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ASEAN-An Analysis

Submitted by
K.M.C.Arunmokan
BA0130014

Project Submitted to
Dr. S. Amirthalingam

TAMILNADU NATIONAL LAW SCHOOL


(A State University established by Act No. 9 of 2012)
Navalurkuttapattu, Srirangam (TK), Tiruchirappalli- 620009

1
ACKNOWLEDGEMENT

I am immensely happy to express my heartfelt thanks to our Vice Chancellor Kamala


Sankaran, for having given me this opportunity to do a doctrinal Research project on
“ASEAN- An analysis” at under graduate level.

With sense of gratitude, I would like to thank Dr. S. Amirthalingam, Assistant Professor of
Law, Tamil Nadu National Law School, Tiruchirappalli - 620 009, for his valuable guidance
and encouragement given to me at every stage of this small Doctrinal Research work.

THANK YOU AGAIN TO ALL WHO HELPED ME.

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DECLARATION

I, K.M.C.Arunmokan, Register Number BA0130014, hereby declare that this project work
entitled “ASEAN- An analysis” has been originally carried out by me under the guidance and
supervision of Dr. S. Amirthalingam, Assistant Professor of Law, Tamil Nadu National Law
School, Tiruchirappalli - 620 009. This work has not been submitted either in whole or in part
of any Degree / Diploma in this Institution or any other Institution/University.

Place: Tiruchirappalli

Date: 20th September 2017 K.M.C.Arunmokan

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INDEX

ACKNOWLEDGMENT
DECLARATION
INTRODUCTION …5

I. ASEAN- AN OVERVIEW …6
A. ASEAN’S PERSONALITY …7

II. ASEAN POLICIES IN RESPECT WITH TRADE

A. THE ECONOMIC SETTING ...10


B. TRADE PATTERN …11
C. COMMERCIAL POLICY …12

III. IMPACT CREATED BY ASEAN

A. EFFECTS ON INTERNATIONAL TRADE …15

CONCLUSION …19

BIBLIOGRAPHY

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Introduction:

The Southeast Asian region’s quest for community building is ambitious in its thoroughness,
encapsulating both the traditional realms of political-security relations and economic
integration and seeking to further produce a common social and cultural community which
will showcase the much-vaunted adage unity in diversity. Diversity is a concept that
accurately captures Southeast Asia. Politically, there is a plethora of governance models in
the region. There is an absolute monarchy, there are democracies, there are one party states,
and there are limited and constitutional monarchies as well as authoritarian states.
Economically, there are already highly-developed states co-existing with rapidly developing
ones and admittedly, stagnating ones. In the social and cultural realm, diversity as a word
cannot truly capture the different societal and cultural groups and ways of living that exist in
the region.

The socio-cultural diversity of ASEAN member-states has not stopped its leaders from
conceptualizing a community that will somehow forge unity and solidarity amongst the
different peoples in Southeast Asia. There are even formal institutional mechanisms such as
the ASEAN Charter and other policy guidelines that the Leaders have agreed on that will
provide the direction that will be followed by the various member-states so that they can
move towards the formation of the ASEAN Socio-Cultural Community (ASCC).
Notwithstanding and in fact acknowledging the difficulties of such a goal, ASEAN member
states see that deepening political security and economic relations can only be meaningful
when there will exist a caring society in Southeast Asia.

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Chapter I
ASEAN- An overview:
The ASEAN Charter, which entered into force on 15 December 2008, asserts in Article 3 that
ASEAN “as an inter-governmental organisation, is hereby conferred legal personality”. This
essay examines the legal status of the Association, as well as the political question of whether
the whole is greater than (or perhaps less than) the sum of its parts. The argument presented is
that legal personality at the international level is less a status than it is a capacity: the fact that
ASEAN now claims international legal personality in the Charter does not mean it lacked it
previously, nor that it now possesses it in any meaningful way. Rather, the key question is
what specific powers have been granted to ASEAN and how those powers are used.

What is ASEAN?

