Marketing Trading steps by sjan143


Topic:          Levels of economic Integration
                Trade alliances.

Submitted to:   Sir Fawad Bashir

Submitted by:   Qaisar Sardar

Class:          MBA-8-F

Roll NO.        2541
Management is no longer constrained by national borders. Managers in all sizes
and types of organizations are faced with opportunities and challenges of
managing in global environment.
Two important features of global environment that managers must understand
    Regional trade alliances
    Different types of global environment
What is trade alliance?
Trade alliance is formed to reduce the trade barriers and increase the economic
co-operation on small scale. Many country with in same geographic area often
join together to establish various forms of economic cooperation.
Now a day global competition has been reshaped by creation of regional trading
and cooperation agreements.
       1. European union                          (EU)
       2. north America free trade free alliance (NAFTA)
       3. association of south east Asian nations (ASEAN)
       4. Latin America free trade organization (LAFTA)
Five steps to build a trade alliance
Trade theorists have identified five steps of economic cooperation. These steps
   1. Free trade area
   2. Customs union
   3. Common markets
   4. Economic and monetary union
   5. Political union
1. Free trade area
The countries involved widraw duties among themselves. While they maintain
their own tariffs against outsiders. The purpose of free trade area is to facilitate
trade among member nations. The problem with this kind of arrangement is the
lake of coordination of tariff against the nonmembers, enabling nonmembers to
direct their export products to enter the free trade area at the point of lowest
external tariffs.
2. A custom union
It is an extension of free trade area in sense that member countries must also
agree on a common schedule of identical tariff rates. In effect the objective of
the customs union is to harmonize trade regulations and to establish common
barriers against outsiders. Uniform tariff and common commercial policy
against members are necessary to prevent them to taking advantages of situation
by taking goods initially to a member country that has lowest joint boundaries.
The world oldest customs union is the Bulex custom union recent example is
Turkey and EU it is too effect in from 1996.
3. A common market
It is higher and more complex level of economic interaction then either a free
trade area or a custom union. In a common market, countries remove all
customs and other restrictions on the movement of the factors of production
among the members of common markets. As a result, business laws and labour
laws standardized to ensure undistorted competition. For an outsider, the point
of entry is no longer dictating member countries with in common markets. The
point of entry is now determined by member’s non tariff barrier. The outsider
strategy should be to enter a member country that has least non tariff
restrictions because goods can be shipped freely once inside the common
4. Monetary union
Some authorities prefer to distinguish a monetary union from an economic
union. In essences it means one money or single currency. The Delores
committee has issued a report entitled economic and monetary union in
europion community. That defines monetary union as having three basic
    Total and irreversible convertibility of currencies.
    Complete freedom of capital movements in fully integrated financial
    Irrevocably fixed exchange rate with no flections margins between
       member currencies.
The economic advantage of single currency includes the elimination of
currency risk and lower transition costs. The European commissions’s one
markets, one money report defines an economic union as single market for
goods, services, capital, and labour complimented by common polices and
coordination in several economic and structural areas. Economic union provides
number of areas of benefits in term of efficiency and economic growth the
transaction cost associated with one currency another eliminated, and the
elimination of foreign exchange risk should improve trade and capital mobility .
In addition stronger competition polices should permute efficiency gains. In
term of inflation the implementation of an economic union is a demonstration
of a credible committee to stable prices.
5. A political union
It is ultimate type of economic cooperation because it involves the integration
of both economic and political polices.
With France and Germany leading the way, the European Union has been
moving toward social, political, and economic integration. EU goal is to form
political union similar to one created by United States.
Three important regional alliances.
European Union
(Abbr. EU)

An economic and political union established in 1993 after the ratification of the
Maastricht Treaty by members of the European Community, which forms its
core. In establishing the European Union, the treaty expanded the political
scope of the European Community, especially in the area of foreign and
security policy, and provided for the creation of a central European bank and
the adoption of a common currency by the end of the 20th century.

Organizational structure
EC, which is The core of the EU, originally referred to the group of Western
European nations that belonged to each of three treaty organizations—the
European Coal and Steel Community (ECSC), the European Economic
Community (EEC), and the European Atomic Energy Community (Euratom).
In 1967 these organizations were consolidated under a comprehensive
governing body composed of representatives from the member nations and
divided into four main branches—the European Commission (formerly the
Commission of the European Communities), the Council of the European
Union (formerly the Council of Ministers of the European Communities), the
European Parliament, and the Justice. Although the EU has no single seat of
government, many of its most important offices are in Brussels, Belgium. The
European Commission, which has executive and some legislative functions, is
headquartered there, as is the Council of the European Union; it is also where
the various committees of the European Parliament generally meet to prepare
for the monthly sessions in Strasbourg, France. In addition to the four main
branches of the EU's governing body, there are the Court of Auditors, which
oversees EU expenditures; the Economic and Social Committee, a consultative
body representing the interests of labor, employers, farmers, consumers, and
other groups; and the European Council, a consultative but highly influential
body composed primarily of the president of the Commission and the heads of
government of the EU nations and their foreign ministers.

