Does Free Trade Matter for Poverty Reduction? The Case of ASEAN

Abstract

Notwithstanding ASEAN’s growth, almost 13% of its population or 76 million people live below the World Bank’s international poverty line of US$1.25 a day. Poverty, aggravated by the vast development divide, has posed a long-standing threat to ASEAN’s internal and external economic integration. Accommodating trade interests among ASEAN-6 countries (Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand) and less-developed Cambodia, Laos, Myanmar and Vietnam (CLMV countries) remains ASEAN’s priority task. To achieve the goal of the ASEAN Economic Community (AEC), it is essential that ASEAN tackle poverty, which hinders integration. Therefore, all ASEAN states have adopted the United Nations Millennium Development Goals (MDGs) as their national development roadmaps. Both the AEC and MDGs set 2015 as the target deadlines to promote equitable development by alleviating poverty. Against this background, this article examines the nexus between ASEAN’s free trade regime and poverty reduction, arguing that the former benefits the latter. Section II of the article analyzes ASEAN’s internal integration with a focus on the AEC’s legal framework and poverty reduction initiatives. Section III explores the features and negotiations of ASEAN external FTAs that affect CLMV countries. It also discusses potential impacts of the ongoing Trans-Pacific Partnership Agreement (TPP) negotiations on ASEAN’s poverty alleviation initiatives. This article concludes by providing legal and policy recommendations for ASEAN countries and other stakeholders.

Keywords: ASEAN, AEC, MDGs, TPP, Asia, poverty, development, trade