Speaking in 1998, in the wake of an economic crisis that shocked the region’s “tigers” and
“dragons”, the Secretary-General of ASEAN, Rodolfo Severino, gave a speech in which he
emphasized that ASEAN “is not and was not meant to be a supranational entity acting
independently of its members. It has no regional parliament or council of ministers with law-
making powers, no power of enforcement, no judicial system.”1 He later reaffirmed more
bluntly that ASEAN lacks “juridical personality or legal standing under international law.”
This was consistent with the view that ASEAN was intended to be a kind of social
community, rather than a legal community.2

A decade later, ASEAN has a Charter stating that, “ASEAN, as an inter-governmental


organisation, is hereby conferred legal personality.”3 On 15 December 2008, that Charter
came into effect thirty days after the tenth instrument of ratification had been deposited with
the ASEAN Secretary-General.4 Does this mean that ASEAN before that moment had no
international legal personality? And that after the entry into force of the Charter such
personality miraculously popped into existence? The answer to both questions is a qualified
“no”: the lack of such a provision did not mean that ASEAN lacked international legal
personality; the presence of one does not mean that it possesses personality in a meaningful

1
Rodolfo Severino, “Asia Policy Lecture: What ASEAN Is and What It Stands For” (The Research
Institute for Asia and the Pacific, University of Sydney, Australia, 22 October 1998), online:
<http://www.aseansec.org/3399.htm>.
2
Paul Davidson, ASEAN: The Evolving Legal Framework for Economic Cooperation (Singapore: Times
Academic Press, 2002) at 29.
3
Charter of the Association of Southeast Asian Nations, 20 November 2007, (entered into force 15 December
2008), art. 3, online: <http://www.aseansec.org/AC.htm> [ASEAN Charter].
4
Ibid

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sense. This section will briefly outline the basis of a test for international legal personality
before applying it to ASEAN.

A. ASEAN’s Personality:

In the case of ASEAN, the reasoning from the Reparations case is easily extended to ASEAN
with respect to the members themselves: ASEAN enjoys such legal personality as those
members have endowed it.5 But the question of whether states and other actors outside
ASEAN must recognize it depends on the application of a more objective set of standards.

Though there is no consensus in the literature and little authority from courts (primarily
focused on the status of the EU and the OSCE),6 Ian Brownlie has developed a three-part test
summarizing the majority views on international legal personality. To enjoy personality, he
argues, an organization must possess the following three attributes:

1. a permanent association of states, with lawful objects, equipped with organs;

2. a distinction, in terms or legal powers and purposes, between the organization and

its member states;

3. the existence of legal powers exercisable on the international plane and not solely within
the national systems of one or more states.7

Applying Brownlie’s test, does ASEAN have personality?

1. Permanent association

The first leg is easily satisfied: even before adopting the Charter, ASEAN was certainly a
permanent association of states, with lawful objects, equipped with at least rudimentary
organs from the outset, growing into a Secretariat over time.

2. Distinction between organization and members

Is there, secondly, a distinction, in terms or legal powers and purposes, between the
organization and its member states? Traditionally within ASEAN, the answer would have

5
See Henry G. Schermers and Niels M. Blokker, International Institutional Law: Unity Within Diversity, 4th
ed. (Leiden: Martinus Nijhoff, 2003) at 989-
6
ibid
7
Brownlie, supra note 10 at 679-680. Other tests are, of course, possible.

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been no. ASEAN’s foundational document, the Bangkok Declaration, essentially stated some
shared goals and announced an annual meeting of foreign ministers.8

As Tommy Koh and others have argued, the purpose of the Charter is to make ASEAN a
more rules-based organization: “The ‘ASEAN Way’ of relying on networking, consultation,
mutual accommodation and consensus will not be done away with. It will be supplemented
by a new culture of adherence to rules.”9 This point was emphasized also in the Report of the
Eminent Persons Group, which explicitly linked rule-adherence to legal personality.10

In the economic sphere, for example, one might argue that ASEAN has a competence distinct
from its members. The Framework Agreement for Enhancing ASEAN Economic
Cooperation, for example, has provided the basis for agreements on trade liberalization,
industrial cooperation, and foreign direct investment.11 The possibility of majority voting was
considered in the 1996 Protocol on Dispute Settlement Mechanism for ASEAN economic
agreements.12 This was never implemented, but was superseded in 2004 by another protocol
that went further in providing for a “negative consensus” model under which the Senior
Economic Officials Meeting (SEOM) would have to decide by consensus not to set up a
panel, adopt a panel report, adopt an appeal report, or authorize retaliation.13

A second area in which there have been interesting developments is on nuclear weapons. This
is marginal to the day-to-day operations of ASEAN, but the adoption of the Southeast Asia
Nuclear-Weapon-Free Zone Treaty in 1995 was unusual for two reasons.14 This is the treaty
that established SEANWFZ (pronounced “see-yan-fez” or “shaun-fizz”). First, the treaty
required only seven ratifications from the ten states parties to enter into force.15 The treaty

