The members of ASEAN are some of the most trade-dependent economies in the world today. In recent years the patterns of intra-ASEAN trade and of ASEAN's exports have changed dramatically, driven by factors such as: greater openness in the global economy; the emergence of other low-cost locations for manufacturing in Asia and the rest of the world; rapid technological change; and the increased rate of vertical supply chain atomization. All four are inter-related.

In 2003, partly driven by these changes in the external environment, ASEAN agreed to establish an ASEAN Economic Community (AEC) which would transform the region into a “single market and production base, turning the diversity that characterises the region into opportunities for business complementation making the ASEAN a more dynamic and stronger segment of the global supply chain”. However, ASEAN's past attempts at promoting greater economic integration and cooperation have not been very successful. The ASEAN Free Trade Area (AFTA) in particular has not lived up to expectations with utilization of the preferential tariff estimated at low levels — some as low as 5 per cent.

In 2004, the region's leaders agreed to the ASEAN Framework Agreement for the Integration of Priority Sectors in 2004. To give further impetus to the initiative, in 2007, the ASEAN leaders went further and adopted the ASEAN Economic Community Blueprint which sets out the steps to be taken to achieve this ambitious goal by 2015.

Based on two of the key characteristics of the AEC, two major trends can be expected: an increase in intra-regional trade as firms decide to allocate various nodes of their global supply chains in different locations in the region, and a certain degree of price convergence as barriers to trade come down.

The Blueprint, along with the focus on priority sectors, goes a long way in addressing the problems associated with previous attempts at integrating the region. However, while the Blueprint provides the policy measures needed to create the Economic Community, the region lacks the infrastructure needed for the people of the region to fully realize the benefits of integration. Drawing an analogy from the world of electronics, it is akin to having developed the operating system and software for a state-of-the-art computer without the processor and hard drive that can handle them.