Regional economic integration ASIA, USA, EU
Submitted by: S M Ruhan Submitted to:
ID: 2011110000171 Lecturer
Program: BBA School of Business Studies
Table of Content
1. Cover Page
2. Table of content
3. Executive Summary
5-8 The European Union Model, The State of the Union, Year Of Established, Objectives of the
9-13 The Fundamental Principles, Rights, List of countries, Current scenario
14-17 FTAs, APEC, ASEAN, SAFTA, The global and regional political context, Current
18-21 NAFTA, Objectives, Member countries
22-23 Objectives Of SICA, Year of Established, Members countries, Functions
24 Conclusion and References
South Asia is the most malintegrated region in the world. And east and south Asia are
much less integrated in finance than they are in trade and FDI – due to highly restrictive
national policies governing financial markets.
Asia’s existing FTAs are “trade light”. They are largely limited to tariff cuts, but have
barely tackled non-tariff regulatory barriers in goods, services and investment, and are be
devilled by complex rules of origin requirements.
Asian regional institutions can be useful at the margin. They can be “chat forums” for
policy dialogue and exchange of information, gradually improve mutual surveillance and
transparency, promote trade facilitation and “best-practice” measures, and (at best)
cement unilateral liberalization and help to prevent its reversal in difficult times. But
more ambitious regional initiatives are inadvisable, indeed unachievable. Better,
therefore, to be pragmatic and realistic – and stick to terra firma.
Asia’s existing FTAs are “trade light”. They are largely limited to tariff cuts, but have
barely tackled non-tariff regulatory barriers in goods, services and investment, and are be
devilled by complex rules of origin requirements.
Asian regional integration is not likely to come about through top-down regional policy
initiatives. The key to future regional and global integration is renewed unilateral, non-
discriminatory liberalization, this time going beyond border barriers to tackle behind-the-
border regulatory barriers. That, more than anything else, would extend multinationals’
supply chains in the region, and open up regional markets for domestic producers and
An APEC FTA initiative has gone nowhere – entirely predictable given such a large, het-
erogeneous grouping. An east-Asian or a pan-Asian FTA, by discriminating against third
countries, would compromise regional production networks linked to global supply
chains. Moreover, huge economic gaps and enduring political differences will stymie
Asian regional integration for some time to come. As for regional monetary and financial
cooperation, it is embryonic, very soft and confined to East Asia.
While the European Union (EU) has long been the most developed
model of regional integration, it was severely shaken by the recent
economic crisis, causing increasing doubts about the integration process.
The lack of a timely and coherent response to the euro crisis called into
question the integrity of the euro zone, whose structural and institutional
fault lines have been revealed by the financial crisis. These doubts
coincide with dramatic changes in the global economic order involving
the relative decline of the EU and United States and the rise of Asia. The
likely economic adjustments are already threatening social cohesion and
political stability in Europe. The crisis has temporarily weakened the
EU's status as a model for regional integration, but as the EU recovers its
confidence, as it always has after previous crises, it will continue to be
the leading example for other efforts at regional integration.
Past efforts at regional integration have often focused on removing
barriers to free trade in the region, increasing the free movement of
people, labor, goods, and capital across national borders, reducing the
possibility of regional armed conflict (for example, through Confidence
and Security-Building Measures), and adopting cohesive regional
stances on policy issues, such as the environment, climate change and
The European Union Model
Since the early 1950s, the EU has been a pioneer in regional integration. The most important
principles underlying the success of the EU project include:
– Visionary politicians, such as Robert Schuman of France and Konrad Adenauer of Germany,
who conceived of a new form of politics based on the supranational "community method" rather
than the traditional balance-of-power model. Support from the United States was also crucial in
the early years.
– Leadership generated by the Franco-German axis. Despite many problems, Paris and Berlin
have been and remain the driving force behind European integration.
– The political will to share sovereignty and construct strong, legally based, common institutions
to oversee the integration project.
– A consensus approach combined with solidarity and tolerance. The EU approach is based on
not isolating any member state if they have a major problem (such as Greece in the most recent
crisis), hesitance to move forward with policies until the vast majority of member states are
ready, and a willingness to provide significant financial transfers to help poorer member states
catch up with the norm.
These four tenets have guided the EU well over the years and enabled the institutions to survive
many crises, from French president Charles de Gaulle's "empty chair" tactic of withdrawing
French representatives from EU political bodies in protest of moves to introduce qualified
majority voting (QMV) to failed referendums on new treaties in a number of member states,
including rejection of the Constitutional Treaty by France and the Netherlands in 2005 and the
Lisbon Treaty by Ireland in 2008. More recently, the EU has adopted a more flexible approach
resulting in a multi-speed Europe with several tiers of integration. For example, not all member
states are in the eurozone, or in the Schengen passport-free zone; this arrangement has allowed
some of the more Euro-skeptic countries such as the United Kingdom to opt out of certain
obligations. Nevertheless, the core tenet of the EU is readiness to share sovereignty and operate
through strong common institutions
The State of the Union
Compared to most other regions of the world, the EU is a haven of peace, prosperity, and
security. Following the global economic crisis, however, there are several major challenges
facing the EU that, if not tackled with urgency and determination, could threaten the entire
European project. Namely, the EU has grown and integrated rapidly without commensurate
strengthening of its political and economic institutions. The emerging gap between necessary
coordination and institutional capacity in the EU suggests a lesson for other regional groupings if
and when they arrive at later stages of the integration process.
