Trade Integration Effects in ASEAN Countries

The paper examines evolution of trade integration process in ASEAN. The author employs three methods in order to evaluate the degree of ASEAN‘s trade integration that has been achieved over two decades since the signing of the Association of South-East Asian Nations Free Trade Area Agreement (AFTA) in 1992. The high degree of trade integration among member states allows moving to the next stage of international economic integration (ASEAN countries are going to form ASEAN Community (the Common Market) by the 1st of January 2016). So the study assesses the ASEAN’s preparedness to the Common Market by determining the share of mutual (intraregional) trade, regional trade intensity index (RTII) and trade integration effects (trade creation and trade diversion effects) for each member state, 2 groups of ASEAN countries (ASEAN-6 and ASEAN-4) and the Association as a whole. The paper shows that despite the increase in the share of intraregional trade during the years of the AFTA functioning, the member states of ASEAN still demonstrate low levels of trade integration: a) 75% of the Association’s external trade focuses on extra regional partners; b) ASEAN as a whole has the low volume of RTII and among its member states only Singapore has the high one; c) trade diversion effect prevails over trade creation on