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Trade liberalization in ASEAN

Introduction

On August 8, 1967, the leaders from five Southeast Asian countries – Indonesia,
Malaysia, Philippines, Singapore and Thailand, signed the ASEAN Declaration (also
known as the Bangkok Declaration), formally establishing the Association of Southeast
Asian Nations (ASEAN). These five countries were later joined by Brunei Darussalam
on January 8, 1984, Vietnam on July 28, 1995, Lao PDR and Myanmar on July 23,
1997 and finally Cambodia on April 30, 19991 2. The purpose of ASEAN was to promote
regional collaboration in economic, socio-cultural and security matters between
countries in the region to ensure mutual peace and prosperity 3 . As such, the
establishment of this regional entity provided the catalyst for trade liberalization in the
region.

Trade liberalization within ASEAN

After its formation, ASEAN took its first step towards regional trade liberalization when
its leaders signed the Declaration of the ASEAN Concord (also known as the Bali
Concord) on 24 February 1976 at the first ASEAN Summit, declaring the adoption of a
framework to achieve “a dynamic, cohesive, resilient and integrated ASEAN
Community”, which includes an ASEAN Security Community (ASC), ASEAN Socio-
Cultural Community (ASCC), as well as an ASEAN Economic Community (AEC). The
AEC was founded on the goal of creating a “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”.4

A year later in 1977, at the second ASEAN Summit in Kuala Lumpur, the ASEAN
member states signed the Agreement on ASEAN Preferential Trading Agreements
(PTA) in Manila, on 24 February 1977, which was the first regional trade agreement in
the region. The PTA provided for intra-regional preferential tariffs for products produced
within ASEAN member states (based on specific Rules of Origin), primarily through the

1
ASEAN Secretariat.Overview of ASEAN. http://www.aseansec.org/64.htm
2
Sandhu, K.S., Siddique, S., Jeshurun, C., Rajah, A., Tan, J.L.H., Thambipillai, P. (1992). The ASEAN
Reader. Institute of Southeast Asian Studies.
3
Ibid
4
ASEAN Secretariat. Declaration of ASEAN Concord II (Bali Concord II).
http://www.aseansec.org/19096.htm
use of the margin of tariff preference approach.5 6 However, due to the limited scope of
manufactured products covered under the PTA, the relatively insignificant differences in
levels of margins provided for by the Agreement, as well as the unclear eligibility criteria
for products to be covered under the PTA, intra-ASEAN trade was not greatly stimulated
and the PTA failed to achieve its objectives of liberalized trade within the region from
the onset.7 Nevertheless, over the ensuing decade, ASEAN Economic Ministers (AEM)
attempted to make improvements to the PTA after its implementation uncovered its
initial flaws, such as by adjusting the levels of margin, further defining eligibility criteria
and providing clearer guidelines as to what products could be considered “sensitive” to
national interests, which could be exempted from the PTA (this previously had been free
to be decided by each ASEAN Member Countries). 8

As it happened, the implementation period for the ASEAN PTA coincided with the
discussions of the Uruguay Round of Multilateral Trade Negotiations. As there were
concerns by ASEAN leaders over the likelihood of success of the Uruguay Round, and
fears that other regional blocs would consolidate their intra-regional trade agreements
(such as NAFTA in North America and the Maastricht Treaty by the EU), impetus was
provided to further improve upon trade liberalization efforts within the region. It is within
this context that discussions to build a framework for the ASEAN Free Trade Area
(AFTA) proceeded at the Third ASEAN Summit in 1987. On January 28, 1992, the
Framework Agreements on Enhancing ASEAN Economic Cooperation and the
Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free
Trade Area were signed by ASEAN leaders, thus formally initiating the development of
AFTA, which was to be realized within a period of 15 years. 9 10

