ADBI-JIIA International Symposium
November 10, 2015

ASEAN Economic Community,East Asia and Japan-ASEAN, AEC, RCEP and JapanKazushi Shimizu (Kyushu University)
shimizu@en.kyushu-u.ac.jp1Introduction
 ASEAN and East Asia are among the world’s fastest growing
regions The most important growth area in the world economy
 Economic integration is underway in East Asia
 ASEAN is to realize the ASEAN Economic Community(AEC) in 2015
 Economic integration is moving forward in East Asia as awhole: RCEP ASEAN and East Asia are also important for Japan The most important production bases and markets forJapanese corporations
 A long history of exchange and friendship
2Structure of This Report Long-term study conducted on ASEAN economic
integration and the AEC within the world economy
 ASEAN economic integration and the automobile
industry Relations between ASEAN and Japan The following are covered in this report:

 AEC and ASEAN
 East Asian Economic Integration
 Changes after the Global Financial Crisis
 AEC, East Asia and Japan
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ASEAN Economic Integration: 1976-2003
 ASEAN is the key player in East Asia’s economic integration Conventionally, the only regional cooperation
organization in East Asia
 AFTA set up with the aim of realizing AEC in 2015
Established in 1967
Economic cooperation began in 1976
Change to the Economic Cooperation Strategy in 1987
Agreed on AFTA (ASEAN Free Trade Area) in 1992
Membership has expanded to Indochina since 1995
 Vietnam in 1995, Laos and Myanmar in 1997, Cambodiain 1999
 Economic integration has been deepening due to changes
since the Asian financial crisis


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Toward an ASEAN Economic Community (AEC) Oct 2003: “ASEAN Concord Ⅱ” and AECAEC: structuring single market/production base by 2020
Inviting foreign investments

 Jan 2007: front-loading AEC up to 2015
 Nov 2007: “AEC Blueprint”
A. Single Market and Production Base
 Free flow of (1) goods, (2) services, (3) investment, (4)capital and (5) skilled labor

B. Competitive Economic Region
C. Equitable Economic Development
D. Integration into the Global Economy

 Since 2008: AEC Scorecard and Monitoring Oct 2010: “Master Plan on ASEAN Connectivity”

 Steadily moving toward realization ofAEC in 20155

Results of ASEAN Economic Integration (1)Tariff Reductions through AFTA

Steady results obtained thus far through
ASEAN economic integration

 Tariff reductions since 1993
 In January 2010, tariffs were eliminated in 6
original member states, thus realizing AFTA
 Simultaneously, tariffs on almost all items (98.96％) were reduced to 0-5％ in CLMV as well
 Increase in AFTA utilization rate by individualstates
 For example, 61.3% of exports from Thailand
to Indonesia in 2010 used AFTA6

Results of ASEAN Economic Integration (2)Support for Production Networks

Japanese corporations have been expanding their production
networks throughout ASEAN
ASEAN policies support these production networks
The automotive industry is a typical example. Japanese automotivemanufacturers hold a large share in ASEAN: 85% in 2014
Toyota: Supported by ASEAN policies (BBC, AICO, AFTA) since the 1990s, withmajor components mutually complemented in the ASEAN region
Toyota IMV (since 2004)
Parts procurement, production and export of 1-ton pickup trucks in variousareasMulti-layered production network is being expanded to include primary parts
makers such as Denso, secondary and tertiary makers as well as materialsuppliers
AFTA provides support

Matching of ASEAN integration policy and corporate production
network structuring
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Schematic of Main Car and Parts Complementation at Toyota IMV
ASEAN

PU
SUV
Mini-vanDiesel engines
Gasoline engines
Manual transmissions○ Mini-vans○ SUVs●Manualtransmissions(Source) Shimizu (2010)(Note) Prepared by author based on interviews.