The history of the EU began shortly after World War II, when there developed
in Europe a strong revulsion against national rivalries and parochial loyalties.
While postwar recovery was stimulated by the Marshall Plan, the idea of a
united Europe was held up as the basis for European strength and security and
the best way of preventing another European war. In 1950 Robert Schuman,
France's foreign minister, proposed that the coal and steel industries of France
and West Germany be coordinated under a single supranational authority.
France and West Germany were soon joined by four other countries—Belgium,
Luxembourg, the Netherlands, and Italy—in forming (1952) the ECSC. The
EEC (until the late 1980s it was known informally as the Common Market) and
EURATOM were established by the Treaty of Rome in 1958. The EEC,
working on a large scale to promote the convergence of national economies into
a single European economy, soon emerged as the most significant of the three
treaty organizations.

The Brussels Treaty (1965) provided for the merger of the organizations into
what came to be known as the EC and later the EU. Under Charles de Gaulle,
France vetoed (1963) Britain's initial application for membership in the
Common Market, five years after vetoing a British proposal that the Common
Market be expanded into a transatlantic free-trade area. In the interim, Britain
had engineered the formation (1959) of the European Free Trade Association.
In 1973 the EC expanded, as Great Britain, Ireland, and Denmark joined.
Greece joined in 1981, and Spain and Portugal in 1986. With German
reunification in 1990, the former East Germany also was absorbed into the

The Single European Act (1987) amended the EC's treaties so as to strengthen
the organization's ability to create a single internal market. The Treaty of
European Union, signed in Maastricht, the Netherlands, in 1992 and ratified in
1993, provided for a central banking system, a common currency to replace the
national currencies (the euro, see European Monetary System), a legal
definition of the EU, and a framework for expanding the EU's political role,
particularly in the area of foreign and security policy. The member countries
completed their move toward a single market in 1993 and agreed to participate
in a larger common market, the European Economic Area (est. 1994), with most
of the European Free Trade Association (EFTA) nations. In 1995, Austria,
Finland, and Sweden, all former EFTA members, joined the EU, but Norway
did not, having rejected membership for the second time in 1994.

A crisis within the EU was precipitated in 1996 when sales of British beef were
banned because of ―mad cow disease‖ .Britain retaliated by vowing to paralyze
EU business until the ban was lifted, but that crisis eased when a British plan
for eradicating the disease was approved. The ban was lifted in 1999, but
French refusal to permit the sale of British beef resulted in new strains within
the EU. In 1998, as a prelude to their 1999 adoption of the euro, 11 EU nations
established the European Central Bank; the euro was introduced into circulation
in 2002 by 12 EU nations.
The EU was rocked by charges of corruption and mismanagement in its
executive body, the European Commission (EC), in 1999. In response the EC's
executive commission including its president, Jacques Santer, resigned, and a
new group of commissioners headed by Romano Prodi was soon installed. In
actions taken later that year the EU agreed to absorb the functions of the
Western European Union, a comparatively dormant European defense alliance,
thus moving toward making the EU a military power with defensive and
peacekeeping capabilities.

The installation in Feb., 2000, of a conservative Austrian government that
included the right-wing Freedom party, whose leaders had made xenophobic,
racist, and anti-Semitic pronouncements, led the other EU members to impose a
number of sanctions on Austria that limited high-level contacts with the
Austrian government. Enthusiasm for the sanctions soon waned, however,
among smaller EU nations, and the issue threatened to divide the EU. A face-
saving fact-finding commission recommended ending the sanctions, stating that
the Austrian government had worked to protect human rights, and the sanctions
were ended in September.

In 2003 the EU and ten non-EU European nations (Estonia, Latvia, Lithuania,
Poland, the Czech Republic, Slovakia, Hungary, Slovenia, Cyprus, and Malta)
signed treaties that resulted in the largest expansion of the EU the following
year, increasing the its population by 20% and its land area by 23%. Most of the
newer members are significantly poorer than the largely W European older
members. The old and new member nations at first failed to agree on a
constitution for the organization; the main stumbling block concerned voting,
with Spain and Poland reluctant to give up a weighted system of voting
scheduled for 2006 that would give them a disproportionate influence in the EU
relative to their populations. In Oct., 2004, however, EU nations signed a
constitution with a provision requiring a supermajority of nations to pass
legislation. The constitution, which must be ratified by all members to come
into effect, was rejected by voters in France and the Netherlands in 2005,
leading EU leaders to pause in their push for its ratification.