In contrast to the PTA, AFTA applied the Common Effective Preferential Tariffs (CEPT)
scheme in building a regional free trade area. Products to be included in the CEPT
scheme were to have their tariffs reduced to 0%-5%, according to a schedule of tariff
reductions as outlined in the CEPT Agreement. 11 The CEPT Agreement also called for
the elimination of quantitative restrictions and non-tariff barriers for products included in
the CEPT scheme12. In relation to the CEPT Agreement, there are four categories of
products described in lists, including the Inclusion List (IL), Temporary Exclusion List
5
ASEAN Secretariat. Agreement on ASEAN Preferential Trading Arrangements, Manila, 24 February
1997. http://www.aseansec.org/1376.htm
6
ASEAN Secretariat, 1997. ASEAN Economic Co-operation: Transition and Transformation. Institute of
Southeast Asian Studies.
7
Ibid.
8
Ibid.
9
ASEAN Secretariat. Framework Agreements on Enhancing ASEAN Economic Cooperation.
http://www.aseansec.org/12374.htm
10
ASEAN Secretariat. Agreement on Common Effective Preferential Tariff Scheme for the ASEAN Free
Trade Area. http://www.aseansec.org/12375.htm
11
Ibid.
12
Ibid.
(TEL), Sensitive List (SL) and General Exemption List. Products that were part of the
CEPT scheme were included in the IL, which were to have their tariffs reduced to 0%-
5% by 2002 for ASEAN6 countries (Brunei, Indonesia, Malaysia, Philippines, Singapore
and Thailand), 2006 for Vietnam, 2008 for Lao PDR and Myanmar, and 2010 for
Cambodia13. Products in the TEL were temporary excluded from the CEPT scheme, but
would have to be transferred to the IL in equal batch up until year 200014. Products in
the SL would also be temporarily excluded from the CEPT scheme, but would be
reviewed 8 years after implementation of the CEPT Agreement15. Finally, those under
the GEL were to be permanently excluded, in line with Article 9 of the CEPT Agreement
and Article XX of the General Agreement on Tariffs and Trade (GATT)16. Under Article 3
of the original CEPT Agreement, agriculture products were excluded from the CEPT
scheme17. However, this provision was later amended in 1995 and agricultural products
were also included18.

In 1995, the Framework Agreement on Enhancing ASEAN Economic Cooperation was


amended to reduce the timeframe for the realization of AFTA from 15 years to 10
years19.

On September 30 1999, the Protocol on the Special Arrangement for Sensitive and
Highly Sensitive Products was signed, which defined the products considered to be
‘sensitive’ and ‘highly sensitive’ by ASEAN member states that would only be phased in
for ASEAN6 countries by 2010, Vietnam by 2013 (except for sugar to be phased in by
2010), Lao PDR & Myanmar by 2015, and Cambodia by 201720. All of the products
listed as ‘sensitive’ or ‘highly sensitive’ were agricultural products21 22. Rice was the only
product listed as ‘highly sensitive, by Indonesia, Malaysia and Philippines23. In August
2007, a Protocol to Provide Special Consideration for Rice and Sugar was adopted,
which allowed member states to obtain waiver from commitments to the CEPT Scheme

13
Pasadilla, G.O., 2006. Preferential Trading Agreements and Agricultural Liberalization in East and
Southeast Asia. Discussion Paper Series No. 2006-02, Philippine Institute for Development Studies.
14
Ibid.
15
Ibid.
16
Ibid.
17
ASEAN Secretariat. Agreement on Common Effective Preferential Tariff Scheme for the ASEAN Free
Trade Area. http://www.aseansec.org/12375.htm
18
ASEAN Secretariat. Protocol to Amend the Agreement on the Common Effective Preferential Tariff
Scheme for the ASEAN Free Trade Area. http://www.aseansec.org/12371.htm
19
ASEAN Secretariat. Protocol to Amend the Framework Agreements on Enhancing ASEAN Economic
Cooperation.
20
ASEAN Secretariat. Protocol on the Special Arrangements for Sensitive and Highly Sensitive Products.
http://www.aseansec.org/1207.htm
21
ASEAN Secretariat. Protocol on the Special Arrangements for Sensitive and Highly Sensitive Products.
Annex 2. List of Sensitive Product. http://www.aseansec.org/sasp_2.htm
22
ASEAN Secretariat. Protocol on the Special Arrangements for Sensitive and Highly Sensitive Products.
Annex 1. List of Highly Sensitive Product. http://www.aseansec.org/sasp_1.htm
23
Ibid.
for these products under exceptional circumstances24. This Protocol was implemented
within the backdrop of the global food crisis.

