The document provides information about the Association of Southeast Asian Nations (ASEAN), including its establishment, membership, goals, challenges, and opportunities. Some key points: - ASEAN was established in 1967 by 5 countries and now has 10 member countries. - Its goals include accelerating economic growth, promoting regional peace and stability, and fostering cooperation across member states. - Challenges have included the Asian financial crisis, haze pollution from forest fires, and conflicts like in Cambodia. - Opportunities include a growing market of over 600 million people that is projected to become a $4 trillion economy by 2025 across diverse industries and sectors.

1. Association of Southeast AsianAssociation of Southeast Asian
NationsNations

2. ESTABLISHMENT AND MEMBERSHIP
•It was established on 8 August 1967.
•In Bangkok by the five Countries namely
Indonesia, Malaysia, Philippines, Singapore,
and Thailand.
-Brunei Darussalam joined on 8 January 1984
-Vietnam on 28 July 1995
-Laos and Myanmar on 23 July 1997
-Cambodia on 30 April 1999

3. The Establishment of
ASEAN
Bangkok, 8 August 1967

4. Goals of ASEAN
 To accelerate the economic growth, social progress and cultural
development in the region.
 To promote
 Regional peace
 Stability
 Southeast Asian studies &
 Active collaboration and mutual assistance on matters of common interest in
economic, social, cultural, technical, scientific and administrative fields.
 To provide assistance to each other in the form of training and research
facilities in the educational, professional, technical and administrative
spheres.
 To collaborate more effectively for greater utilisation of their agriculture and
industries, expansion of their trade, improvement of their transportation and
communications facilities and raising of the living standards of their peoples.
 To maintain close and beneficial cooperation with existing international and
regional organisations.

5. CHALLENGES
The financial crisis
The haze across parts of the region and
The Cambodia question.

6. ASEAN Surveillance Process
To prevent a recurrence of the financial crisis, the ASEAN finance ministers agreed
in October 1998 on a framework for closer consultations on economic policies
called the ASEAN Surveillance Process.
ELEMENTS:-
 Monitoring of global as well as regional and national economic and financial
developments.
 To keep track of the recovery process
 To detect any sign of recurring vulnerability in the ASEAN financial systems and
economies.
 Provides a forum at which ASEAN finance ministers exchange views and
information on developments in their domestic economies, including policy
measures carried out and the progress of structural reforms.

7. ASEAN + 3 Financial Cooperation
In recognition of the financial
interdependence in East Asia, ASEAN has
stepped up its cooperation with China,
Japan and the Republic of Korea.

8. The Chiang Mai Initiative
In May 2000, the ASEAN+3 finance
ministers agreed to establish a regional
financing arrangement called the “Chiang
Mai Initiative.” It consists of two
components: an expanded ASEAN Swap
Arrangement and a network of bilateral
swap arrangements among ASEAN
countries, China, Japan and the Republic
of Korea.

9. The haze across parts of the
region

10. Transboundary Haze Pollution on 10 June 2002 was signed by ASEAN Member Countries (10) in
Kuala Lumpur, Malaysia. The Agreement is the first regional arrangement in the world that
binds a group of contiguous states to tackle transboundary haze pollution resulting from land
and forest fires. It has also been considered as a global role model for the tackling of
transboundary issues.
The Agreement requires the Parties to the Agreement:
(i) Cooperate in developing and implementing measures to prevent, monitor, and mitigate
transboundary haze pollution by controlling sources of land and/or forest fires, development of
monitoring, assessment and early warning systems, exchange of information and technology,
and the provision of mutual assistance;
(ii) Respond promptly to a request for relevant information sought by a State or States that are or
may be affected by such transboundary haze pollution, with a view to minimizing the
consequence of the transboundary haze pollution; and
(iii) Take legal, administrative and/ or other measures to implement their obligations under the
Agreement.
The Agreement establishes an ASEAN Coordinating Centre for Transboundary Haze Pollution
Control to facilitate cooperation and coordination in managing the impact of land and forest
fires in particular haze pollution arising from such fires. Pending the establishment of the
Centre, ASEAN Secretariat and ASEAN Specialized Meteorological Centre (ASMC) co-
performed the interim functions of the Centre.
The Agreement entered into force on 25 November 2003. To date, nine Member Countries, namely
Brunei Darussalam, Cambodia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore,
Thailand, and Viet Nam, have ratified the Haze Agreement.