The first challenge is increased fiscal coordination amid a worsening economic outlook. The EU
needs to cleanse the financial system and follow through on austerity measures introduced by
almost all member states. The situation in late summer 2010 is less critical than it appeared in the
spring, when many doomsayers were predicting the collapse of the euro and even suggesting the
EU might break up. The major risk today is the continuing fragility of the economies of some
euro zone member states such as Greece, Spain, and Portugal, and the possibility of renewed
speculation in the financial markets. Although there are some positive signs of economic
recovery in Europe, many economists continue to warn of a possible "double dip" recession and
the likely impact of the ongoing problems of many European banks. While most passed the
"stress tests" at the end of July 2010, there was broad agreement that these tests were not as
strenuous as they could have been.
The European Union (EU) is an economic and political union of 28 member states that are
located primarily in Europe. The EU operates through a system of supranational independent
institutions and intergovernmental negotiated decisions by the member states.
the EU include the European Commission, the Council of the European Union, the European
Council, the Court of Justice of the European Union, the European Central Bank, the Court of
Auditors, and the European Parliament. The European Parliament is elected every five years by
The EU traces its origins from the European Coal and Steel Community (ECSC) and the
European Economic Community (EEC), formed by the Inner Six countries in 1951 and 1958,
respectively. In the intervening years the community and its successors have grown in size by the
accession of new member states and in power by the addition of policy areas to its remit. The
Maastricht Treaty established the European Union under its current name in 1993. The latest
major amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force in
The EU has developed a single market through a standardised system of laws that apply in all
member states. Within the Schengen Area (which includes 22 EU and 4 non-EU states) passport
controls have been abolished. EU policies aim to ensure the free movement of people, goods,
services, and capital, enact legislation in justice and home affairs, and maintain common policies
on trade, agriculture, fisheries, and regional development.
Year Of Established:
The following visionary leaders inspired the creation of the European Union we
live in today. Without their energy and motivation we would not be living in the
sphere of peace and stability that we take for granted. From resistance fighters to
lawyers, the founding fathers were a diverse group of people who held the same
ideals: a peaceful, united and prosperous Europe. Beyond the founding fathers
described below, many others have worked tirelessly towards and inspired the
European project. This section on the founding fathers is therefore a work in
The Objectives of the European Union
The European Treaty was put in place with a host of major objectives. Each
objective is designed to improve quality of life throughout Europe. There is also a
section on foreign policy and what the Union hopes to achieve throughout the
The European Union uses it’s objectives to help guide the union and put necessary
practices into place. You can continue reading to find out more.
The main objectives of the European Union is to promote peace, along with
ensuring it’s people’s well-being and maintaining the values of the Union.
Major Objectives Included in Union
The Union works hard to follow it’s objectives including freedom and security
with justice for all residents. They work to ensure a free and undistorted
competition and a sustainable development through price stability and economic
growth. Finding information about the Union`s easy on line, do a search the same
as you would for Scottish Trust Deed or st. louis real estate.
Other major objectives of the union include ensuring full employment, improving
environmental quality and technological advancement. They work to fight
discrimination, promote social justice and child protection rights.
You can think of the European Union as a muscle maximizer as they safeguard
cultural heritage throughout the European areas while working hard to achieve
When putting the European Treaty in place the objectives were not solely
dedicated to Europe, they worked hard on a foreign policy as well, which is
worked at on a daily basis.
Their foreign policy ensures fair trade. They want to eradicate poverty throughout
the world while protecting human rights. They want to develop an international
law, a sustainable environment and a sustainable development between countries
while promoting peace.
This policy has not just been written down on a piece of paper and have lab rats
following the rules. These are thought out to not only promote the well-being of
people residing within Europe, but enable these people to work with other
countries whether it’s through trade or working to improve the quality of life in
If you go on line and search for torn hill or Qui bids, chances are you won’t find
anything about the European Unions objectives there, but they do play a part,
through these sites they offer free trade and fair trade throughout the world.
Many countries are happy working with the European Union as they work towards
their objectives, using them as guidelines in the daily development of the area.
Europe has close ties to America and other countries where they import and export
goods, work together to develop suffering areas and form a sustainable
environment ensuring our children have a safe place to grow up in the future.
Through these European Union objectives, prime ministers and presidents are able
to work together to develop the ideals that the Union is working towards. Through
technological advancements the country will be able to enjoy a stable infrastructure
where they can promote their stable prices and enjoy economic growth.
