"ASEAN! All hail the new power in Asia!" Two years ago the

marketing guru Philip Kotler marked the tenth anniversary of the Asian financial crisis with a ringing endorsement of the individual and collective efforts of the countries of the Association of Southeast Asian Nations (ASEAN), which have not only recovered individually but are building a tighter and more cooperative organizational structure. Their potential, whether as production bases or markets, is not to be ignored!

Many countries are already rubbing their hands in anticipation of the ASEAN "regional miracle." But Taiwan, which is so close geographically, is still relatively out of touch with ASEAN.

In fact, if the "ASEAN+1" or "ASEAN+3" free trade areas (which include mainland China) did not have important implications for the proposed Economic Cooperation Framework Agreement (ECFA) between Taiwan and mainland China, it is likely that not many people in Taiwan would be paying much attention to ASEAN.

The 10 member states of ASEAN have not only moved quickly forward with regionalization, the group has signed "bilateral" free trade pacts with mainland China, Japan, Korea, Australia, and New Zealand, and is developing multilateral relations with "the 3" (mainland China, Japan, and Korea) or "the 6" (mainland China, Japan, Korea, Australia, New Zealand, and India). But while East Asian economic integration catches fire, Taiwan, for special political reasons, is unable to join any of the ASEAN+N groupings. Yet Taiwan's economic links to the region are very close: In 2007 East Asia (ASEAN, mainland China, Korea, and Japan) accounted for 54% of all exports from Taiwan and 75% of all Taiwan's foreign investment. The biggest worry is that while trade barriers on materials and products traded between East Asian countries are eliminated, Taiwan alone will be out in the cold, putting its products at a serious competitive disadvantage.

Of all the "ASEAN+N" combinations, it is generally thought that "ASEAN plus China" will be the one most hazardous to Taiwan. This is because, of every NT$100 in goods that Taiwan exports, NT$40 goes to mainland China. When the ASEAN plus China free trade area, with a population of 1.8 billion, is completed in 2010, will Taiwan companies be able to maintain competitiveness in mainland China only if they route their activities through ASEAN? What will be the impact on Taiwanese companies already operating in ASEAN or mainland China? On Taiwan's major domestic industries?

Because regional economic integration typically manifests its impact in companies' investment decisions and in the flow of trade, different industries-each with their own regional division of labor-will be differently affected. In fact, the situation is enormously complex.

In this series we aim to give readers a comprehensive idea of what ASEAN regional integration is about, and what it means for Taiwan. Our first article examines recent developments within ASEAN countries and in ASEAN's external relations. Then three articles focus on one of the industries that is most affected by these developments-textiles (including one article specially investigating the interplay of ASEAN, textiles, and the proposed Economic Cooperation Framework Agreement between Taiwan and mainland China). We have visited Taiwanese firms, old and new, operating in Vietnam and Thailand, to investigate how they are responding to developments. We conclude with a colorful ASEAN photo essay.

In our next issue, we will continue the series with an article on what you should be most attentive to in looking at ASEAN integration, another based on observations about ASEAN integration made by Taiwanese businesspeople in Vietnam and Thailand, and a third on educational business opportunities in ASEAN.