Achieving the Promise of the ASEAN Economic Community

Less Than You Imagine, More Than You Know

James Wallar

EXECUTIVE SUMMARY

This paper provides a snapshot of the Association for Southeast Asian Nations (ASEAN) as it seeks to promote trade and investment within and outside the region and create an ASEAN Economic Community.

MAIN ARGUMENT

ASEAN and its member states have made considerable progress in developing a rules-based system that promotes trade in goods and services and FDI, and indeed ASEAN’s trade and investment performance has been impressive. Measures to create an ASEAN Economic Community (AEC) have contributed to this performance but are not designed to create a European Union–style unified market. While the target date to create the AEC by the end of 2015 should be considered a milestone on a longer journey, the foundations have been laid for deeper and broader integration that could promote productivity and increased, inclusive economic growth to the benefit of all ASEAN member states.

POLICY IMPLICATIONS

• Finance ministers should take a larger role in driving ASEAN integration to tap its potential to generate higher economic growth.
• ASEAN should take the next step toward developing regional rules in areas such as customs, investment, and competition policy so firms can more easily implement regional ASEAN strategies.
• The ASEAN secretariat should be empowered to actively monitor effective implementation of ASEAN agreements and should engage with the private sector to facilitate discussions among the member states.