ASEAN Always at the crossroads?

Abstract

The Association of Southeast Asian Nations (ASEAN) has lasted for three decades, yet it remains an enigma in that very little regional economic integration has occurred. Discriminatory policies aimed at fostering such integration would be costly for these similar economies, and it has been a source of ASEAN's strength that such policies have not been pursued vigorously. Recent integration between Singapore, Johor and Riau has been primarily market-driven and facilitated by nondiscriminatory trade liberalization. The potential gains from the ASEAN Free Trade Area (AFTA) currently being introduced are small. With ongoing unilateral trade liberalization (possibly reinforced by commitments in APEC) AFTA could become irrelevant; otherwise it is unlikely to be fully implemented, just as at a similar crossroads in the early 1980s ASEAN members drew back from preferential trade policies. Despite the lack of formal integration ASEAN has played a positive role in providing a forum for discussing regional matters and in enabling members to adopt common negotiating positions in other forums. The enlargement of ASEAN in the 1990s reflects geo-strategic aspects as relations with Vietnam have improved and the original members and Vietnam now share common external concerns. In terms of debates in international economics, this picture fits with the 'new regionalism' approach to trading arrangements, insofar as ASEAN has emphasized non-trade aspects of regional integration. Nevertheless, the old regionalism associated with the Vinerian concepts of trade creation and trade diversion remains vital in explaining why ASEAN has been unsuccessful in creating a regional trading bloc.