ASEAN leaders pledged not to enforce protectionist policies or raise trade barriers but to move towards a more unified region during the ASEAN summit held in Thailand this weekend. While they realized that they were far from having a common currency like the European Union, they did sign trade deals and agreements to form an integrated economic community by 2015. Prime Minister Abhisit Vejjajiva, who chaired the summit, called on the bloc to accelerate the formation of an attractive single market.
Differences in wealth and national standards are the main reasons keeping ASEAN countries from working together. Aseans biggest problem is that individual members havent been willing to sacrifice for the common good, Michael Montesano, a visiting research fellow at the Institute of Southeast Asian Studies in Singapore told Bloomberg. Every European Union member has given up sovereignty to be part of a stronger union, and we havent seen that in Asean.
As a result of the lack of inter regional cooperation, the ASEAN region has lost out on attracting FDI to India and China. In 2007, the 10 ASEAN nations collectively attracted more than US$60 billion a 18 percent jump than the year before. Meanwhile, China attracted the most FDI in Asia about US$83 billion and India attracted US$23 billion, the fourth largest FDI inflow after China, Hong kong and Singapore.
In order to bolster regional trade, the ASEAN nations signed a free trade agreement with Australia and New Zealand that covers trade in goods, investment and services. It is yet to sign a formal FTA with India. The region which is heavily dependent on exports is worried that trade protectionist policies will deepen the impact of the crisis. While a fund for US$120 billion has been set up to help bail poorer Asian nations out, the new ASEAN charter lays in place no mechanism to stop member countries from implementing protectionist policies.