Asia Pacific Economic Cooperation Economics Essay

Economic integration can be defined as the commercial policy of discriminatively reducing or eliminating barriers only among the nations joining together. The aim of economic integration is to reduce costs for both consumers and producers as well as to increase trade between the countries taking part in the agreement. There are various levels of economic integration which is free trade area (FTA), preferential trade agreements (PTA), customs unions, common market, economic union and also duty free zone. Economic integration was starting by the European Union. European Union was founded by the Treaty of Rome where it signed in March 1957 by six countries which is Germany, Italy, France, Belgium, Netherlands and Luxembourg and came into being on January 1, 1958. The establishment of common external tariff of the six countries in 1958. Free trade in industrial goods, within EU and common price for agricultural good was achieved in 1968 and then restriction on the free movement of labor and capital was reduced in 1970. In 1993, all remaining restrictions on flow of goods, services and resources, becoming largest trade block in the world will be removed.

European Free Trade Associations (EFTA) was formed by seven nations which are United Kingdom, Austria, Denmark, Portugal, Norway, Sweden and Switzerland. In 1967, EFTA achieved free trade in industrial goods but only a few special provisions were made to reduce barriers on trade in agricultural products. However in 1991, membership evolved in EFTA includes Austria, Finland, Iceland, Norway, Liechtenstein, Sweden and Switzerland. On January 1994, European Free Trade Associations joined European Union to form European Economic Area (EEA). North American Free Trade Agreement (NAFTA) was formed by United States, Canada and Mexico and this agreement will eventually lead to free trade in goods and services over entire North American Area. It also phased out many other barriers to trade and reduced barrier to cross- border investments among the three member nations. NAFTA also have benefits the United States by increasing competition in product and resource markets and also lowering prices of many commodities to US consumers.

Association of Southeast Asian Nations (ASEAN was established in 8 August 1967 through Declaration of Bangkok and now known as the ASEAN Declaration. [1] . Originally, ASEAN consists of five countries in Southeast Asia region, namely Malaysia, Thailand, Indonesia, Philippines and Singapore. However, now, it known as ASEAN 10 which is the membership expanded to ten countries includes Brunei, Vietnam, Kampuchea, Laos and Myanmar. The goal of the ASEAN is covering cooperation in economic, social, cultural, technical, educational, and so on. In addition, these organizations also promote regional peace and stability with respect and abide by the laws of justice and otherwise comply with the principles of the Charter of the United Nations (UN). The objective of establishing ASEAN is the first is to accelerate economic growth, social and cultural, second is inculcate and reap the benefits of regional development, the third provides training and research facility, the fourth increase the standard of living (agriculture, industry, trade) and the final objective is to form a close relationships and profitable .

Asia-Pacific Economic Cooperation (APEC) is a semi-official organization which was formed through the first conference in November 1989, in Canberra, Australia. Now, APEC has 21 members which contributes Australia, Brunei Darussalam, Chile, Canada, Hong Kong, Indonesia, China, People’s Republic of China Japan, Republic of Korea, Malaysia, Mexico, Papua New Guinea, New Zealand, Peru, The Russian Federation, Singapore, Philippines, Chinese Taipei, United States of America, Thailand and Viet Nam. APEC has grown to be an important intermediate in promoting open trade and economic cooperation in the region. The main objective of APEC is to accelerate the growth of economies in the Asian-Pacific region and foster a spirit of cooperation among member countries. One of its objectives is to maintain the organization and Development Division Asian-Pacific region for the benefit of the people and thus, contribute to world economic Development Division. And the next objective is to reduce trade barriers in goods and services between member countries in line with the principles of GATT without disturbing the economic interests of others.

ADVANTAGES OF ECONOMIC INTEGRATION

Advantages of the establishment ASEAN and APEC are to increase the flow of employment and expertise between developed countries with developing country. Through cooperation between Asian, expertise or skilled labor can be absorbed into the State to help them improve productivity. Besides that, this relationship can also help Malaysia in producing highly knowledgeable labor force. This is because, people in Malaysia will have the opportunity to study abroad, and especially in developed countries like the United States, Australia, Germany, Japan and Russia. So this opportunity will lead Malaysians to continue their studies at a higher level and the state can produce a high productivity by using their skills and expertise. Thus, the output produced in the State will be higher quality and more consumers can use it.

In addition, skilled labor can also be absorbed into the State to assist the State in increase crop productivity. Skilled labor in Malaysia is still not enough to improve the nation’s economy, especially in the construction sector. [2] Table 1.1 below shows that skilled labor in Malaysia is still not enough to improve the construction sector in the country. Therefore, the government encourages the entry of skilled workers, and through the Asean cooperation skilled labor migration can be done. So, this skilled manpower will help the government improve the productivity of State, besides being able to produce high quality output and can be exported to other countries. In other words the amount of aggregate merchandise exports to ASEAN grew faster than the average regional output. ASEAN’s total merchandise exports between 1988 and 1994 increased ranging between U.S $ 100 to U.S $ 200 billion. [3] While exports in Malaysia in 1980 were 52 percent and in 1994 the export volume has increased to 64 percent. Table 1.1 below shows the ratio of Asean trade and commerce in Malaysia ratio increased from 1980 to 1994.

DISADVANTAGES OF ECONOMIC INTEGRATION

The disadvantages of ASEAN establishment are causing the loss of sovereignty of a State. Generally sovereignty is the supreme power held by an institution in the political community to make a decision on matters relating to the administration and politics. The first philosopher to give its opinion on sovereignty is John Bodin (1530-1596) in his book ‘Six Books Concerning the State’ asserts sovereignty is the supreme power that is in a state of the union supreme power over citizens and the people of the region. According to him the supreme power is owned by the king or ruler of a sovereign power (absolute). Sovereignty is related to national security. [4] The world now has the wave of change in the dimensions of economic and socio-political environment, especially in the process of globalization. Generally the expression of globalization no difference between the terms of a neo-colonialism ‘colonizes’ in the new concept. People who are weak in the mental and spiritual will easily fall in the midst of destruction. Humans will not have longer the values of modesty and personal lives. Eventually it will lead to the demise of civilization of a nation.