Meanwhile, in 2003 the EU embarked, in minor ways, on its first official
military missions when EU peacekeeping forces replaced the NATO force in
Macedonia and were sent by the United Nations to Congo (Kinshasa); the
following year the EU assumed responsibility for overseeing the peacekeepers
in Bosnia. EU members also took steps toward developing a common defense
strategy independent of NATO, and agreed in 2004 to admit Bulgaria and
Romania in 2007 (contingent on those nations meeting the criteria for
membership). José Manuel Barroso succeeded Prodi as president of the
European Commission late in 2004.
European Union

European flag
Motto:                    In                   varietate                  concordia
(Latin: Unity in diversity)
Anthem: Ode to Joy (orchestral)

Capital                Brussels
GDP            (2005) Ranked                                                     1st3
-     Total     (PPP) $12,329,110                                             million
- Per capita (PPP)    $26,900
                       Euro                 (EUR                or                €)4
                       Other                                              currencies:
                       British          pound           (GBP           or         £),
                       Cyprus           pound          (CYP           or        C£),
                       Czech           koruna         (CZK            or        Kč),
                       Danish           krone         (DKK             or        kr),
                       Estonian           kroon         (EEK           or        kr),
                       Hungarian            forint       (HUF           or       Ft),
                       Latvian           lat         (LVL            or          Ls),
                       Lithuanian            litas       (LTL          or        Lt),
                       Maltese           lira        (MTL            or         Lm),
                       Polish           złoty         (PLN            or          zł),
                       Slovak          koruna          (SKK           or         Sk),
                       Slovene tolar

                        Swedish krona (SEK or kr)
The European Union or the EU is an intergovernmental and supranational
union of 25 European countries, known as member states. Two new member
states will join in 2007 - Romania and Bulgaria. The European Union was
established under that name in 1992 by the Treaty on European Union (the
Maastricht Treaty). However, many aspects of the Union existed before that
date through a series of predecessor relationships, dating back to 1951.

The European Union's activities cover all areas of public policy, from health
and economic policy to foreign affairs and defense. However, the extent of its
powers differs greatly between areas. Depending on the area in question, the
EU may therefore resemble:

       a federation (for example, on monetary affairs, agricultural, trade and
        environmental policy, economic and social policy)
       a confederation (for example, on home affairs)
       an international organization (for example, in foreign affairs)

Year Country
1952 Belgium, France, West Germany, Italy, Luxembourg, The Netherlands
     (founding members)
1973 Denmark, Ireland, United Kingdom
1981 Greece
1986 Portugal, Spain
1990 East Germany reunites with West Germany and becomes part of the EU
1995 Austria, Finland, Sweden
2004 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta,
     Poland, Slovakia, Slovenia
2007 Romania, Bulgaria


       Greenland, which was granted home rule by Denmark in 1979, left the
        European Community in 1985, following a referendum.
       Romania and Bulgaria will join the EU on 1 January 2007

European Union: European Communities plus CFSP and PJCC

The European Communities are one of the three pillars of the European Union,
being both the most important pillar and the only one to operate primarily
through supranational institutions. The other two "pillars" – Common Foreign
and Security Policy, and Police and Judicial Co-operation in Criminal Matters –
are looser intergovernmental groupings. Confusingly, these latter two concepts
are increasingly administered by the Community (as they are built up from
mere concepts to actual practice).

    Evolution of the structures of the European Union.

Single market

Many of the policies of the EU relate in one way or another to the development
and maintenance of an effective single market. Significant efforts have been
made to create harmonized standards – which are designed to bring economic
benefits through creating larger, more efficient markets.

The power of the single market reaches beyond the EU borders, because to sell
within the EU, it is beneficial to conform to its standards. Once a non-member
country's factories, farmers and merchants conform to EU standards, much of
the cost of joining the union has already been sunk. At that point, harmonizing
domestic laws in order to become a full member is relatively painless, and may
create more wealth through eliminating the customs costs.

The single market has both internal and external aspects:

Internal policies

      Free trade of goods and services among member states (an aim further
       extended to three of the four EFTA states by the European Economic
       Area, EEA)
      A common EU competition law controlling anti-competitive activities of
       companies (through antitrust law and merger control) and member states
       (through the State Aids regime).
      The Schengen treaty allowed removal of internal border controls and
       harmonization of external controls between its member states. This
       excludes the UK and Ireland, which have derogations, but includes the
       non-EU members Iceland and Norway. Switzerland also voted via
       referendum in 2005 to become part of the Schengen zone.
      Freedom for citizens of its member states to live and work anywhere
       within the EU with their spouses and children, provided they can support
       themselves (also extended to the other EEA states).
      Free movement of capital between member states (and other EEA states).
      Harmonization of government regulations, corporations law and
       trademark registrations.
      A single currency, the Euro (excluding the UK, and Denmark, which
       have derogations). Sweden, although not having a specific opt-out clause,
       has not joined the ERM II, voluntarily excluding itself from the monetary
      A large amount of environmental policy co-ordination throughout the
      A Common Agricultural Policy and a Common Fisheries Policy.
      Common system of indirect taxation, the VAT, as well as common
       customs duties and excises on various products.
      Funding for the development of disadvantaged regions (structural and
       cohesion funds).

