This is an assignment on AU, EU, APEC, NAFTA, AFTA, SAPTA, LAFTA, ASEAN. Informations about it I have collected from the intermet and from some of my friends and teachers :-) Knowledge in power but sometimes it's not free LOL :-)

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An Assignment on
AU, EU, APEC, NAFTA, AFTA,
SAPTA, LAFTA, ASEAN

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Submitted by
TOF– Team of friends
Dept. Business administrtion
11th
batch
Submitted to
mohammad naymur rahaman(rumi)
Lecturer of
Department of Business Administration
Z.H. Sikder University of Science and Technology

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Letter of transmittal
March 30, 2016
Mohammad Naymur Rahaman (Rumi)
Lecturer Of BBA
Department of Business Administration
Subject: Submission of An Assignmentfocused on “AU, EU, APEC, NAFTA, AFTA,
SAPTA, LAFTA, ASEAN”.
Sir,
Here is our study assignment that you assigned us; to submit as a partial
requirement you’re your course namely ‘Introduce to Business.’ While preparing
this assignment we have gone through the face to face conversation with the
respondents as well as internet, newspaper, journals & differentstudy assignment
thatareavailable in the secondarysources.Actuallythisstudyisverymuchrelevant
with our courseand wehavelearnt a lot aboutpractical field of this course,& hope
that will be very much beneficial for our Principles of Financedecision making. We
have put our best effort yet it is very likely that the assignment may have some
mistake and that are unintentional. I hope that the assignment will meet your
expectation. We shall be glad to answer any kind of question about any matter
relating to this assignment and shall be pleased to provide further clarification if
necessary.

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Yours Faithfully,
The Edutainer.
TOF – Team Of Friend
Student name Student ID Student email
Sujon miah 150216009 Sujon009@gmail.com
Rifat Sikder 150316009 Smrifat97@gmail.com
Omar Faruq 150316023 Omarf0165@gmail.com
Robin bepary 150316011 Robin.brpary@yahoo.com

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Table Of Content
No Content Page number
1. AU : Asian Union
6
2. EU : European Union
7
3. APEC : Asia-Pacific Economic Cooperation
9
4. NAFTA : North American Free Trade
Agreement
12
5. AFTA : Asean Free Trade Area
14
6. SAPTA : South Asian Preferential Trade
Arrangement
17
7. LAFTA : Latin American Free Trade
Association
25
8. ASEAN : Association of Southeast Asian
Nations
29

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AU : Asian Union
 Central Asian Union (CAU) :
A Central Asian Union was proposed by Kazakhstan President Nursultan Nazarbayev on April
26, 2007, in order to create an economic and political union similar to that of the EU
encompassing the five former Soviet Central Asian republics of Kazakhstan, Kyrgyzstan,
Tajikistan, Turkmenistan and Uzbekistan.
So far the presidents of Kazakhstan and Kyrgyzstan have signed an agreement to create an
"International Supreme Council" between the two states. In addition, Kazakhstan, Uzbekistan
and Kyrgyzstan have signed a Treaty of Eternal Friendship. Kazakhstan and Uzbekistan have
also decided to set up a free trade zone.
 South Asian Union (SAU) :
The Association of Southeast Asian Nations (ASEAN) is a political and economic organisation
of ten Southeast Asian countries. It was formed on 8 August 1967 by Indonesia, Malaysia, the
Philippines, Singapore, and Thailand. Since then, membership has expanded to include Brunei,
Cambodia, Laos, Myanmar (Burma), and Vietnam. Its aims include accelerating economic
growth, social progress, and sociocultural evolution among its members, alongside protection of
regional stability as well as providing a mechanism for member countries to resolve differences
peacefully.
ASEAN covers a land area of 4.4 million square kilometres, 3% of the total land area of Earth.
ASEAN territorial waters cover an area about three times larger than its land counterpart.
Member countries have a combined population of approximately 625 million people, 8.8% of the
world's population. In 2015, the organisation's combined nominal GDP had grown to more than
US$2.6 trillion. If ASEAN were a single entity, it would rank as the seventh largest economy in

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the world, behind the USA, China, Japan, Germany, France, and the United Kingdom. ASEAN
shares land borders with India, China, Bangladesh, East Timor, and Papua New Guinea, and
maritime borders with India, China, and Australia.
EU : European Union
 EU :
The EU is a unique economic and political partnership between 28 European countries that
together cover much of the continent.
The EU was created in the aftermath of the Second World War. The first steps were to foster
economic cooperation: the idea being that countries who trade with one another become
economically interdependent and so more likely to avoid conflict.
The result was the European Economic Community (EEC), created in 1958, and initially
increasing economic cooperation between six countries: Belgium, Germany, France, Italy,
Luxembourg and the Netherlands. Since then, a huge single market has been created and
continues to develop towards its full potential.
 From economic to political union :
What began as a purely economic union has evolved into an organisation spanning policy areas,
from development aid to environment. A name change from the EEC to the European Union
(EU) in 1993 reflected this.

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The EU is based on the rule of law: everything that it does is founded on treaties, voluntarily and
democratically agreed by all member countries. These binding agreements set out the EU's goals
in its many areas of activity.
 Mobility, growth, stability and a single currency :
The EU has delivered half a century of peace, stability and prosperity, helped raise living
standards, and launched a single European currency, the euro.
Thanks to the abolition of border controls between EU countries, people can travel freely
throughout most of the continent. And it's become much easier to live, work and travel abroad in
Europe.
The single or 'internal' market is the EU's main economic engine, enabling most goods, services,
money and people to move freely. Another key objective is to develop this huge resource to
ensure that Europeans can draw the maximum benefit from it.
 Human rights and equality :
One of the EU’s main goals is to promote human rights both internally and around the world.
Human dignity, freedom, democracy, equality, the rule of law and respect for human rights:
these are the core values of the EU. Since the Lisbon Treaty's entry in force in 2009, the EU's
Charter of Fundamental Rights brings all these rights together in a single document. The EU's
institutions are legally bound to uphold them, as are EU governments whenever they apply EU
law.
 Transparent and democratic institutions :
As it continues to grow, the EU remains focused on making its governing institutions more
transparent and democratic. More powers are being given to the directly elected European
Parliament, while national parliaments are being given a greater role, working alongside the
European institutions. In turn, European citizens have an ever-increasing number of channels for
taking part in the political process.

