How will the emerging ASEAN countries affect the global apparel industry? Find out in the new article here

2. Association of Southeast Asian Nations, ASEAN
• Formed on 8th August 1967.
• Member states: Indonesia, Philippines, Malaysia, Singapore,
Thailand, Cambodia, Lao PDR, Brunei Darussalam, Myanmar,
and Vietnam.
• It is an intergovernmental regional organization, formed to
promote inter-country trade, governmental cooperation,
and economic, political and socio-cultural integration of the
member countries, and globally.

3. Association of Southeast Asian Nations, ASEAN
• It was formed to :
– protect the member states’ regional stability, and
– instill peace amongst them in times of conflict
resolution.
• In 2015, ASEAN organization’s nominal GDP
(combined) was around $2.8 trillion, making
ASEAN a global powerhouse.

4. Association of Southeast Asian Nations, ASEAN
• ASEAN as a single entity shares its physical borders
with major apparel trade giants like India, China, and
Bangladesh.
• It has been the foundation of several establishments
like East Asia Summit, EAS, and Regional
Comprehensive Economic Partnership, RCEP (FTA
between ASEAN, Australia, China, Japan, South
Korea, New Zealand and India).

5. ASEAN Free Trade Agreements
• Free Trade Agreements within the ASEAN countries are
lead by the ASEAN Trade in Goods Agreement (ATIGA)
and the Agreement on Customs.
• The ASEAN Free Trade Area (AFTA) is a trade bloc
agreement which launched the Common Effective
Preferential Tariff Scheme (CEPT).
• CEPT states that the tariff will be reduced to 0-5%, on
the goods being traded within ASEAN region, if the
goods meet a 40% ASEAN content requirement.

6. ASEAN Free Trade Agreements
• ASEAN trade bloc has also signed various FTAs
with some major Asia-Pacific economies.
• These FTAs include:
– The ASEAN-China FTA (ACFTA),
– The ASEAN-Australia-New Zealand FTA (AANZFTA),
– The ASEAN-Korea FTA (AKFTA),
– The ASEAN-India FTA (AIFTA), and
– The ASEAN-Japan Comprehensive Economic
Partnership (AJCEP).

7. (Image Source: www.aseanbriefing.com)

8. The ASEAN Competitive Advantage
• The ASEAN Free Trade Area competes predominantly in
the trade of unprocessed products or raw material for the
textile and clothing industry.
• Apparel and textile industry is vital to the ASEAN
economies and many ASEAN players are the front-runners
in the industry globally.
• AFTA and the regional integration efforts have significantly
contributed to the industry's advancement.

9. The ASEAN Competitive Advantage
• The availability and relative cost of labor are two important
determinants of success in the apparel industry.
• Cross-border integration is nurtured within ASEAN countries, by
investment from the fabric producing countries in ASEAN like
China into the lower-cost-apparel manufacturing countries of
Vietnam and Cambodia.
• The intra-ASEAN trade is an integral part of building the value
chain in the apparel industry.

10. The ASEAN Competitive Advantage
• The process of trade liberalization through AFTA, various
FTAs and the ASEAN Economic Community’s creation in
2015, has led to:
– tariff reduction & elimination
– and elimination of the non-tariff barriers
• We have seen the exports value of ASEAN5 namely Malaysia,
Thailand, Indonesia, Philippines and Vietnam’s exports of
apparel and textile products nearly triple from USD 24.4
billion in 2001 to USD 71.8 billion in 2014.

11. (Image Source: http://www.e-jei.org)

12. ASEAN India FTA
• Came into effect on 1st January 2010.
• This agreement led to duty liberalization between
India and ASEAN countries to enhance bilateral trade.
• Under AIFTA, each trading partner can keep some
products out of the agreements, as far as they
amount to less than 5% of bilateral traded imports.

13. ASEAN India FTA
• Before AIFTA, India's exports of apparels & textiles to
ASEAN have virtually been constant for years and have not
shown much traction.
• India’s competitive advantage in the industry is the
presence of the entire textile value chain, but the trade of
its most exported items to ASEAN like cotton fiber, yarn
and fabrics did not grow, as India wasn’t able to explore
and leverage its strengths to the fullest.
• This FTA can offer a gateway for market access to China,
North East Asia and the EU for India.

14. ASEAN India FTA
• AIFTA is expected to bring investments from ASEAN
textile manufacturers in the Indian manufacturing sector.
• India and ASEAN countries posses traditional weaving
styles and this FTA can help them to structure integration
arrangements for the designers and institutes within the
trading bloc and India to develop fusions which global
markets will cherish.

15. For more insight on this topic, visit
www.stitchdiary.com