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Electronic copy available at: ASEAN’S PROGRESSION TO COMMON MARKET STATUS: PITFALLS AND POLICY PRESCRIPTIONS Charles A. Rarick Barry University ABSTRACT As the Association of Southeast Asian Nations (ASEAN) moves closer towards common market status, a number of potential pitfalls may hamper its success. Issues of development gaps, transparency and corruption, and differing degrees of economic freedom are factors which may inhibit the success of an ASEAN common market. In addition, as China and India continue to develop into economic superpowers, new strategies are needed, however, these strategies must balance economic liberty and mandated collective action. Suggestions are offered to enhance the transition towards a more integrated and prosperous ASEAN. As the Association of Southeast Asian Nations (ASEAN) moves closer towards economic common market status, having moved the target date up from 2020 to 2015, it appears that the region is headed towards economic liberalization. Economic ministers from the region talk about free markets, free trade agreements, and economic cooperation among member states. ASEAN is to become one liberated, free market area where consumers are free to choose, and protection of industries is abolished. While the talk is encouraging, past performance is less encouraging. Recent reports by the World Bank and the Asian Development Bank report that the ASEAN Common Effective Preferential Tariff (CEPT) program, which has been in effect for some time now, is infrequently utilized. Many traders find it more advantageous to simply pay the tariffs than to struggle with the administrative costs and delays of the program (Salvosa 2007). Many industries, from automobiles to palm oil remain protected, and Thailand’s recent coup and proposed investment restrictions make outsiders wonder if a common market can really be achieved. A number of ASEAN countries score very low on the Heritage Foundation Index of economic freedom, including Cambodia, Indonesia, Vietnam, Laos, and Myanmar. With some member states practicing liberal economic policies such as Singapore, the wide variation in economic freedom may cause the liberalizing member states to reverse their policies and fall back into the old practice of state ownership and industry protection. An earlier edition of this paper was presented at the AIB Southeast Asian Conference in Hangzhou, China in December 2007. The motive for further economic integration in Southeast Asia is in part a response to the economic growth experienced by India and China. ASEAN member states have good reason to fear the growth of these two emerging economic superpowers.
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Electronic copy available at: With the world’s fourth largest economy, and its strong growth rate, China is expected to soon pass Germany and become the world’s third largest economy (Dickie 2007). India, while not experiencing the same degree of economic growth as China is, nevertheless,
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This note was uploaded on 04/10/2011 for the course ECON 2001-1 taught by Professor Nickeyturner during the Spring '11 term at Walden University.

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