This paper will try to uncover the question of recent enthusiasm of Asian countries for regional co-operation as well as opportunities and challenges arising from this new wave of integration in the region.

Authors Avatar

         In recent years, one of the most significant developments in the Asian economy has been the rapid growth of regional co-operation. Within a few years, a number of regional initiatives have been endorsed and various forms of co-operative ventures have been established. The results of these developments can be seen in the formation of the Asia-Pacific Economic Cooperation (APEC), the ASEAN Free Trade Area (AFTA) and the revival of the South Asian Association for Regional Cooperation (SAARC) as well as various innovative types of subregional co-operative ventures. This is in contrast to Asia’s historical record on co-operation. For many years, the swiftness of regional co-operation was very slow compared with other regions of the world. The only exception is probably the Association of Southeast Asian Nations (ASEAN). However, the contribution of ASEAN has been primarily political rather economic.

         This paper will try to uncover the question of recent enthusiasm of Asian countries for regional co-operation as well as opportunities and challenges arising from this new wave of integration in the region. It will do so by, first discussing the evolution of Asian regional integration. Second, by presenting the reasons for the regional integration in the Asia. Third, by pointing out the opportunities and challenges of this regional co-operation.  

          In order to answer the question about enthusiasm of Asian countries for co-operation it is important to follow the evolution of regional co-operation. Thus, for many years, the pace of regional co-operation in Asia was very slow. There were some fundamental problems with the Asian countries in forming a trading bloc. First, a trading bloc requires a large volume of internal trade so as to maximize the benefits of forming the bloc. However, during the 1960s and the 1970s, North America and Europe were the major markets for Asian exports and the primary sources of their imports (Min Tang, 1994). Consequently, there was little motivation for Asia to form its own trading bloc since the majority of its trade was with countries outside the region. Second, a trading bloc requires that member countries have similar laws and regulations to govern trade and investment flows within the region. In any case, the diversity of economic systems and the strong protectionist sentiment in Asia in these days made it difficult to harmonize trade and investment practices in the region. Finally, political commitment and policy co-ordination among the member countries are fundamental prerequisites for a trading bloc. In this regard, Asian countries have very different political systems. Also, during the period of the Vietnam War, political conflict made it impossible to form a trading bloc in Asia.

In recent years, however, the attitude towards regional co-operation has changed dramatically in Asia. In fact, regional co-operation has become one of the most distinctive developments in the Asian economy. A number of cooperative arrangements already exist in the region and several others are under consideration. Economic co-operation has taken several forms from small subregional initiatives to larger regional arrangements.

ASIAN was the first established co-operative business enterprise in Asia. During its early years, it achieved slow progress in the areas of economic co-operation. It was more preoccupied with political and security issues. Since 1980s, however, ASEAN has received the importance of economic co-operation. It has proposed several economic co-operation schemes and has undertaken a series of initiatives including the 1981 ASEAN Industrial Complementative Scheme (AIC), the 1983 ASEAN Industrial Joint Ventures (AIJV), the 1987 ASEAN Small and Medium Industries Scheme and modification of the ASEAN Preferential Trading Arrangement. In 1992, the heads of state of six Asian countries agreed to form the ASEAN Free Trade Area (AFTA). AFTA is designed to lower tariffs for intra-ASEAN trade in manufactured goods to a minimum of 5 per cent by the year 2008 and to remove other trade barriers.

In response to the growing interdependence among Asia-Pacific economies, the Asia-Pacific Economic co-operation (APEC) was formed in 1989. To date, APEC includes 18 major economies of the region with a combined aggregate output almost equal to half of the world’s GDP and 40 per cent of total world exports. The most distinguished achievement of APEC was 1994 summit in Bogor, Indonesia, where it was decided by the year 2010, developed member countries of APEC will remove all trade berries and that by the year 2020, the whole APEC region will enjoy free trade. In particular, trade with non-APEC countries is emphasized to ensure they will benefit from APEC liberalization and will conform with GATT/WTO provisions. To promote co-operation in other broad areas, APEC formed two committees including hoc group and ten working groups. In addition, the APEC Secretariat was established in Singapore in February 1993 to support APEC’s activities. Currently, APEC members are working on the details and measures for implementing such a free trade agreement. For example, the recent agreement on information infrastructure co-operation facilitates the constructive expansion of interconnected regional telecommunications and information industry.

Join now!

       The South Asian Association for Regional Cooperation (SAARC) was lunched formally in 1985 during the first summit of seven South Asian countries, namely Bangladesh, Bhutan, India, the Republic of Maldives, Nepal, Pakistan and Sri Lanka. Since the formation of SAARC, several important steps have already been taken towards cooperation among the member countries, particularly, plans to accelerate economic and social development. For example, the agreement on South Asian Preferential Trading Arrangement (SAPTA) allows member countries to import commodities from one another with a tariff 10 per cent lower than those imposed on non-SAARC countries. It was also ...

This is a preview of the whole essay