The ASEAN Economic Integration - Greenpeace · 1 The ASEAN Economic Integration Dr. Marissa...

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The ASEAN Economic Integration

Dr. Marissa Maricosa A. Paderon Assistant Professor

Ateneo de Manila University

Experts Meeting on the AEC May 19, 2014 ASOG Meeting Room, Ateneo de Manila University

Outline…

Overview of ASEAN

ASEAN at a glance

From PTA to AFTA

ASEAN - The Future

AEC Blueprint & implementation

Potential benefits & Costs

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Overview of ASEAN

Founded on August 8, 1967, the Bangkok Declaration of 1967 (ASEAN – 5:Indonesia, Malaysia, Philippines, Singapore, and Thailand)

Main goal was political security (but central part was economic cooperation)

ASEAN followed a slow, step-by-step approach to building regional cooperation…

Preferential Trading Arrangements (PTA)

Enlargement: Brunei (1984), Vietnam (1995), Laos and Myanmar (1997), Cambodia (1999).

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From PTA to AFTA…

ASEAN 5: granted preferential tariffs among members through Margin of Preference (MOP).

Individual tariff to non-members

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AFTA (ASEAN Free Trade Area)

Singapore declaration signed in 1992 created the ASEAN Free Trade Area with ASEAN-6 (5:Indonesia, Malaysia, Philippines, Singapore, and Thailand, Brunei). Later joined by CLMV (Cambodia, Laos, Myanmar & Vietnam).

Objective: to create an integrated market (reduction of tariffs and removal of non-tariff barriers)

Main instrument: Common Effective Preferential Tariff (CEPT) completed in 2002.

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The ASEAN 10

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ASEAN at a glance

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Selected ASEAN indicators

Country

Total land

area

Total

population1/

Annual

population

growth1/

Growth rate of

GDP

Gross domestic

product

at current prices

GDP per capita

International merchandise trade2/

Foreign direct investments

infow3/4/ Ratio of

exports to GDP

Ratio of

imports to GDP

Ratio of total

trade to GDP

km2 thousand percent percent US$ million US$ percent percent percent US$ million US$ million

2012 2012 2012 2012 2012 2012 2012 2012 2012 2011 2012

Brunei Darussalam 5,769 399.8 1.6 1.0 16,969.7 42,445.5 77.7 21.7 99.3 1,208.3 864.8

Cambodia 181,035 14,741.4 1.5 7.0 14,400.8 976.9 51.6 78.0 129.6 891.7 1,557.1

Indonesia 1,860,360 245,425.2 1.4 6.2 878,223.4 3,578.4 21.6 21.8 43.5 19,241.6 19,137.9

Lao PDR 236,800 6,514.4 2.0 7.9 9,083.1 1,394.3 29.2 38.6 67.8 300.7 294.4

Malaysia 330,290 29,518.0 1.6 5.6 305,154.4 10,337.9 74.6 64.4 138.9 12,000.9 9,400.0

Myanmar 676,577 60,976.0 1.0 5.6 51,597.5 846.2 18.1 17.8 35.9 2,057.0 1,152.3

Philippines 300,000 97,594.0 1.9 6.8 250,542.7 2,567.2 20.8 26.1 46.9 1,815.9 2,797.0

Singapore 715 5,312.4 2.5 1.9 284,389.0 53,533.1 143.6 133.5 277.1 48,474.5 59,811.5

Thailand 513,120 67,911.0 0.5 6.5 366,126.6 5,391.3 62.7 67.7 130.4 3,861.1 10,699.2

Viet Nam 330,951 88,772.9 1.1 5.3 141,669.1 1,595.9 80.8 80.0 160.8 7,519.0 8,368.0

ASEAN 4,435,617 617,165.1 1.3 5.8 2,318,156.4 3,756.1 54.1 52.7 106.8 97,370.8 114,082.2

Source: ASEAN Statistics, ASEAN Secretariat

Intra- and extra- ASEAN trade

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Country

Intra-ASEAN

exports Extra-ASEAN exports Intra-ASEAN imports Extra-ASEAN imports Intra-ASEAN trade Extra-ASEAN trade

