Launched as a political bloc and security pact in the aftermath of the Vietnam War, ASEAN has evolved to embrace an ambitious economic agenda. Its latest project is to establish the ASEAN Economic Community (AEC) by 31 December 2015.
But is this likely? The blueprint for achieving the goal envisages the AEC standing on four pillars and meeting the deadline depends on progress on each of them. There have been a number of noteworthy achievements on the first pillar of realising a single market and production base.
The greatest success has been in tariff reduction. Following the implementation of the ASEAN Free Trade Area, common effective preferential tariff rates between the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) fell to virtually zero.
As a result, more than 70 per cent of intra-ASEAN trade incurs no tariff and less than 5 per cent is subject to tariffs above 10 per cent. With tariff rates largely irrelevant, leaders need to prioritise eliminating non-tariff barriers
Author: Jayant Menon, Asian Development Bank
Moving too slowly towards an ASEAN Economic Community