Group seeks freer movement of trade and capital in SE Asia and to create the world’s seventh-largest economy.

Southeast Asian nations have established a formal community that attempts to create freer movement of trade and capital in an area of 625 million people with a combined economic output of $2.6 trillion.

The Community Declaration was signed on Sunday by leaders of the 10-member Association of Southeast Asian Nations (ASEAN) in Kuala Lumpur, Malaysia, this year’s host of the group’s annual summit, where meetings also took place on rooting out “terrorism and extremism”.

“In practice, we have virtually eliminated tariff barriers between us,” Najib Razak, Malaysia’s prime minister, said.

“Now, we have to assure freer movements and removal of barriers that hinder growth and investment.”

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Al Jazeera’s Scott Heidler, reporting from Kuala Lumpur, said the agreement has been eight years in the making.

“The deal creates one market, and when it comes to the gross domestic product [GDP] of these nations, together, it makes the third largest economy in Asia behind China and Japan,” he said.

“So, it has great potential.”

Concrete opportunities

The ASEAN community includes a political, security and sociocultural dimension in a region with governments ranging from communist in Vietnam and quasi-military in Myanmar, to the kingdom of Brunei and the democracy of the Philippines.

But it is the economic community that offers the most concrete opportunities for integration in a region whose combined GDP would make it the world’s seventh-largest economy.

The countries aim to harmonise economic strategies, recognise each other’s professional qualifications, and consult more closely on macroeconomic and financial policies.

At the summit in Kuala Lumpur, Li Keqiang, China’s premier, called on the Southeast Asian nations to set aside their differences as tensions rise over the disputed South China Sea islands, the state news agency Xinhua said.

“In recent years, the South China Sea disputes, which should have been addressed by directly concerned countries through negotiation and talks, have been played up to become a problem concerning the South China Sea’s peace and stability and the freedom of navigation,” Li said.

China, which claims almost the entire energy-rich South China Sea, has been transforming reefs into artificial islands in the Spratly archipelago and building airfields and other facilities on some of them.

That has prompted concerns in Washington and across the region that China is trying to militarise its claims in the South China Sea.

Vietnam, the Philippines, Malaysia, Taiwan and Brunei also have territorial claims in the South China Sea.