( http://www.jidtunisie.net/2012/09/the-major-objectives-of-the-european-union/ )
THE VALUES OF THE UNION
The Union is founded on the values of respect for human dignity, liberty, democracy, equality,
the rule of law and respect for human rights, including the rights of persons belonging to
minorities. These values, which are set out in Article I-2, are common to the Member States.
Moreover, the societies of the Member States are characterized by pluralism, non-discrimination,
tolerance, justice, solidarity and equality between women and men. These values play an
important role, especially in two specific cases. Firstly, under the procedure for accession set out
in Article I-58, any European State wishing to become a member of the Union must respect these
values in order to be considered eligible for admission. Secondly, failure by a Member State to
respect these values may lead to the suspension of that Member State's rights deriving from
membership of the Union
In comparison with the existing Treaties, the Constitution has included new values, notably
human dignity, equality, the rights of minorities and the characterization of the values upheld by
the societies of the Member States.
THE FUNDAMENTAL PRINCIPLES
Article I-4 of the Constitution guarantees the free movement of persons, goods, services and
capital within the Union (the famous "four freedoms") and strictly prohibits any discrimination
on grounds of nationality.
As regards relations between the Union and the Member States, the Constitutional Treaty brings
together the relevant provisions of the existing Treaties in Article I-5, in particular the obligation
to respect the national identities and the fundamental political and constitutional structures of the
Member States. The principle of loyal cooperation is also included in this Article.
Article I-6 of the Constitutional Treaty is devoted to Union law. It lays down the principle of the
primacy of the law of the European Union over the law of the Member States. This principle,
which has been developed by the Court of Justice in its case-law, has long been recognised to be
a basic principle and a key aspect of the functioning of the Union. The Constitution simply gives
it a higher profile by incorporating it into a key part of the Treaty.
Article I-7 confers on the European Union legal personality. Following the merger of the
European Community and the European Union, the new Union will therefore have the right to
conclude international agreements , in the same way as the European Community can today, but
without compromising the division of competences between the Union and the Member States.
THE SYMBOLS OF THE UNION
Article I-8 lists the symbols of the Union:
• the flag of the Union, which is a circle of twelve gold stars on a blue background;
• the anthem of the Union, which is based on the 'Ode to Joy' from the Ninth Symphony by
Ludwig van Beethoven;
• the motto of the Union, which is 'United in diversity';
• the currency of the Union, which is the euro;
• 9 May, which is celebrated throughout the Union as Europe Day, in memory of the 1950
declaration by Robert Schuman, who initiated the European integration project.
The Constitution does not create new symbols. Rather, it takes the symbols that are already used
by the EU and are familiar to ordinary citizens and gives them constitutional status.
As regards the protection of fundamental rights, the Constitution makes significant advances.
Article I-9 of the Constitutional Treaty reproduces the guarantee of fundamental rights provided
in the EU Treaty and refers to the European Convention for the Protection of Human Rights and
Fundamental Freedoms (ECHR) and to the constitutional traditions common to the Member
States. This Article also opens the way for the Union to seek formal accession to the ECHR.
Fundamental rights therefore form part of Union law as general principles.
A protocol annexed to the Constitution provides that the accession of the Union to the ECHR
must preserve the specific characteristics of the Union and Union law and not affect the specific
situation of Member States in relation to the ECHR. Moreover, a declaration annexed to the
Final Act of the Intergovernmental Conference (IGC) notes the existence of a regular dialogue
between the Court of Justice of the European Union and the European Court of Human Rights,
which could be reinforced when the Union accedes to that Convention.
In addition, the Constitutional Treaty includes the Charter of Fundamental Rights, which was
solemnly proclaimed at the Nice European Council in December 2000, in Part II of the
Constitution. The European Union therefore acquires for itself a catalogue of fundamental rights
which will be legally binding not only on the Union, its institutions, agencies and bodies, but
also on the Member States as regards the implementation of Union law. The inclusion of the
Charter in the Constitution does not compromise the division of competences between the Union
and the Member States.
The inclusion of the Charter in the Constitutional Treaty will make it more visible to all citizens,
who will be better informed of their rights. The Charter also contains additional rights not
contained in the European Convention for the Protection of Human Rights and Fundamental
Freedoms, such as workers' social rights, data protection, bioethics or the right to good
A GROWING COMMUNITY – THE FIRST ENLARGEMENT (1970 – 1979)
Denmark, Ireland and the United Kingdom join the European Union on 1 January 1973, raising
the number of member states to nine. The short, yet brutal, Arab-Israeli war of October 1973
result in an energy crisis and economic problems in Europe. The last right-wing dictatorships in
Europe come to an end with the overthrow of the Salazar regime in Portugal in 1974 and the
death of General Franco of Spain in 1975. The EU regional policy starts to transfer huge sums to
create jobs and infrastructure in poorer areas. The European Parliament increases its influence in
EU affairs and in 1979 all citizens can, for the first time, elect their members directly.