11. Opportunities of ASEANOpportunities of ASEAN
ASEAN is observed to be an evolving
economic powerhouse and has been
gaining lot of attraction with the
international investors and enterprises.
 Among the growing economic uncertainty
in the well developed markets, the
regional association comprising largely of
developing nations is brimming with
opportunities in all sectors. It is especially
important for companies operating in the
infrastructure sector.

12. ..contd
 ASEAN Business Outlook Survey 2011, conducted by
The American Chamber of Commerce in Singapore in
collaboration with many other related associations and
chambers, revealed that American companies expect the
ASEAN market to become increasingly important for
their businesses.
 The survey polled 327 senior executives from US
companies in Cambodia, Indonesia, Malaysia,
Singapore, the Philippines, Thailand and Vietnam.
 73% of the survey respondents said they expect
ASEAN's importance to their business will increase over
the next two years, with 85% of them planning to expand
their business in ASEAN.

13.  ..contd
 Trade accounts for nearly 100% of aggregate gross domestic
product across ASEAN – the region lives or dies on the
dynamism of trade and depends on investment to fuel growth.
ASEAN has made significant progress in this area by
implementing the ASEAN Free Trade Area (AFTA) and reducing
over 95% of tariffs to 0-5% across member countries. To
compete for investment, technology and entrepreneurism
ASEAN knows it must follow through on similar pacts to liberalize
investment rules, trade in services and tear down non-tariff
barriers
 ASEAN has a significant commodity and natural resources
sector. Malaysia and Indonesia combined produce 85% of the
world’s crude palm oil, the major edible oil consumed in China
and in India. ASEAN countries are also responsible for about
80% of global rubber production. Malaysia and Indonesia have
oil reserves of 9bn barrels. Indonesia has coal reserves of more
than 4,000mn tonnes and has become one of the key suppliers
of thermal coal to both India and China, two of the world's fastest
growing energy markets. Its geographic location, close to both
countries, gives Indonesia a competitive advantage in terms of
the costs of transporting coal.

14.  ..contd
 ASEAN GDP projected to grow from US$1.7 trillion in
2010 to US$4 trillion in 2025
 Demographics are positive, with a rising share of
population in the working-age bracket
 Singapore poised to benefit from growth of Asia’s high-
net-worth population
 ASEAN is exciting in part because it’s a melting pot of
different types of economies. On the one hand, you have
a developed economy like Singapore; on the other hand
you have emerging economies, such as Vietnam and
Indonesia, that offer very exciting growth opportunities.
 If you look at Indonesia, for example, it has the largest
population in the region, with 238mn people, and at the
same time it is very rich in agriculture and commodity
resources, which feed very nicely into growing markets
like China and India. Or Thailand – agriculture for
instance. Thailand is also a major exporter of auto parts
and large trucks for the region.

15. Singapore – ASEAN’s Biggest Opportunity
 Singapore, one of the most developed members of ASEAN and
located at the heart of ASEAN, is an ideal base to tap the
opportunities in the bloc.
 Elaborating further on the Singapore advantage, it is culturally
synonymous with most of the ASEAN economies. It offers a world
class business infrastructure, enterprise eco-system, financial
services framework, legal regime and more importantly a highly
attractive tax regime.
 Singapore corporate tax rate at 17%, is one of the lowest but
notably, for qualifying regional bases activities such as strategic
business planning and development, marketing control, planning
and brand management, and technical support services, will qualify
for a concessionary corporate tax rate of 15% under the Regional
Headquarters Award scheme. This gives a strategic edge for
companies that decide to incorporate Singapore subsidiary
companies to act as regional base. Given the mounting stature of
ASEAN in global economy it is expected to see more international
businesses to incorporate Singapore companies .