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APEC : Asia-Pacific Economic Cooperation
 APEC:
Asia-PacificEconomic Cooperation (APEC) isa forumfor 21 PacificRimmembereconomies,that
promotesfree trade throughoutthe Asia-Pacificregion.Itwasestablishedin1989 inresponse tothe
growinginterdependence of Asia-Pacificeconomiesandthe adventof regional trade blocsinotherparts
of the world;tofearsthat highlyindustrialised Japan(amemberof G8) wouldcome to dominate
economicactivityinthe Asia-Pacificregion;andtoestablishnew marketsforagricultural productsand
raw materialsbeyondEurope.
 Policy Partnership on Women and the Economy :
The Policy Partnership on Women and the Economy (PPWE) is the senior-officials level
working group responsible for Asia Pacific Economy Cooperation (APEC) gender activities and
outcomes. The PPWE provides a mechanism to integrate gender considerations into APEC
activities, through providing policy advice on gender issues and supporting gender equality
where relevant to the APEC process.
The PPWE was established at the second Senior Officials’ Meeting (SOM) in May 2011 held at
Big Sky, Montana, USA. It combined the former APEC Gender Focal Point Network and the
private sector-oriented Women’s Leadership Network – creating a single public-private entity to
streamline and elevate the influence of women’s issues within APEC. PPWE reports to SOM
Steering Committee on Economic and Technical Cooperation.

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As part of its involvement with PPWE, Australia has co-sponsored a Chinese Taipei APEC
project on Innovation for Women and Economic Development: Facilitation of women’s
livelihood development and resilience with Information and Communications Technology, and
supported two United States-led workshops on women entrepreneurs and their access to markets
and capital.
 Women and the Economy Forum :
As the only APEC forum dedicated to gender issues, the annual APEC Women and the Economy
Forum (WEF) represents an important opportunity to enhance economic opportunities for
women through the APEC process.
The WEF typically consists of three key meetings, including a High-level Policy Dialogue,
Public-Private Dialogue and PPWE officials-level meeting.
2014 APEC Women and the Economy Forum (WEF)
The 2014 APEC WEF took place from 21-23 May in Beijing, China. The main theme was
Harnessing the Power of Women for Asia-Pacific Prosperity. There were also three subthemes:
 Women and Green Development :
The Asia-Pacific is one of the most dynamic and promising regions in global economy, seen as
the engine of the world economic growth. Recent years, however, have witnessed such
challenges as financial crisis, climate change, natural disasters, and the slow-down of economic
growth as well. Efforts were made by various parties in the APEC region to identify new growth
points, promote changes in the economic growth patterns and to achieve the goal of “a balanced,
inclusive, sustainable, innovative and secure growth” set out by the APEC Economic Leaders.
Green development thus became a strategic choice. Women, as a major driving force of
economic development in the Asia Pacific, have an irreplaceable role to play in it.
The theme of women and green development relates to many issues and areas, such as women
and economic restructuring and reform, women and environmental protection and eco-
construction, women and eco-agriculture, regional cooperation in environmental protection and
new economy that participants can discuss and share their views and insights about.
 Women and Regional Trade and Economic Cooperation :
Committed to the regional economic integration, APEC formulated the Bogor Goals and the
vision of a Free Trade Area of the Asia-Pacific (FTAAP), focusing efforts to eliminate barriers to
international trade and investment, construct an all-around, multi-level comprehensive
connectivity, and to build a closer and new type of regional partnership for development. “The
economic inclusion of women is critical for business performance and economic prosperity”,
“We committed to promoting efforts to integrate gender considerations across APEC activities as

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a priority”, said the APEC Economic Leaders in the 21st APEC Economic Leaders’ Declaration.
Women’s trade and economic cooperation is an integral part of the regional trade and economic
cooperation. APEC women and their cooperation in trade and economy can make unique
contributions to the regional prosperity.
 This sub-theme provides an opportunity for participants to:
 learnmore abouttrade and economiccooperationandbusinesscooperationopportunitiesin
the region;
 discussthe integrationof women’sperspectivesandaspirationsintoregional cooperation,the
cooperationamongwomeninthe businesscommunity,and the enhancementof partnerships
betweenthe publicandprivate sectors;and
 explore howtofurtherexpandinvestmentandtechnical training,creatinganenabling
environmentthatsupportswomen’sentrepreneurshipandthe developmentof women-led
businesses includingSMEs.
 Policy Support and Women’s Economic Empowerment :
It is the consensus of all APEC economies to empower women and promote their full economic
participation on an equal footing. Women’s economic empowerment in APEC region has
recorded considerable progress. However, women still remain disadvantaged in terms of their
access to resources, market, and employment and trade opportunities. Policy support is of crucial
importance to address the issues. The declarations of the APEC Economic Leaders meetings and
Women and the Economy Forums/Summit adopted in recent years all emphasised that in order to
strengthen women’s economic participation, concrete measures be taken, investment in women
be encouraged and a conducive environment be built.
 Participants are expected to exchange information on:
 policiesfor,andachievementsin,women’seconomicempowermentintheireconomies;
 talkabout successful storiesof gendermainstreaming;and
 share theirfurtherpolicyrecommendationsandprojectproposals forregional cooperationand
for women’sequal participationinandequal benefitfromeconomicdevelopment.

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NAFTA : North American Free Trade
Agreement
 NAFTA :
The North American Free Trade Agreement (NAFTA) is an agreement between Mexico, the
United States and Canada. The agreement was signed by US President George H.W. Bush,
Canadian Prime Minister Brian Mulroney, and Mexican President Carlos Salinas on December
17, 1992 in San Antonio, Texas, and took effect on January 1, 1994.
The bill removed taxes on products traded between the three countries. It also protects copyright,
patents, and trademarks between those countries. It was updated with the North American
Agreement on Environmental Cooperation, which helped reduce pollution and set more
environmental regulations. It was also updated with the North American Agreement for Labor
Cooperation, which helped people fight for better labor conditions.
 Effects :
Since NAFTA took away taxes for products traded between the US, Canada, and Mexico,
Mexico has been buying more products from the US. It saved U.S. companies the cost of selling
products to Mexico, and saved Mexican companies the cost of buying items from US companies.

