility

    EU (European Union previouslyEEC)

    Economic union: Common market pluscommon currency coordination of fiscal

    and monetary policy

    EMU (Economic and MonetaryUnion)

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    Static effects: Short-term effects (shift of production) Trade creation: production shifts to more efficient member

    countries from inefficient domestic or outside countries. Trade diversion: production shift to inefficient member

    countries from more efficient outsiders. Dynamic effects: Long-term effects Cost reduction due to economies of scale Cost reduction due to increased competition.

    ASEAN aims include the accelerationof economic growth, social progress, culturaldevelopment among its members, theprotection of the peace and stability of theregion, and to provide opportunities for membercountries to discuss differences peacefully

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    Population: GDP(PPP): GDP(nominal)

    575.5 million US$ 3,431.2 billion US$ 1,281.9 billion

    Source:wikipedia Per Capita US$ 5,962 Per Capita-- $2,227

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    The Association of Southeast Asian

    Nations

    A regionally-based internationalorganization 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.

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    Originally a security bloc to show solidarity againstcommunist expansion.

    Therefore Bangkok Declaration on 8 August 1967emphasized cooperation, amity and non-interference.

    Different instinct than Schumans supranational EuropeanCoal 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.

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    ASEAN

    +3/+6

    ASEAN+1

    NAFTA

    Canada

    Mexico

    China

    Japan

    India

    ASEAN+

    1ASEAN+

    1ASEAN+

    1

    ASEAN+1

    U.S.

    ChileP4

    ROK

    Australia

    NZ

    Brunei

    Singapore

    Thailand

    Malaysia

    Source: METI & MEC

    ASEAN

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    The goal is to create a stable, prosperous andhighly competitive ASEAN economic region inwhich there is a free flow of goods, services,investment and a freer flow of capital, equitableeconomic development and reduced povertyand socio-economic disparities in year 2020.

    The ASEAN Economic Community seeks toestablish ASEAN as a single market andproduction base, so as to make ASEAN a moredynamic and stronger segment of the globalsupply chain.

    3 Main Building Blocks AFTA, ASEAN Charterand AEC Blueprint

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    Launched in 1992, the ASEAN Free TradeArea (AFTA) is now in place. It aims topromote the regions competitive advantageas a single production unit.

    The elimination of tariff and non-tariffbarriers among Member Countries is

    expected to promote greater economicefficiency, productivity, and competitiveness. Enabling Clause Notification.

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    Averagetariff under AFTA

    1993

    0

    10

    15

    20

    5

    P

    e

    r

    c

    en

    t

    2002

    12.76%

    3.57%

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    Intra ASEAN trade

    vis--vis total trade

    12

    196712% 2002

    23.2%

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    As of 1 January 2005, tariffs on almost 99 percent of the productsin 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 60percent 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 fromoutside ASEAN based on its national schedules.

    The average tariff for ASEAN-6 has been brought down from morethan 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 oftheir Inclusion List have been brought down to within the 0-5percent range.

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    Other major integration-related economic activities of ASEAN includethe 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 RegulatorsCouncil Sectoral Mutual Recognition Arrangement (ATRC-MRA) onConformity Assessment for Telecommunications Equipment;

    trans-ASEAN energy networks Initiative for ASEAN Integration (IAI) focusing on infrastructure, human

    resource development, information and communications technology, andregional 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.

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    DOH

    3

    Planning

    Bureau

    CHINA

    THAILAND

    VIETNAM

    INDONESIA

    PHILIPPINES

    MALAYSIA

    HONG KONG

    SINGAPORE

    BRUNEI

    INDIA

    Laoag

    CAMBODIA

    LAOS

    DenpasarSurabaya

    Surakarta

    Bandung

    JAKARTABakahuni

    Palembang

    Padang

    Medan

    Banda AcehIpoh

    KotaBaharu

    Hat Yai

    Sarawak

    Kalimantan

    Sabah

    Mindanao

    Zamboanga

    Ho Chi MinhSihanouk Ville

    DaNang

    Haiphong

    ThakhekBanLaouVinh

    HANOI

    Chiang Rai

    Kunming

    Tak UdonThani

    VIENTIANE

    Mergui

    Tavoy

    Meiktila

    Mandalay

    Tamu

    Changsha

    Shanghai

    Shenzhen

    YANGONMANILA

    BANDAR SERIBEGAWAN

    PHNOM PENH

    TungKeng

    Loilem

    BANGKOK

    NakhonRatchasima

    Dumai

    Cikampek

    Udomxay

    NakhonSawan

    Kuantan

    DARUSSALAM

    Banjarmasin

    Lao CaiJinghong

    NamthaLuang

    Vung Tao

    SYMBOL :