External policies

      A common external customs tariff, and a common position in
       international trade negotiations.
      Funding for programmes in candidate countries and other Eastern
       European countries, as well as aid to many developing countries, through
       its Phare and Tacis programmes.
      The establishment of a single market European Energy Community by
       means of the Energy Community South East Europe Treaty.

   In a nut shell A key activity of the EU is the establishment and
   administration of a common single market, consisting of a customs union, a
   single currency (adopted by 12 of the 25 member states), a Common
   Agricultural Policy, a common trade policy, and a Common Fisheries

If considered a single unit, the European Union has the largest economy in the
world with a 2004 GDP of 11,723,816 million USD using PPP equivalence.
The EU economy is expected to grow further over the next decade as more
countries join the union - especially considering that the new states are usually
poorer than the EU average, and have the capacity to grow at a high rate.
However, it is estimated that the euro zone will only grow around 0.3 per cent
(Q2 2005) 1, while other industrialized nations will grow faster, such as the
United States, which is estimated to grow three times as much at around
3.2%(Q2 2005). The European Council published on 17 November 2005 that
the economy of the European Union will have grown approximately 1.5% in
2005. The euro zone however, will have grown 1.3% in 2005. The European
Council is hopeful that the European Union will grow further in 2006 and in
2007 (2.1% 2006 2.4% 2007). Germany, the largest economy in the EU, will
grow about: 0.8% 2005, 1.2% 2006 and 1.6% 2007. After extremely slow
growth, it seems that the EU will grow again in the next couple of years.

      Dictionary               definition        of          European           Union
       The American Heritage® Dictionary of the English Language, Fourth Edition
      Encyclopedia              information       about        European         Union
       The Columbia Electronic Encyclopedia, Sixth Edition Copyright © 2003,
      Wikipedia              information        about         European          Union
       This article is licensed under the GNU Free Documentation License
      Word         Net        information        about         European            Union
       Word Net 1.7.1 Copyright © 2001 by Princeton University. All rights reserved. More
       from Word Net

                    North American Free Trade Agreement

 (Abbr. NAFTA)


North American Free Trade Agreement (NAFTA), accord establishing a free-
trade zone in North America; it was signed in 1992 by Canada, Mexico, and the
United States and took effect on Jan. 1, 1994. NAFTA immediately lifted tariffs
on the majority of goods produced by the signatory nations. It also calls for the
gradual elimination, over a period of 15 years, of most remaining barriers to
cross-border investment and to the movement of goods and services among the
three countries. Major industries affected include agriculture, automobile and
textile manufacture, telecommunications, financial services, energy, and
trucking. NAFTA also provides for labor and environmental cooperation among
member countries. The pact contains provisions for the inclusion of additional
member nations. Labor representatives have criticized NAFTA, claiming the
agreement has led to numerous jobs lost in the United States because industries
have moved plants to Mexico; NAFTA proponents point to the U.S. jobs
created because of increased imports by Mexico and Canada. The agreement
has negatively affected the economies of several Caribbean countries whose
exports to the United States now compete with duty-free Mexican exports.

A trade agreement between Canada, the United States and Mexico that
encourages free trade between these North American countries.

Investopedia Says: The agreement, implemented on January 1, 1994, is based
on the premise that removing as many tariffs as possible between these North
American countries will increase trade within the region and benefit each
country's economy.

An agreement between the United States, Canada, and Mexico to establish free
trade. It took effect in 1994 and is designed to eliminate trade barriers between
the three nations by 2009. Many American labor unions oppose NAFTA on
the grounds that it takes away jobs from American workers as manufacturers
relocate in Mexico to take advantage of cheaper labor. Others argue that free
trade creates more jobs in the United States than it destroys.

The North American Free Trade Agreement, known usually as NAFTA, is a
free trade agreement among Canada, the United States, and Mexico. NAFTA
went into effect on January 1, 1994. NAFTA is also used to refer to the
tripartite trading bloc of North American countries.

NAFTA called for immediately eliminating duties on half of all U.S. goods
shipped to Mexico and gradually phasing out other tariffs over a period of about
14 years. Restrictions were to be removed from many categories, including
motor vehicles and automotive parts, computers, textiles, and agriculture. The
treaty also protected intellectual property rights (patents, copyrights, and
trademarks) and outlined the removal of restrictions on investment among the
three countries. Provisions regarding worker and environmental protection were
added later as a result of supplemental agreements signed in 1993. This
agreement was an expansion of the earlier Canada-U.S. Free Trade Agreement
of 1989. Unlike the European Union, NAFTA does not create a set of
supranational governmental bodies, nor does it create a body of law which is
superior to national law. NAFTA is a treaty under international law. (Under
United States law it is classed as a congressional-executive agreement rather
than a treaty, but that reflects a peculiar sense of the term "treaty" in United
States constitutional law, but that sense is not followed by international law or
the laws of other states.)