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A benefit of the bill is that labels on products exchanged between the three countries come in
French, English and Spanish. That way, Mexicans and Americans who speak Spanish can read
the Spanish label, Americans and Canadians can read the English label, and Canadians who
speak French can read the French label.
NAFTA also encourages more immigration from Mexico to the US. Since small businesses can
no longer be protected by tariffs, many small business owners in Mexico cannot compete with
the prices of subsidized products from the US. As a result, many Mexicans have gone to the US
looking for work. Some believe that NAFTA has been positive for Mexico, which has seen its
poverty rates fall and real income rise.
Others argue that NAFTA has been beneficial to business owners in all three countries, but has
had negative impacts on farmers in Mexico. Mexican farmers have seen food prices fall due to
cheap imports from US agribusiness, while US workers in manufacturing and assembly
industries have lost jobs. Critics also argue that NAFTA has contributed to the rising levels of
inequality in both the US and Mexico.
 Goals of NAFTA :
NAFTA was created to eliminate barriers to trade and investment between the US, Canada and
Mexico. The implementation of NAFTA immediately eliminated tariffs on more than one-half of
Mexico's exports to the US and more than one-third of US. exports to Mexico. Within 10 years
of implementation, all US-Mexico tariffs would be eliminated except for some US agricultural
exports that were to be phased out within 15 years. NAFTA also seeks to eliminate non-tariff
trade barriers and to protect the intellectual property right of the products.
In the area of intellectual property, the North American Free Trade Agreement Implementation
Act made changes to the copyright law of the US, foreshadowing the Uruguay Round
Agreements Act of 1994 by restoring copyright (within NAFTA) on certain motion pictures
which had entered the public domain.
 Trade :
The agreement opened the door for free trade, ending tariffs on various goods and services, and
implementing equality between Canada, the US and Mexico. Since the implementation of
NAFTA, the countries involved have been able to do the following:
 The US had a servicestrade surplusof $28.3 billionwithNAFTA countriesin2009 (the latest
data available).
 Foreigndirectinvestment of CanadaandMexicointhe US (stock) was$237.2 billionin2009, up
16.5% from2008.
 Income inthe maquiladorasectorhasincreased15.5% since the implementationof NAFTA in
1994.

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 To alleviate concernsthatNAFTA wouldhave negativeenvironmental impacts,in1994 the
CommissionforEnvironmentalCooperation(CEC) wasgivenamandate toconductongoingex-
postenvironmentalassessmentof NAFTA.
 Agriculture isthe onlysectionthatrequiresthree separate agreementsbetweeneachpairof
parties.The Canada–US agreementcontainssignificantrestrictionsandtariff quotason
agricultural products,whereasthe Mexico–USpactallowsfora widerliberalizationwithina
frameworkof phase-outperiods.
 Mexicohas gone froma minorplayerinthe pre-1994 US exportmarkettothe 2nd
largest
importerof U.S. agricultural products.
 Accordingto the Departmentof HomelandSecurityYearbookof ImmigrationStatistics(2006),
73,880 foreignprofessionalswere admittedintothe USfortemporaryemploymentunder
NAFTA.
AFTA : Asean Free Trade Area
The creation of the ASEAN Free Trade Area (AFTA) was agreed at the 1992 ASEAN Summit in
Singapore. The main objectives of the AFTA are to:
 create a single market and an international production base;
 attract foreign direct investments; and
 expand intra-ASEAN trade and investments.

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The EU-ASEAN Free Trade Agreement (FTA)
 Trade and Regional Integration Strategies :
The negotiations for a regional FTA represent a key component of both the global and regional
economic integration strategies of both the EU and ASEAN.
For the EU, its ambition to become the most globally competitive economy is outlined in the
Global Europe Strategy which is the Union's over-arching framework for trade and regional
integration. The strategy involves dismantling trade barriers with particular emphasis on non-
tariff barriers, promotion of open trading regimes in and outside EU, development of the internal
market-continuing the process of EU integration, establishing global rules and standards,
protection of intellectual property rights (IPR), the conclusion of the Doha Round, and bilateral
and regional FTAs particularly in the Asian region, where EU's presence is not that strong
compared to the United States, Japan and China
Over the last decade, ASEAN has also endeavored to consolidate an agenda for regional
integration. ASEAN Vision 2020 charts the path for an "outward and forward looking ASEAN,
living in peace, stability and prosperity, bonded together in partnership in dynamic development
and in a community of caring societies". A series of action plans and programmes- the Hanoi
Plan of Action (1999-2004) and the Vientiane Action Programme (VAP) (2004-2010) - have
been developed to operationalize the vision,. The VAP outlines the goals and strategies towards
the establishment of comprehensive ASEAN Community founded on the three pillars of political
and security cooperation, economic integration and socio-cultural cooperation.
 ASEAN Charter and Economic Community Blueprint :
Two major developments took place in the ASEAN Summit in Singapore in November 2007.
The first was the signing of the ASEAN Charter, which confers legal personality to ASEAN and
institutes mechanisms for decision-making and closer coordination among Member states. With
regard to trade negotiations however, the Charter only went so far as providing the mandate to
the ASEAN Coordinating Council (comprised of Foreign Ministers) to prescribe the procedure
for ASEAN to conclude agreements with countries or sub-regional, regional and international
organizations and institutions.
The second important development was the adoption of ASEAN Economic Community
Blueprint (AEC), which will establish ASEAN as a single market and production base
guaranteeing free flow of goods and services, investments and capital, as well as greater mobility
of skilled labor.

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 Shifting approach from regional to bilateral :
A distinct feature of the negotiations between the EU and ASEAN is the region to region
approach to the negotiations.
In an attempt to fast track the EU-ASEAN FTA negotiations, four "exchange of views" meetings
were held last year. These talks however failed to generate the needed momentum prompting the
increasingly frustrated EU to announce a possible shift to a bilateral approach to the negotiations.
The EU has been known in the past to employ such tactics in order to achieve its goals in trade
negotiations. Just last year, it threw out the prospects of a regional deal with the Community of
Andean Nations (CAN) opting instead to move ahead with bilateral deals with Peru and
Colombia, sidestepping the opposition of Bolivia and Ecuador.
Whether or not the EU will make good its threat to go bilateral with ASEAN is something that
should be closely monitored especially in the wake of ASEAN's own assertions of regional unity
with the historic adoption of the ASEAN Charter.
 EU-ASEAN Partnership :
EU and ASEAN are determined to pursue their respective goals of greater regional economic
development. Both see the expansion of markets for trade in goods and services and the easing of
restrictions on investments as central strategies towards the attainment of their goals. There is a
consensus among EU and ASEAN states to anchor regional integration on the free market
corporate-driven paradigm with the pursuit of free trade and economic partnerships agreement as
key element of the strategy.
 Behind the numbers :
As the country researches in this publication show, at least based on the economic numbers, the
relationship between these two regions is significant. The EU is an important dialogue partner of
ASEAN. The EU is ASEAN's third largest trading partner with over-all trade valued at around
100 billion euros. The EU is the major source of investment in ASEAN representing 25 % of
total investments in the region valued at around US $13 billion. Economic relations between the
two regions are also complemented by a host of cooperation agreements that are anchored on EU
Aid to the region.
The aggregate economic figures however mask another reality. EU and ASEAN are two
economically diverse regions facing a range of different economic, social, cultural and
environmental challenges. In Southeast Asia alone, the asymmetry is already stark. The richest
country in the region for instance which is Singapore has a per capita GDP of US $25,207
compared to Myanmar (Burma) with a per capita GDP of only $166 (only 0.6 percent of
Singapore's per capita GDP).
Singapore likewise corners the FDI flows in the region. Of the $25 billion FDI that flowed into
ASEAN,$16 Billion or 64 % of FDIs went to Singapore. Malaysia is a far second cornering $4