Value Share to total

exports Value

Share to total

exports Value

Share to

total

imports

Value Share to

total imports Value

Share to

total trade Value

Share to

total

trade

Brunei Darussalam 1,737.1 13.2 11,445.1 86.8 1,603.0 43.6 2,071.0 56.4 3,340.1 19.8 1,780.7 80.2

Cambodia 990.5 13.3 6,444.5 86.7 4,152.5 37.0 7,076.3 63.0 5,142.9 27.6 1,027.5 72.4

Indonesia 41,831.1 22.0 148,200.7 78.0 53,823.4 28.1 137,866.1 71.9 95,654.5 25.1 41,859.2 74.9

Lao PDR 1,170.2 44.1 1,485.0 55.9 1,167.0 33.3 2,336.6 66.7 2,337.2 37.9 1,203.6 62.1

Malaysia 60,945.2 26.8 166,592.6 73.2 54,867.5 27.9 141,525.0 72.1 115,812.7 27.3 60,973.1 72.7

Myanmar 3,399.0 36.5 5,916.0 63.5 4,126.5 44.9 5,061.9 55.1 7,525.4 40.7 3,443.9 59.3

The Philippines 9,804.4 18.9 42,190.9 81.1 14,953.9 22.9 50,432.5 77.1 24,758.3 21.1 9,827.3 78.9

Singapore 129,802.3 31.8 278,591.3 68.2 79,819.0 21.0 299,904.3 79.0 209,621.3 26.6 129,823.3 73.4

Thailand 56,729.6 24.7 172,794.6 75.3 42,805.9 17.3 204,971.8 82.7 99,535.5 20.9 56,746.9 79.1

Viet Nam 17,445.7 15.2 97,065.1 84.8 20,874.6 18.4 92,408.0 81.6 38,320.2 16.8 17,464.1 83.2

ASEAN 323,855.0 25.8 930,725.7 74.2 278,193.2 22.8 943,653.6 77.2 602,048.2 24.3 324,149.5 75.7

Top 10 ASEAN trade partners, 2012

Trade partner/region Share to total ASEAN trade

Exports Imports Total trade

ASEAN 25.8 22.8 24.3

China 11.3 14.5 12.9

Japan 10.1 11.2 10.6

EU-28 10.0 9.6 9.8

US 8.6 7.5 8.1

Republic of Korea 4.4 6.2 5.3

Taiwan 2.8 5.0 3.9

Hong Kong 6.4 1.2 3.8

India 3.5 2.3 2.9

Australia 3.6 1.9 2.8

Other countries 13.5 17.8 15.6

TOTAL 100.0 100.0 100.0

Source: ASEAN Merchandise Trade Statistics Database, ASEAN Statistics.

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Geographical distribution of

ASEAN Trade

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ASEAN 26%

China 11%

Japan 10%

EU-28

10%

US 9%

Republic of Korea

4%

Taiwan 3%

Hong Kong 6%

India 4%

Australia 4%

Other countries

13%

Share to total ASEAN Exports, 2012

ASEAN 23%

China 15%

Japan 11% EU-28

10%

US 7%

Republic of Korea

6%

Taiwan 5%

Hong Kong 1%

India 2%

Australia 2%

Other countries

18%

Share to total ASEAN Imports, 2012

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Source: ASEAN COMMUNITY IN FIGURES (ACIF), 2011

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Source: ASEAN COMMUNITY IN FIGURES (ACIF), 2011

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Further economic integration…the AEC

ASEAN Vision 2020: In December 1997 at the ASEAN

Summit in Kuala Lumpur, the Leaders decided to transform ASEAN into stable, prosperous & highly competitive region with equitable economic development, and reduced poverty and socio-economic disparities.

Bali Concord II: In October 2003 at the Bali Summit, the ASEAN Economic Community (AEC) was declared to be the goal of regional economic integration by 2020.

Cebu Declaration: At the 12th ASEAN Summit in Cebu on 13 January 2007, the Leaders decided to accelerate the establishment of an AEC from 2020 to 2015 & transform ASEAN into a region of free movement of goods, services, investment, skilled labor and free flow of capital.