8
Tommy Koh, Walter Woon, and Chan Sze-Wei, “Charter Makes ASEAN Stronger, More United and
Effective”
The Straits Times [of Singapore], (8 August 2007).
9
Tommy Koh, Walter Woon, and Chan Sze-Wei, “Charter Makes ASEAN Stronger, More United and
Effective”
The Straits Times [of Singapore], (8 August 2007).
10
The Eminent Persons Group on the ASEAN Charter, Report of the Eminent Persons Group on the ASEAN
Charter (Jakarta, December 2006), para. 43
11
See Paul Davidson, “The ASEAN Way and Role of Law in ASEAN Economic Cooperation” (2004) 8
Singapore
Y.B. Int’l L. 165 at 158-161.
12
ASEAN Protocol on Dispute Settlement Mechanism, 20 November 1996, (entered into force 26 May 1998),
online: <http://www.aseansec.org/16654.htm>.
13
ASEAN Protocol on Enhanced Dispute Settlement Mechanism, 29 November 2004, (entered into force 29
November 2004)
14
Southeast Asia Nuclear-Weapon-Free Zone Treaty, 15 December 1995
15
Bangkok Treaty, supra note 46, art. 16(1). At the time of signing Myanmar, Laos, and Cambodia had not yet
joined ASEAN.

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would not bind states who had not ratified, but this led to the Philippines sitting in on
SEANWFZ meetings as an observer from 1997 until it became a party in June 2001.

Secondly, the Commission that was established by the treaty provided for decisions to be
made by two-thirds majority in cases where consensus could not be reached.16 The provision
has never been implemented and it is unlikely that any matter will be put to a vote. Other
agreements, such as the ASEAN Agreement on Transboundary Haze Pollution, have repeated
the limited ratification requirement (in that case lowering it to six), but majority voting in
other areas was rejected in the discussions on the ASEAN Charter. In so far as ASEAN
continues to rely on consensus, where every member effectively has a veto, it begs the
question of whether the collectivity genuinely has a separate personality from its members.
Outside these two areas of economic cooperation and nuclear weapons, there has been little
indication of a willingness to grant any form of independence to the organization qua
organization, with active resistance to such a development in the area of human rights.

3. Powers

Thirdly, does ASEAN possess legal powers exercisable on the international plane and not
solely within the national systems of one or more of its states? ASEAN was finally granted
observer status at the UN in December 2006, though it was beaten to this milestone by the
Asian-African Legal Consultative Organization in 1980, the Asian Development Bank in
2002, and the Shanghai Cooperation Organization and the South Asian Association for
Regional Cooperation in 2004.

This means little. A more important test is whether the organization can create and accept
legal obligations. The clearest example would be if the organization can enter into treaties in
its own right. The 1979 Agreement Between the Government of Indonesia and ASEAN
Relating to the Privileges and Immunities of the ASEAN Secretariat was signed by the
Secretary-General of ASEAN, but related only to its status within Indonesia.17 When outside
Indonesia, ASEAN officials travel as nationals of their respective member states.18 ASEAN
has signed various Memoranda of Understanding (MOUs) such as the 2000 MOU with
Australia on Haze,19 a 2002 MOU with China on Agricultural Cooperation, and a 2003 MOU

16
Bangkok Treaty, supra note 46, art. 8(8).
17
Agreement Between the Government of Indonesia and ASEAN Relating to the Privileges and Immunities
of the ASEAN Secretariat, 20 January 1979
18
Naya, supra note 6 at 112.
19
Memorandum of Understanding (MOU) between the Association of South East Asian Nations (ASEAN) and

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with China on Information Communications Technology, but on matters regarded as
important or that bind the member states, the various members have signed and ratified in
their individual capacities.

This appears likely to continue under the Charter. Though the Eminent Persons Group
recommended that the Secretary-General be “delegated the authority to sign non-sensitive
agreements on behalf of ASEAN Member States”,20 the Charter as adopted merely provides
that “ASEAN may conclude agreements with countries” and other entities, with the
procedures for concluding such agreements to be prescribed by the ASEAN Coordinating
Council in consultation with the Community Councils.21

So what does this mean in terms of ASEAN’s international legal personality? The first thing
to note is that personality at the international level is not so much a status as a capacity. It
matters less what you claim than what you do. And, importantly, at the international level
there are degrees of legal personality. The UN Charter does not assert personality, but there is
no doubt today that the Organization possesses it. The ASEAN Charter asserts personality,
but ASEAN would appear to have a very limited form of international legal personality
already. From the watered down provisions of the Charter, it is not clear that its ratification
will radically alter that analysis of substance as opposed to form. This was evident in the
media release that accompanied the signing of the Charter. Noting that the Charter conferred
on ASEAN international legal personality distinct from the member states, the release went
on to note that, “Details of what ASEAN can or cannot do with its legal personality will be
discussed and stated in a supplementary protocol after the signing of the Charter.”22 Those
details will answer the question of whether ASEAN exists in a meaningful sense as an
international legal person. By all indications, we will be waiting some time.