    ASEAN Highway

    MYANMARThibawMuse

    KUALA LUMPUR

    Dali

    Payagyi

    Bangsaphan

    Savannakhet

    Ruili

    Kawthoung

    Kuching

    Pontianak

    PakseQuang Ngai

    Matnog

    Surigao City

    ASEAN HIGHWAY NETWORKASEAN HIGHWAY NETWORK

    16source: www.aseansec.org

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    17

    source: www.aseansec.org

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    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 statedas being a threat to the goals envisioned by the charterand also set forth the idea of a proposed human rights

    body to be discussed at a future summit in February2009. This proposition caused controversy, as the bodywould not have the power to impose sanctions or punishcountries who violate citizens' rights and wouldtherefore be limited in effectiveness

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    An ASEAN single market and production base shall comprise fivecore elements:

    (i) free flow of goods (tariffs/NTBs eliminated & ROOs and TFimproved to create single production base);

    (ii) free flow of services (particularly air transport, e-ASEAN, heathcare and tourism / MRAs);

    (iii) free flow of investment (ASEAN Investment Area and ASEANIGA);

    (iv) freer flow of capital (ASEAN Capital Market Development andIntegration); and

    (v) free flow of skilled labor (visas and employment passes forprofessionals and skilled labor and ASEAN University Network).

    In addition, the single market and production base also include twoimportant components, namely, the priority integration sectors,and food, agriculture and forestry.

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    20source: www.aseansec.org

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    21

    ASEAN Regional Forum(ARF)

    Brunei

    Darussalam

    Indonesia

    MalaysiaPhilippines

    Singapore

    Thailand

    Vietnam

    Cambodia

    Laos

    MyanmarPapua NewGuinea

    Australia

    Canada

    China

    India

    Japan

    New

    Zealand

    Russia

    United States

    European Union

    Mongolia

    DPRK

    Rep. of

    Korea

    source: www.aseansec.org

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    Confidence-building Preventive diplomacy Conflict resolution

    (The Republic of China (also known as Taiwan) has beenexcluded since the establishment of the ARF, and issuesregarding the Taiwan Strait is neither discussed at the ARF

    meetings nor stated in the ARF Chairman's Statements.)

    22

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    23

    EXTERNAL RELATIONS

    Inter-regional cooperation

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    Aimed at promoting security, economic

    and transboundary concerns

    Create an East Asian Free Trade Zone inlong 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 proposedweighted index of currencies

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    25

    NEXTERNAL RELATIONS

    Inter-regional cooperation

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    Established 1989 Forum for 21 Pacific Rim countries or regions to

    discuss the regional economy, cooperation, tradeand 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)

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    27

    EXTERNAL RELATIONS

    Inter-regional cooperation

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    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 regionalresearchers in Asia with their counterparts in Europe. Over 60 millionusers now have access to improved network performance providingmutually beneficial global research collaboration between Asia andEurope.

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    29

    EXTERNAL RELATIONS

    Inter-regional cooperation

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    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 eachother's internal affairs, equality and mutual benefit andreaching unanimity through consultation, EALAF wouldprovide a broader platform for political, business and otherleaders to exchange views , and to promote betterunderstanding, and political, economic and culturalcooperation between countries in the two regions.

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    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 Mekong-

    Ganga Cooperation (MGC) and the BIMST-EC In 2003, India acceded to the Treaty of Amity and

    Cooperation (TAC) in South-East Asia

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    Economic Boom

    Massive Investment Inflows

    Regional Stability

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