16.  ..contd
 Singapore went from a third world nation to a first
world nation in one generation. In the first quarter
of 2011, its GDP overtook that of Hong Kong,
something that was unthinkable ten years ago,
when Singapore’s GDP was just 55% of its rival’s.
 With no natural resources and a small population,
Singapore has managed to carve out a niche for
itself in financial services, biomedical, and high-
end manufacturing. To give an example, today the
two dominant Singapore shipyards manufacture
close to 40% of the offshore oil platforms in the
world – an amazing feat given that Singapore itself
does not produce a single drop of oil!
 In financial services, Singapore has become the
“Switzerland of Asia” because of its strong legal
and investor-protection framework.

17.  ASEAN ICT
 There are many opportunities for a strong ASEAN ICT
(Information & Communication Technology) sector as
the world ICT market continues to grow steadily .
 To enhance its competitiveness, ASEAN should
expedite the integration of the ICT sector.
 ASEAN should also call for a strong commitment of
member countries to narrow their internal digital
divides.
 An integrated ASEAN ICT sector would require
integrated policies and regulations on the use of ICT, a
regional physical infrastructure t hat includes adequate
internet connectivity, a pool of skilled ICT professionals
and an integrated ICT labour market.

18. ..contd
In ASEAN today, ICT is a growth industry
and is a good opportunity as it currently
employs 11.7 mn people and contributing
more than 32 mn USD or 3% to ASEAN’s
GDP.
ASEAN governments have to ensure to
provide ICT services to un-served as well
as underserved areas.
ASEAN is able to provide a sizeable
skilled workforce for carrying out the ICT
transformations

19. …contd
Through ICT, trade and investment could
be enhanced
ASEAN has always kept environment
friendly approach. ICT has been able to
accomplish the same.
Creation of Innovation Centres of
Excellence & Research & Development
(R&D) centres for ICT development due to
the infrastructure and enough workforce

20.  The India ASEAN Free Trade Agreement (FTA) was
signed in Bangkok on August 13, 2009, and came into
effect from January 1, 2010 with Malaysia, Thailand and
Singapore. It is expected to be in place with all member
countries by 2016.
 The FTA collectively covers a market of nearly 1.8 billion
people and proposes to gradually slash tariffs for over
4,000 product lines.
 Currently the FTA is restricted to trade in goods while
negotiations for a similar agreement for services are
currently under way

21. Benefits of FTABenefits of FTA
 Increase in Incomes/Growth: An FTA expands trade volumes among member
countries and tends to increase incomes/growth of the members. Intuitively,
starting from a situation of tariff-distorted trade, the elimination of tariffs allows
each member to specialize in the production of the goods in which it has a
comparative advantage and trade those goods in exchange for imports of
other goods from fellow members.
 Achievement of Economies of Scale: An FTA, by eliminating tariffs, expands a
member country s export market thereby allowing it to expand its scale of‟
operations and lower its average cost of production.
 Reduction of Monopoly Inefficiencies: If inefficient monopolies exist in the
domestic market, then increased competition from foreign products dampen
domestic monopoly inefficiencies, if not eliminate them altogether.
 Availability of Greater Product Variety: The opening up of free trade increases
trade flows and expand the variety of products available to consumers in the
home country.

22. Negative Effect of Free TradeNegative Effect of Free Trade
AgreementAgreement
 Trade Diversion: Trade diversion refers to the possibility of an
FTA member country switching its import supplier from a more
efficient (low cost) country to a less efficient member country
resulting in an inefficient allocation of resources.
 Dumping: Dumping refers to the practice of a foreign country
selling its product in the home market at a price that is lower
than its “fair value”.
 Unemployment: The reduction of tariff barriers leads to
greater competition in the domestic market for the imported
product leading to loss of market share and laying off of
workers in that sector.
 Excessive Dependence: Free trade can result in the shutting
down of a number of industries that are unable to compete
with cheaper imports.

