Globalisation, Domestic Politics, and Regionalism: The ASEAN Free Trade Area

Globalisation, Domestic Politics, and Regionalism: The ASEAN Free Trade Area

Globalisation, Domestic Politics, and Regionalism: The ASEAN Free Trade Area

Globalisation, Domestic Politics, and Regionalism: The ASEAN Free Trade Area

Synopsis

This book examines the relationship between globalisation and regionalism through a detailed analysis of the ASEAN Free Trade Area (AFTA) project. It analyses how the interaction between globalisation and domestic politics shaped the evolution of AFTA over the past 10 years, arguing that although AFTA was triggered primarily by the pressures of globalisation, it was a tussle between the imperatives of growth and domestic distribution that shaped the way economic cooperation unfolded and the forms it took.

Excerpt

Considerable scepticism greeted the 1991 announcement by the leaders of the Association of Southeast Asian Nations (ASEAN) that they had decided to form the ASEAN Free Trade Area (AFTA). Those within ASEAN, including scholars and the business community, as well as those outside ASEAN were not convinced of the project’s likely progress, even in its initial limited form. The project was originally designed to lower tariffs on manufactured goods and processed agricultural products to between 0 and 5 per cent by 2008 over a fifteen-year period beginning in January 1992. The economic incentives for forming a free trade area (FTA) in ASEAN seemed far from overwhelming to sustain the regionalist project, especially since member countries were not ‘natural trading partners’ and were, instead, far more closely linked through trade and investment flows with countries outside the ASEAN grouping (Ariff 1994; Ravenhill 1995:866). As a result, significant welfare losses for many ASEAN member countries were expected due to trade diversion. Many believed that this outcome, coupled with the project’s distributional effects, both within and between member countries, would threaten AFTA’s success (Ariff 1994:20; Means 1995; Low 1996:201-2). These early doubts over AFTA’s future did not appear to be misplaced in view of the considerable setbacks experienced in regional trade liberalisation during its initial years and the disputes between member countries that emerged during the project’s course. ASEAN’s previous failed attempts at regional economic cooperation during the late 1970s and 1980s as well as the continual rejection, by most members, of the idea of a regional free trade area, the most recent in 1987 at the Third ASEAN Summit, added to the misgivings many had about AFTA’s viability.

Yet, the AFTA project has not merely persisted, its pace was accelerated and its scope expanded from what was initially planned. Its six original or core members agreed to bring forward the date of AFTA’s completion to 2002/2003 when tariffs on all manufactured products and processed agricultural products are to be at the 0-5 per cent level while a zero tariff ASEAN for the six original AFTA signatories is due in 2010. In addition, the scope of AFTA has been expanded to include unprocessed agricultural . . .

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