Chapter II

ASEAN- Policies in respect with Trade

I. The Economic Setting

ASEAN’s ten economies vary substantially in population, per capita income and economic
structure. Their performance has been somewhat uneven, but strong on average; the region

the Commonwealth of Australia (on Haze), 28 January 2000


20
Eminent Persons Group, Report, supra note 40, para. 37.
21
ASEAN Charter, supra note 8, art. 41(7).
22
ASEAN Secretariat, Media Release, “ASEAN Leaders Sign ASEAN Charter” (20 November 2007)

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has grown at a 5% annual rate over the last two decades, despite two major financial crises
(see Table 1). Growth was rapid before the Asian financial crisis and, after slowing in its
aftermath, has begun to accelerate again. The upswing is especially noteworthy in Indonesia,
the region’s largest economy, which has undertaken wide-ranging political and economic
reforms. Projections envision continued good performance in the future.

Trade patterns:

As Table 1 also shows, virtually all ASEAN economies are open to trade and investment; the
trade/GDP ratio is 131% for the region as a whole and exceeds 400% for Singapore. Over the
last two decades, the region’s exports and imports have shifted from natural-resource-
intensive goods to electronics and other relatively sophisticated manufactures. Manufacturing
exports account for almost three-fourths of total ASEAN exports (up from less than two-
thirds in 1990), and machinery and transport equipment constitute almost half of both exports
and imports (UN COMTRADE database).

Table No. 123

Population GDP 2010 Real GDP (Exports


2010 (mill.) (US$bill.) growth rate +Imports)
1990-2010 /GDP 2010 (%)
ASEAN 591.4 1,719.2 5.0 131
Brunei 0.4 12.0 1.8 127
Cambodia 14.1 11.5 7.3 121
Indonesia 239.9 670.4 4.6 45
Lao 6.2 6.3 6.6 37
Malaysia 28.40 213.1 5.7 192
Myanmar 48.06 28.7 8.7 27
Philippines 93.3 181.5 3.7 71
Singapore 5.1 194.9 6.0 421
Thailand 69.1 297.9 4.3 139
Vietnam 86.9 103.1 7.4 149

Top ASEAN exports include not only labor intensive products but also a variety of advanced
manufactures, such as SITC 776 - thermionic valves.24 This sector’s export value has

23
Source UN COMTRADE

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increased ten-fold from $12.1 billion in 1990 to $119.6 billion in 2006, accounting for 16%
of total ASEAN exports ($759 billion) and one-third of world exports ($379 billion). Success
in this sector reflects the region’s integration into global production chains, which rely
heavily on international exchanges of goods, capital and expertise.

Trade in services constitutes roughly one-fourth of ASEAN’s trade. Imports of services grew
even faster over this period. Hence, the trade balance in services has moved from a slight
surplus in 1990 to a $24 billion deficit in 2006.25

ADB (2007) argues that ASEAN’s development more or less conforms to the Kuznets
process: the contribution of agriculture to GDP falls over time; Thus, the service sector had
become the dominant contributor to income growth in the late 1990s in all large ASEAN
countries except for Indonesia, where manufacturing was still slightly more important.26
Since regional cooperation has progressed less in services than in other sectors, the sector is
singled out as a particularly important priority in the AEC.

ASEAN’s intra-regional trade is still modest at one-fourth of the region’s total trade, but its
share has risen by over 50% from 1990 to 2007 (UN COMTRADE). Given that the region
consists of small and medium-sized developing countries with strong global production links,
it is not surprising that most of its trade also involves extra-regional partners. But controlling
for the region’s size, intra-ASEAN trade is four times as high as it would be if the region’s
trade flows were randomly distributed across partners.27

Commercial policy:

Like much of East Asia, ASEAN economies have relied on outward-oriented trade and
investment strategies.28 Their policies have focused on macroeconomic stability, trade
liberalization, infrastructure investments in ports and roads, human capital development, and
support for technology. A more detailed view of the trade policy environment suggests that:29

• Protection is relatively high in agriculture and beverage products relative to manufactures


(with the exception of chemicals, transport equipment and clothing for some countries).

