Purpose
ASEAN’s purpose is to form a common market similar to the European Union. The ASEAN Economic Community was established in 2015. It is working toward free movement of goods and services, investment and capital, as well as skilled labor. It will also create common standards in agriculture and financial services, intellectual property rights, and consumer protection. These are all necessary to attract foreign direct investment and promote growth. AEC has identified 611 measures it must implement to achieve its goals. Almost 80% of these measures have been completed. ASEAN is lowering trade tariffs on 99% of its products to the 0-5% tariff range. Rice is excepted since it is so important to local economies. ASEAN is working to make regulations and product standards uniform among the nations. The multilateral trade agreements between ASEAN and its neighbors lessen these countries’ need for the World Trade Organization. Communication among these long-standing enemies in the name of trade means that they realize the preeminent importance of economic prosperity for all, regardless of ancient grudges and even democratic principles.
Member Countries and Their Economies
ASEAN has 10 members. The two largest economies are both founding members, Indonesia and Thailand. The other eight countries hope to boost their much smaller economies by exporting to the markets of the larger countries.
ASEAN 3
ASEAN+3 is the term that refers to the countries of ASEAN plus China, Japan, and South Korea. It was formed in the aftermath of the 1997 Asian financial crisis. The East Asia Vision Group was formed to create a vision for cooperation among all 13 countries to prevent another crisis from happening again.
ASEAN Summit
Each year, ASEAN holds a summit hosted by one of its members. On June 23, 2019, Bangkok hosted the 34nd summit. The ASEAN leaders asked the United States and China to resolve their trade war. They warned that U.S protectionism is not good for them or international trade in general. The trade war is a key tool in President Donald Trump’s economic policies. Members continue to be concerned about China’s threat to ASEAN countries’ maritime rights in the South China Sea. China has been extending its reach by building islands. The South China Sea runs right through ASEAN’s territory. It is a hotly contested group of tiny islands that see 15 million barrels of oil per day and 4.7 trillion cubic feet of natural gas. It is also one of the richest fisheries in the world. Most important to the United States is the South China shipping lane. Through it goes half of the world’s merchant fleet tonnage, representing $5.3 trillion in global trade. Of that, $1.2 trillion winds up at U.S. ports. In addition, one-third of the world’s crude oil is also shipped through the Sea. On February 15, 2016, President Barack Obama held a historic U.S.-ASEAN Summit. He pledged U.S. support for ASEAN rights in the South China Sea. In 2010, former Secretary of State Hillary Clinton declared at the 2010 ASEAN Summit that the freedom of navigation through the Sea was of national interest. Many fear that rivalry over competing claims in the South China Sea could lead to armed conflict in the region.
ASEAN and China
China is ASEAN’s largest external trading partner. In 2017, it received 14.1% of ASEAN’s exports. The EU came next at 12.0%, followed by the United States at 10.8%. The nations though are also wary of China’s ability to dominate the area. They don’t want cooperation to lead to their absorption by their neighbor.
RCEP
ASEAN is negotiating the Regional Comprehensive Economic Partnership with Australia, China, India, Japan, Korea, and New Zealand. It is an economic cooperation and trade agreement that began on May 2013. On August 2, 2019, China hosted the RCEP ministerial conference. The 27th round of negotiations followed later that month.