23. No of FTA in ASEAN Countries as
2010

24. Source: Asian Regional Integration Centre website

25. Factors that helped behind
emergence of FTA
 The deepening of market-driven economic integration – Asian
policymakers have realized the potential of FTAs in reducing trade barriers,
harmonizing rules, standards and regulations and the long term economic
benefits that these can bring in and have embarked on a mission to foster
greater economic integration in the region through trade pacts
 The success of European and North American economic integration
initiatives - The successes of initiatives for economic integration in
Europe
 The Asian financial crisis - The financial crisis of 1997-98 that rocked
the economies of East Asia has been an eye-opener to the fact that the
region needs to strengthen regional economic cooperation in order to
sustain economic growth along with stability. Fear of exclusion has also
prompted many nations to join the FTA bandwagon.
 Slow progress of the WTO DOHA negotiations - The WTO Doha
Development Round commenced on November 2001 as an initiative to
promote trade-led growth in developing countries. The negotiations were
primarily centered on two key areas: agriculture and non-agricultural market
access.

26. Challenges in FTA in AsiaChallenges in FTA in Asia
 Low utilization of rates of FTA: A free trade agreement bestows
numerous benefits like preferential tariffs, market access, and new
business opportunities for partner economies
 Coverage of Agricultural Goods in FTA: Another potential
problem with Asian FTAs is the suboptimal level of liberalization in
agricultural products. Lack of political will and pressure to the
pressures from the farm lobbies and social concerns.
 Rules of Origin (ROO): Rules of origin are used to determine
the country of origin of a product for purposes of international
trade. They are used to determine which goods will enjoy
preferential tariffs to prevent trade deflection among FTA members

27. Conclusion
 The India-ASEAN FTA is significant because it is the first multilateral
FTA that India has negotiated till date
 Over the last six years, the hurdles faced by the India-ASEAN FTA
 Began with objections that India had more than 1,400 items on the
sensitive or negative list.
 ASEAN countries the engine of liberalization and regulatory reform has
to be home-driven with governments taking unilateral, measures in
response to internal and external conditions. In essence, it not only
compares and contrasts trade policies in individual Southeast Asian
countries.
 India ASEAN cooperation covers the economic, political, security and
development dimensions with a number of mechanisms established to
promote dialogue and cooperation in these areas.
 Vigorous and sustained interaction between ASEAN and India would
help both parties in maintaining a high growth path and meet their
development objectives
 The fear of India losing its multilateral economic deal resounds in the
rising closeness between the two regions i.e., China and ASEAN

28. India’s Commitment
 India Commitment
 I. Normal Track - Applied Most Favored Nation tariff rates will be reduced and
subsequently eliminated in accordance with the following schedule:
 (i) Normal Track 1- 70% of the total tariff lines of which tariff rates will be reduced/
eliminated by 2014.
 (ii) Normal Track 2 - 9% of the total tariff lines of which tariff rates will be reduced/
eliminated by 2017.
 II. Sensitive Track
 (i) Sensitive Track 1- 11% of the total tariff lines with applied MFN tariff rates above
5 per cent will be reduced to 5 per cent by 2017.
 (ii) Sensitive Track 2 - 0.5% of the total tariff lines with applied MFN tariff rates at 5
per cent will be maintained; however, applied MFN tariff rates which are below 4 per
cent, will be eliminated by 2020.
 III. Special Products- Applied MFN tariff rates for special products (including crude
and refined palm oil, coffee, black tea and pepper) will be reduced to 37.8-50 per cent
by 31 Dec. 2019. (crude and refined palm oil, coffee, black tea and pepper)
 IV. Exclusion List – Applied MFN tariff rates for 489 products remains the same and
shall be subject to an annual tariff review with a view to improving market access.
coconut, cotton, milk/dairy products, wheat, paddy/rice, sugarcane, apples..

29. AGREEMENT ALREADY
COMPLETED
Agreement of Cooperation with Nepal to Control Unauthorised Trade
 Agreement on Economic Cooperation between India and Finland
 Agreement on South Asia Free Trade Area SAFTA
 Asia Pacific Trade Agreement APTA
 CECA between The Republic of India and the Republic of Singapore
 Comprehensive Economic Cooperation Agreement between India and Malysia
 Global System of Trade Preferences GSTP
 India Chile PTA
 India Afghanistan PTA
 India ASEAN Agreements
 India Bhutan Trade Agreement
 India Japan CEPA
 India Korea CEPA
 India MERCOSUR PTA
 India Nepal Trade Treaty
 India Sri Lanka FTA
 SAARC Agreement on Trade in Services SATIS
 Treaty of Transit between India and Nepal