THE CHANGING FACE OF EUROPE - THE FALL OF THE BERLIN WALL (1980 –
The Polish trade union, Solidarność, and its leader Lech Walesa, become household names
across Europe and the world following the Gdansk shipyard strikes in the summer of 1980. In
1981, Greece becomes the 10th member of the EU and Spain and Portugal follow five years
later. In 1986 the Single European Act is signed. This is a treaty which provides the basis for a
vast six-year programme aimed at sorting out the problems with the free-flow of trade across EU
borders and thus creates the ‘Single Market’. There is major political upheaval when, on 9
November 1989, the Berlin Wall is pulled down and the border between East and West Germany
is opened for the first time in 28 years, this leads to the reunification of Germany when both East
and West Germany are united in October 1990.
A EUROPE WITHOUT FRONTIERS (1990 – 1999)
With the collapse of communism across central and eastern Europe, Europeans become closer
neighbours. In 1993 the Single Market is completed with the the 'four freedoms' of: movement of
goods, services, people and money. The 1990s is also the decade of two treaties, the ‘Maastricht’
Treaty on European Union in 1993 and the Treaty of Amsterdam in 1999. People are concerned
about how to protect the environment and also how Europeans can act together when it comes to
security and defence matters. In 1995 the EU gains three more new members, Austria, Finland
and Sweden. A small village in Luxembourg gives its name to the ‘Schengen’ agreements that
gradually allow people to travel without having their passports checked at the borders. Millions
of young people study in other countries with EU support. Communication is made easier as
more and more people start using mobile phones and the internet.
FURTHER EXPANSION (2000 – 2009)
The euro is the new currency for many Europeans. 11 September 2001 becomes synonymous
with the 'War on Terror' after hijacked airliners are flown into buildings in New York and
Washington. EU countries begin to work much more closely together to fight crime. The
political divisions between east and west Europe are finally declared healed when no fewer than
10 new countries join the EU in 2004, followed by two more in 2007. A financial crisis hits the
global economy in September 2008, leading to closer economic cooperation between EU
countries. The Treaty of Lisbon is ratified by all EU countries before entering into force on 1
December 2009. It provides the EU with modern institutions and more efficient working
A DECADE OF OPPORTUNITIES AND CHALLENGES (2010 – TODAY)
The new decade starts with a severe economic crisis, but also with the hope that investments in
new green and climate-friendly technologies and closer European cooperation will bring lasting
growth and welfare.
List of Countries - European Union (EU) 2013
List of Countries - European Union (EU) 2013 - Classification structure
Code Country Alpha-2 Alpha-3
040 Austria AT AUT
056 Belgium BE BEL
100 Bulgaria BG BGR
191 Croatia HR HRV
196 Cyprus CY CYP
203 Czech Republic CZ CZE
208 Denmark DK DNK
233 Estonia EE EST
246 Finland FI FIN
250 France FR FRA
276 Germany DE DEU
300 Greece GR GRC
List of Countries - European Union (EU) 2013 - Classification structure
Code Country Alpha-2 Alpha-3
348 Hungary HU HUN
372 Ireland, Republic of (EIRE) IE IRL
380 Italy IT ITA
428 Latvia LV LVA
440 Lithuania LT LTU
442 Luxembourg LU LUX
470 Malta MT MLT
528 Netherlands NL NLD
616 Poland PL POL
620 Portugal PT PRT
642 Romania RO ROU
703 Slovakia SK SVK
705 Slovenia SI SVN
724 Spain ES ESP
752 Sweden SE SWE
826 United Kingdom GB GBR
Function of EU
The overall function of the European Union is to create and implement laws and regulations that
integrate the member states of the EU. The countries of the EU are supposed to have uniform
laws and policies concerning a variety of things (like immigration, labor, weights and measures
-- all sorts of things). The function of the EU government is to decide how this integration
should be done and to carry it out.
For example, 16 members of the EU use the Euro as their currency. One of the functions of a
part of the EU government was to devise the currency -- to decide what it would be called what it
would look like, etc. Another part of the EU government tries to get countries using the Euro to
enact fiscal policies that will keep the Euro stable. They try, in other words, to prevent fiascos
like what happened in Greece this past year and they try to remedy them if they happen.
Current situation of EU
The European Union is an economic and political partnership between 27 European countries
that together cover a large part of the European continent. As the EU website explains: “It was
created in the aftermath of the Second World War. The first steps were to foster economic
cooperation: the idea being that countries who trade with one another become economically
interdependent and so more likely to avoid conflict. The result was the European Economic
Community (EEC), created in 1958, and initially increasing economic cooperation between six
countries: Belgium, Germany, France, Italy, Luxembourg and the Netherlands. Since then, a
huge single market has been created and continues to develop towards its full potential. But what
began as a purely economic union has also evolved into an organisation spanning all policy
areas, from development aid to environment. A name change from the EEC to the European
Union (the EU) in 1993 reflected this change.”