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billion or 16 %, followed by Vietnam with $1.6 billon or 6%. The Philippines is in 6th place with
FDI amounting to $469 million or a mere 1.6 % of FDIs in the region.
In terms of merchandize exports, Singapore tops the list again with exports in 2004 amounting to
$197 billion and Lao-PDR on the tail end with merchandize exports of only $363 million or a
mere 0.1 % of the level of Singapore's exports. Philippine exports amounting to $38 billion or 19
% of Singapore's export level.
We would like to thank the following donors for their generous contribution to the work of the
EUASEAN FTA campaign: ICCO and Trocaire for their support to the April Week on EU FTAs
in Europe, the research work and to this publication, Our World is not For Sale Network and
ISVARA Foundation for supporting the national and regional sectoral caucuses, Irish aid for
their support to the Vietnam Roundtable, the Vietnamese participation in the regional campaign
and the research and upcoming publication on Vietnam, and finally Christian Aid and 11.11.11
for their support to the over-all regional campaign.
SAPTA : South Asian Preferential Trade
Arrangement
 SAPTA :
The South Asian Free Trade Area (SAFTA) isan agreementreachedon6 January2004 at the
12th SAARCsummitinIslamabad,Pakistan.Itcreatedafree trade areaof 1.6 billionpeoplein
Afghanistan,Bangladesh,Bhutan,India,Maldives,Nepal,PakistanandSri Lanka(as of 2011, the
combinedpopulationis1.8billionpeople).The sevenforeignministersof the regionsigneda

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frameworkagreementonSAFTA toreduce customsduties of all traded goodsto zeroby the
year2016.
 After the Second World War, significant protectionist sentiment compelled the
economies of South Asia to pursue import-substituting industrialization (ISI).
 While intra-regional trade is not a novel concept for the region, the economies of South
Asia are new to the ideas of regionalism and regionalization.
 Several factors combine to make a negative case for a viable free trade agreement in the
short-term. Even so, a reasonable case exists for the creation and gradual strengthening of
SAFTA, as there are few benefits to dwelling on historical ill will. As these economies
grow and economic complementarities begin to develop, the countries of South Asia may
find that SAFTA can offer a potentially significant contribution to their progress.
Due to a legacy of conflict between them, the member countries of SAARC were initially
hesitant to come together. A lack of enthusiasm, a poor understanding of the benefits to regional
integration, and excessive caution, made the processes of negotiation and implementation
lengthy and challenging. Instead of devising pragmatic sub-regional integration schemes for the
good of all members, SAARC often seemed to be nothing more than a host to discussions,
seminars, and conferences. Notwithstanding its potential to accelerate growth, intra-regional
trade, and investment, and alleviate poverty, it has fallen short of its stated objectives (Table 1).
Table 1. Gross National Income (GNI) in 2004
Country
GNI
(in Billions of Dollars)
GNI Per Capita (in Dollars)
Bangladesh 61.3 440
Bhutan 0.7 760
India 673.2 620
Pakistan 90.7 600
Nepal 6.6 250
The Maldives N/A 2,300
Sri Lanka 19.5 1,010
Source: The World Bank. 2006. World Development Indicators. Washington, D.C. Table 1.1.

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 Liberalizing Protectionist Regimes :
After the Second World War, significant protectionist sentiment compelled the economies of
South Asia to pursue import-substituting industrialization (ISI). They maintained a strong anti-
export bias, a massive public sector, and a control-ridden private sector at their periphery. ISI
advocates worked to limit trade, especially intra-regional trade.
Pre-1990 tariff levels in Bangladesh, India, and Pakistan are demonstrative. In the early 1990s, a
few South Asian economies began to slash tariffs and liberalize their domestic trade regimes.
According to the United Nations’ Commodity Trade Database, while considerable tariff
liberalization did occur, the region has continued to rank among the most highly protected in the
world, second only to the group of socialist economies (Table 2).
Table 2. Tariff Rates in South Asian Economies (Percent)
Country Year
Simple
Average
Weighted
Average
Standard
Deviation
Bangladesh 2004 18.42 16.87 10.2
Bhutan 2002 16.61 18.18 10.9
India 2001 32.32 26.50 13.0
The
Maldives
2003 20.21 20.68 13.2
Nepal 2003 13.61 16.80 10.9
Pakistan 2003 17.10 14.46 10.9
Sri Lanka 2001 9.25 6.68 9.3
Source: Mukherji. 2005. Computed from the United Nations' COMTRADE Database.
Both simple and trade-weighted average tariff rates1 were highest in India and lowest in Sri
Lanka. In 1989-90, applied average unweighted tariffs for the South Asian economies were 76%.
Non-tariff barriers (NTBs) and para-tariff barriers (PTBs) have also presented serious problems
to sub-regional integration. In April 2006, trade ministers of the seven countries met in Dhaka to

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review and control NTBs and PTBs. Pursuant to that end, the SAFTA Committee of Experts was
established to meet twice a year.
The South Asian economies implemented macroeconomic reforms and liberalization measures
due to general disenchantment with the socialistic style of economic management that prevailed
under the ISI regime, whereby large governments intervened in the economic sphere. Regional
economic policymakers believe that their countries have been missing out on the growth
opportunities that East and Southeast Asia enjoy. Except for Sri Lanka, the economies of South
Asia failed to liberalize their trade and foreign investment policies until the early 1990s. A
pioneer in the region, it undertook significant reform and liberalization measures towards the end
of the 1970s and during the 1980s. Given the country’s relatively high per capita GNI, its
reforms seem to have yielded significant benefits (Table 1).
In conjunction with trade policy liberalization, the South Asian economies also launched a much-
needed and long-awaited campaign of industrial deregulation. Public policy mandarins were
slow to realize the error of their ways. The business community and a segment of the
policymaking community eventually began to recognize, however belatedly, how critical the
external sector could be to economic growth and poverty alleviation. Even incomplete reform
measures of recent times have achieved clear gains. At 16.1% in 1981, the poverty gap index for
the region declined to 11% in 1990 and 6.4% in 20012.
 Financial Sector Liberalization :
Until the region could adopt a greater degree of integration, financial sector liberalization was
necessary. India and Sri Lanka began to deregulate interest rates and permitted private sector
banking to grow in the mid-1990s; Nepal and Pakistan pursued identical measures in the late
1990s. With the exception of India and Sri Lanka, who were concerned with looming budget
deficits, a majority of South Asian economies followed suit.
Launched after a long period of procrastination, economic and structural reforms in these
economies have been incomplete. There is a pressing need to implement further reforms, unleash
market forces, reduce the high level of government intervention, and address the rigidities of
current regional economic structures. As exemplified by the trade-induced path to growth that
East Asia pursued, these measures promise to benefit the absolute poor3.
 Consequences of Reforms and Restructuring :
A review of the region’s economic history suggests that openness correlates significantly with
accelerated economic growth. This relationship holds whether “openness” is measured in terms
of trade policy (for example, the level of tariff and non-tariff barriers) or policy outcomes (for
example, the ratio of trade (exports plus imports) to GDP). As seen in increasing levels of
globalization during the 1990s, export-led growth provided a key strategic thrust to the South
Asian region (consider, for instance, its significantly increasing ratio of merchandise trade to
GDP)..

