The New Political Economy of Southeast Asia

The New Political Economy of Southeast Asia

Edited by Rajah Rasiah and Johannes Dragsbaek Schmidt

This well-researched book examines the dramatic transformation of Southeast Asian countries from agricultural and mining economies to industrial nations.

Chapter 8: Rationale for Free Trade Agreements (FTAs) in Southeast Asia

Sanchita Basu and Aekapol Chongvilaivan

Subjects: asian studies, asian economics, economics and finance, asian economics, political economy, politics and public policy, political economy

Extract

Sanchita Basu Das and Aekapol Chongvilaivan INTRODUCTION With regionalism gaining strength, free trade agreements (FTAs) have emerged to be a reality world-wide. They are seen as an action by governments to liberalize or facilitate trade and investment on a bilateral basis through detailed negotiations. FTAs are thus the first building blocks for regional economic integration. Initially, FTAs focused on providing preferential treatment for trade in goods among the members, but later they became more complex and covered negotiations on trade regulation and customs cooperation as well as those on labour standards, safeguard provisions and so on, besides negotiations on market access for trade in services. Thus FTAs are being regarded by policymakers as being effective and expeditious instruments for achieving economic cooperation and trade liberalization among ‘like-minded’ trading partners (Sen, 2007), while concomitantly pursuing multilateral trade liberalization through the World Trade Organization (WTO). These agreements, largely providing preferential market access to its signatory members on a reciprocal basis, are discriminatory by definition against non-members. The number of FTAs and regional trade agreements (RTAs) has grown rapidly since the creation of the WTO in 1995 (Figure 8.1). As of 2008, out of more than 400 FTAs notified to the GATT/WTO, almost 300 arrangements were established after January 1995. Among these FTAs, over 225 are currently in force, with the remaining ones expected to be operational soon. The WTO estimates that, by the end of 2010, about 400 FTAs might come into force all over the world, provided FTAs reportedly planned or...

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