Building blocks or stumbling blocks? : Regional cooperation arrangements in Southeast Asia

This paper examines the inter-relationships between subregionalism, regionalism, and multilateralism using the Greater Mekong Subregion (GMS) and the ASEAN Free Trade Area (AFTA) as case studies. In particular, we look at whether subregionalism or regionalism can assist a country in moving towards multilateralism. We find that the GMS program is assisting its members to integrate more closely with the ASEAN region and, through this, with the rest of the world. As a program based on market rather than institutional integration, the GMS is promoting regionalism without hampering multilateralism. With regard to AFTA, if members pursue open regionalism and offer their trade and other preferences to nonmembers on a nondiscriminatory basis, then this is consistent with the objectives of multilateralism. For the original ASEAN members, AFTA has actually hastened the speed at which they have moved towards their goal of free trade because of the ambitious liberalization program it has committed them to. The newer ASEAN members should follow suit if they are going to maximize the benefits from liberalization and minimize the costs associated with trade diversion and trade, production, and investment deflection.