Posted by: ardhasugarda | April 2, 2009

Business Opportunity in EU-ASEAN Free Trade Agreement

Business Opportunity in EU-ASEAN Free Trade Agreement

by: Ardha Prapanca Sugarda

European Union

European Union

ASEAN

ASEAN

“Strengthening the commitment and focus of EU trade policy in Asia is an important part of the EU’s Global Europe trade strategy. An EU-ASEAN FTA is a key part of that. This meeting helped clarify issues and map out the work ahead. I remain strongly committed to a wide-ranging twenty-first century trade agreement, which will require effort from both sides. But the benefits for both sides will certainly be worth the effort”.
Peter Mandelson – EU Trade Commissioner, January 2008[1]

The rise of China and India as the fastest emerging countries in the world has wakened ASEAN to strengthen its competitive capabilities in the international arena and to ensure ASEAN’s integration into the global economy. ASEAN does not want to be left behind on the track of globalization and EU as a longstanding partner of ASEAN seen this opportunity and together they are setting up an FTA of EU-ASEAN.

According to a study by CEPII – CIREM, the conclusion of an FTA would bring +2% to the GDP of the ASEAN region, resulting in greater purchasing power for its more than 550 million inhabitants. In addition an FTA would allow both EU and ASEAN businesses to make the most of the future economic single ASEAN market.

With each comparative advantage, EU and ASEAN businesses can gain benefits from this FTA and will be able to increase the trade where both side are specialize in. Therefore, the establishment of a free trade area would undoubted bring economic benefits and promote the European model of integration among the ASEAN countries, while it would also allow ASEAN producers to have a  significant role as a part of global supply chain and to have an easier access on the European market.

It is true that to achieve an FTA between two regions is hard and complex, and will be so many obstacles in doing so, especially will be on the employment that either will be decreasing or increasing after the realization of this FTA. This will be the main tasks for EU and ASEAN that this integration process will give the benefits for both sides and not only for one side.


[1] Mandelson, Peter,  EU Trade Commissioner in The Trans-Regional EU-ASEAN Trade Seminars, January 2008


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