The East Asia Economic Caucus (EAEC) was proposed in 1990 as a regional free trade area by the fourth

Prime Minister of Malaysia, Tun Dr. Mahathir Mohamed. A free trade area implies that there will be no trade barriers between the member countries, which means there will be no form of taxes, quotas, limitations or any form of restriction on imports from a country which is a member of the free trade zone. This concept implies that imports and exports can flow freely within members of the free trade area. The EAEC was intended to comprise of ASEAN, which consists of Malaysia, Indonesia, Brunei Darussalam, Thailand, Singapore, Myanmar, Laos, Vietnam, Cambodia and the Phillipines, and three non-ASEAN nations; China, Japan and South Korea. However, the EAEC was never officially implemented due to the overly Asiancentric and anti-Western standpoints of Tun Dr. Mahathir. Indeed, this idea was made totally unfeasable by the strong bilateral relationship between Japan and the USA, thus Japan totally disagreed with the proposition of the EAEC.

The ASEAN Free Trade Area, or AFTA in short, was formed in 1992. As the name implies, it is a free trade area which is in effect among the 10 ASEAN countries. As mentioned earlier, a free trade area works to rid its member nations of trade restrictions between themselves. AFTA has two primary goals, the first of which is to increase ASEANs competitive edge as a production base in the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers. Tariffs are basically taxes which a government implies on imported goods and services either to generate income for the government or as an attempt to reduce the presence of an undesirable good in the countrys domestic economy. Non-tariff barriers include measures such as quotas, intended to restrict the amount of a good that can enter a country, and embargoes, outright bans towards a particular good, among other measures. By eliminating tariffs and other restrictions, the cost of imported goods will no longer be high, and trade between the member countries will be encouraged, finally increasing the overall production potential of the entire AFTA. This is because member countries can specialise in the production of goods, producing an even greater amount of the good than any other country can, and thus sharing the goods with the other member countries, in return, receiving other necessary goods from the member countries. The second goal is to attract more foreign direct investment to ASEAN. This will definitely boost the economic state of ASEAN as more capital will flow into ASEAN, therefore allowing the ASEAN nations to develop at an even greater rate in all sectors.

The main mechanism for realising the two goals of AFTA is the Common Effective Preferential Tariff (CEPT) scheme. The goal of the CEPT is to increase the regions competitive advantage as a production base geared for the world market. As said before, the reduction of tariffs and other trade barriers will allow for greater production possibilities in various goods within ASEAN, thus fulfilling the CEPTs goal to transform ASEAN into a production base. However, unlike the European Union (EU), CEPT does not impose a common external tariff, since it only requires a fixed tariff rate for goods produced and imported within the ASEAN nations. This means that any of the 10 ASEAN nations are free to implement tariffs towards goods imported from the rest of the world, whether it is the USA, UK, Switzerland, South Africa or Russia, based on the discretion of their separate economies. On the other hand, the tariff rate within ASEAN has been set at 0 to 5%. The four later members; Cambodia, Laos, Vietnam and Myanmar, were given extended time to tweak their respective tariffs into the given range. However, there are three types of exceptions for the CEPT. First, temporary exclusions in which ASEAN nations are given time until 2010 to reduce their tariffs on such goods, and until 2015 for the four later members. Second, exclusions on sensitive agricultural products such as rice as rice is the staplefood and main agricultural produce of the Southeast Asian countries, and restrictions on it will create an uproar of social crises. Lastly is the general exception which is in effect on goods which may affect national security, public morals, or the protection of human, animal and plant life.

ASEAN plus three was formed in 1996 and consists of ASEAN, Japan, China and South Korea. Looking at the constituents of the scheme, ASEAN+3 can be perceived as the successor to the failed EAEC. In all possible ways, ASEAN+3 enjoyed greater success than its predecessor, the EAEC, with the implementation of several concepts. The first of which is the Asian Currency Unit, which is a weighted index of currencies for ASEAN+3. Its purpose is to help stabilise the regions financial markets. However, the Asian Currency Unit is not a real currency like the Euro, which is used throughout the whole of Europe. In that sense, the Asian Currency Unit is not a general currency which is universally used in all 13 member countries. It is simply a currency basket, which is essentially 13 distinct currencies grouped together. The Asian Development Bank, under ASEAN+3, reviews options concerning the technical aspects of the Asian Currency Unit, including the nature of the basket, the choice of fixed weights versus fixed units, the selection of currencies to be included in the basket, the choice of weights, the criteria for revision of the Asian Currency Unit, and other aspects. Besides that, ASEAN+3 has been involved in non-financial subjects such as food and energy security, disaster management, rural development, human trafficking, diseases, environment and sustainable development and transnational crimes.

The Asia Pacific Economic Cooperation, or APEC for short, was formed in 1989. It is made up of 21 member economies; Brunei, Malaysia, Thailand, Indonesia, the Phillipines, Singapore, Vietnam, Australia, Canada, Japan, South Korea, New Zealand, the USA, Mexico, Chile, Peru, Russia, Papua New Guinea, China, Taiwan and Hong Kong. Basically, it consists of all nations with coastlines in contact with the Pacific Ocean, hence the name. Its constituents are typically referred to as economies and not countries, thus enabling China, Taiwan and Hong Kong to participate as three separate entities although in reality they all belong to a single nation; The Peoples Republic of China. In addition to these 21 countries, there are possibilities for enlargement of APEC, following requests for membership from India, Panama, Pakistan, Bangladesh, Sri Lanka, Macau, Mongolia, Laos, Cambodia, Costa Rica, Colombia, Ecuador and other countries. This in itself is a testament to the success of APEC as an economic entity. General goals of APEC include to raise living standard and education levels and to foster a sense of community.

In order to achieve its goals, APEC adheres rigidly to the three pillars of APEC. The first being trade and investment liberalisation. This is the basic goal of any free trade area and in itself can bring many benefits from an economic point of view. As mentioned, all trade barriers within the 21 economies will be reduced, enabling greater movement of goods within APEC, and causing the prices of goods within APEC to be almost similar in the manufacturing economies as well as the importing economies due to the absence of tariffs. The second pillar is business facilitation. This focuses on reducing the costs of business transactions, improving access to trade information and aligning policy and business strategies to facilitate growth and free and open trade. Essentially, this will enable importers and exporters to conduct business more efficiently within APEC as the transaction costs within APEC will be kept to a minimum. Business facilitation will result in increased trade, cheaper goods and greater employment opportunities resulting from a more and more seamless economy within APEC. One particular example of APECs efforts to conform to its second pillar is the implementation of the APEC Business Travel Card, which allows officials to travel within APEC without the need for a Visa. The third and final pillar of APEC is economic and technical cooperation. On a large scale, APEC has realised this goal through the establishment of APEC Study Centers among universities and research institutions in member economies. Several notable APEC Study Centers are located in Australia, Canada, Japan, Taiwan and China. The third pillar essentially aims to provide training and cooperation to build capacities in all APEC member economies to take advantage of global trade. In short, APEC members will share their knowledge to increase each and every one of the member economies potential, thus increasing each and every one of their capabilities in participating in international trade, as we have seen that trade can be beneficial.