The ultimate objective of AFTA is to increase ASEAN’s competitive edge as a production base geared for the world market. It is believed that, through elimination of intra-regional tariffs and non-tariff barriers, ASEAN’s manufacturing sectors will become more efficient and competitive.
Larger size of the market will bring about economies of scale, attract foreign direct investment, and stimulate growth of supporting industries.
Creation of ASEAN is an experiment in creating new vistas of development for the region. It is hoped that the ASEAN would enable its members to end their self-perpetuating dependence on the advanced industrial nations.
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It would marshal the still untapped potentials of this rich region through united action. Its modus operandi is to build in voluntary, informed, and mutually agreed small steps and gradually lead to more binding and institutional agreements. Over the years, ASEAN has progressively entered into several formal and legally-binding instruments.
The Association is open for participation to all States in the Southeast Asian region which subscribe to its aims and principles. ASEAN has great trade potential.
With a population of 537 million, combined GDP of ASEAN member countries in 1996 had touched S 724, 134 million, falling to 5685,891 million in 2003.
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For individual countries, GDP varied from US S 208,625 million for Indonesia and USS 143,303 million for Thailand to a low of US $2,043 million for Laos. Merchandise exports of ASEAN in 2003 totaled US $465,957 million as against imports of US $382,696 million, with Singapore having the highest share in both.
ASEAN is a group of unevenly developed countries, and provides scope for an expansion of mutually gainful (and growth-oriented) trade between them.
Thus, for example, Singapore and Brunei had (year 2003) the highest per capita income of over US $21,829 and US $ 12,973, respectively. At the other extreme, Myanmar’s per capita income in 2003 was only US $ 179. For Thailand, the figure was US $2,241.
As a regional economic bloc, ASEAN has come to occupy a special place for India because of recent establishment of close economic ties with it. India became a dialogue partner of ASEAN in 2003. It also entered into Free Trade Agreement with Thailand on October 10, 2003.
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This association is expected to provide a springboard to India for rapid trade and investment growth, particularly because Thailand is also a member of the 21 -nation Asia Pacific Economic Cooperation.
There is also a talk of FTA with other important countries like Singapore and even with China and Korea (all these countries are also members of APEC). A blueprint is already available for an FTA with ASEAN scheduled to be achieved by 2011.