News

    ASEAN Seeks to Boost Exports with Free Trade Agreements

    The Association of Southeast Asian Nations has gone from its origins as a small grouping of relatively impoverished nations to one of the world's major trading blocs. At its annual summit on November 29th and 30, ASEAN will sign a deal with China that ultimately will create the world's largest free trade area.

    Within five years, a new free trade agreement between the Association of Southeast Asian Nations, ASEAN, and China will cover more than 1.7 billion people. Already trade between the two is worth $100 billion annually.

    The deal makes it easier for all 10 ASEAN nations to export goods to China, and to import Chinese products. Some ASEAN businesses are concerned they will be overpowered by China's giant, low-cost manufacturers. But many economists see the deal as good for Southeast Asia, and a harbinger of things to come.

    Ifzal Ali, the chief economist for the Asian Development Bank, a non-profit lending institution in Manila, says that as China's economy grows and its wages increase, some of its manufacturing will shift to ASEAN's poorer members.

    "So what you will see is that as China rushes ahead, some of the things that it is doing now will be transferred to countries like Vietnam, other countries in the Mekong area," he said. "I look at it more as a win-win rather than a zero-sum game."

    The deal with China will not be the last. ASEAN already is in talks with South Korea, Japan and India on creating trading alliances. And several ASEAN nations have signed bilateral trade agreements with other countries, Singapore and Thailand both have deals with the United States.

    Trade is the lifeblood of Asia. Starting with Japan and South Korea, which built economic dynamos from the ashes of war in the last century, every country in the region has sought to build wealth by exporting everything from lumber to computer chips.

    ASEAN, which includes some of the world's poorest countries - Cambodia, Burma, Laos and Vietnam - already is a major trading entity. It exports more than $400 billion worth of goods a year, and its imports top $360 billion.

    With the World Trade Organization making slow progress on global trade liberalization, ASEAN leaders have made it clear they will look to free trade agreements to ensure growth.

    However, analysts warn these deals, known as FTAs, have risks. One problem for small nations is that leaders, eager to sign a deal with large, wealthy countries, may grant too many concessions, harming their own interests.

    Mark Thirlwell, a trade analyst with the Lowy independent Institute on International Policy in Australia, warns the biggest risk may be that FTAs could undermine the global benefits of the World Trade Organization's structure. He says dozens of overlapping FTAs may put conflicting and overly complex trade rules in force.

    "And there's a risk there that it sort of gums up world trade. I mean, the whole point of the multilateral system is that if you do it at one central global level, you can sort of try to overcome these distortions that you get by doing it regionally or bilaterally," explained Mr. Thirlwell.

    Even when trade agreements are balanced and do not impede WTO efforts, they can leave many businesses struggling to compete.

    Teofilo Aquila, who studies Southeast Asian economic development at the National University of Singapore and says many small ASEAN companies may lose the struggle when the FTA with China starts phasing in next year, says ASEAN governments and businesses can reduce the disruption, if they work together.

    "By pulling together, the industries in ASEAN, including both physical and human resources, so that ASEAN can come up with much bigger, companies, that would enable smaller and medium enterprises to minimize the risks," he said.

    ASEAN governments, and many economists, think free trade agreements offer far more benefits than disadvantages. Mr. Ali at the Asian Development Bank notes that the deals can push governments to improve their banking and legal systems to facilitate trade, and to develop fiscally sound budgets.

    "Markets will punish countries that do not follow appropriate macro-economic policies both on the fiscal and the monetary side, do not follow appropriate microeconomic polices in terms of ensuring an even playing field," he said.

    Ultimately, Mr. Ali says, if it signs an FTA with India in the next few years, on top of this year's deal with China, ASEAN is likely to have a pivotal role in an unprecedented economic expansion in Asia.

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Displaced By War, Syrian Artist Finds Inspiration Abroadi
    X
    May 02, 2016 1:36 PM
    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video Kurdish Football Team Helps War-Torn City Cope

    With the conflict still raging across much of Turkey’s predominantly Kurdish southeast, between the rebel PKK and the Turkish state, many Kurds are trying to escape the turmoil by focusing on the success of their football team Amedspor in Diyarbakir. The club is increasingly becoming a symbol for Kurds, not only in Diyarbakir but beyond. Dorian Jones reports from southeast Turkey.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.
    Video

    Video Pakistani School Helps Slum Kids

    Master Mohammad Ayub runs a makeshift school in a public park in Islamabad. Thousands of poor children have benefited from his services over the years, but, as VOA's Ayesha Tanzeem reports, roughly 25 million school-age youths don't get an education in Pakistan.
    Video

    Video Florida’s Weeki Wachee ‘Mermaids’ Make a Splash

    Since 1947, ‘mermaids’ have fascinated tourists at central Florida’s Weeki Wachee Springs State Park with their fluid movements and synchronized ballet. Performing underwater has its challenges, including cold temperatures and a steady current, as VOA’s Lin Yang and Joseph Mok report.
    Video

    Video Somali, African Union Forces Face Resurgent Al-Shabab

    The Islamic State terror group claimed its first attack in Somalia earlier this week, though the claim has not been verified by forces on the ground. Meanwhile, al-Shabab militants have stepped up their attacks as Somalia prepares for elections later this year. Henry Ridgwell reports there are growing frustrations among Somalia’s Western backers over the country’s slow progress in forming its own armed forces to establish security after 25 years of chaos.
    Video

    Video Documentary Tells Tale of Chernobyl Returnees

    Ukraine this week is marking the 30th anniversary of the world's worst nuclear accident, at the Chernobyl nuclear power plant. Soviet officials at first said little about the accident, but later evacuated a 2,600-square-kilometer "exclusion zone." Some people, though, came back. American directors Holly Morris and Anne Bogart created a documentary about this faithful and brave community. VOA's Tetiana Kharchenko reports from New York on "The Babushkas of Chernobyl." Carol Pearson narrates.
    Video

    Video Nigerians Feel Bite of Buhari Economic Policy

    Despite the global drop in the price of oil, Nigerian President Muhammadu Buhari has refused to allow the country's currency to devalue, leading to a shortage of foreign exchange. Chris Stein reports from Lagos businessmen and consumers are feeling the impact as the country deals with a severe fuel shortage.
    Video

    Video  Return to the Wild

    There’s a growing trend in the United States to let old or underused golf courses revert back to nature. But as Erika Celeste reports from one parcel in Grafton, Ohio, converting 39 hectares of land back to green space is a lot more complicated than just not mowing the fairway.

    Special Report

    Adrift The Invisible African Diaspora