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International Political Economy (IPE)

International Political Economy (IPE). International College Khon Kaen University Week 12 – Asian Regional Economic Integration. Regionalism in IPE. Regionalism is the formal process of inter-governmental collaboration between three states or more

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International Political Economy (IPE)

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  1. International Political Economy (IPE) International College KhonKaen University Week 12 – Asian Regional Economic Integration

  2. Regionalism in IPE • Regionalism is the formal process of inter-governmental collaboration between three states or more • Regional cooperation and collaboration has progressed further, and faster, than economic integration efforts at the global level • Reaching agreement is easier if there is a smaller number of states participating in the negotiation • Population pressure and environmental degradation have also encouraged regional cooperation

  3. Regional FTAs are on the Increase

  4. Regional Economic Integration • Regional economic integration refers to agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, capital and, occasionally, labor between each other • Regional trade agreements are designed to promote free trade and speed up economic growth for parties to the agreement

  5. Asian Regional Integration • Free trade allows countries to specialize in those goods and services they produce most efficiently • increases Asian production • stimulates economic growth • Greater investment flows allow for the transfer of technology and management skills • increases economic growth • Asian regional agreements attempt to achieve gains that go beyond international agreements such as the WTO negotiating rounds

  6. Asian Regional Integration • Regionalism in Asia, as elsewhere, involves the use of economic means for politicaland social ends: • To build confidence and enhance security • To improve Southeast Asia’s international bargaining position • To improve political stability as a platform for economic reform and poverty reduction • Regional agreements are easier to negotiate and implement than agreements at the global level

  7. Asian Regional Integration • There are also a number of good economic reasons to pursue regional integration: • To provide access to a larger ‘domestic’ market • To make SE Asia more attractive to foreign investors • To maintain some control over what parts of the economy are liberalized, or modernized • To prepare the economy for broader global liberalization • To make Southeast Asia more competitive with other regional groupings and with regional giants like China

  8. FTAs: Why Important?

  9. Asian Economic Integration • The most established regional economic integration initiatives in Asia are: • ASEAN, and the ASEAN Free Trade Area (AFTA) – 10 members • Asia-Pacific Economic Cooperation (APEC) – 21 members • The South Asian Association for Regional Cooperation (SAARC) – 8 members

  10. Southeast Asian Regional Integration • In addition to established trade and investment agreements in the Asian region, there is increasing economic cooperation at the sub-regional level • The two most relevant for Thailand, and for Northeastern Thailand in particular, are: • The Greater Mekong Subregion (GMS) • The East-West Economic Corridor (EWEC)

  11. Association of Southeast Asian Nations (ASEAN) • The Association of Southeast Asian Nations: • was formed in 1967 • has ten member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam • in 2003, ASEAN leaders agreed to establish an “ASEAN Community” by 2020, with the “ASEAN Economic Community” as its key economic integration component • aims to foster freer trade between member countries and to coordinate industrial policies

  12. ASEAN and its FTAs

  13. ASEAN Economic Community • The ASEAN Economic Community (2015) aims for the free (or at least freer) flow of: • Goods - ATIGA (ASEAN Trade in Goods Agreement, formerly known as AFTA) • Services - AFAS (ASEAN Framework Agreement on Services) • Investment - ACIA (ASEAN Comprehensive Investment Agreement) • Professionals - MRAs (Mutual Recognition Agreements for professionals)

  14. ASEAN Economic Community • The objectives of the ASEAN Economic community are to: • Ensure the most efficient allocation of resources within the Southeast Asian region • Facilitate social and economic development • Since 1993 the average tariff over all products of “ASEAN 6” has reduced from 12.76% to 1.51%

  15. ASEAN Economic Community • To help strengthen ASEAN economies, the 10 ASEAN countries have also negotiated partial trade agreements with selected external trading partners: • Japan • Republic of Korea • China • Australia and New Zealand • India

  16. ASEAN Economic Community • The Framework Agreement on the ASEAN Investment Area was signed in 1998 to speed up investment liberalization in the ASEAN countries • ASEAN countries to open up most industries for investment: • By 2010 for fellow ASEAN investors • By 2020 for investors from outside ASEAN • As for goods under AFTA, members can continue to protect sectors by placing them on a Temporary Exclusion List or Sensitive List

  17. Asia-Pacific Economic Cooperation (APEC) • APEC currently has 21 members including the United States, Japan, and China • Aims to increase multilateral cooperation in view of the economic rise of the Pacific nations and the growing interdependence within the region • Four smaller APEC members signed a “P4” free trade agreement in 2001 • Four larger countries are negotiating to join this group – the US, Australia, Vietnam and Peru

  18. Asia-Pacific Economic Cooperation (APEC)

  19. Asia-Pacific Economic Cooperation (APEC) • Before this round of negotiations is complete another 3 or 4 countries are likely to join in – Japan, South Korea, Malaysia (and Thailand?) • It is hoped that eventually all 21 APEC members will join this Trans-Pacific Partnership FTA • This huge regional Trans-Pacific FTA would be larger and more powerful than the European Union or the North American FTA (NAFTA)

  20. Southeast Asian Regionalism • There are two interpretations of the impact of regional economic arrangements: • The optimistic view is that the ASEAN Community and APEC will lead to greater regional integration, not only economically, but also socially, politically and environmentally • The less positive view is that, with regional arrangements in other parts of the world, they undermine the globalization process led by the WTO • Regionalism is not necessarily making the world safer – it may serve as a new basis of competition and conflict

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