ASEAN: Regional Trends in Economic Integration, Export ... - USITC

progress has been only achieved in the automotive, textiles, air travel and tourism
sectors.” 21
In December 2008, the ASEAN Charter entered into effect, which provides the legal and
institutional framework for ASEAN to be a more rules-based organization. According to
ASEAN officials, the Charter strengthens ASEAN institutions and supports ASEAN’s
community-building and integration efforts by enhancing the formal nature of ASEAN
integration. 22 To ensure compliance with agreed rules and obligations, the Charter
provides that “disputes that concern the interpretation or application of ASEAN
economic agreements shall be settled in accordance with the ASEAN Protocol on
Enhanced Dispute Settlement Mechanism,” 23 which was adopted in 2004. The enhanced
dispute settlement process includes three stages: advisory, consultative, and adjudicatory.
As of February 2009, no disputes had been raised for adjudication. 24
ASEAN Trends in Economic Integration, Export
Competitiveness, and Inbound Investment
Strengthening economic integration, improving export competitiveness, and attracting
foreign direct investment are all goals of the formation of a single market and production
base, as envisaged by the AEC. Broad ASEAN trends in these three areas over the past
five years are presented below.
Economic Integration
Between 2004 and 2008, intra-ASEAN trade increased slightly. Although intraregional
trade is important in each of the six priority sectors covered in this report, none of the
sectors exhibited a clear trend towards increased integration during this period.
ASEAN agreements affecting integration
Efforts to form a single market and production base have met with the most success in the
area of tariff liberalization under AFTA. 25 AFTA is considered a “deep” FTA relative to
others among developing countries because of its comprehensive coverage, ambitious
liberalization to zero or near-zero rates, and timely implementation. 26 Intraregional tariff
reductions and eliminations to 0–5 percent rates under the CEPT scheme of AFTA are
supposed to be completed in 2010 for the ASEAN-6 and in 2015 for the ASEAN-4, and
by 2018 for the ASEAN-4 on some sensitive products (unprocessed agricultural
products). On January 1, 2010, the ASEAN-6 reduced intraregional duties on an
additional 7,881 tariff lines to zero, bringing the total number of intraregional duty-free
21 Malaysian Ministry of International Trade and Industry, “16th ASEAN Economic Ministers’ Retreat,”
February 28, 2010.
22 Pitsuwan, “Progress in ASEAN Economic Integration since the Adoption of the ASEAN Charter,”
June 29, 2009, 1.
23 ASEAN Charter, article 24.
24 ASEAN Secretariat, “Fact Sheet: ASEAN Dispute Settlement System,” February 24, 2009.
25 See, for example, Calvo-Pardo, Freund, and Ornelas, “The ASEAN Free Trade Agreement: Impact on
Trade Flows and External Trade Barriers,” June 2009, 3.
26 Calvo-Pardo, Freund, and Ornelas, “The ASEAN Free Trade Agreement: Impact on Trade Flows and
External Trade Barriers,” June 2009, 10.
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