Page 272 - DMGT401Business Environment

Unit 12: International Monetary Fund

Association of Southeast Asian Nations (ASEAN) Notes

The Association of Southeast Asian Nations is a primary multinational trade group of Asia. The
goals of this group are economic integration and cooperation through complementary industry
programmes; preferential trading, including reduced tariff and non tariff barrier; guaranteed
member access to markets throughout the region; harmonised investment incentives.
Today, ASEAN economic cooperation covers the following areas: trade, investment, industry,
services, finance, agriculture, forestry, energy, transportation and communication, intellectual
property, small and medium enterprises, and tourism.

ASEAN was established on August 8, 1967 in Bangkok by the five original member countries,
namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Brunei Darussalam joined
on January 8, 1984, Vietnam on July 28, 1995, Laos and Myanmar on July 23, 1997, and Cambodia
on April 30, 1999.
The ASEAN region has a population of about 500 million, a total area of 4.5 million square
kilometres, a combined gross domestic product of US$737 billion, and a total trade of
US$ 720 billion.

The Treaty of Amity and Cooperation (TAC) in Southeast Asia, signed at the First ASEAN
Summit on February 24, 1976.
The TAC stated that ASEAN political and security dialogue and cooperation should aim to
promote regional peace and stability by enhancing regional resilience. Regional resilience shall
be achieved by cooperating in all fields based on the principles of self-confidence, self-reliance,
mutual respect, cooperation, and solidarity, which shall constitute the foundation for a strong
and viable community of nations in Southeast Asia.

South Asian Preferential Arrangement (SAPTA)

South Asian Preferential Arrangement was signed by the SAARC members on April 11, 1993
and came into force in December 1995. The objective of the SAPTA is the creation of trade among
the SAARC countries through the reduction of tariffs and on preferential basis. It thus seeks the
economic development of all the SAARC nations. The biggest argument in favour of SAPTA is
that there is geographical proximity (a big scope for cross border railway and road link) among
the member nations and nations are also culturally close to each other.

The basic principles underlying SAPTA are:
1. overall reciprocity and mutuality of advantages so as to benefit equitably all contracting
states, taking into account their respective level of economic and industrial development,
the pattern of their external trade, and trade and tariff policies and systems;
2. negotiation of tariff reform step by step, improved and extended in successive stages
through periodic reviews;
3. recognition of the special needs of the Least Developed Contracting States and agreement
on concrete preferential measures in their favour; and
4. inclusion of all products, manufactures and commodities in their raw, semi-processed and
processed forms.

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