The Nobel Prize Committee recognised the achievements of the European Union by awarding
the 2012 Peace Price to the project “for over six decades contributed to the advancement of
peace and reconciliation, democracy and human rights in Europe“. But in the shadow of the
European debt crisis Europe appears less the united with Euroscepticism gaining momentum in
some countries. A 2009 study by the European Commission “Portugal and Hungary (both 50%)
and Latvia (51%) contain the fewest people who feel optimistic about the EU’s future. The UK
(53%), Greece (54%) and France (57%) also record noticeably low figures” (see page 212 in the
accompanying report). “Euroscepticism in the United Kingdom has been a significant element in
British politics since the inception of the European Economic Community (EEC), the
predecessor to the EU”, concludes a Wikipedia contribution, which reflects the emotional and
often – in either way – dogmatic nature of the debate in the most skeptic members of the Union.
The EU appears to have become a welcome recession scapegoat.But what is the European Union
anyway. Rather than an alien construct imposed on the member states, it still is the agreed
structure set up by its member states (for the good or bad, that is). The following series of maps
gives a brief introduction into some of the key figures that shape the countries that are part of the
EU and who are about the meet for negotiations on how to fund the European Union for the rest
of the decade – having crucial implications on the role and purpose of the project. All maps
shown here are cartograms based on national-level statistics. The first map is a population
cartogram of the member states showing where how many people live (a more detailed
perspective gives this gridded population cartogram of the EU)
In essence, Asia has played FTA catch-up with other regions. FTAs have proliferated like
wildfire. By June 2009, East Asia plus India (the ADB’s “integrating Asia”) had concluded 54
FTAs, up from 3 in 2000. 40 FTAs are currently in effect, and another 78 are either under
negotiation or proposed (Table 5). Most of these (74% of concluded FTAs) are bilateral FTAs
rather than plurilateral or regional negotiations and agreements. Many – indeed the majority for
China, India, Singapore and South Korea -- are with extra-regional partners.13 The major Asian
players – China, India and Japan – are involved, as are South Korea, Australia, New Zealand, the
ASEAN countries, as well as other south-Asian countries. The USA is involved with individual
Asian countries, as are some Latin American countries and South Africa. The EU has FTA
negotiations with South Korea, India and ASEAN.
APEC’s membership is diverse and unwieldy; its agenda has become impossibly broad and
unfocused; its vaunted Open (i.e. non-discriminatory) Regionalism is dead in the water; and
these days it is driven by shallow conferencitis and summitry. It cannot be expected to contribute
Anything serious to regional economic integration. An APEC FTA initiative (FTAAP – Free
Trade Area of the Asia Pacific) was launched at the APEC Hanoi Summit in 2006.17 It has gone
nowhere: political and economic divisions in such a large, heterogeneous grouping are manifold
and intractable. The best APEC can hope for is to encourage “best-practice” trade-related
policies through research, mutual surveillance and exchange of information – akin to what the
OECD does for its members. But even that may be too much to expect.
The ASEAN Free Trade Area (AFTA) has an accelerated timetable for intra-ASEAN tariff
elimination, but seen little progress on “AFTA-plus” items such as services, investment, non-
tariff barriers, and mutual recognition and harmonization of standards. An ASEAN Economic
Community (AEC), a single market for goods, services, capital and the movement of skilled
labor, with a fast track for “priority sectors”, is supposed to be achieved by 2015. A new ASEAN
Charter gives the group a common legal personality. On the economic front, the Charter contains
two new agreements, the ASEAN Trade in Goods Agreement (ATIGA) and the ASEAN
Comprehensive Investment Agreement (ACIA). these integrate separate agreements into single
consolidated legal texts on trade in goods and FDI respectively. The ASEAN Agreement in
Services (AFAS) remains unchanged. Will these initiatives spur intra-regional integration and be
a viable collective force in Asian and wider international relations? The track record indicates
otherwise. AFTA is among the strongest Asian FTAs, but it is also trade-light. Its vaunted
success is the Common Effective
Preferential Tariff (CEPT): Intra-regional tariffs have come down close to zero in the
old ASEAN members, with longer transition periods for the poorer new ASEAN members. But
the CEPT is mostly a paper exercise: ASEAN countries’ tariffs have been coming down
unilaterally in any case; and there has been minimal take-up of CEPT preferences by firms.
ASEAN also has agreements on tackling non-tariff barriers and liberalizing services and
But these are very weak and have resulted in hardly any net liberalization. In sum, ASEAN
economic integration has been limited to tariff cuts, but it has a pathetic record in tackling intra-
regional regulatory barriers.
