How the Globalized Economy Works Today 337food staple of the region— and certain other highly sensitive products. And like the
EU, AFTA has also emphasized nontariff barriers, quantitative restrictions, and har-
monizing customs rules. By the end of 2014, 70 percent of ASEAN intraregional trade
incurred no tariffs, and the average tariff rate was less than 5 percent. Unlike in the EU,
however, the goal is not to create a common external tariff.
Compared to either the EU or NAFTA, the original AFTA agreement is relatively
brief, with no binding commitments. Under the ASEAN Charter adopted in 2007,
the or ga ni za tion has legal personality, giving it authority to conclude trade agreements
with countries and regional, subregional, and international organ izations. ASEAN has
agreements with India, Japan, China, and South Korea, among others. Although AFTA
members signed agreements to form an integrated ASEAN Economic Community by
2015 (minus a common currency), that has not occurred. The hope is that closer regional
economic integration will boost growth. Whether ASEAN members can bridge their
large differences in levels of development and national standards, however, remains to
be seen. China has voiced interest in joining AFTA— a step apt to complicate regional
economic integration.
Transr EGional Economic arranGEmEnTs
The United States is negotiating on both trade and investment issues with both Asia and
Eu rope. In late 2015, the United States, Japan, and ten Pacific Rim countries (including
both developed and developing states such as Canada, Chile, Mexico, Vietnam, and
Australia) reached agreement on provisions affecting 40 percent of the world’s economy
through the Trans- Pacific Partnership (TPP). Proponents claim it is a standard setter
for global commerce. Import tariffs on 18,000 American products, including automo-
biles, machinery, technology, and agricultural products, would be phased out. Macro-
economic cooperation would be strengthened, although there is no enforceable currency
provision. There are provisions for protection for labor and the environment, going well
beyond what is found in other trade agreements. Stricter rules are included for protec-
tion of copyrights and patents. One estimate concludes that the agreement would boost
the world economy by $223 billion in the next de cade, but absent the final details, that
estimate is just that—an estimate.^8
The key question is China. For some, the purpose of TPP is to contain China’s rise.
To others, the expectation is that China will eventually join, as will others like South
Korea. With China occupying such a key position of the global supply chain, it is hard
to see the viability of the agreement without China. Both U.S. congressional skepti-
cism and public concern for the loss of jobs and stagnant incomes means that U.S.
passage of the agreement through Congress is not guaranteed.
The United States and the Eu ro pean Union are also negotiating a series of trade
and investment agreements that would knit together their economies even more closely.