At the 14th ASEAN Summit on February 26, 2009, ASEAN member states further signed
the ASEAN Trade in Goods Agreement, which is a consolidation of the CEPT
Agreement on AFTA25. It is considered to be a more comprehensive trade agreement
than its predecessor, and includes other issues apart from tariff liberalization an
elimination of non-tariff barriers, such as simplified Rules of Origin, trade facilitation
measures, trade remedy measures, customs procedures, standards, technical
regulations & conformity assessment procedures, as well as and sanitary &
phytosanitary measures 26 27 . A provision was also provided for regarding Most
Favoured Nation (MFN) treatment, whereby if an individual ASEAN member state were
to sign any trade agreements with non-member states and provide for lower tariff rates
to the non-members, other ASEAN member states would have the right to request for a
reduction of tariffs from the party of the external agreement28. With regard to the MFN
treatment provision, it is salient to note that there had been a proliferation of mainly
bilateral free trade agreements between individual ASEAN member states with other
countries outside the region. The Agreement also imposed a requirement to issue legal
enactments by each ASEAN member state to give effect to the implementation of the
tariff liberalization schedules in the agreement, which is significant as it is a first case of
supra-national governance by ASEAN over its members 29 . This was largely made
possible by the signing of the ASEAN Charter, giving ASEAN recognition as a legal
entity30.

Trade liberalization between ASEAN and other regions

Apart from trade liberalization within the region, ASEAN as a regional bloc has also
engaged in trade liberalization activities with other trading blocs and economies by
signing free trade agreements.

ASEAN-China Free Trade Area

24
ASEAN Secretariat. Protocol to Provide Special Consideration for Rice and Sugar.
http://www.aseansec.org/22975.pdf
25
ASEAN Secretariat. ASEAN Trade in Good Agreement. http://www.aseansec.org/22223.pdf
26
Ibid.
27
ASEAN Secretariat. ASEAN Trade in Good Agreement Fact Sheet.
http://www.aseansec.org/Fact%20Sheet/AEC/2010-AEC-025-2.pdf
28
ASEAN Secretariat. ASEAN Trade in Good Agreement. http://www.aseansec.org/22223.pdf
29
Ibid.
30
ASEAN Secretariat. ASEAN Charter. http://www.aseansec.org/publications/ASEAN-Charter.pdf
The first among this was the establishment of the ASEAN-China Free Trade Area
(ACFTA), which was initiated by the signing of the Framework Agreement on
Comprehensive Economic Co-Operation Between ASEAN and the People’s Republic of
China on November 4, 2002 and entered into force on July 1, 2003. The Agreement
provided 3 tracks for liberalization of tariffs to 0%, including the Early Normal Track,
Sensitive Track and Early Harvest Program. Under the normal track, goods targeted for
tariff eliminations would be liberalized (rates would be agreed upon by the parties) by
2010 for ASEAN6 countries and China, while the remaining ASEAN countries would
have until 2015 to do so. As for those under the sensitive track, the end rates and date
for tariff reduction would be negotiable and agreed upon by the parties31. The Early
Harvest Program allowed for parties to the Agreement the option of liberalizing tariffs for
certain goods earlier than the 2010 deadline. Products covered under the Early Harvest
Program included agricultural products, although an exemption list was provided for to
cover certain ‘sensitive’ products 32 . After the Framework Agreement, a few other
subsidiary agreements were signed including the Agreement on Dispute Settlement
Mechanism of the Framework Agreement on Comprehensive Economic Co-operation
between the Association of Southeast Asian Nations and the People’s Republic of
China on November 29, 2004; Trade in Goods of the Framework Agreement on
Comprehensive Economic Co-operation between the Association of Southeast Asian
Nations and the People’s Republic of China on November 29, 2004; Agreement on
Trade in Services of the Framework Agreement on Comprehensive Economic Co-
operation between the Association of Southeast Asian Nations and the People’s
Republic of China on January 14, 2007; and lastly, the Agreement on Investment of the
Framework Agreement on Comprehensive Economic Co-operation between the
Association of Southeast Asian Nations and the People’s Republic of China on
November 29, 200433.

