Free Trade Agreement: A discontent truth

When reading on the small sentence describing the ASEAN Free Trade Agreement (AFTA) from a report outlining energy integration market, I was a little bit dismay. Not because the description itself, but on the insight I tried to explore when reading the material.

The free trade agreement, by its logic consequence, means that a country has the right to trade / export its manufactured / processed goods to another targeted country. The export country has some degree of freedom to export the goods. The import country becomes consumer of the imported goods. This is fair enough unless when we consider that the import country has limited resource to produce and/or manufacture goods to be exported.

Logical implications of the Free Trade Agreement revolve around these arguments:

- Given the constrain on the economic condition, the import country will not become a potential consumer country
- Given the argument number 1, Free Trade Agreement between countries having significant economic disparities will not work unless it is precluded by Foreign Direct Investment (FDI) activities to the less developed countries
- The impact on FDI activities for the overall economy of the less developed countries joining FTA will take some time. Consequently, the benefit of FTA from the export country to the import country and vice versa will not appear in short time.

With such arguments, it would be essential from the export country to target specific goods to the import country having less developed situation. In such case the FTA will benefit both countries.