South Asia’s regional-integration initiatives are even weaker than in East Asia – not surprising
given its abysmal record on intra-regional trade. South Asia’s strongest FTA is that between
India and Sri Lanka. But this is actually weak, with carve-outs, tariff-rate quotas
And stringent ROOs effectively excluding or restricting up to half of bilateral trade. The South
Asian Association of Regional Cooperation (SAARC) was founded in 1985, and a South Asian
Preferential Trade Area (SAPTA) became operational in 1995. The latter had limited product
coverage. The South Asian Free Trade Area (SAFTA), operational since 2006, is supposed to be
a full-fledged FTA by 2015. To date it is restricted to trade in goods. But tariff lines in members’
“sensitive lists” exclude just over half of intra-regional trade, in addition to very restrictive
ROOs on products targeted for tariff reduction. Other NTBs make matters worse. For example, a
“rule of destination” restricts entry of covered imports to specified Indian ports and land customs
stations. Finally, trade between SAFTA’s two largest members,
India and Pakistan, is minuscule. Bilateral trade is throttled because neither country effectively
accords the other most-favored-nation (MFN) status. It is extraordinary that two countries with
such a long shared border, and which, pre-independence, were a unified political-economic
space, should have bilateral trade that amounts to less than 1 per cent of their total trade.
Wider regional-integration initiatives: ASEAN Plus Three, ASEAN Plus Six, APC, TPP
Lastly, there is much talk in the region of folding bilateral FTAs and collective ASEAN FTAs
with third countries into larger, integrated FTAs that would cover East Asia, perhaps include
south Asia, and even stretch across the Pacific. At the more modest end of the scale, the Trans-
Pacific Strategic Economic Partnership Agreement is a four-way FTA (dubbed “P4”) that brings
together Singapore, Brunei, New Zealand and Chile, all small, open econo¬mies with a network
of pre-existing bilateral FTAs. Australia, Peru and Vietnam – and now the USA – have agreed to
negotiate with the P4 to enter an expanded Trans-Pacific Part¬nership (TPP). More ambitiously
in terms of geographic coverage, an “ASEAN plus Three” (APT) FTA (the “three” being Japan,
South Korea and China) has been touted. There is talk of an “ASEAN plus Six” FTA that would
subsume APT plus India, Australia and New Zealand. The first East Asia Summit (EAS), held in
Kuala Lumpur in 2005, gave impetus to these ideas. An ASEAN-Plus-Six FTA has been
promoted by the Japanese government – as a counter to what Japan sees as an inevitably China-
centered APT. And now the Australian Prime Minister, Kevin Rudd, has floated the idea of an
Asia-Pacific Community, probably reaching across to North America and some South American
countries. This would be an overarching forum that would cover political, security and economic
Monetary and financial policies
There are three main sets of regional initiatives on monetary and financial cooperation, all
centered on East Asia: the Chiang Mai Initiative on currency swaps; the Asian Bond Fund and
the Asian Bond Market Initiative; and the Asian Currency Unit. These are all “soft” or “middle-
strength” ideas, not “hard” proposals for exchange-rate and monetary coordination or
harmonization of financial regulations. One harder proposal – for an Asian Monetary Fund – was
tabled by the Japanese government in response to the Asian financial crisis in 1997/8. It was
promptly shot down by the US administration as an unwelcome rival to the IMF. Also note that,
to date, none of these initiatives includes India or the rest of south Asia.
The Chiang Mai Initiative (CMI) was a direct response to the Asian crisis. Established in 2000, it
is a network of currency-swap arrangements among ASEAN countries, and more widely among
the ASEAN Plus Three. It is intended as a precautionary crisis-preventing measure by increasing
the availability of liquidity and instilling market confidence. But it is very “soft”. Its aggregate
size is tiny compared with foreign-exchange reserves in the region (the major Asian countries
have a total of almost USD 4 trillion in reserves); and it has not yet been “multi lateralized” – it
has no collective mechanism to approve or coordinate bilat¬eral swaps. It remains voluntary and
uncoordinated. Revealingly, the CMI was not used in response to the recent global economic
The global and regional political context:
Those who favor a big push for regional economic integration in Asia now have their day in the
sun. They say that the global economic crisis has accelerated the decline of the US and the rise of
China, India and other parts of Asia. Power is shifting inexorably from the West to Asia.34 the
new Japanese government also wants to accelerate east-Asian economic integra¬tion. In
geopolitics, security relations have altered since the end of the Cold War. The end of
communism, the rise of new powers (China and India), and the questioning of security
dependence on the US (in South Korea and Japan), have opened up new ground. Now,
there¬fore, is the time to strengthen regional institutions and regional economic integration.
But I have doubts. The foundations for Asian regionalism are still weak. In East Asia, trade-and-
investment integration has been market-led and bottom-up. It has not been driven by top-down
policy initiatives such as FTAs or regional institutions like ASEAN and APT – let alone
“international regimes” or “global governance”. Rather it has been led by unilateral, country-by-
country liberalization of trade and FDI. This opened the door to first American and Japanese and
then other MNEs to set up vertically-integrated production networks, linked to global supply
chains and final markets in the West. This happened in Southeast Asia in the 1980s (earlier in
Singapore), with China inserting itself into regional production networks from the 1990s.
