Question
Explain what the statements made by Michael Plummer and Pearl Iboshi (1994) mean or imply regarding NAFTA affecting ASEAN countries. As the United States is
Explain what the statements made by Michael Plummer and Pearl Iboshi (1994) mean or imply regarding NAFTA affecting ASEAN countries.
"As the United States is a critical trade and investment partner for the Association of Southeast Asian Nations (ASEAN) member countries, the North American Free Trade Agreement (NAFTA) is of significant concern to the region. Studies using computational general equilibrium models and other economy-wide approaches to the economic implications of NAFTA generally show minor effects on non-partners, ASEAN countries included. However, these small effects on aggregate output could mask important sectoral effects on export industries deemed important to the economic development of individual ASEAN countries. It is found that significant trade and investment diversion will occur in a number of important sectors, in more traditional manufactured industries such as textiles and clothing, as well as in rapidly-growing sectors characterized by higher levels of technical sophistication such as transistor values and other electric components. The possibility of investment diversion and other effects of NAFTA for ASEAN is high."
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