ASEAN Free Trade Area
1. Introduction on Regional Economic Integration (REI)
Regional economic integration is an agreement among countries in a geographic region to reduce and ultimately remove tariff and non-tariff barriers to the free flow of goods or services and factors of production among each other (Ghani et al., 2008). It can be also refers as any type of arrangement in which countries agree to coordinate their trade, fiscal, and/or monetary policies are referred to as economic integration. Obviously, there are many different levels of integration as listed below:
Free Trade Area: A free trade area occurs when a group of countries agree to eliminate tariffs between themselves, but maintain their own external tariff on imports from the rest of the world. The North American Free Trade Area is an example of a FTA. When the NAFTA is fully implemented, tariffs of automobile imports between the US and Mexico will be zero. However, Mexico may continue to set a different tariff than the US on auto imports from non-NAFTA countries.
Customs Union: A customs union occurs when a group of countries agree to eliminate tariffs between themselves and set a common external tariff on imports from the rest of the world.
Common Market: A common market establishes free trade in goods and services, sets common external tariffs among members and also allows for the free mobility of capital and labor across countries.
Economic Union: An economic union typically will maintain free trade in goods and services, set common external tariffs among members, allow the free mobility of capital and labor, and will also relegate some fiscal spending responsibilities to a supra-national agency.
Political Union: Separate nations are essentially combined to form a single nation. The establishment of the European Parliament suggests that Europe is moving towards political union. Giving up this last bit of sovereignty, however, is a big step psychologically and philosophically.
2.
Regional economic integration is an agreement among countries in a geographic region to reduce and ultimately remove tariff and non-tariff barriers to the free flow of goods or services and factors of production among each other (Ghani et al., 2008). It can be also refers as any type of arrangement in which countries agree to coordinate their trade, fiscal, and/or monetary policies are referred to as economic integration. Obviously, there are many different levels of integration as listed below:
Free Trade Area: A free trade area occurs when a group of countries agree to eliminate tariffs between themselves, but maintain their own external tariff on imports from the rest of the world. The North American Free Trade Area is an example of a FTA. When the NAFTA is fully implemented, tariffs of automobile imports between the US and Mexico will be zero. However, Mexico may continue to set a different tariff than the US on auto imports from non-NAFTA countries.
Customs Union: A customs union occurs when a group of countries agree to eliminate tariffs between themselves and set a common external tariff on imports from the rest of the world.
Common Market: A common market establishes free trade in goods and services, sets common external tariffs among members and also allows for the free mobility of capital and labor across countries.
Economic Union: An economic union typically will maintain free trade in goods and services, set common external tariffs among members, allow the free mobility of capital and labor, and will also relegate some fiscal spending responsibilities to a supra-national agency.
Political Union: Separate nations are essentially combined to form a single nation. The establishment of the European Parliament suggests that Europe is moving towards political union. Giving up this last bit of sovereignty, however, is a big step psychologically and philosophically.
2.
References: 1. http://www.tariffcommission.gov.ph/afta-cep.html (Accessed online on 1 March 2013) 2. Alavi, Rokiah, 1996. Industrialisation in Malaysia: Import substitution and infant industry performance, London: Routledge. 3. Flynn, M. S., Alkire, K. F., Senter, R. Jr., 1999. Shifting Strategies: The Big Three in ASEAN. University of Michigan Transportation Research Institute, Office for the Study of Automotive Transportation, UMTRI 99-25. 4. Hew, D., Soesastro, H., 2003. Realizing the ASEAN Community by 2020: ISEAS and ASEAN-ISIS Approaches. ASEAN Economic Bulletin, Vol. 20., No. 3: 292-96. 5. Chu, K. S. 2001. Automobile Industry – Can Malaysia Compete in AFTA. Paper presented at the MIER National Outlook Conference, 2002, 6-7 November, Hotel Nikko, Kuala Lumpur. 6. Ghani, K., Zainuddin, Y., Fereidouni, H.G. 2008. AFTA: Effect on Malaysia Economy. Journal of Management and Social Science, 4; 134-141. 7. Ricardo, D. 1971. On the Principles of Political Economy, and Taxation. Baltimore: Penguin.