Apart from the issue whether liberalisation in the region is carried out quickly enough, questions can also be raised about AFTA’s contribution to general welfare. Although most authors agree on the positive impact ASEAN has had on the political stability and cohesion in the region, there is less consensus on the economic grounds for the establishment of a free trade agreement in Southeast Asia. Krugman suggested that FTAs between “natural trading partners” are more likely to be welfare enhancing, than agreements between countries that lie scattered. If the regional bias of a particular trading arrangement is too large, trade diversion might, however, exceed trade creation, thus reducing welfare (Krugman, 1991:21-22). AFTA seems a good example of a “natural trading bloc”, but it should also be mentioned that ASEAN member countries traditionally have been outward-looking economies. Elliot and Ikemoto rightfully note that inter-regional trade – rather than intra-regional trade – has largely contributed to ASEAN’s economic growth during the last three decades or so. Theoretically, AFTA could therefore easily have trade diversion effects