25
UNCTAD Statistical Yearbook, 2010
26
Clemes and Gani (2002).
27
This type of normalization is done by dividing the intra-regional trade shares by the shares of ASEAN trade in
global trade.
28
ADB (2008) gives a survey of these studies.
29
WTO Tariff Profiles 2008

12
• Protection is reasonably symmetric otherwise; in any given country, tariffs are similar
across most commodity categories. This limits distortion effects.

• Protection tends to fall with income. The region’s wealthiest economies—Singapore and
Brunei—have essentially free-trade regimes; those with intermediate incomes—Indonesia,
Malaysia, the Philippines and Thailand—have mostly low tariffs; and its low-income
economies—Cambodia, Laos and Vietnam—have relatively high tariffs. (Myanmar is an
anomaly with low tariffs.)

Overview of the AEC Blueprint30

Core Elements Actions Model Representation


A. Single Market and Production Base
1. Goods
• Eliminate duties, non-tariff • Lower tariffs
barriers • Lower goods non-tariff
• Simplify rules of origin barriers
• Trade facilitation, customs
integration, single window
• Harmonize standards and
regulations

2. Services
• Remove restrictions on • Lower service non-tariff
service trade barriers
• Allow at least 70% equity • Higher FDI flows
participation
• Schedule commitments
• Extend mutual recognition
agreements, liberalize financial
services

3. Investment
• Investment protection, • Higher FDI flows
facilitation, promotion,
liberalization
• Non-discrimination, national
treatment

4. Capital
• Harmonize regulations
• Promote cross-border capital
raising

5. Labor

30
http://www.asean.org/storage/images/2015/November/aec-page/AEC-Blueprint-2025-FINAL.pdf

13
• Facilitate movement of • Lower service non-tariff
skilled and professional labor barriers
in cross-border trade
• Enhance movement of
students
• Work toward harmonizing
qualifications

6. Priority sectors
• Projects in priority sectors

7. Food, agriculture, forestry


• Harmonize best practices, • Lower goods non-tariff
sanitary and phytosanitary barriers
measures, safety and quality
standards, chemical use,
regulation of products derived
from biotechnology
• Promote technology transfer

B. Competitive Economic Region


1. Competition policy
• Introduce competition • Lower goods non- tariff
policies and develop regional barriers
networks and guidelines

2. Consumer protection • Develop regional networks


and guidelines

3. Intellectual property rights • Higher FDI flows


• Implement ASEAN
Intellectual Property Rights
Action Plan
• Promote regional cooperation

4. Infrastructure
• Facilitate multimodal • Lower service non-tariff
transport barriers
• Complete Singapore-
Kunming rail link
• Integrated Maritime
Transport, open sky policies,
single aviation market
• High-speed information
technology interconnections
• ASEAN power grid, gas
pipeline

5. Taxation • Complete bilateral


agreements

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6. E-commerce • Adopt best practices and • Lower service non-tariff
harmonize legal infrastructure barriers

C. Equitable Economic Development


1. SMEs
• ASEAN Blueprint of best
practices
2. Initiatives for integration
• Technical assistance and
capacity building in low-
income countries
D. Integration in to the
Global Economy
1. Coherent approach • Review free trade area
commitments • Free trade areas with other
• Establish coordination and economies
possibly common external
approaches

2. Supply networks • International best practices


and standards
• Technical assistance

Chapter III

Impact created by ASEAN:

