Free Trade Area Essay

Document Type:Coursework

Subject Area:Business

Document 1

They have no similar policies to non- members and always include barriers when dealing with them (Aggarwal, 2013). The paper will discuss in details a specific free trade agreement in Asia. The Association of South East Asia( ASEAN ) in terms of (a) brief background about the ASEAN (b) its contribution to the regional economic integration of the region (c) its progress to the regional economic integration of the region (c) the opportunities and threats that ASEAN presents to the regional economic integration of your region. Introduction The ASEAN was formed in early the 1960s by several Asian countries namely Japan , China , Qatar , Pakistan, Cambodia, Vietnam, philipines, Thailand, Indonesia, korea, Singapore. After world war II, most Asia countries economies were left devastated by effects of the prolonged war. There was the need for economic recovery which needed an urgent response (Acharya, 2014). Countries had to come up with a strategy to win global market which was dominated by European and some South American countries. This called for the formation of ASEAN which has seen the Asia economies improvement to almost rival that of developed countries. The aim of the association was to realize a collaboration of country with one purpose of economic growth. The ASEAN leaders saw the association as an economic crisis absorber; this was after they suffered a collapse of the stock market during the war. The value of their currency depreciated gradually resulting in near collapse of many economies in the region thereby reducing the per capita income tremendously. There was decrease in asset prices and turnover.

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Many blamed the bank for the downfall claiming it was as a result of weak financial management mechanisms and lack of transparency from the premiers. They thought the government policies were responsible for the deteriorating economic situation The ASEAN contribution to the regional economic integration of the region The ASEAN vision is to create a prosperous, growing and peaceful region. Heightened economic growth through investment and minimize trade barriers. To enhance inter- regional trade and ensure that people, goods and services are freely conveyed from the producer to the consumer. The need for rapid globalization and progressive regionalization with benefit led to the formation of free trade agreements (Krapohl, 2013). Asia has development strategies, well- defined communication channels, networked interconnections and an upgraded community of practice and intellectual capital, there still arises the need for rapid expansion of trade.

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This is particularly important for small and medium-sized economies that will be able to operate at the global zone hence growth. Most Asia countries economy has risen at a relatively high percentage since formation of the trading block. Other economies benchmark it. Through visits and learning, they are recommended on how to upgrade their production and supply chains in relation to logistics. In agricultural dependent economies, farmers are insured from adverse weather changes. This greatly reduces agricultural tariffs and subsidies. ASEAN has emerged to be a dependable and reliable trading block which has won the tests of time; even the world economic recession has failed to shake its strength. China has especially experienced wage growth hence maximum utilization. While integrating outsourcing of developed production engineered skills, technology- intensive exports are produced.

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The high demand for products imported through free trade agreements leads to value creation especially for middle- income trading areas. Opportunities From 1970 the gross domestic product of members has increased gradually as well as the per capita income. This has led to increased economic growth thereby economic stability. THREATS The free trade agreement is mainly subject to large economies which perform excellently therefore, small scale participants are barred from joining. The free trade agreement has documentation which is expensive and cumbersome to exporters hence reduced morale from firms. The paperwork involved is time consuming which delays delivery hence disruptions in the supply chain due to difference in culture ,norms ,language and traditions ,diversification is realized which blocks the interrelations. The countries are of different religion like Christianity, Buddhism and Islam, thereby creating differences between the countries.

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The difference in stability of the members in terms level of development creates a challenge. It has set a scorecard of economic development which has won a world class success. Despite various challenges, the member countries have embraced it as a platform for solving economic crises. Aggarwal, V. Urata, S. Eds. A. Arreguín-Toft, I. M.  Essentials of International Relations: Sixth International Student Edition. WW Norton & Company.

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