ASEAN and Regional Free Trade Agreements

Editor : Christopher Findlay, 2015

ISBN: 978-0-415-87072-6

Publisher: Routledgeasean-and-regional-free-trade-agreements-5-720.jpg

Year: 2015

Reviewed by Dr. R. Shashi Kumar, Professor of Economics and Director of the UGC Centre of the Study of Social Exclusion and Inclusive Policy, Bangalore University, Bangalore—560 056, India.


Routledge, one of the frontiers of the publication world, has brought out a remarkable book in the field of international economics entitled ASEAN and Regional Free Trade Agreements in 2015 with a high aspiration of looking at the fundamental facts of regional trade. A spectacular work was done by Christopher Findlay, an executive dean at the Faculty of the Professions, University of Adelaide, on the ASEAN and Regional Free Trade Agreements concerning trade and investment. A marvellous editorial work completed by Professor Findlay is an enthusiastic approach in building new dimensions of economic integration in the regional trade agreements at the global level in general and the ASEAN region in particular. Regional trade agreements take a unique position while dealing with the exchange of goods and services across the borders. Either as a border system or with the intervention of money, trade matters even more in recent years.


The edited volume is comprised of thirteen varied chapters.  Naturally, the first chapter is an introductory overview of the whole gamut of the volume.  In his authored overview, Professor Findlay has begun with the ‘+1’ agreements and its implications. His elucidation of supply chain perspective found that East Asia’s dominance on world markets for finished products. The connotation of regional economic integration and economic partnership, transitional arrangements, negotiations, common concession are all vividly explained differently to appreciate the growth of trade in Asian inter-region and thereby the creation of competition among trading countries.


An increasing trend of China’s economy is a miracle instinct added with self-reliance and hard work. An amazing growth rate with fundamental stability along with the eloquent move towards the village and local industries is a wonderful financial journey.  China’s external trade signified the concept of commodity classification system in which provisions of selected commodities trade occupy a significant role in the promotion of trade balances. In this background, the second chapter on Production Network Trade of ASEAN in the context of China’s rise reviews the basic foundations of China’s domestic production and its impact on its external trade.  This chapter is written by Nobuaki Yamashita, a senior lecturer at the School of Economics, Finance and Marketing, at RMIT University of Melbourne, Victoria.  Examination of a trading pattern of ASEAN countries in the context of global production networks, trade pattern in China and ASEAN-China trade implications is introduced. A comparative analysis of trade among China, the world, Japan and the US shows that China’s share steadily increased from lower base to nearly 10 percent between 1990 and 2010.  Amazing to know that export specialization of China is still resting mainly on the labour-intensive assembly stage of production sharing which envisages China’s one of the objectives of the labour oriented economy. The chapter also depicts empirical evidence of the ‘China fear’ hypothesis.


Trade facilitation in ASEAN+6 economies is the third chapter written by Marie Isabelle Pellan of WTO and Marn-Heong Wong of National Univesity of Singapore.  While concentrating their studies on ASEAN+6 countries and standards, technical regulations, conformity assessment and mutual recognition. This paper highlights the importance of the construction of trade facilitation indicators in the ASEAN region. The authors reiterate tackling of non-tariff barriers and behind-the-border measures were the crucial reasons behind the extension of multinationals’ supply chains and opening up regional markets for both domestic producers and consumers.


The fourth chapter of Shandre M. Thangavelu, Christopher Findlay and Hank Lim is written about FDI liberalisation, free trade agreements and greater regionalism in Asia and ASEAN.   This chapter emphasizes the scale of FDI liberalization in the ASEAN region and found the most severe impediments being due to the lack of transparency and complicated and inefficient processing in screening and appraisal procedures regarding FDI applications.  This chapter highlights that the FDI Restrictiveness Index was constructed along with ease of doing business and efficiency of government institutions are a significant part of influencing FDI in the region.


Hikari Ishito’s Services in ASEAN+1 FTAs is placed in the fifth chapter, based on the project ‘Comprehensive Mapping of FTAs in ASEAN and East Asia.’ As a director of the APEC Study Center and professor at the Faculty of Law and Economics, Chiba University, Japan, Hikari focuses on the four ASEAN-related FTAs, i.e., Australia, New Zealand, China and Korea, which examines trade in services. The assessment of ASEAN Economic Community Blueprint targets would be of more importance in the study.


The sixth chapter of Arata Kuno, Yoshifumi Fukunaga and Fukunari Kumura, ‘Pursuing a consolidated tariff structure in the RCEP,’ signify the task of an overall structure of preferential tariff of members of the ASEAN region. Setting the tariff-elimination targets, common concession approach of taxes, level of consistency in tariff are significant study issues.  This chapter suggests how to remove trade and tariff barriers to conduct smooth functioning of trade among member countries with proper free trade practices.