The agreement was initially pursued by free-trade conservative governments in
the US and Canada, led by Canadian Prime Minister Brian Mulroney, and US
President George H. W. Bush. There was considerable opposition on both sides
of the border, but in the United States it was able to secure passage after
President Bill Clinton made its passage a major legislative initiative in 1993.
After intense political debate and the negotiation of several side agreements, the
US House passed NAFTA by 234-200 (132 Republicans and 102 Democrats
voting in favor) and the US Senate passed it by 61-38. Some opposition persists
to the present day, although labour unions in Canada have recently removed
objections to the agreement from their platforms.

Official Emblem
The United States and Canada have been arguing for years over the United
States' decision to impose a 27% duty on Canadian softwood lumber imports.
Canada has filed numerous motions to have the duty eliminated and the
collected duties returned to Canada. Canada has won every case brought before
the NAFTA tribunal, the last being on August 10, 2005. The United States
responded by saying "We are, of course, disappointed with the [NAFTA
panel's] decision, but it will have no impact on the anti-dumping and
countervailing duty orders," (Neena Moorjani, spokeswoman for U.S. Trade
Representative Rob Portman). The failure of the U.S. to adhere to the terms of
the treaty has generated widespread political debate in Canada. The debate
includes imposing countervailing duties on American products, and possibly
shutting off all or some energy shipments, such as natural gas.


NAFTA has been controversial since it was first proposed. Transnational
corporations have tended to support NAFTA in the belief that lower tariffs
would increase their profits. Labor unions in Canada and the United States have
opposed NAFTA for fear that jobs would move out of the country due to lower
labor costs in Mexico. Some politicians, economists, and policy experts have
opposed free trade for fear that it will turn countries, such as Canada, into
permanent branch plant economies. Farmers in Mexico have opposed and still
oppose NAFTA because the heavy agriculture subsidies for farmers in the
United States have put a great deal of downward pressure on Mexican
agricultural prices, forcing many farmers out of business. Opposition to
NAFTA also comes from environmental, social justice, and other advocacy
organizations that believe NAFTA has detrimental non-economic impacts to
public health, the environment, etc. In Mexico, as only a single example,
poverty has risen considerably since the signing of NAFTA. Wages there have
decreased by as much as 20 percent in some sectors. NAFTA's approval was
quickly followed by an uprising amongst Zapatista revolutionaries, and tension
between them and the Mexican government remains a major issue.
Furthermore, NAFTA was accompanied by dramatic reduction of the influence
of trade unions in Mexico's urban areas. NAFTA has been accompanied by a
dramatic increase of illegal immigration from Mexico to the United States;
presumably, a significant fraction of these people are farmers forced off their
land by bankruptcy. However, since NAFTA was signed, there has also been
economic growth in all three nations, with an increase in the standard of living
in Canada, and especially in Mexico, when compared to that in the United
States. NAFTA has helped to integrate the three economies. Canada and
Mexico have reaped gains from free trade with the largest economy in the
world, while the United States has benefited from unhindered access to their
markets and products as well.

Another matter that is particularly controversial is "Chapter 11", which allows
corporations to sue federal governments in the NAFTA region if they feel a
regulation or government decision adversely affects their investment. It is
argued this provision scares the government from passing environmental
regulation because of possible threats from an international business. For
example Methanex, a Canadian corporation, filed a $970 million suit against the
United States, claiming that a Californian ban on MTBE, a substance that had
found its way into many wells in the state, was hurtful to the corporation's sales
of methanol. In another case Metalclad, an American corporation, was awarded
$16.5 million from Mexico after the latter passed regulations banning the toxic
waste dump it intended to construct in El Llano, Aguascalientes. Further, it has
been argued that the provision benefits the interests of Canadian and American
corporations disproportionately more than Mexican businesses, which often
lack the resources to pursue a suit against the much wealthier states. It has been
a longtime fear of some Canadians that this provision gives large US companies
too much power. There was one case where a Natural Gas company in Nova
Scotia which pumped from Sable Island wanted to sell cheaper gas to residents
in New Brunswick, a Canadian province, but threats of a lawsuit over Chapter
11 stopped these plans in their tracks.

Since NAFTA was signed, it has been difficult to analyze its macroeconomic
effects due to the large number of other variables in the global economy.
Various economic studies have generally indicated that rather than creating an
actual increased trade, NAFTA has caused trade diversion, in which the
NAFTA members now import more from each other at the expense of other
countries worldwide. Some economists argue that NAFTA has increased
concentration of wealth in both Mexico and the United States.

