Zero Tariff Trade Bodes Well for ASEAN

The beginning of 2010 bodes so well to the regional group ASEAN or Association of Southeast Asian Countries as six of its members began zero-tariff trading on January 1, 2010.

Under a scheme that began as far back as 1993, ASEAN countries agreed to have tariffs reduced to 5% by 2010 and ultimately down to zero by 2015 under the Common Effective Preferential Tariffs for ASEAN Free Trade Area (CEPT-AFTA) guidelines. At this rate, the grand ambition of having a single market and eventually a unified economy for ASEAN is just about on the right track, bringing forth to reality the grand ambition set forth when ASEAN Economic Community (AEC) was initiated in 2002.

This tariff-free trading opens up myriads of opportunities for those who make business and should bring in more vigor to intra-ASEAN trade. Sourcing of cheaper raw materials should be far more flexible now. Goods could flow from one member-country to another without the usual restraints, increasing trade activities exponentially. Thus could redound to wide employment creation as a result of increased production and higher profitability.

ASEAN boast of a huge market that could easily rival that of China and India with a population of more than half-a-billion and with a workforce deemed to be equally if not more skilled and knowledgeable. With the danger of financial ballooning and industrial peaking looming over China and India, ASEAN could be the next preferred haven for foreign direct investments from abroad, offering a location that is far richer in natural resources and labor.

However, full economic integration for ASEAN encounters very difficult obstacles ahead as the economic disparity of its members is too patent for comfort where member countries like Singapore and Malaysia are far too advanced from those striving economies of Laos and Myanmar.

To make matters more complicated, political issues is one remaining thorn in the side of ASEAN economic ambitions as Myanmar continues to be adamant in introducing structural reform in government, as well as in the communist states of Vietnam and Laos.

A unitary currency is therefore unthinkable at this point, at least not within the decade or two.
European Union had almost flawlessly integrated itself in 1993 because of the non-issue of economic disparity and political divergence among its members. But for ASEAN, these are issues that remain unresolved and off-putting.

Yet, despite of this, hope should remain for ASEAN as long as it keeps on moving, albeit in slow and calculated steps.