Asean free trade area (PDF)

Running Head: LITERATURE REVIEW – ASEAN FREE TRADE AREA
Literature Review – ASEAN Free Trade Area
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1LITERATURE REVIEW – ASEAN FREE TRADE AREA
Table of Contents
Introduction......................................................................................................................................2
1. Review of Literature on ASEAN Free Trade Area..................................................................2
1.1. Significance of AFTA in Dispute Settlements Related to Trade and Commerce.............2
1.2. Moderating Business Performance and Trade Quality through AFTA............................3
1.3. Effects of AFTA on Chinese Exports...............................................................................3
1.4. Impact of AFTA on the Free Movement of Goods...........................................................5
1.5. AFTA and Regional Economic Integration......................................................................6
1.6. AFTA and Chinese Trade Development...........................................................................7
2. Gaps in the Literature Reviewed..............................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

2LITERATURE REVIEW – ASEAN FREE TRADE AREA
Introduction
The ASEAN Free Trade area is in essence an important trade bloc agreement signed by
all the members of the Association of South East Asian Nations. The AFTA came about in order
to support local trade as well as manufacture in the different countries of South Eastern Asia as
well as to facilitate economic integration and cooperation with regional and international allies.
The AFTA is considered to be one of the largest of free trading zones in the whole world and has
been responsible for driving some of the biggest blocs and trading forums in the globe such as
the East Asia Summit, Regional Comprehensive Economic Partnership and Asia Pacific
Economic Cooperation. This report reviews important scholarly literature on the ASEAN Free
Trade Area and points out the gaps in this literature in its conclusion.
1. Review of Literature on ASEAN Free Trade Area
1.1. Significance of AFTA in Dispute Settlements Related to Trade and
Commerce
In the view of Puig and Tat (2015), there are a number of problems that can be seen to
exist in the ASEAN Free Trade Area when it comes to the settlement of disputes and also when
it comes to arriving at effective solutions for economic growth and integration. They argue that
close economic integration is something that can help the ASEAN to retain its competitiveness
as an important free trade area in the international economy. However, they also argue that if this
economic integration is to be achieved, disputes need to be effectively settled, that arise
inevitably as a result of the liberalization of investment and trade. The authors further argue in

3LITERATURE REVIEW – ASEAN FREE TRADE AREA
their work, for the invocation of the Protocol on Enhanced Dispute Settlement Mechanism which
came into being 2004, and which, till date has not been utilized by the AFTA for proper, legal
dispute settlement. In doing so, the authors point to the pros and the cons of this dispute
settlement mechanism and also propose the adoption of an arbitration model. This arbitration
model, they believe, would be ideal for resolving conflicts within the ASEAN, particularly when
it comes to settling conflicts relating to liberalized trade and investment.
1.2. Moderating Business Performance and Trade Quality through AFTA
Ahmad et al (2014), point to the moderating effect that the ASEAN Free Trade Area has
on business performance and total quality management. They argue that while AFTA brings with
it a number of benefits for foreign companies in the Southeast Asian region, it does not do the
same for all the local companies in the region. Ahmad et al (2014), examine the role that AFTA
plays, as a moderator when it comes to guiding business growth in Southeast Asia, and proposes
a relationship between business partnership and quality management practices with AFTA. What
the research undertaken by the authors suggests is that business enterprises and traders need to
focus on the production of high quality goods and services in the global market place. For
instance, Malaysian companies have been finding it increasingly difficult to survive in the
international market place owing to the lack of quality of its services and goods. The authors
suggest that the AFTA has a moderating impact in this respect and guides businesses in the
Southeast Asian region into producing the goods and services that can help these to secure long
term clientele and business development.
1.3. Effects of AFTA on Chinese Exports
Zhang et al (2018) examine the effects that the ASEAN Free Trade Area has on the
exports that are carried out by Chinese firms in the region of Southeast Asia. According to them,