MC No. 06, s. 2016 ASEAN

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FAQs: The ASEAN Community

1. How would you describe the ASEAN Community in brief?

The ASEAN Community will bring the 10 Member States of ASEAN even closer together, as we will be bound by the shared vision of a durable, peaceful, stable and prosperous region. Community-building has three pillars - in the political-security, economic and socio-cultural areas. The establishment of a Community is a significant milestone in ASEAN’s continued evolution as an organisation with a common regional identity, one that is home to some 620 million people aspiring for ‘One Vision, One Identity, One Community’.

2. The Community is in place on Dec. 31, 2015. What changes can we expect in the new year?

ASEAN Community-building is an ongoing process, not an overnight transformation. To prepare for its launch, ASEAN Member States have undertaken initiatives under the three ASEAN Community blueprints, aimed at deepening and widening integration. ASEAN Leaders have also adopted the ‘ASEAN Community Vision 2025’ which charts our continued integration and consolidation over the next 10 years.

3. How will the ASEAN Community affect my everyday life?

The primary goal of regional integration through the ASEAN Community is to improve the lives of ASEAN’s citizens. The 2015 Kuala Lumpur Declaration on The Establishment of The ASEAN Community, issued by ASEAN Leaders at the 27^th ASEAN Summit in November 2015, speaks of their aspiration to establish “a truly rules-based, people-oriented, people-centred Community where our peoples continue to participate in and benefit fully from the ongoing process of ASEAN integration and community-building.”

For an ASEAN citizen, the Community will offer opportunities such asa bigger, more open and rules-based market for business, more trade, and increased people-to people interaction through commerce, travel and education, among others.

4. Will I be able to travel freely in the region or work in another ASEAN country?

Various agreements and initiatives within ASEAN have eased travel among ASEAN nationals’ countries, and more are underway.

In the area of employment, the Mutual Recognition Arrangements within ASEAN Community provide for the freer movement of skilled professionals – engineers, nurses, architects, land surveyors, medical doctors and dentists, accountants, and tourism professionals.

5. Some ASEAN members have differences with each other. How will the ASEAN Community help in these?

Like in any family, ASEAN Member States may have differing views on a range of issues, and a number have pending border issues. ASEAN Member States are committed to the ASEAN Charter as their guiding principle, which includes resolving anydisputes through peaceful means. Among others,the ‘ASEAN Way’ is about Community and consensus-building, non-violence over confrontation, moderation over extremism, and a peaceful settlement of disputes.

ASEAN has a number of agreements for promoting regional peace, cooperation and solidarity. This includes the 1971 Declaration on the Zone of Peace, Freedom and Neutrality, the 1976 Treaty of Amity and Cooperation and the 2004 Protocol for Enhanced Dispute Settlement Mechanism for resolving economic-related disputes. The ASEAN Declaration on the South China Sea (1992) and the Declaration on the Conduct of Parties in the South China Sea (2002) also play a key role in maintaining peace, security and stability in the South China Sea. A third example of how ASEAN manages cross-border challenges is the ASEAN Agreement on Transboundary Haze Pollution.

The Long Journey to Economic Integration

The ASEAN Economic Community gets a lot of mention these days, but ASEAN’s journey of economic integration has actually been underway for over decades.

The economic linkages that bind ASEAN together have taken root through different channels over time. This includes different ASEAN countries sharing complementary roles in manufacturing, the improved ease in moving products across borders, and other mechanisms that facilitate the smoother flow of goods, services and capital, and skilled labour across the region.

This contributes towards the narrative on ASEAN being one of the most dynamic regions in the world, and a key contributor to world economic growth. Economic integration – and the doors of opportunity it opens – has brought concrete financial and economic benefits to hundreds of millions of people in ASEAN.

If it were a single country, ASEAN would be the seventh largest economy in the world and the third largest in Asia. From 2007 to 2014, its combined GDP nearly doubled to 2.57 trillion US dollars.

Tariffs among ASEAN countries stand at nearly zero today, bringing down the price of goods and increasing choice for consumers. ASEAN has also become a world class investment destination attracting 136 billion US dollars in foreign direct investment in 2014, thus creating more economic and employment opportunities for its population.

Looking ahead, the further liberalisation and integration of ASEAN’s economies after the launch of the ASEAN Economic Community in December 2015 is expected to bring more benefits for the region.Collectively ASEAN is projected to become the world’s 4^thlargest economy by 2050.

Formally established on 31 December 2015, the ASEAN Economic Community (AEC) is a major milestone in the ongoing regional economic integration agenda of ASEAN. Adopted by the ASEAN Leaders in November 2007, the AEC Blueprint (2008-2015) has helped chart the region’s journey towards the formal establishment of the AEC, characterized by: (a) a single market and production base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy.

As an integrated community, ASEAN aims to be a region where there are simplified rules, lower tariffs and harmonised standards and closer regulatory cooperation, greater transparency and a talented, well-educated pool of workers and a large, vibrant consumer base.

The story of ASEAN’s economic cooperation and integration spans more than four decades, its foundation having been planted through the seventies and picking up pace in the nineties.

As early as 1977, ASEAN put in place the ASEAN Preferential Trade Agreement. The steps toward deeper economic integration quickened with the Framework Agreement on Enhancing ASEAN Economic Cooperation, which covered areas ranging from trade, industry, minerals and energy; finance and banking; food, agriculture, and forestry; transport and communications.

This led to other ASEAN trade accords, including the 1992 ASEAN Free Trade Area (AFTA) that is largely responsible for tariff reductions within the region. AFTA aimed to boost ASEAN’s competitive edge as a production base through the elimination of tariffs and non-tariff barriers, and through the attraction of more foreign direct investment into the region. Other agreements that pushed economic integration range from the ASEAN Framework Agreement on Services in 1995, the ASEAN Trade in Goods Agreement in 2010 which consolidates ASEAN commitments and initiatives on trade in goods, and the ASEAN Comprehensive Investment Agreement in 2012.

By 2003, ASEAN Leaders declared the formation of the ASEAN Economic Community as the goal of regional economic integration within the ASEAN Community.

In 2007, they adopted the Blueprint that served as the master plan guiding the establishment of the ASEAN Economic Community in 2015, a completion date that had been moved up from 2020.

As at end-October 2015, the ASEAN Economic Community Scorecard, which tracks the progress of the measures in the Blueprint, showed that ASEAN had implemented 92.7% or 469 out of 506 measures they committed to undertake. In terms of the four areas of integration under the Economic Community, Member States had fulfilled 100% of the measures relating to equitable economic development and ASEAN’s integration into the global economy. The remaining key measures will be prioritised for implementation by end-2016.

At the same time, ASEAN Leaders have acknowledged the need to continue working on regional economic integration.

In the area of trade liberalisation, ASEAN Member States will need to continue working on reducing non-tariff barriers, which Malaysian Prime Minister Najib Tun Abdul Razak said remain “too extensive” and hinder free and open trade across ASEAN economies.

ASEAN Leaders have also committed to ensuring that the continued integration process is inclusive, and also serves to narrow the development gap among and within ASEAN Member States.

These considerations are also why ASEAN’s newer members – Cambodia, Lao PDR, Myanmar and Vietnam – have until 2018 to fully adopt the ASEAN Economic Community’s tariff liberalisation commitments. While regional integration efforts are underway, ASEAN has also put in place other frameworks to narrow the development gap such as the Initiative for ASEAN Integration.