Case Study

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1) There are some 200 economic integration agreements in effect around the world already, far more than even a few years ago. Virtually every country is now party to one or more free trade agreements. Supporters argue that free trade is good for nations.

a) What is the basis for their support? That is, what are the specific benefits that countries seek by joining an economic bloc?

Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or quotas. According to the law of comparative advantage, the policy permits trading partners’
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enacts. By breaking the cycle of poverty, America’s FTA policies can enable even the most impoverished countries to begin to create their own dynamic towards prosperity.

b) What is the main economic bloc for your country?

The main economic bloc of my country which is Malaysia is the Asean Free Trade Area (“AFTA”). AFTA is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries. The AFTA agreement was signed on 28th January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand, Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now comprises the ten countries of ASEAN.

The primary goal of AFTA is to seek the following: • Increase ASEAN’s competitive edge as a production base in the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers; and • Attract more foreign direct investment to ASEAN.

c) From your perspective, what advantages has bloc membership brought to your country?

The advantages that AFTA has brought to my country are as follows:

• Comprehensive Investment Area

The ASEAN Comprehensive Investment Area (“ACIA”) will encourage the free flow of investment within ASEAN. The main principles of the ACIA are

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