In Canada a large amount of the opposition to NAFTA comes from fears over
the possible effects of various clauses and articles of the treaty. For example, if
something is sold even once as a commodity, the government cannot stop its
sale in the future. This of course applies to the water from Canada's Great Lakes
and rivers, fueling fears over the possible destruction of Canadian ecosystems
and Canada's water supply. Other fears come from the effects NAFTA has had
on Canadian law making. In 1996, MMT, a chemical additive that some studies
had linked to nerve damage, was brought into Canada by an American
company. The Canadian government banned the importation of the additive but,
when sued by the American company, was forced to settle out of court. The
American company argued that their additive had not been conclusively linked
to any health dangers, and that the prohibition was damaging to their company.

From the perspective of North American consumers, one of the effects of
NAFTA has been the significant increase in bilingual or even trilingual labeling
on products, for simultaneous distribution through retailers in Canada, the U.S.,
and Mexico in French, English, and Spanish.

With reference
        North American Free Trade Agreement
       "NAFTA" is also an abbreviation for the
       ―New Zealand Australia Free Trade Agreement‖.

      Greider, William (1997). One World, Ready or Not. Penguin Press. ISBN
      During 2004. Source: CIA World Factbook 2005, IMF WEO Database
      Public Citizen's Report on NAFTA
      George Bush Presidential Library and Museum
(Abbr. ASEAN)


The Association of Southeast Asian Nations or ASEAN was established
on 8 August 1967 in Bangkok by the five original Member Countries,
namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand.
Brunei Darussalam joined on 8 January 1984, Vietnam on 28 July 1995,
Laos and Myanmar on 23 July 1997, and Cambodia on 30 April 1999.

The ASEAN region has a population of about 500 million, a total area of
4.5 million square kilometers, a combined gross domestic product of
US$737 billion, and a total trade of US$ 720 billion.

The ASEAN Declaration states that the aims and purposes of the
Association are: (i) to accelerate the economic growth, social progress
and cultural development in the region through joint endeavors in the
spirit of equality and partnership in order to strengthen the foundation for
a prosperous and peaceful community of Southeast Asian nations, and
(ii) to promote regional peace and stability through abiding respect for
justice and the rule of law in the relationship among countries in the
region and adherence to the principles of the United Nations Charter.

In 1995, the ASEAN Heads of States and Government re-affirmed that
“Cooperative peace and shared prosperity shall be the fundamental
goals of ASEAN.”

  The Association represents the collective will of the nations of to bind themselves together in
  friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples
  and for posterity the blessings of peace, freedom, and prosperity. (The ASEAN Declaration,
  Bangkok, 8 August 1967)

Fundamental Principles
The Treaty of Amity and Cooperation (TAC) in Southeast Asia, signed at
the First ASEAN Summit on 24 February 1976, declared that in their
relations with one another, the High Contracting Parties should be
guided by the following fundamental principles:

      Mutual respect for the independence, sovereignty, equality,
       territorial integrity, and national identity of all nations;
      The right of every State to lead its national existence free from
       external interference, subversion or coercion;
      Non-interference in the internal affairs of one another;
      Settlement of differences or disputes by peaceful manner;
      Renunciation of the threat or use of force; and
      Effective cooperation among themselves.

The TAC stated that ASEAN political and security dialogue and
cooperation should aim to promote regional peace and stability by
enhancing regional resilience. Regional resilience shall be achieved by
cooperating in all fields based on the principles of self-confidence, self-
reliance, mutual respect, cooperation, and solidarity, which shall
constitute the foundation for a strong and viable community of nations in
Southeast Asia.

Some of the major political accords of ASEAN are as follows:

     ASEAN Declaration, Bangkok, 8 August 1967;
     Zone of Peace, Freedom and Neutrality Declaration, Kuala
      Lumpur, 27 November 1971;
     Declaration of ASEAN Concord, Bali, 24 February 1976;
     Treaty of Amity and Cooperation in Southeast Asia, Bali, 24
      February 1976;
     ASEAN Declaration on the South China Sea, Manila, 22 July
     Treaty on the Southeast Asia Nuclear Weapon-Free Zone,
      Bangkok, 15 December 1997; and
     ASEAN Vision 2020, Kuala Lumpur, 15 December 1997.
     Declaration of ASEAN Concord II, Bali, 7 October 2003

The ASEAN Security Community is envisaged to bring ASEAN’s political
and security cooperation to a higher plane to ensure that countries in the
region live at peace with one another and with the world at large in a
just,       democratic        and        harmonious         environment.

