CRITICAL ANALYSIS OF

ASIAN TRADE BLOCS

Presented By:
Group 2

Course Name: International Finance

Institute of Business Administration, University of Dhaka

Date: February 16, 2020

 What is a Trade Bloc?

 A trade bloc is a type of intergovernmental agreement, often part of a regional

intergovernmental organisation, where regional barriers to international trade,
(tariffs and non-tariff barriers) are reduced or eliminated among the participating
states, allowing them to trade with each other as easily as possible.

Advantages
• Competition
• Economies of Scale
• Improved Market efficiency
• Increased FDI
• Trade effects
Disadvantages
• Concessions
• Interdependence
• Loss of sovereignty
• Regionalism vs
Multinationalism

Trade Bloc example: ASEAN, EU, NAFTA etc.

 ASEAN
Brief overview (Establishment)

 The Association of Southeast Asian Nations, or

ASEAN, was established on 8 August 1967 in
Bangkok, Thailand, with the signing of the Bangkok
Declaration by the Founding Fathers of ASEAN,
namely Indonesia, Malaysia, Philippines, Singapore
and Thailand.
 Brunei Darussalam then joined on 7 January 1984, Viet
Nam on 28 July 1995, Lao PDR and Myanmar on 23
July 1997, and Cambodia on 30 April 1999, making up
what is today the ten Member States of ASEAN.
ASEAN
Brief overview (Member countries)
 ASEAN
Brief overview (Aims & Purpose)

 Acceleration of economic growth, social progress and cultural development in the region
through joint endeavours.
 Promoting regional peace and stability through abiding respect for justice and the rule of law
 Promoting active collaboration and mutual assistance on matters of common interest in all
fields;
 Providing assistance to each other in the form of training and research facilities in all spheres
 Collaborating more effectively for the greater utilisation of their agriculture and industries,
the expansion of their trade, including the study of the problems of international commodity
trade, the improvement of their transportation and communications facilities and the raising
of the living standards of their peoples
 Maintaining close and beneficial cooperation with existing international and regional
organisations with similar aims and purposes
 ASEAN
Economic Environment

 ASEAN countries have a total population of 650 million people and a combined gross
domestic product (GDP) of $2.8 trillion.
 The ASEAN economy has consistently outperformed the global economy. The region’s GDP
growth has remained close to 5.0% since 2011, while global GDP stayed below 4.0% over the
same period.
 ASEAN
Economic Environment contd.

 By 2018, ASEAN’s share of the

global economy had expanded,
in nominal terms, to 3.5% (up
from 2.9% in 2010).
 ASEAN has risen to fifth place
among the largest economies in
the world, with nominal GDP
estimated at USD 3.0 trillion, an
increase of more than 50% from
its 2010 level
 Member country’s individual pe
rformance.
ASEAN
Exchange Rate
ASEAN
Balance of trade
ASEAN
Trade and Investments in ASEAN
ASEAN
Investment Environment
ASEAN
Trade in good
ASEAN
Exports & Imports
 ASEAN
Customs & Single Window

 ASEAN Customs plays an important role in facilitating the seamless movements of goods in
the region.
 The customs integration agenda aims to simplify customs procedures in the region, a move
that is expected to reduce trade transaction costs significantly.
 One of ASEAN’s key achievements in this area is the ASEAN Customs Transit System
(ACTS). A joint effort between Customs and Land Transport Authorities,
 ACTS enables free movement of trucked goods between participating countries without the
need for a customs declaration at each border or a change of vehicle. Under this system,
duties and taxes can be covered by a single guarantee, and this applies for all countries
involved in the transit operation.
 The ASEAN Single Window (ASW) enables electronic processing and exchange of data and
information to accelerate customs clearance processes in the region.
 ASEAN
Economic progress

 In 1992, members created the ASEAN Free Trade Area with the goals of creating a single
market, increasing intra-ASEAN trade and investments, and attracting foreign investment.
 The bloc has prioritized eleven sectors for integration, including electronics, automotive,
rubber-based products, textiles and apparels, agro-based products, and tourism.
 Since 2012, it has been negotiating the Regional Comprehensive Economic Partnership
(RCEP), a proposed free trade agreement that would include all ASEAN members, Australia,
China, India, Japan, New Zealand, and South Korea.
ASEAN
Influence of China and USA

 China a member of ASEAN+3 and also of ASEAN+6

 Maritime disputes in the South China Sea. ASEAN silent.
 The United States is ASEAN’s fourth-largest trading partner in terms of
goods, trailing China, the European Union, and Japan. Merchandise trade
between the two sides reached more than $271 billion in 2018.
 TPP (Brunei, Malaysia, Singapore, and Vietnam)
ASEAN
Exclusion of Bangladesh

 Bangladesh will have a tougher time ahead with its export, as it has failed
to become a partner of any major free trade blocs.
 There is a competition in the world as to which country can sign how many
FTAs, and which country can become a member of bigger FTAs.
 Vietnam as a threat. (TPP)
 Following INDIA in case of RCEP.