ASEAN Continues Integration


Textile World Asia Special ReportASEAN Continues IntegrationASEAN sets sights on building
stronger cooperation to facilitate trade in the growing region.

The Association of Southeast Asian Nations (ASEAN) was established in 1967 with five original
member countries – Indonesia, Malaysia, the Philippines, Singapore, and Thailand. In 1984, Brunei
joined followed by Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. According to
ASEAN, the region currently has a population of approximately 500 million in a total area of 4.5
million square kilometers. The combined gross domestic product is $737 billion and total trade is
on the order of $720 billion.In late November of 2004, the heads of state and government of the
ASEAN gathered in Vientiane, Laos, for the 10th ASEAN Summit with the theme “Towards shared
prosperity and destiny in an integrated, peaceful and caring ASEAN Community.”The gathered
dignitaries reiterated their commitment to “strengthen efforts to narrow the development gap in
ASEAN by building upon existing initiatives such as the Initiative for ASEAN Integration, the
Roadmap for the Integration of ASEAN, the Ha Noi Declaration on Narrowing Development Gap for
Closer ASEAN Integration of 23 July 2001 and the Vientiane Declaration on Enhancing Economic
Cooperation and Integration among Cambodia, Lao PDR, Myanmar and Viet Nam of 28 November
2004.”According to ASEAN, special attention was focused on two areas. The first is the broader
integration of the 10 member countries into one cohesive ASEAN community. The second is to identify
new strategies to narrow the development gap; to quicken the pace of integration; and for member
countries to work closely among themselves and with dialogue partners and others to mobilize
political will and generate the required resources for the effective implementation of the
Vientiane Action Programme.Textile TradeIn terms of trade integration in the region, textiles and
apparel are included in the “Initial Eleven Priority Sectors for Integration” outlined by ASEAN.
According to ASEAN, acceleration of economic integration towards a single market and production
base will begin with 11 sectors, selected on the basis of comparative advantage in natural resource
endowments, labor skills and cost competitiveness, and value-added contribution to ASEAN’s economy.
These sectors are expected to demonstrate that integration enhances competitiveness and thereby
ASEAN’s attractiveness as an investment destination. As the institutional capacity of ASEAN for
economic integration strengthens, more sectors will be included in the accelerated integration
program.The following are the 11 priority sectors identified for full integration by 2010:

  • agro-based products
  • automotive
  • electronics
  • fisheries
  • rubber-based products
  • textiles and apparels
  • wood-based products
  • air travel
  • e-ASEAN
  • healthcare
  • tourism

As to why these sectors were selected and the purpose of the integration, ASEAN stated: “The
proposed approaches to integrate these priority sectors are premised on combining the economic
strengths of ASEAN member countries for regional advantage; facilitating and promoting intra-ASEAN
investments; improving the conditions to attract and retain manufacturing and other economic
activities within the region; promotion of intra-industry trade and outsourcing within ASEAN; and
promoting the development of “Made in ASEAN’ products and services.”

At its most recent summit, ASEAN reiterated its commitment for broader integration of the
member countries into one cohesive community.According to ASEAN, the selected sectors accounted for
more than 50 percent of intra-ASEAN trade in 2003. In value terms, the priority sectors contributed
$48.4 billion and $43.4 billion of intra-ASEAN exports and imports, respectively, in 2003. In terms
of implementation, ASEAN said there will be a roadmap to serve as the basis for economic
integration for each priority sector.The roadmap aims to:

  • enhance the competitiveness of ASEAN;
  • strengthen regional integration efforts through liberalization, facilitation and promotion
    measures; and
  • promote private sector participation.

The roadmap includes specific measures that are of direct relevance to each sector, as well as
common measures that cut across all priority integration sectors to be implemented with timelines
from now on to the year 2010, said ASEAN.

Based on the roadmaps, import duties for products in the priority sectors will be fully
eliminated by 2007 for ASEAN-6 and 2012 for the new members of ASEAN. This is three years earlier
than the original target set by the ASEAN Free Trade Area. Approximately 4,000 tariff lines or
approximately 40 percent of total tariff lines in ASEAN are included in the fast-track
integration.According to ASEAN, the roadmaps will also focus on trade and investment facilitation
measures, such as the ASEAN Single Window. Electronic processing of trade documents at national and
regional levels will be implemented; product standards and technical regulations will be
harmonized; and mutual recognition of test reports and certification will be concluded to reducethe
transaction costs of doing business in ASEAN. In addition, ASEAN nationals traveling within ASEAN
will be exempted from visa requirements, thus facilitating the movement of business people,
experts, professionals and talents. It is expected that implementing the measures in the roadmaps
will not only accelerate the integration of ASEAN, but the experience also will serve as a showcase
for more sectors to be included in future accelerated integration program. ASEAN said “this initial
exercise is critical in paving the way for the deeper economic integration of ASEAN and to achieve
the objective of the ASEAN Economic Community by 2020 or earlier. It is also critical in preparing
ASEAN in the light of the various free-trade area negotiations being pursued with China, India,
Japan, Australia and New Zealand and the Republic of Korea.”

Plus ThreeThe ASEAN Plus Three cooperation began in 1997 with the convening of an informal
summit among the leaders of ASEAN and their counterparts from China, Japan and Korea. The process
was formalized in 1999 when ASEAN leaders issued a joint statement on East Asia cooperation at the
3rd ASEAN Plus Three Summit. The statement expressed resolve and confidence in further
strengthening and deepening East Asia cooperation at various levels and in various areas,
particularly in economic, social, political and other fields. The latest ASEAN Plus Three Summit
was held in late 2004 in Vientiane, during which it was decided that an expert group will be
established to conduct a feasibility study on the establishment of an East Asia Free Trade Area.

ASEAN Plus Three Nations:China, Korea, Japan.ASEAN said at the summit, ”We agreed that the
establishment of an East Asian Community is a long-term objective. We reaffirmed the role of the
ASEAN Plus Three process as the main vehicle for the eventual establishment of an East Asian
Community. China, Japan and the Republic of Korea reiterated their support for ASEAN’s role as the
major driving force in East Asia cooperation.”

March/April 2005