ASEAN Economic Community is no game changer

The ASEAN Economic Community (AEC) formally takes effect on 31st December and aims to transform ASEAN into a single market and production base, which its supporters hope will one day enable it to rival China as the workshop of the world. ASEAN has already done a lot to reduce trade barriers, at least as far as tariffs are concerned. More than 70% of total trade between member countries is currently conducted with zero tariffs. But the AEC is falling short when it comes to the bigger challenge of reducing non-tariff barriers and improving the region’s dreadful infrastructure, which makes trading between countries much harder than it need be. ASEAN, with its tradition of non-interference into the affairs of member countries, an absence of penalties for non-compliance, and a lack of a powerful central bureaucracy, is ill-equipped to tackle these obstacles. (For more see our Focus “Will ASEAN take China’s place as the workshop of the world, 19th August.)