Intra- and Extraregional Trade Costs of ASEAN Economies: Implications for Asian Regional Integration

Abstract

Since its creation in 1967, the ASEAN (Association of Southeast Asia Nations) has been actively engaged in regional trade integration. ASEAN member states (AMS) have made particularly significant progress in reducing tariffs: by the end of 2014, intra-ASEAN tariffs had been eliminated for most goods, as scheduled by the ASEAN Economic Community (AEC). However, as envisaged in the AEC Blueprint, transforming ASEAN into “a single market and production base” by 2015 also involves removing other trade barriers and impediments. Many trade facilitation related initiatives have been taken by ASEAN members over the past two decades in this regard, with successful implementation of these initiatives expected to result in significant efficiency gains and measurable reduction in their overall cost of trade. However, implementation has been slower than expected. This chapter provides an analysis of the level of intraregional cost of trade in goods within Southeast Asia and between Southeast Asia and other regional groupings in Asia and the Pacific, identifying some of the key factors driving the reduction in these trade costs. Since AMS have already made considerable improvements in reducing tariffs, we focus on the analysis of trade costs other than tariffs.