1. INTRODUCTION MALAYSIA AND ECONOMIC REGIONALISM Topic 9:

2. At the end of this topic, students should be able to: 2 i.Define economic regionalism ii.Explain five factors why we need economic regionalism iii.Differentiate between the type of economic regionalism iv.Explain the background of the ASEAN v.Discuss the objectives of the ASEAN vi.Explain the background of the APEC vii.Discuss the objectives of the APEC viii.Explain the background of the EAEC ix.Discuss the objectives of the EAEC x.Explain the background of the WTO xi.Explain the objectives of the WTO

3. Agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other 3 9.1 Economic regionalism

4. i. To gain the trade benefits of improved resource allocation and greater competition. ii. To provide a training ground or launching pad for outward-looking policies. iii. To gain improved market access to other countries and to provide insurance against the breakdown of multilateralism. 4 9.2 Why we need economic regionalism?

5. iv. To lock-in and provide credibility to politically difficult domestic policies. v. To increase multilateral bargaining power in international forums. vi. To raise visibility in attracting external assistance and investment to facilitate ‘deep’ integration. 5 9.2Why we need economic regionalism?

6. i. Free Trade Area Members eliminate tariffs among themselves but keep their own tariffs against the rest of the world. Examples: AFTA, NAFTA, CEFTA and ANZCER. 6 9.3 Types of regional integration arrangements

7. ii. Customs Union Members eliminate tariffs among themselves and adopt a common tariff against the rest of the world. Examples: Andean Pact, SACU 7

8. iii. Common Market Members eliminate tariffs among themselves, adopt a common external tariff, and remove barriers to movements of factors of production between member countries. Examples: European Economic Community (EEC), MERCOSUR 8

9. iv. Economic Union Allows the free flow of products and factors of production between members, a common external trade policy, a common currency, a harmonized tax rate, and a common monetary and fiscal policy. Examples: European Union, WAEMU 9

10. v. Political Union A political union involves a central political apparatus that coordinates the economic, social, and foreign policy of member states. Example: The EU is headed toward at least partial political union, and the United States is an example of even closer political union 10

11. Level of Economic Integration

12. 9.4The Association of Southeast Asian Nations (ASEAN)  The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration).  The Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand.  Brunei Darussalam then joined on 7 January 1984, Vietnam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten Member States of ASEAN. 12

13. Asean lOGO 13

14. 14

15. Objectives of ASEAN i.To accelerate the economic growth, social progress and cultural development. Through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of Southeast Asian Nations. 15

16. Objectives of ASEAN ii. To promote regional peace and stability Through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter; 16

17. Objectives of ASEAN iii. To promote active collaboration and mutual assistance On matters of common interest in the economic, social, cultural, technical, scientific and administrative fields. 17

18. Objectives of ASEAN iv. To provide assistance to each other in the form of training and research Facilities in the educational, professional, technical and administrative spheres; 18

19. Objectives of ASEAN v. To collaborate more effectively for the greater utilisation of their agriculture and industries, The expansion of their trade, including the study of the problems of international commodity trade, the improvement of their transportation and communications facilities and the raising of the living standards of their peoples; 19

20. Objectives of ASEAN vi. To promote Southeast Asian studies vii. To maintain close and beneficial cooperation with existing international and regional organisations with similar aims and purposes, and explore all avenues for even closer cooperation among themselves 20

21. 9.5 Asia-Pacific Economic Cooperation (APEC) Asia-Pacific Economic Cooperation (APEC) is an association of economies that share the boundaries of the Pacific Ocean. APEC was established in 1989 to further enhance economic growth and prosperity for the region and to strengthen the Asia- Pacific community.. 21

22. 9.5 Asia-Pacific Economic Cooperation Asia-Pacific Economic Cooperation, or APEC, is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region. When APEC was established, there were twelve (12) founding member-countries: Australia, Brunei Darussalam, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States. 22

23. 9.5 Asia-Pacific Economic Cooperation In 1991, the People's Republic of China, Hong Kong, and Chinese Taipei were accepted as members. Mexico and Papua New Guinea were accepted in 1993 and Chile became a full member in 1994. The latest members are Peru, Vietnam and Russia whose formal memberships were acknowledged in November 1998. 23

25. APEC lOGO 25

26. Objectives of APEC i. To sustain the growth and development To sustain the growth and development of the region for the common good its peoples and, in this way, to contribute to the growth and development of the world economy. 26

27. Objectives of APEC ii. To enhance the positive gains To enhance the positive gains both for the region and the world economy, resulting from increasing economic interdependence, including by encouraging the flow of goods, services, capital and technology. 27

28. Objectives of APEC iii.To develop and strengthen the open multilateral trading system in the interest of Asia-Pacific and all other economies. 28

29. Objectives of APEC iv.To reduce barriers to trade in goods and services and investment among participants in a manner consistent with GATT principles, where applicable, and without detriment to other economies. 29

30. 9.6The East Asia Economic Caucus (EAEC) The East Asia Economic Caucus (EAEC) or East Asia Economic Group (EAEG) was a regional free trade zone (FTA) proposed in 1990 by former Malaysian Prime Minister Dr. Mahathir bin Mohamad. 30

31. 9.6The East Asia Economic Caucus  It encompasses the Association of Southeast Asian Nations (ASEAN) member states, China, South Korea and Japan.  Japan though refused participation due to the exclusion of the Western nations, which were already members of APEC and many other notable regional organizations in East Asia. 31

32. 9.6The East Asia Economic Caucus  The EAEC was a reaction to ASEAN's integration into the Asia-Pacific Economic Cooperation (APEC) by Dr. Mahathir, who is known for his strong Asian standpoint.  His suggestion apparently articulated his dissatisfaction with ASEAN joining APEC, which includes Western nations, an idea he was strongly opposed to. 32

33. 9.6The East Asia Economic Caucus  Therefore EAEC was basically an APEC without North America and Australia. Nevertheless, it was never put into action officially.  Recently the ASEAN+3 rounds might be called the successor of EAEC, which prompted Malaysia to state that EAEC was a reality. 33

34. Objectives of EAEC  The objective of the EAEC formation was to establish a regional trade arrangement in response to the emergence of other regional trade groupings around the world and to exercise a global impact on trade issue (Kawai, 2004). 34

35. 9.7 The World Trade Organization (WTO)  World Trade Organization (WTO) was officially commenced on January 1st 1995. An association of 153 countries globally.  The organization officially commenced on 1 January 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948.  All types of countries like socialists, capitalists, rich and poor countries, very industrialized and developing countries are in WTO. 35

36. 36 WTO Logo

37. OBJECTIVES OF WTO i. To implement the new world trade system as visualised in the Agreement ii. To promote World Trade in a manner that benefits every country iii. To ensure that developing countries secure a better balance in the sharing of the advantages resulting from the expansion of international trade corresponding to their developmental needs 37

38. OBJECTIVES OF WTO iv. To demolish all hurdles to an open world trading system and usher in international economic renaissance because the world trade is an effective instrument to foster economic growth; v. To enhance competitiveness among all trading partners so as to benefit consumers and help in global integration; vi. To increase the level of production and productivity with a view to ensuring level of employment in the world; 38

39. OBJECTIVES OF WTO vii. To expand and utilize world resources to the best; viii. To improve the level of living for the global population and speed up economic development of the member nations. 39