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How is the EU-ASEAN FTA viewed by ASEAN stakeholders?

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Abstract

Since April 2007, the EU Commission has been entrusted to start negotiating a FTA with ASEAN countries. Being enshrined in the logic contained in its ‘Global Europe strategy’, the proposed EU-ASEAN FTA finds its economic rationale in the expected overall positive impact found by most econometric studies on the topic. This article argues that although beneficial, these studies are limited conceptually and methodologically. In particular, they are unable to tackle the issue of differentiated effects on several groups of stakeholders. By analysing, through a questionnaire, the opinion of a number of ASEAN stakeholders, this article brings complementary information on the perception of the planned EU-ASEAN FTA by these different stakeholders. Whilst offering many opportunities, the FTA presents also a number of risks, the most critical one being the costs of adjustment, particularly for poorer ASEAN member countries.

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Notes

  1. Note that, unlike the situation in the 1970s, when the impetus for a connection between Europe and South East Asia came from the latter group, a connection that led to the 1980 EC-ASEAN Cooperation Agreement (CEC, 1980), the recent further engagement with ASEAN has been very much instigated by the EU. Negotiations between the EU Commission and ASEAN opened on 23 April 2007.

  2. Such as the absorptive capacity of the economy receiving technology either through imports or through inward direct investment.

  3. General Trade Analysis Project.

  4. In this article, the author explains the problem of the Philippines with due reference to its structural similarity with China and to the necessity to find a market niche.

  5. One of the valuable attempts at linking trade theory, and in particular CU theory, with MNE theory can be found in the work of Ethier (1998).

  6. See below.

  7. The number of PTAs signed either by ASEAN or by its individual members has indeed mushroomed in the last 10 years of so. At the time of writing, Singapore has concluded, or is in the process of concluding, more than 15 FTA agreements, outside the ASEAN remit.

  8. For an early comprehensive review of the literature dealing with the economic interaction between the ASEAN and the EU, see Kettunen (2004).

  9. This study finds that the FTA would boost EU exports to ASEAN by 24.2 per cent and that ASEAN countries would increase their exports to the EU by 18.5 per cent. When both goods and services sectors are liberalised, the welfare gains for ASEAN and the EU are 2.16 per cent and 0.10 per cent of their GDP, respectively.

  10. ASEAN-6 refers to Brunei Darussalam, Indonesia, Malaysia, The Philippines, Singapore and Thailand, whereas ASEAN-4 encompasses Cambodia, Lao, Myanmar and Vietnam.

  11. Note that this split of ASEAN into two groups is only a second best strategy. for Vietnam and Singapore do not fit perfectly well in the groups of ASEAN-4 and ASEAN-6 respectively. One of the ASEAN respondents in our survey is indeed quoted for saying: “Proceeding differently with each country will help go faster”.

  12. As much as possible, the questionnaires were filled in during face-to-face interviews in the various ASEAN countries by several members of the team working on the 2006 Report to the Commission in early 2006 (see Andreosso-O’Callaghan et al., 2006). However, given the enormity of the task, the time as well as budget constraints, some questionnaires were filled in and sent by e-mail, with a response rate exceeding 40 per cent in the case of ASEAN. Note that at the time, Bulgaria and Romania were not members of the EU.

  13. This simple test rests of the following Null hypothesis: Ho: m1 = m2 = …… = mI,, where, mi is the mean value for country i, with i = 1…n , and relating to a specific question.

  14. When asked “Which region is the most protective”, a majority of ASEAN respondents replied ‘the EU’, whereas EU respondents replied on the whole ‘the ASEAN’.

  15. This was the third top priority in the case of the Philippines.

  16. Again, Brunei and Myanmar are excluded from the analysis.

  17. ASEAN-4 or the CLMV group encompasses Cambodia, Lao, Myanmar and Vietnam, the group of least developed countries in ASEAN.

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Authors and Affiliations

  1. Euro-Asia Centre and Department of Economics, Kemmy Business School, University of Limerick, Limerick, Ireland

    Bernadette Andreosso-O’Callaghan

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  1. Bernadette Andreosso-O’Callaghan
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Correspondence to Bernadette Andreosso-O’Callaghan.

Additional information

This paper draws partly on research work conducted jointly with F. Nicolas as part of a research contract for the European Commission DG Trade

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Andreosso-O’Callaghan, B. How is the EU-ASEAN FTA viewed by ASEAN stakeholders?. Asia Eur J 7, 63–78 (2009). https://doi.org/10.1007/s10308-008-0214-y

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