I. Myanmar before the AEC: A Brief Background

Myanmar's admission to the Association of Southeast Asian Nations (ASEAN) in July 1997 was accompanied by the country's blanket accession to the treaties and commitments of ASEAN, including measures to be implemented for participation in the ASEAN Free Trade Area (AFTA) through the Common Effective Preferential Tariff (CEPT) Scheme. Myanmar's status as a member of the World Trade Organization (WTO) had facilitated ASEAN's consideration of Myanmar's ability to meet her obligations for multilateral trade relations with other WTO and ASEAN members.1 In 1997, the other “new” members of ASEAN, i.e. Vietnam (which had joined ASEAN in 1995) and Lao PDR (which was admitted to ASEAN in 1997 together with Myanmar), were not yet WTO members. Myanmar's “potential” to participate in regional economic integration processes was thus seen by the other ASEAN members as the means by which economic development could underpin political change in the country.

However, this potential remained largely unrealized as the military junta in Myanmar hesitated to move forward on its self-styled “roadmap to democracy” and in achieving a functional market economy. ASEAN itself is facing considerable challenges in achieving its goal of regional economic integration. The Asian financial crisis of 1997–98 had set back targets for trade and investment liberalization, and since then ASEAN member states are facing difficulties in gaining the investors’ confidence back into the region. The integration challenges of the four “newer” members of ASEAN — Cambodia, Laos, Myanmar and Vietnam (CLMV) — required ASEAN to devise programmes of partnership to help build capacities in the CLMV countries that would facilitate implementation of regional integration goals. In order to move forward, ASEAN adopted an “ASEAN minus x” formula in 2002 for negotiating liberalization of services. This formula can also seen as broadly applied to the respective schedules for ASEAN member states to achieve their commitments for trade and investment liberalization. The newer members were given more time and extended “deadlines” for tariff reduction and service sector liberalization.