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These traditionally slow-growing economies also began turning in superior economic
performances. From 2000 to 2005, Bangladesh, Bhutan, India, the Maldives, and Pakistan
recorded average GDP growth rates of 5% or greater. Sri Lanka and Nepal fell behind, however,
with respective growth rates of 4.7% and 2.5%. According to the World Bank’s 2006 World
Development Indicators Report, GDP growth rates for all of the South Asian economies had
passed 5% by 2005. India and Pakistan turned in stellar performances with respective annual
GDP growth rates of 8.5% and 7.8%.
 More than Incomplete Reform Programs :
Reform implementation has remained slow and incomplete in the region. According to South
Asia scholars, governance issues have proven to be its Achilles’ heel. Transparency
International’s Corruption Perception Index (CPI), an annual ranking, found that Bangladesh was
the most corrupt nation in the world, receiving a score of 1.7 out of 10. Other ranked South
Asian countries also recorded poor performances (Table 3).
Table 3. Country Rank in the World CPI Score
Country Rank Score
Bangladesh 158 1.7
Pakistan 144 2.1
Nepal 117 2.5
India 88 2.9
Sri Lanka 78 3.2
Source: Transparency International. Berlin, Germany.
The economies of South Asia have continued to suffer from macroeconomic, financial, and
governance-related constraints. These deficiencies have combined to retard productivity growth
rates and rein in the competitiveness of export-oriented sectors. In effect, private economic
activity has suffered from infrastructural bottlenecks, poor economic governance, labor and land
constraints, and deficient financial market performance. The most conspicuous economic
constraints have been attributable to power shortages, archaic labor laws, and inefficient customs
procedures and trade regulations. Small and medium-sized business enterprises have frequently
faced problems in accessing capital from the organized financial sector. While property rights

23. 23
have been properly defined, implementation has been arbitrary. Bureaucracy and rent-seeking
practices in government continue to increase transaction costs enormously.
Longstanding social challenges have only exacerbated these economic difficulties—the presence
of corruption, inefficient government systems, incompetent bureaucracies in the larger South
Asian economies, domestic turmoil, and foreign conflict have all proved detrimental.
 Intra-Trade and Regional Integration Initiatives :
While intra-regional trade is not a novel concept for the region, the economies of South Asia are
new to the ideas of regionalism and regionalization. Even before tariff barriers and NTBs had yet
to be raised, trade barriers in the industrial economies were still significant at the time given the
legacy of the Great Depression. As a result, intra-regional trade in South Asia declined. As many
of the countries gained independence in the late 1940s, intra-regional trade came to account for
almost one-fifth of total trade. However, these levels would soon see steady reductions—to 4%
of total trade in 1960 and 2% in 1970. This figure more or less persisted until 1990, rising to only
4% by 1999.
Table 4. Intra-Regional Trade as a Percent of GDP in 2004
Region Intra-Regional Trade
East Asiaand Pacific 26.5
Europe and Central Asia 15.3
Latin America 6.4
Sub-SaharanAfrica 5.3
Middle Eastand North Africa 3.5
SouthAsia 0.8
Source: World Bank. Global Economic Prospects 2005. Washington, D.C. p. 43.
Why is 95% of South Asia’s trade carried out with extra-regional economies? Close scrutiny of
trade flows and statistics reveals that intra-regional trade has remained heavily concentrated in a
small number of traditional regional markets. These economies have neglected to expand their
intra-regional markets in the postwar period. Persistent protectionism, long-running conflicts
among the larger countries, and transportation constraints have remained among the principal
inhibiting factors.

24. 24
Due to multifarious feuds in South Asia, many countries were reluctant to form an economic
union of any kind. Confrontations during the postwar period made economic cooperation
difficult. The seven South Asian economies belatedly signed an agreement in 1993 to form the
South Asian Preferential Trade Area (SAPTA) by December 1995. Despite three rounds of
negotiations, member countries failed to compromise. SAPTA’s shortcomings left no one
surprised, given the obstacles at the time: the persistence of protectionist sentiment among
member countries, a lack of substantial tariff reduction measures, outright exclusion of several
large sectors of trade from tariff reduction, domestic crises, and tense relations. Posing yet
another challenge, India refused to remove a ban on consumer product imports from SAPTA
countries until 1998 and from the rest of the world until 2001. At its very inception, SAPTA had
fallen short.
 India’s Unique Position :
India has emerged as the region’s unquestioned economic leader. It has failed to reach its full
potential, however, due to tenuous relations with its neighbors. Experiences of the last two
decades (1985-2005) have shown how difficult it is to bring about reasonable economic
integration between such politically acrimonious members of the SAARC as India and Pakistan.
Their relationship has always been one of suspicion4. In stark contrast, the small economies of
Bhutan and Nepal have maintained strong trade links with India.
It is important to note the extent to which economic developments in India can affect
developments in other sub-regional economies. Until the early 1990s, India was never regarded
as a rapidly growing economy or successful trader. Its export structure abounded in products that
were undifferentiated, labor-intensive, low-skill, and technologically simple. Its dispirited
performance adversely affected neighbor economies. The situation changed dramatically when
its growth began to accelerate in the 1990s. Since 2000, several macroeconomic and financial
indicators suggest a marked improvement. India’s trade with Asian economies, particularly
China, has improved significantly after the currency crisis of 1997-98. India’s stock market has
boomed, with capitalization growing at a heady pace. Recent rankings show India as one of the
three most favored destinations for FDI. The flow of resources to India has provided benefits to
the rest of the region.
 Mixed Evidence of Complementarity :
In comparison to those of other regions, South Asia’s exports include an unusually large share of
labor-intensive manufactures, owing to its distinctive combination of resources and factor
endowments—relative to their supply of labor, South Asian economies have lower levels of
education and fewer natural resources. Any future trade and development policy schemes must
internalize these realities.
India and Pakistan’s exports are notably complementary to the imports of some South Asian
economies, particularly those of Bangladesh and Sri Lanka. Other economies, however,
demonstrate efficiency in only a small number of export areas, most of which are not
complementary to India’s imports (or those of any other country). South Asian export markets

