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What is the ASEAN Free Trade Area?

Mary McMahon
Mary McMahon
Mary McMahon
Mary McMahon

The Association of Southeast Asian Nations (ASEAN) Free Trade Area is an agreement between a group of Southeast Asian countries to limit trade barriers between member nations. This is designed to promote the free exchange of trade between these nations to strengthen their position on the global market while also attracting the attention of companies that may be interested in foreign direct investment. In addition to the original ASEAN Free Trade Area, ASEAN member nations have also negotiated free trade agreements with neighboring nations like China.

The initial proposal for the ASEAN Free Trade Area was developed in 1992, and in 2003, the agreement was implemented. Ten nations ended up joining the ASEAN Free Trade Area: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Vietnam, the Philippines, Singapore, and Thailand. These member nations agree to limit or remove tariffs and other trade barriers that interfere with trade between the member nations.

The ASEAN Free Trade Area aims to strengthen the global presence of member nations.
The ASEAN Free Trade Area aims to strengthen the global presence of member nations.

Within the ASEAN Free Trade Area, countries are essentially allowed to move goods without paying duties. This facilitates the free flow of trade across borders and has advantages for all member nations. Similar agreements have been established in some other regions of the world, such as the North American Free Trade Agreement (NAFTA). Such agreements promote trade between nations, improving all member economies, and also help nations establish a better footing in the international trade community.

China may negotiate free trade areas with neighboring ASEAN member countries.
China may negotiate free trade areas with neighboring ASEAN member countries.

The creation of free trade areas like that developed by ASEAN is sometimes criticized, as member nations are accused of having an unfair advantage. It is cheaper to import goods from member nations and to export goods to member nations, putting nonmembers at a disadvantage because in order to compete, they must drop their product prices. Such agreements have also been criticized on the grounds that they tend to disproportionately benefit specific member nations.

Free trade areas are sometimes criticized for giving member nations an unfair trade advantage over other countries.
Free trade areas are sometimes criticized for giving member nations an unfair trade advantage over other countries.

China reached a free trade agreement with ASEAN that was implemented in 2010, and nations like Australia and New Zealand have also expressed interest in developing a better trade relationship with ASEAN member nations. Drafting trade policy can take months or years, and decades to implement, as illustrated by the fact that the ASEAN Free Trade Area was agreed to in 1992 and didn't go into effect until 11 years had passed. Patience on the part of negotiators is important, as there are a number of critical stages where agreements can collapse, undoing previous work and forcing people to start all over again.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Learn more...
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Learn more...

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    • The ASEAN Free Trade Area aims to strengthen the global presence of member nations.
      By: Chuck Hagel
      The ASEAN Free Trade Area aims to strengthen the global presence of member nations.
    • China may negotiate free trade areas with neighboring ASEAN member countries.
      By: Butch
      China may negotiate free trade areas with neighboring ASEAN member countries.
    • Free trade areas are sometimes criticized for giving member nations an unfair trade advantage over other countries.
      By: Gerard Koudenburg
      Free trade areas are sometimes criticized for giving member nations an unfair trade advantage over other countries.