The ASEAN Free Trade Area: Moving Ahead on Regional Integration.

Address by H. E. Rodolfo C. Severino, Secretary-General of the Association of Southeast Asian Nations, at the AFTA Roundtable Discussion

Bangkok, 21 November 2000

We are here, first, to have a close look at where we are in the economic integration of Southeast Asia -- particularly at the state of the ASEAN Free Trade Area, which is a key component of regional integration. Secondly, we hope to harvest from our discussions some ideas on how to deepen, broaden and hasten integration.

The public discussion of regional economic integration in Southeast Asia in the past three years has been burdened by two myths. The first myth is that the financial crisis would lead to the crippling, even the death, of AFTA and the consequent evisceration, and even the break-up, of ASEAN. The second myth is that the delay in the transfer by one country of finished or knocked-down cars into the AFTA scheme would constitute a devastating setback for AFTA, if not for ASEAN itself.

First, the myth about the financial crisis destroying AFTA. Almost as soon as the crisis struck, many commentators predicted -- almost in glee -- that the ASEAN countries would retreat into protectionism, into isolationism, that AFTA would break up. It would be every country for itself. Such predictions flew in the face of logic, of ASEAN's words, and of ASEAN's deeds. They went against what would logically be expected and against what actually happened.

Apprehensions over AFTA's death as a result of the crisis went against all logic. If ASEAN needed anything in those difficult times, it was investments, particularly foreign direct investments. The way to attract investments was to move faster on creating a big, regional, integrated market, which investors, particularly in these times, generally prefer to small, national, fragmented economies. It made no sense for the ASEAN countries, having gone so far on the road to a free trade area, suddenly to reverse course. It would have been self-destructive.

The ASEAN commitment to AFTA and to regional economic integration was exactly what ASEAN's leaders re-affirmed at the height of the crisis. At their summit in December 1997, they issued the ASEAN Vision 2020 statement, in which they committed themselves "to moving towards closer cohesion and economic integration" and resolved to "advance economic integration and co-operation" by, among other measures, "fully implement(ing) the ASEAN Free Trade Area and accelerat(ing) the liberalization of trade in services".