ASEAN and its Affect on Southeast Asian

Executive Summary
Integration between the ASEAN countries makes both economic and
logistical sense. In this report we have looked at some areas of
cooperation that could strengthen the economic integration between these
countries and the benefits of such integration. The safta agreement is the
first step towards such union. However if Southeast Asias trade is to be
integrated then this will require the integration of the infrastructure of the
region. This would point to cooperation in the areas of energy as well as
the strengthening of transportation transit and communication links across
the region. This would further require harmonization of standards and
simplification of customs procedures. Trade cooperation would point to
monetary cooperation thereby suggesting the need for greater
coordination among Central Banks.

Introduction
This is the second volume of the AFTA Reader. It continues the tradition of
providing basic information about the background, status and future
direction of the ASEAN Free Trade Area AFTA and the major instrument for
achieving it, namely the Common Effective Preferential Tariff CEPT
Scheme.
It has now been two years since the landmark launching of the ASEAN Free
Trade Area AFTA and the implementation of the CEPT package is very well
in progress. The commitment of the ASEAN Governments to AFTA and

trade liberalization remains the driving force for the eventual realization of a
dynamic free trade grouping in the region. The measures in the CEPT
Scheme will serve to ensure that intra-regional trade and investment are
facilitated and enhanced, with the objective of reducing as much as possible
all obstacles to the flows of goods and capital in the region. This, no doubt,
will enhance the rapid growth and competitiveness of the ASEAN
economies and increase the attractiveness of the region to foreign investors.
Together with the political and economic stability of the region, built from
almost thirty years of cooperation and partnership in ASEAN, these provide
a conducive business environment for entrepreneurs both within and outside
ASEAN. Given ASEAN's commitment to AFTA, the economic prospects for
the region continue to be bright.
This volume continues the Question & Answer format initiated in the first
volume of the Reader. This remains an important conduit of information
between both the private and Government sectors on issues relating to the
implementation of CEPT for AFTA. The questions are mainly those posed to
us at the Secretariat by the private sector and are deemed crucial to the
successful implementation of AFTA. We welcome any queries and questions
on CEPT for AFTA. In this volume, we provide information on focal points
in the ASEAN Governments and at the ASEAN Secretariat to which queries
may be posed.
We also take a look at the CEPT Scheme in detail. In particular, we examine
the products which is covered under the CEPT. This comprises two groups
the products for temporary exclusion and those for inclusion. The large
coverage of the CEPT Scheme on many products is evident here is 88% of
the tariff lines in ASEAN are included in the Scheme, each with a tariff
reduction schedule.
Manufacturing industries have been the cornerstone of ASEAN's
industrialization process, and it is likely that these industries will continue to
be the driving force of economic growth and dynamism in ASEAN, and will
continue to integrate the economies in AFTA. The effects of the CEPT for

AFTA on these industries are indeed favorable both in terms of increasing

the region's competitiveness and the possibilities for greater intra-and interindustrial linkages within the region. We therefore take a look it important
industries in ASEAN, those which have the largest number of tariff lines in
the Scheme and assess the tariff reductions in them. The industries covered
include agriculture, electronics, machinery and textiles
In the next issue we will continue to deal with on-going implementation
issues on CEPT for AFTA, including information on the latest decisions
affecting the CEPT. In the meantime, it is hoped this issue will be both
useful and informative. Any comments or opinions are welcomed.
.

Overview of the trading blocks

ESTABLISHMENT

The association of Southeast Asian nations or ASEAN was established on 8

August 1967 in Bangkok, Thailand with the signing of the ASEAN
Declaration Bangkok Declaration by the founding fathers of ASEAN namely
Indonesia, Malaysia, Philippines, Singapore and Thailand.
Brunei Darussalam then joined on 7 January 1984, Viet Nam on 28 July
1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April
1999, making up what is today the ten Member States of ASEAN.
AIMS AND PURPOSES
As set out in the ASEAN declaration the aims and purposes of ASEAN
are-- To accelerate the economic growth social progress and cultural
development in the region through joint endeavors in the spirit of equality
and partnership in order to strengthen the foundation for a prosperous and
peaceful community of Southeast Asian Nations.

