ASEAN-EU TRADE : TRENDS, PROBLEMS AND PROSPECTS

Abstract

The relationship between ASEAN and the EU is one that depicts the bond between the world's largest cum most integrated entity and the most successful regional bloc in the developing world. While external relations began informally in 1972, they were formalised in 1980 through the ASEAN-EC Co-operation Agreement. This exercise examines the trade relations between the two regions. In order to have a greater understanding of the bloc-to-bloc trade as well as the bilateral trade between ASEAN countries and EU, this exercise adopts the trade intensity approach developed by Drysdale (1969) and Garnaut (1972) as the framework for analysis. The degree of trade orientation, complementarity and resistances between the two blocs over the period 1986-1995 is of special interest to our study. The findings of our study depict that ASEAN's overall export and import trade intensity had been low throughout the reference period. Though the intensity of trade indices exhibited an upward trend over the years, the improvement was not substantial. Moreover, complementarity between the two regions had experienced a slight dip while country bias indices under both export and imports saw some marginal improvement. Trade relations between countries are seldom problems-free. The low trade intensities between ASEAN and the EU further reflect that problems are inherent in the bloc-to-bloc trade relationship. This exercise identifies the stumbling blocks to closer ASEAN-EU trade relations and attempts to examine the future prospects.