Open regionalism: the case of ASEAN free trade area

Abstract

The Fourth ASEAN Summit Meeting in January 1992 agreed to establish an outward looking and market-based ASEAN Free Trade Area (AFTA). From ASEAN point of view, AFTA is a part of a multi-layered approach to economic cooperation in Asia-Pacific region, with APEC as its apex. Prior to the Fourth Summit in August 1990, Indonesia, Singapore and Malaysia formed a sub- regional economic zone, popularly known as "growth triangle", encompassing Singapore, the Malaysian State of Johor and Riau Islands of Indonesia. There is a similar plan to link the economies of Sumatra of Indonesia, Northern States of Malaysia and South Thailand. Indonesia and Australia have signed a Memorandum of Understanding to link the economies of Indonesia's eastern region, particularly the Province of Nusa Tenggara Timur and the Northern Territory of Australia. Low market potential from bilateral economic links between Indonesia and Australia can be magnified by expanding the integration covering Papua New Guinea and the affluent economies in Northeast Asia. Restoration of peace and stability in Indochina paves the way for turning "the former battlefields into market places". All of these sub-regional economic cooperation, including East Asia Economic Caucus (EAEC), which had been originally proposed by the Prime Minister Mahathir Muhammad of Malaysia and taken over by the Fourth ASEAN Summit, are complementary to APEC and not a substitute for it.