The Association of Southeast Asian Nations has once again demonstrated its willingness to dream. This year's summit meeting, held this week in Brunei, ended with a call to conclude a free-trade area with China. It is a seductive vision, but it is hard to envision the project's success: ASEAN is already having difficulties reaching agreement on its own FTA, which is to come into effect in 2003. The economic and political obstacles attached to this new project make it as daunting as it is desirable.
The logic behind an ASEAN-China FTA is difficult to resist. It would create a market of 1.7 billion people with a gross domestic product of $2 trillion. More important, it would cut the region's dependence on the U.S. market, which is in the midst of its own slowdown and is dragging down the Southeast Asian economies. With Asia facing IMF-estimated growth of only 1 or 2 percent this year and the possibility of a prolonged recession, leaders are exploring every possible option.
China's preference for such a scheme is also understandable. Beijing is always looking for ways to forge closer ties to the region. China's size would give it more influence over decision making, and its huge population would give it a nearly unbeatable labor-cost advantage.