25. 25
compete in a narrow range of products, particularly in textiles, apparel, and other light
manufactured goods. Given this trade structure, the prospects of sub-regional integration do not
seem promising.
 Assessing the Economic Case for SAFTA :
Historical figures reveal a steady decline in intra-regional trade in South Asia during the postwar
period—down to 2% of total trade levels by the mid-1960s. Despite small improvements in
recent years, consistent figures of less than 5% indicate the low likelihood of uniting the sub-
region as a cohesive trading bloc in the short-term. Moreover, the World Bank concludes that
SAFTA member countries have tended to trade far more extensively with industrial economies
like the United States and the European Union, due perhaps to differences in factor endowments
(India and Pakistan provide a case in point).
While Bangladesh and Sri Lanka, in contrast, respectively received 20% and 15% of their total
imports from South Asian countries (notably India), their import volumes covered a small share
of Indian exports. As a share of total exports, Indian trade flows to neighboring sub-regional
economies did see a small increase in the 1990s, from 3% in 1990 to 5% in 2002. These
improvements were not, however, universal—unilateral non-discriminatory tariff liberalization
was carried out on a most-favored-nation basis. This evidence suggests, albeit weakly, that a
cohesive and profitable free trade agreement in South Asia is possible in the short-term.
 Estimates of Benefits from Quantitative Studies :
A number of scholars have attempted to model the potential economic benefits of free trade in
South Asia. While quantitative predictions offer varying degrees of accuracy, the popular gravity
and computable general equilibrium (CGE) models seem to offer significant insight on how
much economic synergy might be achieved.
In its basic form, the gravity model postulates that the degree of trade between two countries is
directly proportional to the product of their GDPs and inversely proportional to their distance.
Popularized for modeling trade flows, the gravity model has received numerous adjustments. In
particular, it has proven unable to account for the welfare effects of free trade agreements.
Using 1997 statistical series, Kabir Hassan discovered that the seven SAARC economies not
only reduced trade amongst themselves but with other regions as well. Given the traditionally
weak trading performance of SAARC economies, particularly the large ones, his conclusion
seems intutiive. Seekkuwa Hirantha also employed the gravity model, using both panel and
cross-sectional data from 1996 to 2002 to estimate trade creation and trade diversion effects
under the current SAFTA regime. Unlike Hassan, Hirantha found evidence of trade creation
among the SAARC member countries, without any trade diversion with the rest of the world.

26. 26
 A Reasonable Case for SAFTA :
South Asia saw a far larger level of intra-regional trade half a century ago than it has seen in
current times. Recent history demonstrates that hurdles in the path towards an active and
functional free trade agreement are essentially political in nature. The countries of South Asia
must strive to emulate the recent achievements of Southeast Asian economies, which have
succeeded in achieving economic integration despite a history of rivalry and poor mutual
relations. The pursuit of mutual economic interest must be prioritized over political harmony.
South Asian policy makers must be responsible enough to realize that if regional welfare gains
are to be achieved, animosity must be put aside. A legacy of tension has made the member
countries excessively cautious in taking meaningful policy measures toward economic
cooperation. Thus viewed, several factors combine to make a negative case for a viable free trade
agreement in the short-term. Even so, a reasonable case exists for the creation and gradual
strengthening of SAFTA, as there are few benefits to dwelling on historical ill will. As these
economies grow and economic complementarities begin to develop, the countries of South Asia
may find that SAFTA can offer a potentially significant contribution to their progress.
LAFTA : Latin American Free Trade Association
 LAFTA:
Historically linked by their geographical proximity and their shared histories of being created by
European colonialism, the United States and the many nations of Latin America have long been
important trading partners. The late twentieth century rise in globalization has pushed these
nations’ economic development closer together and prompted the creation of new treaty
relationships that are moving the entire Western Hemisphere toward a single free trade zone.
As former colonies of European nations that won their independence during the same era, around
the turn of the nineteenth century, the United States and the nations of Latin America in Central
and South America and the Caribbean share similar histories. Efforts of Great Britain’s North

27. 27
American colonies to conduct trade with the Latin American colonies were resisted by imperial
Spain and Portugal. However, after most of the Western Hemisphere’s nations were independent,
U.S. trade with Latin America began to grow. Differences among the countries in climate,
topography, and raw materials ensured that they would produce many products that their trading
partners could not produce for themselves, and their physical proximity to one another
encouraged their trade.
 North American Free Trade Agreement :
A major stimulus to U.S.-Latin American trade has been the North American Free Trade
Agreement (NAFTA), which the United States, Mexico, and Canada signed in 1994. That
agreement transformed the three North American nations into something like a free trade zone,
greatly increasing trade among those nations. By 2006, Mexico accounted for 11.5 percent of
U.S. trade, as measured by value, and accounted for 60 percent of all of U.S. trade with Latin
America. The United States exported goods valued at $134 billion to Mexico in 2006. In turn,
the Mexicans shipped $198 billion worth of goods to the United States during the same period.
The North American Free Trade Agreement treaty did not discontinue all tariffs and duties
immediately but began phasing them out over a fourteen-year period. This staggered approach
was adopted so as to soften the effect that cheaper prices of imported goods would have on
existing domestic markets. Even so, many Mexican peasant farmers found themselves unable to
compete with some imported American agricultural products. The main challenge the farmers
faced was the difficulty of shipping their own products over poor roads and through inadequate
railroad service. NAFTA officials have sought to aid the farmers by investing in a series of
improvements designed to support their marketing capabilities. Nevertheless, many Mexican
farmers have continued to oppose the treaty. Despite this problem and several minor disputes,
North American Free Trade Agreement is generally regarded as an outstanding success as a trade
stimulus. It has been one of the world’s most successful trade agreements in terms of the
combined gross domestic product produced for all three parties. The positive results achieved
have given rise to the development of other agreements of a similar nature.
 Central American Free Trade Agreement :
In 2004, the success of NAFTA led to the formulation of the similar Central American Free
Trade Agreement (CAFTA), involving the United States and the Central American nations of
Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Shortly afterward, the Caribbean
island nation of the Dominican Republic joined the agreement, which became known as DR-
CAFTA.
The goal of DR-CAFTA has been to create a free trade area similar to that of the NAFTA
agreement. It has been designed to remove upward of 80 percent of the tariffs imposed on U.S.
imports entering the Central American nations and the Dominican Republic. When the
agreement was signed, most exports from those nations to the United States were already duty-
free because of the U.S. government’s existing Caribbean Basin Initiative. The new agreement
created an export market for the United States second only in size to that of NAFTA.
By 2008, two-way trade within the DR-CAFTA nations amounted to $32 billion annually. The

