Before and After the Crisis
Chapter 7: ASEAN and other regional trading arrangements
7. ASEAN and other regional trading arrangements Another source of serious concern for ASEAN countries in their dealings with developed countries is the likely negative impacts of regionalism in these economies. This chapter will examine the two major regional economic initiatives formed by Western developed countries and their likely impact on ASEAN economies: the deepening and enlargement of European integration and the establishment of the North American Free Trade Area (NAFTA). The late 1980s witnessed a growing interest in regionalism as an alternative to multilateralism. During this period important steps were taken to establish and deepen existing levels of economic integration. The European Community (EC) led the way by first aiming for a Single European Market (SEM), then forming the European Union (EU) and later a European Economic Area (EEA) that includes four members of the European Free Trade Area (EFTA). Quite recently, the EU has further advanced into a higher level of regional grouping by forming a European Monetary Union (EMU). In 1992 the North American countries, the US, Canada and Mexico, signed a historic free trade agreement (NAFTA), and since then much of the commitments towards trade liberalization within this grouping have been implemented. These developments seem to indicate the emergence of two trading blocs and have caused the fear that the EU and NAFTA could turn into inward-looking blocs, thereby posing a threat to the openness of the world multilateral trading system. Theoretically, an economic grouping becomes a bloc only when the members adopt a common economic...
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