ASEAN BEYOND AFTA

Abstract

Interest in regional integration has been recently revived in both developed and developing countries. The United States has responded to the lack of progress in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) by pursuing bilateral trade negotiations with Canada and Mexico, while the developing countries' trade liberalization of the 1980s have prompted them to reevaluate the potential benefits of regional integration. The tendency for the world trading system to divide into three blocs - the European Community, the Americas and East Asia - is providing their members with guaranteed access to large markets. Non-member countries will surely suffer from the loss of access to these markets, with the situation further exacerbated by an increasing risk of trade wars. This recent bout of regional trading agreements is a clear indication of a rapidly changing international economic order. This change has propelled ASEAN to go beyond the pursuit of regional peacekeeping and political stability into greater economic cooperation. The Fourth ASEAN Summit held in January 1992 has concluded an agreement to form an ASEAN Free Trade Area (AFTA) over a 15 year time frame. This marked the turning point in the history of ASEAN's economic cooperation.

Indeed, the implementation of AFTA has set the stage for further liberalization in trade. However, AFTA should not be viewed as a panacea, simply because greater opportunities abound for ASEAN in the face of a constantly evolving international arena. To capitalize on the potential benefits that these opportunities may encapsulate, far-sighted strategies need to be adopted. Towards this end, this academic exercise is written to provide a platform for the analysis of the future strategies that ASEAN can pursue. With the employment of statistical tools and economic theories, this paper seeks to construct the long-term strategies that will further escalate the growth of the ASEAN countries.

Based on the assumption that AFTA can stretch its boundaries to embrace other countries within the Asia Pacific Economic Cooperation (APEC) region through a bilateral free trade arrangement, the crux of the analysis will hinge on identifying the country or group of countries that can maximize the growth of ASEAN. The main findings of this exercise suggest that in forming greater ties with Korea, ASEAN's growth can be accentuated.

It is with regret that little has been advanced in this area of research. Existing literature merely highlighted the implications of AFTA, with few venturing into the realms of further trade liberalization beyond the boundaries of AFTA. Hence, it is in the hope of the author that the concise analysis presented in this paper can shed some light in this field, providing a deeper insight into the future of ASEAN beyond AFTA.