ASEAN-India Free Trade Area

On October 8, 2003, ASEAN signed the Framework for Comprehensive Economic


Cooperation Between the Republic of India and the Association of Southeast Asian
Nations, establishing the ASEAN-India Free Trade Area (AIFTA) 34 . The Framework
Agreement is similar to the Framework Agreement for the ASEAN-China Free Trade
Area, and also provides for three tracks for tariff reductions to 0% – the Normal Track,
Sensitive Track and Early Harvest Programs. Under the Normal Track, Brunei

31
ASEAN Secretariat. Framework Agreement on Comprehensiv Economic Co-Operation Between
ASEAN and the People’s Republic of China. http://www.aseansec.org/13196.htm
32
Pasadilla, G.O., 2006.
33
ASEAN Secretariat. ASEAN China Free Trade Area. http://www.aseansec.org/19105.htm
34
ASEAN Secretariat. Framework for Comprehensive Economic Cooperation Between the Republic of
India and the Association of Southeast Asian Nations. http://www.aseansec.org/15278.htm
Darussalam, Indonesia, Malaysia, Singapore and India would eliminate tariffs by end of
2011, and Cambodia, Lao PDR, Myanmar and Philippines would do so by end of 201635.
Subsidiary agreements under the Framework that have been signed include the
Agreement on Trade in goods Under the Comprehensive Economic Cooperation
between the Association of Southeast Asian Nations and the Republic of India on
August 13, 2009; and the Agreement on Dispute Settlement Mechanism Under the
Comprehensive Economic Cooperation between the Association of Southeast Asian
Nations and the Republic of India also on August 13, 2009. Agreements on trade in
services and investment have not yet been signed at this time.

ASEAN-Japan Free Trade Area

At the same as the signing of the Framework for the ASEAN-India Free Trade Area,
ASEAN signed the Framework for Comprehensive Economic Partnership between the
Association of Southeast Asian Nations and Japan on October 8, 2003, establishing the
ASEAN-Japan Free Trade Area, also known as the ASEAN Japan Comprehensive
Economic Partnership (AJCEP)36 37. This was followed up by signing of the Agreement
on Comprehensive Economic Partnership among Member States of the Association of
Southeast Asian Nations and Japan, which covered many areas related to trade
liberalization including trade in goods, rules of origin, sanitary and phytosanitary
measures, standards, technical regulations and conformity assessment procedures,
trade in services, investment, economic cooperation and settlement of disputes38.

ASEAN-Republic of Korea Free Trade Area

ASEAN signed its third free trade agreement with the Republic of Korea in the guise of
the Framework Agreement on Comprehensive Economic Cooperation Among the
Governments of the Member Countries of the Association of Southeast Asian Nations
and the Republic of Korea on December 13, 2005, forming the ASEAN-Republic of
Korea Free Trade Area (AKFTA)39. The subsidiary Agreement on Trade in Goods Under