●Diesel engines●Gasoline engines☆OHQ(procurement, logistics,QC, development)Indonesia◎Mini-vans(Mother plants)○SUVs●Gasoline engines

ASEAN Member StatesIndia◎PUs◎SUVs(Mother plants)

ASEAN Member States

World markets

ThailandPhilippines○Mini-vans●Manualtransmissions

Malaysia○PUs○SUVs○Mini-vans

Viet Nam○Mini-vans○ SUVsSingapore☆OHQ(Sales / marketing)ASEAN and East Asian Regional Cooperation
 East Asia regional cooperation: developed in the wake of
the Asian financial crisis
 Key player is ASEAN ASEAN, ASEAN＋3, EAS, etc. are deployed in multiple
layers Structuring of FTA networks as ASEAN+1 FTAs
 ACFTA (ASEAN-China)
 AJCEP (ASEAN-Japan)
 AKFTA (ASEAN-Korea)
 AIFTA (ASEAN-India)
 ASEANCER (ASEAN-Australia / New Zealand) Completed in January 2010
 However, FTAs for East Asia as a whole and CJK havenot been established9Framework of East Asia Regional Cooperation Centering on ASEAN

Indonesia
Malaysia
Philippines
Singapore
３Thailand Brunei Vietnam

Laos Myanmar
Cambodia

ASEAN (AFTA)
Japan

China Korea

Australia New
Zealand
USRussia

ASEAN＋3(EAFTA→RCEP)India
ASEAN＋6(CEPEA→RCEP)
EASCanadaEU
ASEAN Post-Ministerial
Conferences

Papua New Guinea
Peru Mexico Chile
Hong Kong Taiwan
APEC(FTAAP)

East Timor Mongolia Pakistan
North Korea Bangladesh Sri Lanka

ASEAN Regional ForumSource) Prepared by authorNotes) ( ) indicates free trade region (including conception)
ASEAN: Association of Southeast Asian Nations, AFTA: ASEAN Free Trade Area
EAFTA: East Asia Free Trade Area, EAS: East Asia Summit
CEPEA: Comprehensive Economic Partnership in East Asia
RCEP: East Asia Regional Comprehensive Economic Partnership
APEC: Asia-Pacific Economic Cooperation
FTAAP: Free Trade Area of Asia-Pacific
The underlined countries are Trans Pacific Partnership (TPP) negotiating countries .

Changes after Global Financial Crisisand East Asia (1) ASEAN and East Asia
 Becoming the most important growth area in the worldeconomy
 Major production bases for the world economy
 Huge markets for the world economy
 United States
 “Plan to double exports”
 Participating in TPP, aiming to export to East Asia

 Realization of Mega-FTAs: TPP and RCEP TPP: Mega-FTA in Asia Pacific

12 states: Malaysia, Singapore, Brunei, Vietnam, Japan, Australia,
New Zealand, US, Canada, Peru, Mexico and Chile

 RCEP: Mega-FTA in East Asia

16 states: 10 ASEAN states, Japan, China, Korea, Australia, NewZealand and India
11Changes after Global Financial Crisis
and East Asia (2):Realization of Mega-FTAs
 Realization of mega-FTAs: TPP and RCEP



Mar 2010: TPP negotiations began
Nov 2011: ASEAN Summit
 ASEAN proposed East Asia Regional Comprehensive Economic
Partnership (RCEP)
August 2012: First Economic Ministers Plus ASEAN FTA Partners
Consultations
Nov 2012:
 Agreement on beginning RCEP negotiations in early 2013
 Agreement on beginning CJK FTA negotiations
May 2013: First Meeting of Trade Negotiating Committee (RCEP)
July 2013: Japan joined TPP negotiations

TPP and Japan’s participation in TPP accelerated RCEPand CJK FTA negotiations
TPP and RCEP negotiations accelerated the realization ofAEC
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Realization of AEC in 2015 (1) A. Single Market and Production Base
 1. Free Flow of Goods Elimination of Tariffs (A): 10 ASEAN member
states: 95.99% Tariff Lines at 0% in Jan 2015

 CLMV: eliminated duties with flexibility of 7% of tariff lines
up to Jan 2018

 Improved Rules of Origin, ASEAN Single Window Elimination of NTBs (D) 2. Free Flow of Services (B) 3. Free Flow of Investment (B) 4. Free Flow of Capital (B) 5. Free Flow of Skilled Labor (C)13Realization of AEC in 2015 (2) B. Competitive Economic Region (B) C. Equitable Economic Development (B) D. Integration into the Global Economy (A) RCEP, ASEAN+1 FTAs