China’s massive unilateral liberalization in the 1990s, before it joined the WTO, spurred
additional unilateral liberalization in Southeast Asia. They moved up to higher-value production
of parts and components while labor-intensive production migrated to China, and more recently
The two-day conference, organized by the South Asia Watch on Trade, Economics and
Environment (Sawtee), aims to present policy messages and recommendations for the benefit of
governments in South Asia.
“Nepal’s neighborhoods have been dynamic, but our efforts have been less focused on benefiting
from the two emerging economies,” said Danish Bhattarai, foreign affairs adviser to the prime
minister. “Inadequate infrastructure to facilitate trade and high operating costs have been
impeding the country’s trade. Meanwhile, the agriculture sector-the largest employment
provider-has been neglected or is suffering from low investment.”
Bhattarai added that lack of development in these two major sectors had kept Nepal trapped in a
vicious circle of poverty. “This is also the case of other South Asian economies.”
He underscored the need for regional policy cooperation and coordination to advance the reforms
of regional and intra-regional connectivity for trade facilitation. “As we are holding the 18th
Saarc Summit in November this year, the outcomes of the conference will be considered and
recommended in the summit deliberations,” added Bhattarai.
Similarly, Officiating Secretary at the Ministry of Foreign Affairs Shankar Das Bairagi said that
successful countries have been able to take advantage of globalization. “In terms of South Asian
nations, the picture of globalization is different, as all the South Asian economies remain least
Given the current scenario, there is a need for increasing the region’s investment in trade and
facilitation of intra-regional trade and transit. The primary focus of South Asia should be on
coherent policy actions to address stronger recovery, particularly in the farm sector, he said.
OBJECTIVES OF NAFTA
To reduce barriers to trade.
To increase cooperation for improving working conditions in North America.
To create an expanded and safe market for goods and services produced in North
To establish clear and mutually advantageous trade rules.
To help develop and expand world trade and provide a catalyst to broader international
YEAR OF ESTABLISHED NAFTA
On January 1, 1994, the North American Free Trade Agreement between the United States,
Canada, and Mexico (NAFTA) entered into force.
All remaining duties and quantitative restrictions were eliminated, as scheduled, on January 1,
NAFTA created the world's largest free trade area, which now links 450 million people
producing $17 trillion worth of goods and services.
Trade between the United States and its NAFTA partners has soared since the agreement entered
U.S. goods and services trade with NAFTA totaled $1.6 trillion in 2009 (latest data available for
goods and services trade combined). Exports totaled $397 billion. Imports totaled $438 billion.
The U.S. goods and services trade deficit with NAFTA was $41 billion in 2009.
The United States has $918 billion in total (two ways) goods trade with NAFTA countries
(Canada and Mexico) during 2010. Goods exports totaled $412 billion; Goods imports totaled
$506 billion. The U.S. goods trade deficit with NAFTA was $95 billion in 2010.
Trade in services with NAFTA (exports and imports) totaled $99 billion in 2009 (latest data
available for services trade). Services exports were $63.8 billion. Services imports were $35.5
billion. The U.S. services trade surplus with NAFTA was $28.3 billion in 2009.
MEMBER COUNTRIES OF NAFTA
UNITED STATES OF AMERICA
FUNCTION OF NAFTA
The major functions of NAFTA are:
Eliminate trade barriers in various service sectors belonging to its member nations.
Reduce high Mexican tariffs and help to promote agricultural exports.
Assist firms spanning the three nations to bid on government contracts.
Assure fair market value to investors by reducing risk and offering the same legal rights
that are enjoyed by local investors.
CURRENT SITUATION OF NAFTA:
If you listened to the NAFTA debate in the United States last year, you might mistake it
as simply an agreement about jobs. Jobs are very important and I am prepared to make
the case that NAFTA will in effect create jobs in Mexico, the United States and Canada.
Yet I think we will all readily agree that NAFTA is about much more than just jobs.
NAFTA has overarching implications that extend far beyond its job effects.
First, I stress that the U.S.-Mexico aspect of NAFTA exemplifies a reciprocal, mutually
advantageous cooperation between a developed and a developing country. This is a
critical issue with respect to NAFTA and an important component for NAFTA's
implementation by the United States. The global arena in which NAFTA occurs is very
much a post-Cold War world. The focus will no longer be so exclusively East-West, but
increasingly will be returning to North-South. NAFTA is a good news story that shows
how the developing and developed worlds can cooperate with each other to their mutual
Second, NAFTA will encourage global as well as regional trade liberalization. We
probably would not have been able to conclude the Uruguay Round of GATT talks in
December 1993 if NAFTA had been defeated. Moreover, many of the GATT contracting
parties appreciate that if we cannot liberalize world markets through a multilateral forum
such as the General Agreement on Tariffs and Trade (soon to be rechristened the World
Trade organization), those who most ardently champion trade.