35
Ibid.
36
ASEAN Secretariat. Framework for Comprehensive Economic Partnership between the Association of
Southeast Asian Nations and Japan. http://www.aseansec.org/15274.htm
37
Singapore FTA Network. Overview of ASEAN JAPAN Comprehensive Economic Partnership (AJCEP).
http://www.fta.gov.sg/fta_ajcep.asp?hl=38
38
ASEAN Secretariat. Agreement on Comprehensive Economic Partnership among Member States of
the Association of Southeast Asian Nations and Japan.
http://www.aseansec.org/agreements/AJCEP/Agreement.pdf
39
ASEAN Secretariat. Framework Agreement on Comprehensive Economic Cooperation Among the
Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of
Korea. http://www.aseansec.org/18063.htm
the Framework Agreement Comprehensive Economic Cooperation Among the
Governments of the Member Countries of the Association of Southeast Asian Nations
and the Republic of Korea was signed on August 24, 2006, which provided for tariff
reductions towards Most Favoured Nation rates through a Normal Track and Sensitive
Track. ASEAN 6 and Republic of Korea were to achieve this by 2010, Vietnam by 2016,
and Cambodia, Lao PDR & Myanmar by 201840. Other subsidiary agreements under
AKFTA include the Agreement on Dispute Settlement Mechanism Under the Framework
Agreement Comprehensive Economic Cooperation Among the Governments of the
Member Countries of the Association of Southeast Asian Nations and the Republic of
Korea, signed on December 13, 2005; Agreement on Trade in Services Under the
Framework Agreement Comprehensive Economic Cooperation Among the
Governments of the Member Countries of the Association of Southeast Asian Nations
and the Republic of Korea, signed on November 27, 2007; and Agreement on
Investment Under the Framework Agreement on Comprehensive Economic
Cooperation Among the Governments of the Member Countries of the Association of
Southeast Asian Nations and the Republic of Korea, signed on June 2, 200941.

ASEAN-Australia New Zealand Free Trade Area

The final free trade agreement signed by ASEAN with other trading blocs thus far is
Agreement Establishing the ASEAN-Australia New Zealand Free Trade Area
(AANZFTA), on February 27, 200942. The AANZFTA Agreement touches upon areas
also included under the ATIGA, such as trade in goods, rules of origin, customs
procedures, sanitary and phytosanitary measures, standards, technical regulations and
conformity assessment procedures, safeguard measures, trade in services, movement
of natural persons, electronic commerce, investment, economic co-operation, and
intellectual property. Of particular note is the inclusion of Article 3 under Chapter 2 on
Trade in Goods, which provides for the elimination of all forms of export subsidies for
agricultural products43.

40
ASEAN Secretariat. Agreement on Trade in Goods Under the Framework Agreement on
Comprehensive Economic Cooperation Among the Governments of the Member Countries of the
Association of Southeast Asian Nations and the Republic of Korea.
http://www.aseansec.org/AKFTA%20documents%20signed%20at%20aem-rok,24aug06,KL-pdf/TIG%20-
%20ASEAN%20Version%20-%2022August2006-final.pdf
41
ASEAN Secretariat. ASEAN – Republic of Korea Free Trade Area. http://www.aseansec.org/22557.htm
42
ASEAN Secretariat. Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area.
http://www.aseansec.org/22260.pdf
43
Ibid.
Trade liberalization between individual ASEAN Member States and other
countries

Apart from trade liberalization efforts between ASEAN as a regional bloc with trading
partners outside the region, each of the individual ASEAN Member States have also
signed free trade agreements with other economies. A list of existing free trade
agreements are listed in the following, which are mostly between ASEAN6 countries
with other non-ASEAN economies (except the Laos-Thailand Preferential Trading
Arrangement) 44 . It should be noted that there are several more that have been
proposed and are still under negotiation.