 Next AEC Goal to be 2025
 Nov 2015: 27th ASEAN Summit
 “AEC Blueprint 2025”
 Dec 31, 2015 to be the Great Milestone
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Summary (1)AEC and ASEAN
 Steadily moving toward realization of AEC in2015
 AFTA has been established in ASEAN
 Solid results obtained: tariff reduction andelimination
 Support for production networks
 Key player in East Asian economic integration

 ASEAN is one of the most important cases ofeconomic integration in the world Realization of AEC to be accelerated bystructural changes in the world economy
15Summary (2)East Asian Economic Integration
 East Asia is the most important growth region
in the current world economy
 East Asian FTA to be realized in the contextof structural changes to the world economy

 AEC is to be realized at the end of 2015
 Moving toward realization of RCEP TPP negotiations to accelerate RCEP, CJK FTA
negotiations and the realization of AEC

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Summary (3)ASEAN, East Asia and Japan ASEAN and East Asia are among the most important
areas for Japan ASEAN and East Asia are among the most important
production bases and markets for Japanese
corporations
 Japan has to develop together with ASEAN and EastAsia
 To strengthen cooperation with ASEAN
 To cooperate in connection with AEC
 To promote a mega-FTA in East Asia (RCEP) To promote mega-FTAs in the Asia-Pacific (TPP,FTAAP)
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References


ASEAN Secretariat (2008), ASEAN Economic Community Blueprint, Jakarta.
ASEAN Secretariat (2010), Master Plan on ASEAN Connectivity, Jakarta.
ASEAN Secretariat (2012), ASEAN Economic Community Scorecard, Jakarta.
“Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership.”“ Nay Pyi Taw Declaration on the ASEAN Community's Post-2015 Vision.”
Intal, P., Fukunaga, Y., Kimura, F. et.al (2014), ASEAN Rising: ASEAN and AEC beyond 2015, ERIA,Jakarta.
Ishikawa, K., Shimizu, K. and Sukegawa, S. (eds.) (2009), ASEAN Economic Community (AEC), JETRO,Tokyo.
Ishikawa, K., Shimizu, K. and Sukegawa, S. (eds.) (2013), ASEAN Economic Community (AEC) andJapan, Bunshindo, Tokyo.
Ishikawa, K., Kuchiki, A. and Shimizu, K. (eds.) (2015), ASEAN Economy, Bunshindo, Tokyo.
Urata, S., Ushiyama, R. and Kabu, S. (eds.) (2015), ASEAN Economic Integration, Bunshindo, Tokyo.
Shimizu, K. (1998), Political Economy of Intra-ASEAN Economic Cooperation, Minerva Shobo, Kyoto.
Shimizu, K. (2010), “ASEAN Economic Cooperation and Production Network: ASEAN Auto Parts
Complementation and Toyota’s IMV Project,” JETRO (2010), Asian Production Network after World
Economic Crisis, Tokyo.
Shimizu, K. (2011), “Asian Financial Crisis and ASEAN/East Asia Thereafter,” Iwanami Kouza, East Asia
Modern History Vol. 10, Iwanami Shoten, Tokyo.
Shimizu, K. (2013), “TPP and ASEAN Economic Integration,” Ishikawa, K., Umada, K., Kimura, F,Watanabe, Y, (eds.) TPP and Japan’s Decision, Bunshindo, Tokyo.
Shimizu, K. (2014), “RCEP and East Asian Economic Integration,” International Affairs, 632, JIIA, Tokyo.
Shimizu, K. (2015), “ASEAN Economic Integration in the World Economy,” Ishikawa, K., Kuchiki, A. andShimizu, K.(2015), ASEAN Economy, Bunshindo, Tokyo.
Shimizu, K., Tamura, K., Yokoyama, G. (eds.) (2011), Introduction to Southeast Asian Politics, Minerva
Shobo, Kyoto.
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Thank you very muchfor your attention!

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