A truly daunting trading bloc would be the creation of a Free Trade Area of the Americas (FTAA). The objective of the FTAA (www.alca-ftaa.org) is to create the largest free trade area on the planet, stretching from the northern tip of Alaska to the southern tip of Tierra del Fuego, in South America. The FTAA would comprise 34 nations and 830 million consumers, with Cuba being the only Western Hemisphere nation excluded from participating. The FTAA would work alongside existing trading blocs throughout the region.
The first official meeting, the 1994 Summit of the Americas, created the broad blueprint for the agreement. Nations reaffirmed their commitment to the FTAA at the Second Summit of the Americas in April 1998 and negotiations began in September 1998. The Third Summit of the Americas was held in April 2001 and met with fierce protests. The ambitious plan of the FTAA means that it will likely be many years before such an agreement would be realized.
1. What is the Andean Community? Identify why its progress is behind schedule.
2. Identify the members of the Southern Common Market (MERCOSUR). How has it performed?
3. Characterize economic integration efforts throughout Central America and the Caribbean.
4. What is the objective of the Free Trade Area of the Americas? What are its current prospects for success?
Integration in Asia
Efforts outside Europe and the Americas at economic and political integration have tended to be looser arrangements. Let’s take a look at important coalitions in Asia and among Pacific Rim nations—the Association of Southeast Asian Nations, the organization for Asia Pacific Economic Cooperation, and the Australian and New Zealand Closer Economic Relations Agreement.
Association of Southeast Asian Nations (ASEAN)
Indonesia, Malaysia, the Philippines, Singapore, and Thailand formed the Association of Southeast Asian Nations (ASEAN) in 1967. Brunei joined in 1984, Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1998 (see Map 8.1). Together, the 10 ASEAN (www.aseansec.org) countries comprise a market of about 560 million consumers and a GDP of nearly $1.1 trillion. The three main objectives of the alliance are to: (1) promote economic, cultural, and social development in the region; (2) safeguard the region’s economic and political stability; and (3) serve as a forum in which differences can be resolved fairly and peacefully.
The decision to admit Cambodia, Laos, and Myanmar was criticized by some Western nations. The concern regarding Laos and Cambodia being admitted stems from their roles in supporting the communists during the Vietnam War. The quarrel with Myanmar centers on evidence cited by the West of its continued human rights violations. Nevertheless, ASEAN felt that by adding these countries to the coalition, it could counter China’s rising strength and its resources of cheap labor and abundant raw materials.
Companies involved in Asia’s developing economies are likely to be doing business with an ASEAN member. This is even a more likely prospect as China, Japan, and South Korea accelerate their efforts to join ASEAN. China’s admission would allow the club to bridge the gap between less advanced and more advanced economies. Some key facts about ASEAN that companies should consider are contained in the Global Manager’s Briefcase titled, “The Ins and Outs of ASEAN.”