Indonesia

1. Pakistan-Indonesia Free Trade Agreement, Framework Agreement signed on


November 25, 2005
2. Japan-Indonesia Economic Partnership Agreement, 2008

Lao PDR
1. Laos-Thailand Preferential Trading Arrangement, 1991

Malaysia
1. Malaysia-Japan Economic Partnership Agreement (JMEPA), 2006
2. Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA), 2008
3. Malaysia-New Zealand Free Trade Agreement, 2009
4. Malaysia-Chile Free Trade Agreement, 2010

Philippines
1. Japan-Philippines Economic Partnership Agreement, 2008

Singapore
1. European Free Trade Association-Singapore Free Trade Agreement, 2003
2. Gulf Cooperation Council-Singapore Free Trade Agreement, 2008
3. India-Singapore Comprehensive Economic Cooperation Agreement, 2005
4. Japan-Singapore Economic Agreement for a New-Age Partnership, 2002
5. Korea-Singapore Free Trade Agreement, 2006
6. New Zealand-Singapore Closer Economic Partnership, 2001
7. People’s Republic of China-Singapore Free Trade Agreement, 2009
8. Singapore-Australia Free Trade Agreement, 2003
9. Singapore-Costa Rica Free Trade Agreement, 2010

44
Asia Regional Integration Center, Asia Development Bank (ADB). Free Trade Agreements by Country.
http://aric.adb.org/FTAbyCountryAll.php
10. Singapore-Jordan Free Trade Agreement, 2005
11. Singapore-Panama Free Trade Agreement, 2006
12. Singapore-Peru Free Trade Agreement, 2009
13. United States-Singapore Free Trade Agreement, 2004

Thailand
1. Laos-Thailand Preferential Trading Arrangement, 1991
2. Japan-Thailand Economic Partnership Agreement (JTEPA), 2007
3. India-Thailand Free Trade Area, framework agreement signed on November 30,
2003
4. People’s Republic of China-Thailand Free Trade Agreement, 2003
5. Thailand-Australia Free Trade Agreement, 2004
6. Thailand-New Zealand Closer Economic Partnership Agreement, 2005
7. Thailand-Bahrain Free Trade Agreement, framework agreement signed on
December 29, 2002
8. Thailand-Peru Free Trade Agreement, framework agreement signed on January
2004

Vietnam
1. Japan-Vietnam Economic Partnership Agreement, 2009

ASEAN member states as part of multilateral economic groupings


1. Preferential Tariff Arrangement-Group of Eight Developing Countries, 2006
(Indonesia and Malaysia are members)
2. Trade Preferential System of the Organization of the Islamic Conference,
Framework Agreement signed on March 31, 2004 (Malaysia is a member)
3. Trans-Pacific Strategic Economic Partnership Agreement, 2006 (Brunei
Darussalam and Singapore are members)
4. Trans-Pacific Partnership, framework agreement signed on March 15, 2010
(Brunei Darussalam, Malaysia, Singapore and Vietnam are members)
5. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation
(BIMSTEC), framework agreement signed on February 8, 2004 (Myanmar and
Thailand are members)
Trade liberalization between individual ASEAN Member States and multilateral
institutions

Many member countries of ASEAN, particularly the ASEAN6, are members of


multilateral trade institutions such as the GATT and WTO.

The following are the ASEAN member countries that have signed the GATT and the
dates when they became signatories to the Agreement by 199445:

Brunei Darussalam: December 9, 1993

Indonesia: February 24, 1950

Malaysia: October 24, 1957

Myanmar: July 29, 1948

Philippines: December 27, 1979

Singapore: August 20, 1973

Thailand: November 20, 1982

All of the above countries became members of the WTO upon its establishment, on
January 1, 1995. The remaining ASEAN member countries that have joined the WTO
since then are46:

Cambodia: October 13, 2004

Vietnam: January 11, 2007

Lao PDR is still not a member of the WTO at present but is in the process of accession,
and participates as an observer47.

