ASEAN ECONOMIC COMMUNITY: Playing a

key role in Asian economic integration

• In 1967 some Asian nations formed a regional organization called the Association of South East Asian
Nations(ASEAN)
• The primary objective of this was to promote intergovernmental cooperation and facilitate economic
integration among its member nations
• As an organization it has immensely helped its member nations to achieve impressive economic
growth as well as regional stability by working together
• After five decades of successful promotion of economic & intergovernmental cooperation under
ASEAN ,the member nations realized that they could achieve more if they operate together as one
economy
• Aim of moving closer to create a single free trade area for the region, the member nations agreed on
consolidating, integrating and transforming ASEAN into a community called ASEAN Economic
Community(AEC)
 Creation of AEC
• Established on December 2015 with the aim of opening up opportunities for members to capitalize
on their diverse resources, factors of production and advantages of their geography
• The four pillars of AEC are as follows
 Single Production and market base
 Competitive Economic region
 Equitable economic development
 Integration with the global economy
• Along with this objectives ,measures such as elimination of intra- ASEAN import tariffs and
restrictions in the goods and services, simplification of cross-border trading processes have
created immense trading opportunities
• Free labor mobility within the member nations offer the community a myriad opportunities to
develop itself into an international business hub
 Challenges Ahead
• The four pillars which are key to AEC requires specific and committed actions by ASEAN member
nations both collectively and individually
• Development divide- the existing gap in the degree of economic development among the
member nations
• Level of protectionism is not uniform
• Differences between member countries with respect to issues ranging from tax codes to foreign
ownership restrictions
• Unlike European Union, the AEC lacks a proper framework that institutionalizes the structure of
a community
The Way Forward
• ASEAN nations need to undergo structural reforms within and take bold measures to deepen the
economic integration which is a key to achieve objectives of AEC
• There is a need for proper coordination of regulations and synchronization of national policies
across member nations ,businesses
• Requires changes in domestic laws and may even need amendments in the constitutions of the
member nations to accommodate AEC accords
• The establishment of AEC is not the end goal, but a long-term dynamic process that will require
true commitment from every member
• Blueprint 2025 has been adopted which provides guidelines through strategic measures for the
AEC from 2016 to 2025
FALSE FRIENDS? EMPIRICAL EVIDENCE ON
TRADE POLICY SUBSTITUTION IN RTA
• We examine the interplay of regional economic integration and the use of bilateral antidumping (AD)
measures
• AD originally intended to prevent or offset “unfair ”price setting in international trade relations i.e.
selling an export good at a lower price abroad rather than domestically
• There are 3 central findings to highlight:
 Regional trade agreements (RTAs) generally reduce the likelihood of AD activity among integration
partners
 An improvement in the tariff treatment between trading partners—regardless of whether expressed
as the directly faced tariff or as a tariff margin—generally leads to a lower likelihood of bilateral AD
 A higher tariff margin between integration partners leads to a higher likelihood of bilateral AD than
an equal tariff margin among non‐integration trading partners.
 Conclusions & way forward
• The estimated result indicate an increase in the likelihood of bilateral AD activity with increasing
ad-valorem tariffs. It suggests that a trading partner experiencing a comparatively unfavorable
tariff treatment will then also be likely to face more AD measures to be imposed
• The co-efficient estimate for RTAijt points towards a decreased likelihood of AD activity between
member countries of the same RTA
• These results could be interpreted as an indication of trade policy substitution in RTA’S
• Based on these results further research can be conducted. But however there some questions to
address . That include i) Why does this effect appear to be particularly pronounced in RTA’S with
‘south’ country involvement?
ii)What are the implications with regard to the design of future and existing RTA’S?