 To promote regional peace and stability through abiding respect for

justice and the rule of law in the relationship among countries of the region
and adherence to the principles of the United Nations Charter.
To promote active collaboration and mutual assistance on matters of
common interest in the economic, social, cultural, technical, scientific and
administrative fields.
To provide assistance to each other in the form of training and research
facilities in the educational, professional, technical and administrative
spheres.
To collaborate more effectively for the greater utilisation of their
agriculture and industries, the expansion of their trade, including the study
of the problems of international commodity trade, the improvement of their
transportation and communications facilities and the raising of the living
standards of their peoples.
To promote Southeast Asian studies.
To maintain close and beneficial cooperation with existing international
and regional organizations with similar aims and purposes and explore all
avenues for even closer cooperation among themselves.

FUNDAMENTAL PRINCIPLES
In their relations with one another the ASEAN Member States have adopted
the following fundamental principles as contained in the Treaty of Amity
and Cooperation in Southeast Asia of 1976.
Mutual respect for the independence, sovereignty, equality, territorial
integrity, and national identity of all nations.

The right of every State to lead its national existence free from external
interference, subversion or coercion.

Non-interference in the internal affairs of one another.

Settlement of differences or disputes by peaceful manner.

Renunciation of the threat or use of force.

Effective cooperation among themselves.

Objectives
The ASEAN Declaration states that the aims and purposes of the
Association are To accelerate the economic growth social progress and cultural
development in the region through joint endeavors in the spirit of equality
and partnership in order to strengthen the foundation for a prosperous and
peaceful community of Southeast Asian nations.

To promote regional peace and stability through abiding respect for

justice and the rule of law in the relationship among countries in the region
and adherence to the principles of the United Nations Charter. In 1995 the
ASEAN heads of State and Government reaffirmed that Cooperative peace
and shared prosperity shall be the fundamental goals of ASEAN.

Primary objective:
Our primary objective is to write this report to learn how ASEAN and its
affect on Southeast Asia.

Secondary objective:
More specifically, this study entails the following aspects: To give an
overview of ASEAN on Southeast Asia.

Methodology
The study is conducted in a systematic procedure starting from selection of
the topic to final report preparation. The integral part was to identify and
collect data they were classified, analyzed, interpreted and presented in a
systematic manner to find the vital points. The overall process of
methodology followed in the study is explained further.
Primary Sources: Primary Data was derived from the practical deskwork.
Moreover the survey also helped us to get information directly from the
field work.
Collection of Data:
We collect information from the internet and collect information from
various sources.

Limitations
The information and data provided in this report are factual and represent the
actual scenario relating the ASEAN status. Although it has data ranging from
annual figures to data of a few decades the report cannot in any event be
taken as a thorough research paper since it provides a cursory glance at the
whole scenario.

Analysis and Findings

Theres a party about to start to which Thailand has yet to be invited. The
partys a big one too it includes 40% of the global economy.

Wide-ranging
The Trans Pacific Partnership signed in early October this year, is a free
trade agreement which is the culmination of a seven-year negotiation
process involving twelve countries. It is incredibly wide-ranging with thirty
chapters, covering subjects such as: financial services, ecommerce,
intellectual property, rules of origin and small and medium.
The agreement has so far been signed by New Zealand, Singapore, Brunei,
Chile signatories to a previous agreement as well as the US, Australia,
Vietnam, Malaysia. To begin with it was negotiated in secret, meaning that
the millions of people potentially affected by such an agreement had to rely
on occasional leaks to learn snippets of its content.
To some extent, controversy can be expected. After all, any reduction in
tariffs exposes local players to competition from abroad. If that competition
is able to provide a service or product cheaper be it because of overall
efficiencies, lower salaries, operating costs or less regulation in their home
countries the local business feels at threat.

