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What Is ASEAN?

How Does It Affect China, the U.S. and You?

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ASEAN

The 10 ASEAN members are highlighted in yellow.

Credit: ASEAN.org
Cargo Ships

Half of the world's merchant fleet tonnage goes through ASEAN's area.

Credit: Justin Sullivan/Getty Images

Definition: ASEAN is the Association of South East Asian Nations. It promotes the economic growth of 10 countries south of China, who need the economic clout to compete with their neighbor to the north. 

ASEAN was created on August 8, 1967, in Bangkok, Thailand. It's forming an European Union type of common market by 2015.  The ASEAN Economic Community includes free movement of goods and services, investment and capital as well as skilled labor. It focuses on agriculture, air travel, e-commerce, electronics, fisheries, healthcare, rubber, textiles, tourism, and wood. (Source: ASEAN Economic Community Factbook). 

To start, tariffs were lowered in 2005, increasing trade by 24% to a total of $160 billion. By 2010, tariffs had been remove on 99.5% of all traded goods. ASEAN is working to make regulations and product standards uniform among the nations.

These multilateral trade agreements between ASEAN and its neighbors lessen these countries’ need for the World Trade Organization (WTO). Communication among these long-standing enemies in the name of trade means that they realize the preeminent importance of economic prosperity for all, regardless of ancient grudges and even democratic principles. (Source: ASEAN web site, Channel News Asia web site, China People’s Daily web site)

ASEAN Countries

ASEAN has 10 members. It was founded in 1967 by Indonesia, Malaysia, Philippines, Singapore and Thailand.  Brunei Darussalam  joined on January 7,1984;  Viet Nam on July 28, 1995;  Lao PDR and Myanmar on July 23, 1997; and Cambodia on April 30, 1999. 

 Their total economic output, as measured by Gross Domestic Product (GDP), was $3.62 trillion. This was about a third of the China's $12.38 trillion GDP. This translated to $5,869 poer person, compared to China's GDP per capita of $9,100. ASEAN's economy grew 5.7%, again slower than China's growth of 7.8%. (Source: ASEAN, ASEAN's GDP Robust, October 21, 2013)

ASEAN 3

 ASEAN+3 is the term that refers to the countries of ASEAN plus China, Japan and South Korea.  It was formed in the aftermath of the 1997 Asian financial crisis.  The East Asia Vision Group  was formed to created a vision for cooperation among all 13 countries to prevent another crisis from happening again. 

ASEAN Summit

Each year,  ASEAN holds a summit hosted by one of its members. The 23 Summit was held on October 9, 2013, in Brunei Darussalam. The group recommitted to  realize the ASEAN Community by 2015. After the ASEAN member mets, the ASEAN+3 and the U.S. met. Non-ASEAN members were jockeying for economic clout in the region, but China seemed to eclipse the U.S. when President Obama sent Secretary of State John Kerry instead. Obama had his hands full with the government shutdown. China announced the formation of a an Asian investment bank. 

ASEAN and China

China is ASEAN’s largest trading partner, with $280.4 billion in trade in 2011 (up 20% since 2010).   ASEAN exported $145.7 billion, an 28.9% increase, to China. Similarly, it imported $134.7 billion from China during that time.  Imports from China grew by 13.2% amounting to US$134.7 billion. Balance of trade was in ASEAN’s favour for the first time in 2011, with exports exceeding imports by US$11 billion. ASEAN is China’s third largest trading partner, after the U.S. and the EU. 

China's foreign direct investment in the ASEAN nations more than doubled, to $5.9 billion in 2011.  ASEAN has begun a five-year plan of action with China to expand free trade in information and communications technology.  (Source: ASEAN, ASEAN-China Dialogue Relations)

However, the nations are also wary of China's ability to dominate the area. They don't want cooperation to lead to their absorption by their neighbor.

How ASEAN Affects the U.S. Economy

The South Chna Sea runs right through ASEAN's territory. It is a hotly contested group of tiny islands that are sitting on potential reserves of 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas. It is also one of the richest fisheries in the world.

Most important to the U.S is the South China shipping lane. Through it goes half of the world's merchant fleet tonnage, representing $5.3 trillion in global trade. Of that, $1.2 trillion winds up at U.S. ports. In addition, one-third of the world's crude oil are also shipped through the Sea.

For that reason, former Secretary of State Hillary Clinton declared at the 2010 ASEAN Summit that the freedom of navigation through the Sea was of national interest. To back that up, the Navy will shift base 60% of its forces to the Pacific by 2020 (up from 50% now). Many fear that rivalry over competing claims in the South China Sea could lead to armed conflict in the region. (Source: New York Times Magazine, A Game of Shark and Minnow, October 27, 2013; AlJazeera, ASEAN Summit Gets Underway in Brunei)

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