‘Rules of origin in ASEAN+1 free trade agreements and the supply chain in East Asia,’ written by Erlinda M. Medalla and Maureen Ane D. Rosellon, depicts the role of supply chain systems in regional economic integration through the concept of ‘noodle bowl syndrome.’  The implications of rules of origin (ROOs) regime is accurately compiled with best examples of wholly obtained (WO) and regional value content (RVC) methods. An exemplary connotation of this chapter is the origin certification procedure that broadens the ideas of issuing body/authority, standard origin certification procedures (OCP) process and documentation requirements.  Four firms in the Philippines were interviewed to extract how trade occurs in the ASEAN region with particular reference to ROO compliance costs and the supply chain.


The eighth chapter is the study of ‘ASEAN+1 FTAs and the global supply chain in East Asia,’ contributed by Maureen Ane D. Rosellon and Erlinda M. Medalla. This chapter is a spectacular time bounding study with special reference to the Philippines trade practices in ASEAN context.  The special study of automotive and electronics sectors reveals the reality that they are the major contributors of trade.  Intra-industry trade with FTA partners critically evaluates the implications of these sectors on diversification and marketing strategies of the Philippines.  An important observation of the study is that the improvement of these sectors depends on the higher value-added production possibilities.


Archanun Kohpaiboon of Thammasat University, Thailand, has written on ‘FTAs and supply chains in the Thai automotive industry,’ marked the success of the automotive industry of Thailand as the ‘Detroit of the East,’ supported by the supply chain management.  Composed of both qualitative and quantitative analysis of the automotive industry in Thailand and it is an imperative relationship with the rest of the world, particularly of the ASEAN, is a splendid research exertion. Role of FTAs in supply chain alternatives added with ROOs applications in preferential tariffs is brought the work to the forefront to analyse potentialities of Thailand trade.


The tenth chapter tries to comprehend the prospects and consequences of one of the major industries of Malaysia, the electronics industry. Entitled with the simple jargon ‘The electronic industry in Malaysia,’ authors Rasyad A. Parinduri and Shandre M. Thangavelu have crucially examined the policies, programmes, role and impact of the electronic industry from 1960 to 2010 in Malaysia. Production, comparative advantage, value-added growth strategy, trade flows, research and development (R&D) activities, linkages with SMEs are major variables in this study.


‘The electronics industry in Indonesia,’ is the eleventh chapter written by Rina Oktaviani and Eka Puspitawati of Bogor Agricultural University, in which impact of regional integration on Indonesian electronic industry has been studied.  They opt the fact that the electric sector is considered to be one of the eight priority sectors in the ASEAN region and hence the topic needs to be thoroughly explored.  As the electronic industry in Indonesia dates back to the 1970s, the long duration of the production and its potential market acquisition would lead to operational facilities.  Study on free trade zones, exchange rates, labour issues like wage negotiations and labour unions are central aspects discussed in the chapter.


Marn-Heong Wong and Claire H. Hollweg have derived the seamless provision of logistics services in their paper ‘Regulatory restrictions in logistics services of ASEAN+6 economies,’ through international supply chains. It seeks to review the logistics service providers in the ASEAN+6 economies and its implications on the growth of free trade agreements. Logistics restrictiveness index predominantly in the horizontal restrictions (from least restrictive to most restrictive score) for customs, investment and movement of people, domestic versus foreign variants are major indices of study in this paper. This paper concludes with a note that the ASEAN countries have experienced positive trends in ‘doing business,’ of logistics.


The last thirteenth chapter entitled ‘The nature of relationships within supply networks and their role in the delivery of services in East Asian emerging markets,’ authored by Susan Freeman, Hung Trong Hoang and Wahid Murad is a description of the significance of service industries in the East Asian markets. It encompasses the concept of ‘tacit knowledge’ through the quality of infrastructure and the level of competence of various agencies in the promotion of trade and trade practices.


Thus, the edited volume ‘ASEAN and Regional Free Trade Agreements,’ is a pleasant journey to those who genuinely wish to know about the regional trade and its impact on the overall development of an economy. The book reinvestigates the bombardment of tariff and non-tariff barriers on intriguing economic independence and economic interdependence in a great technique. It occupies a permanent place in the research in the arena regional trade practice directly through investment and indirectly through infant-industry argument. A historical biography of ASEAN, like the establishment of an ASEAN Trade Repository, Agreement to Establish and Implement the ASEAN Single Window (ASW), negotiations under Regional Comprehensive Economic Partnership (RCEP) are elaborately examined by different rational intellectuals.  All chapters have appendices except the second, sixth, eighth and thirteenth chapter. These, in fact, serve as supportive documents for further research. An astonishing part of the volume is its endnotes and references.  Especially the reference part is an alternative research component of the book, as it elaborates information about FTAs and ASEAN regional integration.


Though the common jargon of the book contains research methods, supply chain, challenges and impediments to trade, policy implications, trade facilitation, sector-wise study and economic integration, negotiations, the volume is an enjoyable read.  The effort made by Christopher Findlay in editing this volume a splendid work that stays good till the concept of ‘trade’ exists in this world. Moreover, as noted by the editor “There are challenges in the bottom-up approach to regional integration and towards progress on the different components of a consolidated approach, refereeing to goods, services, investment, tariffs and trade facilitation having potentially different requirements” (p. 14).