28. 28
plan was designed to help modernize the economies of the six smaller countries, improve their
labor laws, raise their environmental standards, and encourage private investment in all the
nations. One concern expressed by some economists in the small Latin American countries was
the possible harm from the U.S. mass producers of competing goods to the fledgling industries
within their own borders.
DR-CAFTA and other agreements similar to it are considered by many free trade advocates as
steps in the direction toward the ultimate goal of many—a Free Trade Area of the Americas
(FTAA) that will encompass North, Central, and South America and the island nations of the
Caribbean. Most economists regard free trade as largely positive because it reduces the need for
domestic subsidies, encourages formation of capital investment, and helps promote full
employment for the parties involved as well. An obvious advantage in the adoption of a
hemisphere-wide FTAA would be in the reduction in rules governing each separate agreement.
The adoption of such a plan would make trade activity easier to manage by all the parties
concerned.
 Other Free Trade Agreements :
In 2004, a free trade agreement between the United States and Chile went into effect. This
bilateral treaty soon resulted in a 154 percent increase in the value of trade between the two
countries. By 2008, the United States was Chile’s primary trading partner for both imports and
exports. The United States sends Chile electronic goods, motor vehicles, road building
equipment, fertilizers, tractors, and petroleum oil. Chile ships the United States copper, wine,
cheeses, and a wide variety of fruits and vegetables and wood products. As a Southern
Hemisphere exporter of agricultural products, Chile is a particularly valuable trading partner of
the United States because it grows summer crops during the Northern Hemisphere’s winter.
The United States entered similar trade agreements with Peru in 2005 and Colombia in 2006 and
has negotiated a trade agreement with the Central American nation of Panama. In these new
agreements, both the U.S. and Latin American representatives have addressed an additional
challenge— the problems arising from gross disparities in income distribution in the Latin
American nations. The business sector believes that increased trade will increase job
opportunities for the poorest sectors of their respective economies. Representatives of the
International Labor Organization have argued that the agreements should spell out the labor
sector’s rights, such as provisions against the exploitation of child labor.

29. 29
United States Trade with Selected Latin American Countries, 2007, in Millions of Dollars
Source:Data from U.S. CensusBureau,ForeignTrade Division,DataDisseminationBranch,Washington,
D.C. 20233
Note:Trade figuresare fromthe U.S. perspective.
 Mercosur :
The United States does not have an exclusive prerogative to form trade agreements throughout
the Western Hemisphere. Other countries in the region have also recognized the necessity to
inaugurate free trade programs to help them meet the challenges of economic globalization. As
early as 1991, four countries in South America’s so-called Southern Cone—Brazil, Argentina,
Uruguay, and Paraguay— initiated a treaty designed to increase economic cooperation and to
expedite trade within the group, which is known as Mercosur (Mercado Común del Sur) or
Mercosul (Mercado Comun do Sul). In 2006, Venezuela became the fifth member of the group,
which has steadily reduced tariffs on imports and exports traded among the members of the
group. The original assessment of the group’s trading potential has proven to be correct, as the
volume of trade among the five nations has increased markedly since the inauguration of the
treaty. Although competition within the group in some products has continued, the overall trade
balances among them produces a positive flow of commerce.
Since Mercosur’s founding, Bolivia, Chile, Colombia, Ecuador, and Peru have become associate
members. By 2008, Mercosur had announced its goal to make all South and Central American

30. 30
nations members. However, Mercosur’s quest to expand its membership may present long-range
problems to an overall trade program for the Western Hemisphere. For example, Brazil, a
Mercosur leader, and the United States have shown little willingness to move closer to each other
on a number of trade issues. Both Brazil and Argentina have continued to maintain strong
restrictions on their trade with the United States. Venezuelan president Hugo Chávez has openly
expressed his opposition to any expansion of U.S. influence in Latin American affairs. However,
Chávez is more concerned with American political influence than he is with economic
relationships with the United States. Meanwhile, the United States has continued to buy large
quantities of Venezuelan petroleum, and Venezuelan imports of American products have
continued to increase. Meanwhile, increasing government control of industry in Bolivia and
Ecuador has tended to inhibit the growth of commerce between these two South American
nations and the United States.
Trade continues to be a major consideration in U.S.-Latin American relations. It is one of the
areas in economic policy that is subject to a great deal of wrangling and debate among traders on
all sides. Mexico has remained the leading Latin American trading partner of the United States.
Mexico’s imports from the United States increased by 11.5 percent in 2006 alone, but trade
between the United States and many other Latin American countries has also generally
increased. U.S. trade has even increased with Venezuela, despite growing political friction
between the two nations.
ASEAN : Association of Southeast Asian Nations
 ASEAN :
The Association of Southeast Asian Nations (ASEAN) is an alliance promoting economic
and political cooperation by fostering dialogue among its ten members: Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand,
and Vietnam. ASEAN is becoming a major economic powerhouse in the region, having