In 1992, the ASEAN Heads of State and Government declared that
ASEAN should intensify its external dialogues in political and security
matters as a means of building cooperative ties with states in the Asia-
Pacific region. Two years later, the ASEAN Regional Forum or ARF
was established. The ARF aims to promote confidence-building,
preventive diplomacy and conflict resolution in the region. The present
participants in the ARF include: Australia, Brunei Darussalam,
Cambodia, Canada, China, European Union, India, Indonesia, Japan,
Democratic Peoples' Republic of Korea, Republic of Korea, Laos,
Malaysia, Myanmar, Mongolia, New Zealand, Pakistan, Papua New
Guinea, Philippines, Russian Federation, Singapore, Thailand, United
States, and Vietnam.

Through political dialogue and confidence building, no tension has
escalated into armed confrontation among ASEAN members since its
establishment more than three decades ago.

When ASEAN was established, trade among the Member Countries was
insignificant. Estimates between 1967 and the early 1970s showed that
the share of intra-ASEAN trade from the total trade of the Member
Countries was between 12 and 15 percent. Thus, some of the earliest
economic cooperation schemes of ASEAN were aimed at addressing
this situation. One of these was the Preferential Trading Arrangement of
1977, which accorded tariff preferences for trade among ASEAN
economies. Ten years later, an Enhanced PTA Programme was
adopted at the Third ASEAN Summit in Manila further increasing intra-
ASEAN trade.

The Framework Agreement on Enhancing Economic Cooperation was
adopted at the Fourth ASEAN Summit in Singapore in 1992, which
included the launching of a scheme toward an ASEAN Free Trade Area
or AFTA. The strategic objective of AFTA is to increase the ASEAN
region’s competitive advantage as a single production unit. The
elimination of tariff and non-tariff barriers among the member countries
is expected to promote greater economic efficiency, productivity, and
competitiveness. The Fifth ASEAN Summit held in Bangkok in 1995
adopted the Agenda for Greater Economic Integration, which included
the acceleration of the timetable for the realization of AFTA from the
original 15-year timeframe to 10 years.

In 1997, the ASEAN leaders adopted the ASEAN Vision 2020, which
called for ASEAN Partnership in Dynamic Development aimed at forging
closer economic integration within the region. The vision statement also
resolved to create a stable, prosperous and highly competitive ASEAN
Economic Region, in which there is a free flow of goods, services,
investments, capital, and equitable economic development and reduced
poverty and socio-economic disparities. The Hanoi Plan of Action,
adopted in 1998, serves as the first in a series of plans of action leading
up to the realization of the ASEAN vision.

In addition to trade and investment liberalization, regional economic
integration is being pursued through the development of Trans-ASEAN
transportation network consisting of major inter-state highway and
railway networks, principal ports and sea lanes for maritime traffic,
inland waterway transport, and major civil aviation links. ASEAN is
promoting the interoperability and interconnectivity of the national
telecommunications equipment and services. Building of Trans-ASEAN
energy networks, which consist of the ASEAN Power Grid and the
Trans-ASEAN Gas Pipeline Projects, are also being developed.

ASEAN cooperation has resulted in greater regional integration. Within
three years from the launching of AFTA, exports among ASEAN
countries grew from US$43.26 billion in 1993 to almost US$80 billion in
1996, an average yearly growth rate of 28.3 percent. In the process, the
share of intra-regional trade from ASEAN’s total trade rose from 20
percent to almost 25 percent.        Tourists from ASEAN countries
themselves have been representing an increasingly important share of
tourism in the region. In 1996, of the 28.6 million tourist arrivals in
ASEAN, 11.2 million or almost 40 percent came from within ASEAN

Today, ASEAN economic cooperation covers the following areas: trade,
investment, industry, services, finance, agriculture, forestry, energy,
transportation and communication, intellectual property, small and
medium enterprises, and tourism.

Desiring to build a community of caring societies, the ASEAN leaders
resolved in 1995 to elevate functional cooperation to a higher plane to
bring shared prosperity to all its members. The Framework for Elevating
Functional Cooperation to a Higher Plane was adopted in 1996 with a
theme: “Shared prosperity through human development, technological
competitiveness, and social cohesiveness.” Functional cooperation is
guided by the following plans:

     ASEAN Plan of Action on Social Development;
     ASEAN Plan of Action on Culture and Information;
     ASEAN Plan of Action on Science and Technology;
     ASEAN Strategic Plan of Action on the Environment;
     ASEAN Plan of Action on Drug Abuse Control; and
     ASEAN Plan of Action in Combating Transnational Crime


The highest decision-making organ of ASEAN is the Meeting of the
ASEAN Heads of State and Government. The ASEAN Summit is
convened every year.        The ASEAN Ministerial Meeting (Foreign
Ministers) is held on an annual basis. Ministerial meetings on several
other sectors are also held: agriculture and forestry, economics, energy,
environment, finance, information, investment, labour, law, regional
haze, rural development and poverty alleviation, science and
technology, social welfare, transnational crime, transportation, tourism,
youth, the AIA Council and, the AFTA Council. Supporting these
ministerial bodies are 29 committees of senior officials and 122 technical
working groups.

