U.S. and ASEAN agreed upon Strategic Partnership as ASEAN approaches its Economic Community Launch this December

Thai Prime Minister Prayut Chan-o-cha was one of the 10 national leaders who signed the declaration officially endorsing the December launch of the AEC and its 10-year strategy. United States President Barack Obama also attended the summit, signaling the importance the U.S. places on ASEAN and the AEC as part of America’s shifting focus towards stronger engagement with Asia.

Leaders of the 10 nations of the Association of Southeast Asian Nations (ASEAN), meeting at a summit in the Malaysian capital of Kuala Lumpur last week, mapped out a 10-year strategy to increase regional integration and cooperation when the ASEAN Economic Community is officially launched at the end of December.

The strategy will emphasize liberalization of services, lowering trade and investment barriers, and harmonizing and equalizing product standards across all member countries. The formation of the 10-nation free-trade zone is expected to raise the region’s status to that of a global economic heavyweight and make it even more attractive as a destination for foreign investment.

During ASEAN-U.S. Summit, the Prime Minister of Thailand, along with other ASEAN leaders and U.S. President, adopted Joint Statement on the ASEAN-U.S. Strategic Partnership and Plan of Action to implement the ASEAN-U.S. Strategic Partnership 2016 – 2020.

Thailand supports the elevation of ASEAN-U.S. relations to strategic partnership level, making it a key part of the ASEAN centered regional architecture and also the U.S. proposal to convene Special ASEAN-U.S. Summit retreat next year. Thailand sees the retreat as a good opportunity for ASEAN and the U.S. to explore ways to strengthen the strategic partnership. Thailand’s view on areas of potential cooperation under ASEAN-U.S. Strategic Partnership, visit http://thaiembdc.org/2015/11/25/thailand-supports-asean-u-s-strategic-partnership/

While ASEAN may never be as integrated as the E.U., or boast a market the size of China’s, the 10-country grouping’s economic community will clearly be a force to be reckoned with in global trade and investment.

With a total population of 625 million people, the AEC will be a larger market than the European Union. Its combined gross domestic product (GDP) of $2.6 trillion makes it the third largest economy in Asia and the seventh largest in the world. Although the economies of its member states range from advanced, such as Singapore’s, to developing, such as Myanmar’s, all members have agreed to the free movement of goods, services, capital and labor, albeit with a more gradual lifting of restrictions among some of the developing economies.

Unlike the E.U., the AEC will not have a common currency, and while the movement of labor will be freer among its member states, borders will still be regulated as tightly as possible. The lack of a common currency should provide the AEC with more resilience and avoid the difficulties the E.U. has been experiencing over debt among some of its member states.

ASEAN’s economic allure has been increasing in anticipation of the AEC launch. Last year, the region received $136 billion in foreign direct investment (FDI), equal to 11 per cent of global FDI inflows. Intra-ASEAN FDI was the second highest in the world in 2014, just behind the E.U.

In the seven-year period from 2007 to 2014, GDP per capita surged by 76 percent, from $2,343 to $4,135. And Intra-ASEAN trade comprised the largest share of ASEAN’s total trade by partner, reaching US$2.5 trillion in 2014.