31. 31
signed free-trade agreements (FTA) with China, Australia, New Zealand, India, Japan,
and Korea. But the regional organization faces distinct challenges of late, including, most
notably, member countries' disputes over maritime sovereignty in the South China Sea.
Experts say the group's lack of diplomatic coherence, differences in strategic priorities,
and weak leadership has prevented it from making meaningful progress in negotiating a
resolution to the tugs-of-war with China, whose blanket claims over territories in the
region have inflamed diplomatic relations in recent years.
 Addressing Regional Security Issues :
ASEAN was formed in 1967 amid the Vietnam War, uniting Indonesia, Malaysia, the
Philippines, Singapore, and Thailand against the potential threat of a communist-led insurgency.
It was originally intended to serve as a security community, promoting social and political
stability during a turbulent time in the region, says CFR Senior Fellow Sheila A. Smith.
In addition to preventing intraregional flare-ups, ASEAN provided a way for the countries to
create "a voice for themselves in the broader Cold War arena so the Southeast Asian area would
speak as one on particular issues," Smith says. To that end, ASEAN signed the Zone of Peace,
Freedom, and Neutrality [PDF] accord in 1971. The resolution signaled ASEAN's refusal to be
divided along Cold War lines, says Sheldon Simon, a professor of political science at Arizona
State University.
The fall of the Soviet Union left ASEAN "searching for a new organizing principle for security,"
Simon says, and ASEAN has since established these forums to address more contemporary
challenges:
ASEAN Regional Forum: Launched in 1993, it aims to promote security in the broader Asia-
Pacific region, although the group's contribution has entailed more discussion than action, says
Zachary Abuza, a professor of political science at Simmons College in Boston. Still, white
papers, military exchanges, and the creation of a register of experts who can be consulted during
conflicts have increased transparency and defense cooperation.
ASEAN Plus Three (APT): Initiated in 1997, it aims to foster collaboration between ASEAN,
Japan, China, and South Korea, and was characterized as "the most coherent and substantive
pan-Asian grouping" in a recent CFR Council Special Report.
East Asia Summit: First held in 2005, the summit aims to promote security and prosperity in the
region and is attended by heads of state from ASEAN, Australia, China, India,
Japan, South Korea, and New Zealand. Since 2009, China has taken a more aggressive tack in
regional disputes over borderlands with India, maritime sovereignty, and the Mekong River, say
analysts. CFR's Fellow for Southeast Asia Joshua Kurlantzick warns that countries like Vietnam

32. 32
and Malaysia are "arming up" to protect strategic interests and energy resources in areas like the
South China Sea. Investment in arms purchases in Southeast Asia nearly doubled between 2005
and 2009 alone, writes Richard Weitz, a senior fellow at the Hudson Institute.
Despite the rising level of engagement, experts have pointed out that considerable hurdles to
multilateral cooperation remain.
One of the most contentious regional issues has been the escalation of disputes between China
and ASEAN members over territorial claims to the resource-rich South China Sea. China, which
lays claim to most of the area, has been in a standoff with the Philippines since April 2012 over a
reef known as the Scarborough Shoal. It has also disputed overlapping territorial claims with
Vietnam, Malaysia, and Brunei, all of which lay various claims to the clusters of uninhabited
islands spanning the sea. While ASEAN has made repeated attempts to resolve the long-standing
issue, multilateral discussion has yielded little progress; the group failed, for the first time in its
history, to issue a joint communiqué at its annual meeting in July 2012 that would have
presented a code of conduct for the region to avoid potential contingencies. China's preference to
discuss such issues bilaterally has often exacerbated stalemates, although Beijing's new
government has recently expressed willingness to negotiate a code of conduct with ASEAN.
Despite the rising level of engagement, experts have pointed out that considerable hurdles to
multilateral cooperation remain. Security priorities vary among members, who tend to treat
military and counterterrorism issues more bilaterally. Still, as Andrew Chau of the University of
Queensland's School of Political Science and International Studies writes in Asian Survey,
ASEAN's consensus-based decision-making and policy of noninterference in members' affairs
have created a "state-centric approach to foreign policy behavior" that undermines regional
integration initiatives.
 Human Rights Concerns :
The alliance's noninterference principle came under scrutiny when the group drafted a 2007
charter, which all ten members ratified by October 2008. Early drafts included provisions for
charter violation sanctions and a system of compliance monitoring for ASEAN agreements, but
these elements were cut after deliberations revealed conflicting visions of ASEAN's continued
role in the region.
Experts say the concept of noninterference has become a tool for protecting human rights
transgressors. Cambodia, Laos, Myanmar, and Vietnam—countries with contentious human
rights records—balked at the proposition to give the charter's human rights commission the
power to monitor or investigate abuses (Brunei and Singapore also expressed reservations,
fearful of opening the door to intervention). The commission was rendered virtually powerless,
dismaying Indonesia and the Philippines, the last members to ratify the charter.

33. 33
 The Myanmar Question :
While the charter did not change ASEAN's conflict resolution tactics, the group's response to
events in 2008 revealed willingness to use tougher diplomatic pressure on members. Such was
the case after Cyclone Nargis hit Myanmar in May 2008, when the country's ruling junta allowed
only limited international aid and insisted that it be distributed through its military. In response,
ASEAN called an emergency meeting and issued a statement that "Myanmar should allow more
international relief workers into the stricken areas, as the need is most urgent, given the
unprecedented scale of the humanitarian disaster." After Secretary-General Surin Pitsuwan
continued to press for cooperation on a trip to Yangon, Myanmar's ruling junta finally allowed
the entry of international aid workers.
In November 2010, Myanmar held its first elections since 1990. Though critics complained the
elections were marred by rampant corruption and fraud [PDF], reform-minded Thein Sein was
elected president and took office in 2011. Sein began implementing reforms, and the country has
started moving toward democracy. ASEAN's treatment of Myanmar was a significant factor in
that democratic shift, wrote Malaysian prime minister Najib Razak in an April 2012 op-ed in the
Wall Street Journal. While most countries treated Myanmar with sanctions and isolation, Razak
wrote, ASEAN members believed "constructive engagement and encouragements were just as
effective."
 Growing Trade :
Despite rapidly burgeoning trade ties, ASEAN's diverse membership has presented difficulties in
dismantling barriers to trade, Surin said in a CFR meeting. He explained that the process of
creating a single economic community was complex in an organization whose members' average
per capita incomes ranged from $209 to $50,000 per year, requiring trade standards to cater to a
wide range of economic needs. Still, annual intra-ASEAN trade ballooned from $376 billion in
2009 to $598 billion [PDF] in 2011, and is projected to comprise 35 percent of the group's total
trade volume by 2020.
judicial systems in the region also create roadblocks to trade because they make contracts hard to
enforce.
 Relations With the United States :
In 2012, ASEAN was the United States' fifth-largest trading partner, with goods trade totaling
$198 billion. A stronger China, freedom of navigation in Southeast Asian sea lanes, and U.S.-
China currency disputes have all given the United States an impetus to secure tighter diplomatic
and trade ties with ASEAN, said former CSIS fellow and current U.S. ambassador to Myanmar
Derek J. Mitchell.
The Obama administration has increased U.S. participation in ASEAN activities, naming an
ambassador to ASEAN and establishing the U.S.-ASEAN annual summit. U.S. secretary of state

34. 34
Nevertheless, the U.S.-ASEAN relationship will prove increasingly strategic as Asian powers vie
for influence in Southeast Asia; visits to regional countries by China, South Korea, and Japan—
whose prime minister, Shinzo Abe, has visited Southeast Asia three times since returning to
office in 2012—have upped the ante for U.S. engagement in the region.