ASEAN ECONOMIC COMMUNITY: Playing

a key role in Asian economic integration

• Established in 1967 with the primary objective 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
• 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
 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
• The establishment of AEC is not the end goal
• Blueprint 2025 has been adopted
FALSE FRIENDS? EMPIRICAL EVIDENCE ON
TRADE POLICY SUBSTITUTION IN RTA
• AD originally intended to prevent or offset “unfair ”price setting in international trade
relations
• There are 3 central findings to highlight:
RTA’s 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
• The co-efficient estimate for RTAijt points towards a decreased likelihood of AD
activity between member countries of the same RTA
• 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?