The ASEAN Free Trade Agreement: Precipitating Causes and Future Consequences

Abstract

This paper examines (1) the transformations in the international economy that led to the ASEAN (Association of Southeast Asian Nations) Free Trade Agreement and (2) the factors working in favor and against the agreement's implementation. The underlying motivation for AFTA is examined in terms of being a reaction to the rise of the European Community and the North American Free Trade Agreement, which led to fears of reduced foreign investment, trade diversion, diminished bargaining power in negotiations, and lower international competitiveness. The implementation of AFTA is discussed as being constrained by a lumber of factors, including regional security tensions, product exclusions, long lead time, uneven levels of development, insufficient coordination of external policy, as well as lack of treatment of NTBs, subsidies and government procurement practices.