At the WTO, the different ASEAN member countries are also members of the various
groupings, as follows48:

45
WTO. The 128 countries that had signed GATT by 1994.
http://www.wto.org/english/thewto_e/gattmem_e.htm
46
WTO. Members and Observers. http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
47
WTO. Accessions – a Lao People’s Democratic Republic.
http://www.wto.org/english/thewto_e/acc_e/a1_laos_e.htm
Groups ASEAN Member Countries

Asia Pacific Economic Cooperation Brunei Darussalam, Indonesia, Malaysia,


(APEC) Philippines, Singapore, Thailand, Vietnam

G-90 Cambodia, Myanmar, Lao PDR (as


observer)

Least developed countries (LDCs) Cambodia, Myanmar, Lao PDR (as


observer)

Recently acceded members (RAMs) Vietnam

Cairns group Indonesia, Malaysia, Philippines, Thailand

G-20 Indonesia, Philippines, Thailand

G-33 Indonesia, Philippines

NAMA 11 Indonesia, Philippines

Friends of Anti-Dumping Negotiations Singapore, Thailand


(FANs)

‘W52’ sponsors Indonesia, Thailand

Questions on the future of ASEAN and its direction in trade liberalization

ASEAN was originally set up as a loose regional political grouping, mainly with the view
of maintaining peace and stability within the Southeast Asian region, amongst a milieu
of decolonization, the Cold War, as well as ongoing tensions between countries within
the region. It was only later that ASEAN was envisioned as a platform for regional
economic cooperation through trade liberalization. The signing of the ASEAN Charter
provided the first step towards real regional integration, with the objective of creating a
single market within the region similar to the European Union49.

Nevertheless, while on the one hand ASEAN Member States have made unitary steps
towards this objective by liberalizing trade within the region, as well as engaging outside

48
WTO. Groups in the WTO. http://www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.pdf
49
ASEAN Secretariat. ASEAN Chater. http://www.aseansec.org/publications/ASEAN-Charter.pdf
economies as a single economic bloc, on the other, each have also made and continue
to pursue exclusive economic relationships with outside partners on separate bases. At
the multilateral level at the WTO, ASEAN Member States also do not always negotiate
as a unified bloc on all issues, such as on agriculture, as its members are separately
part of various groupings50. This could be contrasted with the European Union, which is
a recognized group at these negotiations51.

In light of these differing directions taken by its Member States on trade policy both at
the bilateral and multilateral levels in recent years, it is thus questionable whether the
overall trade liberalization project within ASEAN will be successful at the end, and
whether the ASEAN single market could become a reality.

The ASEAN situation demonstrates that while there may be apparent economic
incentives for trade liberalization and economic integration at a regional level, such
incentives may not always be realized. For ASEAN, this boils down to a lack of political
will among ASEAN leaders to act in unison towards the expressed objectives of creating
an ASEAN community (including the ASEAN Economic Community). During times of
crisis, these divisions have become more obvious. An example of this can be found
during the global food crisis, where ASEAN Member States did not work in solidarity to
provide for food security within the region, as net rice exporting countries (such as
Cambodia, Thailand and Vietnam) elected to supply rice to the global market for higher
prices, rather than come to the aid of net rice importing countries (such as Indonesia
and the Philippines)52 53.

Conclusion

ASEAN provide an interesting case study on trade liberalization, as there appears to be


two tracks occurring at the same time. One is the regional track, where trade
liberalization is carried out with the goal of establishing a regional economic bloc in the
form of the AEC, through implementation of AFTA and other associated trade
agreements. The other is on an individual basis by each of the ASEAN Member States
with ASEAN, other countries outside the region, as well as at the multilateral stage at
the WTO.

50
WTO. Groups in the agricultural negotiations.
http://www.wto.org/english/tratop_e/agric_e/negoti_groups_e.htm
51
Ibid.
52
Chandra, A. C. & Lontoh, L. A. (2010). Regional Food Security and Trade Policy in Southeast Asia: The
Role of ASEAN. Policy Brief, Trade Knowledge Network.
http://www.iisd.org/tkn/pdf/regional_food_trade_asean_brief.pdf
53
Dano, E. & Peria, E. (2006). Emergency or Expediency? A Study of Emergency Rice Reserve
Schemes in Asia. ASIA DHRRA and AFA. http://asianfarmers.org/wp-
content/uploads/2008/05/emergency-or-expediency.pdf