ASIAN INTEGRATION EFFORTS
ASIAN INTEGRATION EFFORTS
It has been argued that the 1990s is the decade of the Triad Strategy.27 Because the combined GNPs of Japan, the United States (or the United States and Canada, given that they are now involved in a free trade agreement), and the European Community are so vast, companies need to develop a Triad Strategy that includes trade and investment with all three areas. The liberalization of Eastern Europe probably will cause the economic power of the EC to expand considerably in the decade to come, and the realization of the "Enterprise of the Americas" could expand the trade and investment bases of the Americas considerably. What about regional economic integration in the Pacific Rim?
The Pacific Economic Cooperation Conference (PECC) is a forum for the discussion of common problems of the Pacific Rim countries, although it is not a regional economic bloc that is formally increasing the free flow of goods and services. The member countries are Australia, Brunei, Canada, China, Indonesia, Japan, Korea, Pacific Island nations, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand, and the United States. It is interesting to note the absence of the Latin American countries that border the Pacific, India and the surrounding countries, and the Soviet Union. However, the PECC is discussing the possibility of establishing some type of permanent Pacific economic cooperation structure. The fear, of course, is the large size and influence of Japan and the United States.28
The major form of integration in Asia is the Association of South East Asian Nations (ASEAN), which was organized in 1967. As noted in the map on page M-10, ASEAN, which includes Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, is trying for cooperation in many areas.
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including industry and trade. In industry, ASEAN countries are attempting to enter into joint projects and set up medium-sized industries in different countries. These industries would be 60 percent owned by the host country and 40 percent owned by the other members of ASEAN. The two initial projects approved and currently operating are urea (fertilizer) projects in Indonesia and Malaysia; other start-up projects were plagued by a series of problems. Nevertheless, by 1988, 15 ASEAN joint ventures had been formed, where 40 percent of the venture would be owned by private-sector companies from two or more ASEAN countries and where exports of products from the joint venture would be given preferential access to ASEAN countries.
Although ASEAN countries have not opted for a free trade area at this point, they are cooperating in reducing tariffs in a variety of areas. Their Basic Agreement on the Establishment of ASEAN Preferential Trade Arrangements was approved by GATT and has resulted in some trade liberalization. However, only 5 percent of intra-ASEAN trade consists of preferentially traded items, so the tariff-liberalization efforts have not been successful.
The Japanese, who are not members of ASEAN, have been very successful in investing in and exploiting raw materials in ASEAN nations and using them to manufacture finished goods in Japan which they re-export to the ASEAN nations. That process has created some serious tensions in ASEAN, as some have claimed that Japan is doing economically what it was not able to do militarily in World War II.29
A major problem with the ASEAN nations is the disparity in economic strength. In 1988 the per capita GNP of Singapore was $9,070, whereas it was only $440 in Indonesia. In addition, the involvement of the Japanese— who belong to a non-ASEAN country—is a source of contention, as mentioned above.
It has been argued that the 1990s is the decade of the Triad Strategy.27 Because the combined GNPs of Japan, the United States (or the United States and Canada, given that they are now involved in a free trade agreement), and the European Community are so vast, companies need to develop a Triad Strategy that includes trade and investment with all three areas. The liberalization of Eastern Europe probably will cause the economic power of the EC to expand considerably in the decade to come, and the realization of the "Enterprise of the Americas" could expand the trade and investment bases of the Americas considerably. What about regional economic integration in the Pacific Rim?
The Pacific Economic Cooperation Conference (PECC) is a forum for the discussion of common problems of the Pacific Rim countries, although it is not a regional economic bloc that is formally increasing the free flow of goods and services. The member countries are Australia, Brunei, Canada, China, Indonesia, Japan, Korea, Pacific Island nations, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand, and the United States. It is interesting to note the absence of the Latin American countries that border the Pacific, India and the surrounding countries, and the Soviet Union. However, the PECC is discussing the possibility of establishing some type of permanent Pacific economic cooperation structure. The fear, of course, is the large size and influence of Japan and the United States.28
The major form of integration in Asia is the Association of South East Asian Nations (ASEAN), which was organized in 1967. As noted in the map on page M-10, ASEAN, which includes Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, is trying for cooperation in many areas.
!ii
including industry and trade. In industry, ASEAN countries are attempting to enter into joint projects and set up medium-sized industries in different countries. These industries would be 60 percent owned by the host country and 40 percent owned by the other members of ASEAN. The two initial projects approved and currently operating are urea (fertilizer) projects in Indonesia and Malaysia; other start-up projects were plagued by a series of problems. Nevertheless, by 1988, 15 ASEAN joint ventures had been formed, where 40 percent of the venture would be owned by private-sector companies from two or more ASEAN countries and where exports of products from the joint venture would be given preferential access to ASEAN countries.
Although ASEAN countries have not opted for a free trade area at this point, they are cooperating in reducing tariffs in a variety of areas. Their Basic Agreement on the Establishment of ASEAN Preferential Trade Arrangements was approved by GATT and has resulted in some trade liberalization. However, only 5 percent of intra-ASEAN trade consists of preferentially traded items, so the tariff-liberalization efforts have not been successful.
The Japanese, who are not members of ASEAN, have been very successful in investing in and exploiting raw materials in ASEAN nations and using them to manufacture finished goods in Japan which they re-export to the ASEAN nations. That process has created some serious tensions in ASEAN, as some have claimed that Japan is doing economically what it was not able to do militarily in World War II.29
A major problem with the ASEAN nations is the disparity in economic strength. In 1988 the per capita GNP of Singapore was $9,070, whereas it was only $440 in Indonesia. In addition, the involvement of the Japanese— who belong to a non-ASEAN country—is a source of contention, as mentioned above.
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