Effects on International Trade (2015) (Table 3)31

Change in exports, % from baseline

AFTA AFTA+ AEC AEC+ AEC++

ASEAN 6.5 31.2 42.6 70.9 88.9

Cambodia 37.0 70.3 77.6 86.8 113.9

Indonesia 6.5 22.5 53.6 84.0 109.5

Laos 41.0 85.0 101.1 103.6 110.3

Myanmar 8.7 43.9 65.8 100.7 163.2

Malaysia 4.5 26.4 35.6 56.3 65.4

Philippines 2.9 25.4 45.4 67.3 82.4

31
Source UN COMTRADE

15
Singapore 4.5 39.7 43.7 61.1 64.9

Thailand 8.8 27.8 33.6 63.5 85.5

Vietnam 15.4 49.0 55.4 160.1 239.5

Brunei 2.1 9.8 10.4 8.6 13.7

Partners

China 0.0 -0.7 -0.8 7.5 6.9

Japan -0.1 -0.6 -0.5 8.4 7.6

Korea -0.2 -1.1 -1.5 7.1 6.6

India 0.1 -0.1 -0.3 57.4 57.0

Australia -0.1 -0.5 -1.0 5.3 4.4

New Zealand- 0.3 -0.5 -0.6 6.1 5.1

USA 0.0 -0.3 -0.8 -1.4 2.9

Europe -0.1 -0.3 -0.9 -1.3 0.6

World 0.4 1.8 2.1 6.4 8.4

B. Change in imports, % from baseline

AFTA AFTA+ AEC AEC+ AEC++

ASEAN 7.0 32.7 35.4 67.8 86.4

Cambodia 39.5 76.5 82.0 93.4 135.3

Indonesia 7.1 24.3 17.6 60.0 86.0

Laos 32.8 70.0 73.3 75.7 82.3

Myanmar 7.8 39.7 45.1 78.9 132.9

Malaysia 6.0 34.2 40.6 70.9 81.4

Philippines 3.0 27.2 34.0 55.8 69.9

Singapore 4.4 34.5 38.1 54.5 58.1

Thailand 9.8 31.5 34.7 72.2 97.8

Vietnam 14.3 43.1 47.1 129.8 197.4

Brunei 6.1 28.1 30.1 27.2 41.8

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Partners

China 0.0 -0.8 -0.8 7.7 6.9

Japan 0.0 -0.5 0.1 10.8 9.9

Korea -0.1 -0.9 -1.2 8.1 7.6

India 0.1 0.0 -0.2 40.8 40.8

Australia -0.1 -0.4 0.3 7.5 6.6

New Zealand -0.4 -0.5 -0.3 8.4 7.3

USA 0.0 -0.1 0.2 0.3 3.3

Europe 0.0 -0.1 0.1 0.4 2.4

World 0.4 1.8 2.2 6.6 8.6

The market orientation of economies also affects which agreements would matter the most.
For most ASEAN members agreements with “plus 6” countries would be more important
than agreements with Western economies, because their trade involves Asian networks and
they face higher rates of protection in Asia than in Western markets. For Vietnam, the effects
would be similar. But in the case of Cambodia, agreements with the West would be more
important because exports are mainly destined for those markets and involve products (such
as clothing and footwear) that are relatively protected.

Thus the AEC, as intended, would stimulate trade and the integration of member economies
with each other and with the global economy. Importantly, its effects would be relatively
strong for the trade of ASEAN’s newest (and poorest) members. Thus, the deepening of
regional and global linkages could also help to address the political goal of reducing regional
inequalities. But the results also show that the importance of external markets varies among
member economies, generating potential differences in priorities attached to future
agreements that could in turn generate disagreements about external initiatives.

17
Conclusion:

ASEAN serves as association for development of its member states in socio-cultural and
economic aspects. It also aims in attaining peace among its member states as well as other
countries of the world. Political imbalance in an international organisation is always probable
one and ASEAN is no exception. Inspite of that, its effective functioning is evident with
joining of new members, since ASEAN was association with 5 members at its inception now
has become an association with 10 members. But effectiveness of implementation of
regulations imposed by ASEAN upon its member states is still into a question.

The AEC is a highly ambitious effort to enhance ASEAN’s global competitiveness. Through
the free flow of goods, services, and skilled labor, the project intends to establish a efficient
“single market and production base” encompassing nearly 600 million people and $2 trillion
in production. The project is comparable in scale and difficulty to that of European
integration. Although the AEC does not envision the macroeconomic cooperation attempted
in Europe, it faces other large challenges associated with its diversity and varied levels of
development

Estimating the economic effects of such a comprehensive project is difficult and speculative.
While the implications of liberalizing explicit barriers to goods trade are relatively well
understood, the effects of easing regulatory and other impediments to flows of goods,
services and investment are less so. Other aspects of the AEC project—the free movement of
skilled labor, extended cooperation in capital market development, and the implications of
ASEAN increased clout for international negotiations—are even more difficult to assess. This
study is based on a more comprehensive model than is the case with most other studies of
regional integration, but the results are still best viewed as rough, lower-bound estimates of
an enormously complex undertaking.

18
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4. http://carnegieendowment.org/2008/11/28/asean-integration-and-its-effects-event-
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19

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