To support the conduct of ASEAN’s external relations, ASEAN has
established committees composed of heads of diplomatic missions in
the following capitals: Brussels, London, Paris, Washington D.C., Tokyo,
Canberra, Ottawa, Wellington, Geneva, Seoul, New Delhi, New York,
Beijing, Moscow, and Islamabad.

The Secretary-General of ASEAN is appointed on merit and accorded
ministerial status. The Secretary-General of ASEAN, who has a five-
year term, is mandated to initiate, advice, coordinate, and implement
ASEAN activities. The members of the professional staff of the ASEAN
Secretariat are appointed on the principle of open recruitment and
region-wide competition.

ASEAN has several specialized bodies and arrangements promoting
inter-governmental cooperation in various fields: ASEAN University
Network, ASEAN-EC Management Centre, ASEAN Centre for Energy,
ASEAN Agricultural Development Planning Centre, ASEAN Earthquake
Information Centre, ASEAN Poultry Research and Training Centre,
ASEAN Regional Centre for Biodiversity Conservation, ASEAN Rural
Youth Development Centre, ASEAN Specialized Meteorological Center,
ASEAN Tourism Information Centre, and ASEAN Timber Technology

In addition, ASEAN promotes cooperative activities with organizations
with related aims and purposes: ASEAN-Chambers of Commerce and
Industry, ASEAN Business Forum, ASEAN Tourism Association,
ASEAN Council on Petroleum, ASEAN Ports Association, ASEAN
Vegetable Oils Club, and the ASEAN-Institutes for Strategic and
International Studies. Furthermore, there are 53 Non-Governmental
Organizations (NGOs), which have formal affiliations with ASEAN.
  Member Countries

 Brunei Darussalam   Cambodia   Indonesia   Laos     Malaysia
 Myanmar                Philippines       Singapore   Thailand   Vietnam

In a nut shell ASIAN is strongest economic power in the Asia as Kofi Annan
“Today, ASEAN is not only a well-functioning, indispensable reality in
the region. It is a real force to be reckoned with far beyond the region.
It is also a trusted partner of the United Nations in the field of
Kofi Annan
Secretary-General of the United Nations
16 February 2000

  Wikipedia information                  about    ASEAN       Free      Trade     Area
       This article is licensed under the GNU Free Documentation License

Comparison of Regional blocs
 Most active regional blocs
 Regional                                              GDP (PPP) ($US)           Member
               Area (km²) Population
 bloc 1                                                in millions per capita    states 1
 EU            3,977,487    460,124,266                11,723,816 25,480         25
 CARICOM 462,344            14,565,083                 64,219      4,409         14+1 3
 ECOWAS 5,112,903           251,646,263                342,519     1,361         15
 CEMAC         3,020,142    34,970,529                 85,136      2,435         6
 EAC           1,763,777    97,865,428                 104,239     1,065         3
 CSN           17,339,153 370,158,470                  2,868,430 7,749           10
 GCC           2,285,844    35,869,438                 536,223     14,949        6
 SACU          2,693,418    51,055,878                 541,433     10,605        5
 COMESA        3,779,427    118,950,321                141,962     1,193         5
NAFTA         21,588,638    430,495,039     12,889,900 29,942        3
ASEAN         4,400,000     553,900,000     2,172,000 4,044          10
SAARC         5,136,740     1,467,255,669   4,074,031 2,777          8
Agadir        1,703,910     126,066,286     513,674    4,075         4
EurAsEC       20,341,700    181,216,423     1,643,379 9,069          5
CACM          422,614       37,816,598      159,536    4,219         5
PARTA         528,151       7,810,905       23,074     2,954         12+2 3
Reference                                   GDP (PPP) ($US)
blocs     and Area (km²)    Population
countries 2                                 in millions   per capita divisions
UN            133,178,011           6,411,682,270 55,167,630 8,604    191
AEC           29,910,442            853,520,010     2,053,706 2,406   53
India         3,287,590             1,102,600,000 3,433,000 3,100     35
China         9,596,960             1,306,847,624 7,249,000 5,200     33
USA           9,631,418             296,900,571     11,190,000 39,100 50
Canada        9,984,670             32,507,874      958,700    29,800 13
Russia        17,075,200            143,782,338     1,282,000 8,900   89
  Including data only for full and most active members
    The first two states in the World by area, population and GDP (PPP)
  Including non-sovereign autonomous entities of other states
mm smallest value among the blocs compared
mm largest value among the blocs compared
During 2004. Source: CIA World Factbook 2005, IMF WEO Database

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