Central American Integration System
The Central American Integration System (Spanish: Sistema de la Integración
Centroamericana, or SICA) is the economic and political organization of Central
American states since February 1, 1993. On December 13, 1991 the ODECA countries
(Spanish: Organización de Estados Centroamericanos) signed the Protocol of
Tegucigalpa, extending earlier cooperation for regional peace, political freedom,
democracy and economic development. SICA's General Secretariat is in El Salvador.
In 1991, SICA's institutional framework included Guatemala, El Salvador, Honduras,
Nicaragua, Costa Rica and Panama. Belize joined in 2000 as a full member, while the
Dominican Republic became an associated state in 2004 and a full member in 2013.
Mexico, Chile and Brazil became part of the organization as regional observers, and the
Republic of China, Spain, Germany and Japan became extra-regional observers. SICA
has a standing invitation to participate as observers in sessions of the United Nations
General Assembly, and maintains offices at UN Headquarters.
Four countries (Guatemala, El Salvador, Honduras, and Nicaragua) experiencing
political, cultural and migratory integration have formed a group, the Central America
Four or CA-4, which has introduced common internal borders and the same type of
passport. Belize, Costa Rica, Panama and the Dominican Republic join the CA-4 for
economic integration and regional friendship.
OBJECTIVES OF SICA:
The objectives of this Act (SICA) as incorporated in its preamble, emphasizes the following
The SICA had been enacted in the public interest to deal with the problems of industrial sickness
with regard to the crucial sectors where public money is locked up.
It contains special provisions for timely detection of sick and potentially sick industrial
companies, speedy determination and enforcement of preventive, remedial and other measures
with respect to such companies.
Those measures are to be taken by a body of experts.
The measures are mainly
(b) Financial restructuring
YEAR OF ESTABLISHED SICA:
In 1991, SICA's institutional framework included Guatemala, El Salvador, Honduras, Nicaragua,
Costa Rica and Panama. Belize joined in 2000 as a full member, while the Dominican Republic
became an associated state in 2004 and a full member in 2013. Mexico, Chile and Brazil became
part of the organization as regional observers, and the Republic of China, Spain, Germany and
Japan became extra-regional observers. SICA has a standing invitation to participate as observers
in sessions of the United Nations General Assembly and maintains offices at UN Headquarters.
MEMBER COUNTRIES OF SICA:
Member countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama,
joined later by Belize.
Associated country: Dominican Republic.
Regional observer country: Mexico.
Extra-regional observer countries: China and Spain.
FUNCTION OF SICA:
Internal factors are those which arise within an organization. They include:-
• Mismanagement in various functional areas of a company like finance,
production, marketing and personnel;
• Wrong location of a unit;
• Overestimation of demand and wrong dividend policy;
• Poor implementation of projects which may be due to improper planning or
• Poor inventory management in respect of finished goods as well as inputs;
• Unwarranted expansion and diversion of resources such as personal
extravagances, excessive overheads, acquisition of unproductive fixed assets, etc.
• Failure to modernize the productive apparatus, change the product mix and other
elements of marketing mix to suit the changing environment;
• Poor labor-management relationship and associated low workers' morale and low
productivity, strikes, lockouts, etc.
External factors are those which take place outside an organization. They include:-
Energy crisis arising out of power cuts or shortage of coal or oil;
Failure to achieve optimum capacity due to shortage of raw materials as a result
of production set-backs in the supply industries, poor agricultural output because
of natural reasons, changes in the import conditions, etc.
Infrastructural problems like transport bottlenecks;
Situations like market recession, changes in technology, etc.
International pressures or circumstances, etc.
Industrial sickness may be caused by a combination of all such factors. It has
several adverse consequences on the economy as a whole. Some of which may be
enumerated as follows:-
It leads to loss of substantial revenue to the Government and enhances its public
It locks up necessary resources and funds in the sick unit. This also increases the
non-performing assets (NPAs) of banks and financial institutions;
It leads to loss of production and productivity in the economy;
It aggravates the problem of unemployment in the economy;
Summarizes the main findings of the report on Regional Economic Integration in
EU, Asia, America and provides a broad direction for reform priorities. The major
political changes sweeping through the region today provide an opportunity to
introduce economic and social reforms conducive to economic growth and job
creation in an increasingly competitive world. Leaders throughout the region are
looking for new measures their governments can take to boost growth and
employment. Deeper regional and global economic integration presents valuable
opportunities to (1) make the region more attractive to investors, (2) boost
productivity and competitiveness, and (3) create opportunities for the good jobs
that young people in the region need. The Arab Spring provides an opportunity for
countries to break with the slow reform pace of the past and embark on a faster,
deeper, more comprehensive reform agenda, with strong support from the donor