ASEAN, the Association of Southeast Asian Nations, is gaining importance as a trading bloc and is now the third largest in the world after the European Union and the North American Free Trade Agreement. Composed of the Asian Tigers of Indonesia, Malaysia, philippines, Singapore, Thailand and Vietnam (ASEAN 6) with smaller players such as Brunei, Cambodia, Laos and Myanmar, it has a combined GDP of $2.31 trillion (2012) and hosts about 600 million people. In addition to the China-India Free Trade Agreement, ASEAN also has a combined free trade agreement with Australia and New Zealand, known as AANZFTA. The agreement, which will also be phased in, has eliminated tariffs on 67% of all products traded between regions and will be extended to 96% of all products by 2020. This is the first time that ASEAN has begun negotiations for a free trade agreement covering all sectors, including goods, services, investment and intellectual property rights, making it the most comprehensive trade agreement ever negotiated by ASEAN. For more details on this agreement, click here. ASEAN has a similar free trade agreement with India, which is being phased in and is in the process of reducing tariffs to 90% of all goods traded between ASEAN and India. From 2016, import and export tariffs on more than 4,000 products will be abolished. This will have a similar effect to that of the China Free Trade Agreement, as it opens up the Indian consumer market to ASEAN industrial products. Indeed, India has a considerable middle-class consumer market of around 250 million, although it is not growing as fast in the short term as China. The ASEAN-India Free Trade Agreement will also be extended to services, discussions are already at an advanced stage and a conclusion is expected before the end of the year. For more details on the ASEAN-India Free Trade Agreement, click here. Other ASEAN treaties are being negotiated, including with Japan, which already has a series of far-reaching economic partnerships, while South Korea already has a free trade agreement.
Both are similar to the above – the more than 90% reduction in all goods traded between ASEAN and these countries. This has a specific impact on the future evolution of production capacities. The focus is on China, which has enjoyed a cheaper and younger “workers` dividend” for twenty years and has thus become the world`s production centre. But China is also aging – and fast, because the same workforce is graying and getting richer. This means that cheap Chinese labor is a thing of the past, but this is being offset by China, which is becoming a huge consumer market.