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annual growth rate of 13.4% over the period 2000–2011, intra-ASEAN trade rose from
US$166.8 billion in 2000 to US$584.2 billion in 2011 (ASEAN Secretariat, 2012b).
There are three main reasons for AFTA’s success in deepening economic integration in
ASEAN. AFTA’s coverage is comprehensive, as over 90% of product classifications were in
the Inclusion List from the outset of the liberalization program. The liberalization program is
also very ambitious, ultimately requiring free/near-free trade within the area for almost all
products. Finally, AFTA members have clear commitment to achieve free intra-bloc trade
(Calvo-Pardo et al., 2009, p. 10).
3. ASEAN Vision 2020
In 1997, the ASEAN countries continued the process of economic integration by establishing
a vision and outlook for the year 2020. Their vision is to have a Zone of Peace, Freedom, and
Neutrality for the ASEAN countries. The pathway chosen to reach this vision is to expand the
economic integration of member countries. It is hoped that by 2020 an ASEAN Economic
Region can be established and be a free trade area for member countries.
The ASEAN Leaders considered the importance of establishing an ASEAN Community at
the 9th ASEAN Summit in 2003, and signed the Cebu Declaration on the Acceleration of the
Establishment of an ASEAN Community by 2015 at the 12th ASEAN Summit in January
2007. The ASEAN Community is comprised of three pillars, namely the ASEAN Political-
Security Community, ASEAN Economic Community (AEC) and ASEAN Socio-Cultural
Community. Each pillar has its own Blueprint, and, together with the Initiative for ASEAN
Integration (IAI) Strategic Framework and IAI Work Plan Phase II (2009–2015), they form
the Roadmap for and ASEAN Community 2009–2015 (ASEAN Secretariat, 2012b).
Among the three communities in ASEAN, AEC would transform ASEAN into a region in
which goods, services, capital and skilled labour would flow freely. The establishment of
AEC is (1) to generate a post-AFTA agenda that would be comprehensive; (2) to deepen
economic integration in ASEAN in light of the new international commercial environment,
especially the dominance of free trade areas (FTAs); (3) given (2), to prevent the possibility
that bilateral FTAs could actually jeopardize ASEAN integration since all member-states
were free to pursue their own commercial policy agenda; (4) to prevent the economic crises
such as the one which occurred in 1997 through cooperation in the real and financial sectors
and free flow of skilled labour (Plummer, 2006, p. 436).
2.3. ASEAN+3
ASEAN+3—including the ASEAN-10 countries, China, Japan, and the Republic of Korea—
was initiated in the informal ASEAN Leader’s Meeting in December 1997 in the midst of the
Asian financial crisis. The East Asia Vision Group, established in 1999, proposed the idea of
forming an “East Asian Community.” In November 2004, the ASEAN+3 Leaders agreed to
establish an “East Asian Community” as a long-term objective and regarded ASEAN+3 as
the main engine for this eventual formation. Its main purposes in terms of economic, trade,
and investment integration are the establishment of an EAFTA and trade liberalization well
ahead of the Asia Pacific Economic Cooperation (APEC) Bogor Goal
4
; the enlargement of
the Framework Agreement on an ASEAN Investment Area (AIA) to all of East Asia; the
4
The APEC Bogor goal was declared in 1994 to set the goal of zero tariffs by 2010 for developed countries and
by 2020 for developing countries.
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advancement of development and technological cooperation among regional countries to
provide assistance to
less developed countries; and the realization of a knowledge-based
economy and establishment of a future-oriented economic structure (Dean and Wignaraja,
2007).
ASEAN and its ‘+3’ countries have made substantial progress in the areas of economic,
monetary and financial cooperation. Total trade value between ASEAN and the +3 countries
has been rising over time with an annual average growth rate of 14.6% over the period 2005–
2011). It rose from US$315.2 billion (25.7% of total ASEAN trade) in 2005 to
US$669.1billion(28% of total ASEAN trade) in 2011 (ASEAN Secretariat, 2012b). The main
driving force behind this trade flow is the establishment of bilateral trading arrangements
between ASEAN and its counterparts, namely, ASEAN-China, ASEAN-Japan, and ASEAN-
Korea. These arrangements will serve as the building blocks for the possible establishment of
an East Asian Free Trade Area (EAFTA). In terms of financial cooperation, a regional
financing arrangement called the ‘Chiang Mai Initiative’ (CMI) has been put in place. The
CMI comprises an expanded ASEAN Swap Arrangement (ASA) and a network of bilateral
swap arrangements (BSAs) among ASEAN members.
In addition, there has been significant progress in developing the Asian Bond Market
Initiative (ABMI) for China, Japan and the Republic of Korea. ASEAN+3
countries are
taking initiatives to alter existing regulations to help the issuance of and investment in local
currency denominated bonds under the ABMI.
1. ASEAN+China
The development of ASEAN-China trade and economic relations can roughly be divided into
three stages (Jianglin, 2007). The first stage, covering 1967 to 1990, was an important
moment to build mutual understanding and trust. The mutual understanding between ASEAN
and China was gradually strengthened through bilateral activities in the late 1970s and early
1980s when China dramatically changed its foreign policy. China formally agreed to have
diplomatic relations with all ASEAN members by 1991. The second stage, covering 1991 to
2001, was the rapid improvement of political and economic relations between China and
ASEAN. In particular, in 1997, both sides issued a joint declaration on building a good-
neighborly partnership oriented to the 21
st
century. The third stage, starting from 2002 to
present, is to enhance the China-ASEAN Free Trade Area by 2010. In 2004, all ASEAN
members unanimously recognized China’s full market economy status and signed the
Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic
Cooperation with China. In July 2005, the ‘early harvest trade in goods’ programme came
into effect. In 2007, both sides signed the Agreement on Trade in Services. These
arrangements have reinforced economic relationship between ASEAN and China.
2. ASEAN+Japan
The bilateral trade relationship between ASEAN and Japan has been strengthened since the
Joint Declaration made at the Japan-ASEAN Summit held on 5 November 2002 in Phnom
Penh, Cambodia. This declaration signaled an intention to (1) implement measures for the
realization of a Comprehensive Economic Partnership, including elements of a possible Free
Trade Area to be completed as soon as possible within 10 years, and (2) to establish a
Committee to consider and draft a framework for the realization of the Comprehensive
Economic Partnership between Japan and ASEAN. In October 2003, the governments of
Japan and of the ASEAN-10 signed a general framework for a bilateral free trade agreement.
In November 2004, they agreed to initiate the negotiating process. The talks started in April