9 - ASEAN Integration

Summary

When the topic of ASEAN integration is being discussed, it is often assumed that ASEAN economic integration is being broached. According to Mr Severino, ASEAN economic integration has political and cultural elements. All elements are essential for regional integration to take place and to make ASEAN economic integration possible.

There are two levels to ASEAN economic integration. The first level is integration within ASEAN itself. The second level is integration with its external partners. Each level has two stages; in the case of ASEAN, it progressed from economic cooperation to economic integration to form an ASEAN economic community. In the second level, the relationship between ASEAN and its external partners has evolved from a donor-recipient relationship to one where the economies are now more closely cooperating.

In the Bangkok Declaration when ASEAN was founded in 1967, all references to economic cooperation were used to mask political objectives. Economic cooperation was only institutionalized and acquired its form before the ministerial meetings of the ASEAN Summit in February 1976. During that time, the main pillars of ASEAN economic integration consisted of preferential trading arrangements (PTA) and the intended establishment of large ASEAN industrial projects. The PTAs that were adopted were based on negotiated lists of products to which preferences (note that these were margins of preferences) were given. The industrial projects that were initiated and directed by the governments were also protected. These projects were not market driven. This protectionist direction that certain ASEAN member countries adopted resulted in the very slow pace that ASEAN economic integration took. Nevertheless, the positive outcome was that the processes established during the early periods of economic cooperation between the ASEAN states later paved the way for future successful communication.

The twin trends of globalization and worldwide regionalization pressurized ASEAN to propose the ASEAN Free Trade Area (AFTA). This resulted in attracting investments from multinational corporations, economies of scale in the regional markets and lowering transaction costs. Additionally, ASEAN had more clout to negotiate in international economic forums.