Concerns
That said some of the accusations, if proven to be accurate, are quite
worrying. For example, there is concern that chapters regarding the
agricultural sector are opening the door for the legalization of geneticallymodified plants. The issue is that if this happens, never mind the unknown
effects on the local ecosystem.
Cost effective to move to countries with cheaper labor costs. Added to that,
there is even criticism from those who are actually party to the wording of
the agreement. Apparently the US government has prohibited its advisors
from sharing the specifics of the TPP with the public. Thus, if they make
open criticisms, the US government accuses them of being too vague.
Contrary to the agreement through investor-state dispute settlement panels.
Whilst this clause has been criticized for allowing big multinationals the
opportunity to wield power and influence over governments, it does have
limits and some mechanism is required to block a government from acting
purely in its own interest. What those limits are, however,remainsunclear.
Companies will also be able to send data across borders freely and
governments will be banned from requiring companies to house servers and
other IT facilities in a country. Countries will not be allowed to impose
localization rules either, a practice which cloud computing companies see as
a major trade barrier.

Financial Services

According to the US Trade Representative, the TPP will enable the sale of
certain financial services across borders meaning that providers will not
necessarily have to establish a company in the host country to offer these
services. This isnt a UCITS style passport however, as the products on offer
would require authorization by the host regulator first. It wont cover all
products but regulators will not be permitted to make their financial services
markets more restrictive to foreign providers. Dispute resolution in the
financial services sector does at least seem to be reasonable on paper.
Apparently the agreement is that arbitrators must have financial services
expertise. The financial service chapter also includes exceptions to preserve
broad discretion for regulators to act to ensure financial stability and the
integrity of their financial system though its unclear whether ensuring
financial stability includes banning potentially toxic products as mentioned
above. The implementation of monetary or other financial policies will also
be permitted, so long as they are not discriminatory.
As for retail banking, industry groups have asked that foreign banks get the
same treatment as their local rivals. For example, in Vietnam foreign banks
may only open one branch per province and in Malaysia a foreign lender
cannot operate within 1.5 km of an existing local,competitorsbranch.

Should Thailand be present?

Like many international trade agreements, there are winners and losers in
each sector. Yet, as the purpose of these agreement in nominally to make
trade easier between all signatory countries. Thus an open, frank discussion
would be helpful to ensure the best agreement possible is in place.

Seemingly, though, certain parties do not wish this to be thecase.

Whether it is beneficial for Thailand to have its economy, legal system and
financial system bound by such an agreement is, as yet, uncertain. Of course
it doesnt want to miss out on the opportunity to further increase its export
market especially in the automotive sector, where it is currently the worlds
5th largest truck producer.
However, it may be better to wait and see how the system works in practice.
Of course that all depends on whether the country is even invited to join the
party in the first place.

Recommendations
The ASEAN-U.S. EPG envisions a mutually supportive ASEAN-U.S
relationship focusing on areas of mutual interest and on strengthening
ASEAN. In advancing ASEAN-U.S. relations, ASEAN centrality and its role
as the driving force in the region should be key guiding principles in
achieving regional peace, security, prosperity, and stability. These
recommendations build on the already strong and vibrant ASEAN-U.S.
relationship and are also guided by the long-established process of
cooperation between ASEAN and the United States, including the Plan of
Action to Implement the ASEAN-U.S. Enhanced Partnership for Enduring
Peace and Prosperity 2011-2015.
To enhance ties, deepen economic and cultural cooperation, and elevate the
existing relationship, the EPG recommends that the Leaders of ASEAN and
the United States announce their intention to form a strategic partnership by
2015 and declare the following goals in the three community pillars, namely
the political-security, economic, and socio-cultural communities, at the 4th
ASEAN-U.S. Leaders Meeting in Phnom Penh in November 2012.

Conclusion
In recognition of the fundamental importance of improving the livelihoods
and well-being of the peoples of Southeast Asia, and the need to promote
ASEAN awareness as well as people to people contact through scholarships,
fellowships and other exchanges, the Leaders of the Association of
Southeast Asian Nations ASEAN agreed to establish the ASEAN Foundation
on 15 December 1997 in Kuala Lumpur during the Associations 30th
Anniversary Commemorative Summit. The ultimate aim was to help bring
about shared prosperity and a sustainable future to all ASEAN countries
which comprises of Brunei Darussalam, Cambodia, Indonesia, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Viet Nam.