ASEAN Economic Community (AEC)

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ASEAN – The Future

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ASEAN Economic Community (AEC)

ASEAN Economic Blueprint will implement the AEC by

2015. Principles of AEC

Open Outward-looking Inclusive Market-driven economy Consistent with multilateral rules Adherence to rules-based system

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Elements of AEC Blueprint

A single market & production base Highly competitive economic region A region of equitable economic development A region fully integrated into the global

economy

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A Single Market & Production Base

Free flow of goods

Free flow of services

Free flow of

investment

Free flow of capital

Free flow of skilled

labor

Priority Integration

Sectors

Food, Agriculture

and Forestry

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Free flow of goods


Free flow of

investment



labor


Sectors

Food, Agriculture

and Forestry

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1. Free Flow of Goods

Aim: to facilitate development of production networks in the region & enhance ASEAN’s capacity to serve as a global production center or part of global supply chain. Removal of tariffs & NTBs (ASEAN-FTA) Simplify CEPT Rules on Origin (ROOs) Trade Facilitation, Customs Integration, Single Window Harmonize Standards and Technical Barriers to Trade

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Free flow of goods


Free flow of

investment



labor


Sectors

Food, Agriculture

and Forestry

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2. Free Flow of Services

Remove restrictions on service trade No back-loading of commitments & pre-agreed flexibility shall be

accorded to all ASEAN member countries. Priority sectors (air transport, e-ASEAN, healthcare & tourism by

2010), logistics services by 2013; other services by 2015. No restrictions for Modes 1 (Cross-Border Supply) & 2

(Consumption Abroad), with exceptions due to bona fide regulatory reasons (such as public safety) which are subjects to agreement by all Member countries on a case-by-case basis;

Progressively remove other Mode 3 market access limitations by 2015

Allow at least 70% equity participation Extend MRAs, liberalize financial services.

GATS.ppt

Services Sector includes Business services (professional, computer, R&D, real estate, rental/leasing

of machinery & equipment, other) Communication Services (postal, courier, telecoms, audiovisual, other) Construction & related engineering services Distribution services (agents, wholesale, retail) Educational services (primary, secondary, higher, Adult Ed, Other) Environmental services (sewerage, refuse-disposal, sanitation, other) Financial services (insurance, banking & finance, other) Health & social services (hospitals, other human health, social services,

other) Tourism & travel services (hotels & restaurants, travel agencies & tour

operators, tourist guides, other) Recreational, cultural & sporting services (entertainment, news agencies,

culture, sport, other) Transport services (maritime, internal water-ways, air, space, rail, road,

pipeline, auxiliary services, other) All other services, n.i.e.

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Free flow of goods


Free flow of

investment



labor


Sectors

Food, Agriculture

and Forestry

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3. Free Flow of Investment

Aim: To enhance ASEAN’s competitiveness in

attracting foreign direct investment and intra-ASEAN investment.

Investment protection, facilitation, promotion, liberalization

Non-discrimination, national treatment

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Free flow of goods


Free flow of

investment



labor


Sectors

Food, Agriculture

and Forestry

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4. Free Flow of Capital

Harmonize regulations in capital market

Promote greater capital mobility

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Free flow of goods


Free flow of

investment



labor


Sectors

Food, Agriculture

and Forestry

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5. Free Flow of Skilled Labor (Movement of Natural Persons)

Facilitate movement of natural persons -- skilled and

professional labor (issuance of visas & employment passes) in cross-border trade & investment related activities.

Work toward harmonization & standardization of qualifications

Enhance cooperation among ASEAN University Network to increase mobility of students and staff

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Free flow of goods


Free flow of

investment



labor


Sectors

Food, Agriculture

and Forestry

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6. Priority Integration Sectors (PIS)

Instead of integrating the entire economic sectors, the

ASEAN identified a limited number of priority sectors that will serve as a catalyst for the overall ASEAN economic integration.

12 priority sectors identified where member countries took the coordinator role per sector.

Each priority integration sector has a roadmap, combines specific sector initiatives & broad initiatives that cut across all sectors (e.g. trade facilitation measures).

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6. Priority Integration Sectors

Eliminate restrictions to entry for investment in the 12 Priority

Integration Sectors (PIS):

Agro-based products

Air travel (air transport)

Automotive

e-ASEAN

Electronics

Fisheries

Healthcare

Rubber-based products

Textiles and apparels

Tourism

Wood-based products

Energy

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Free flow of goods


Free flow of

investment



labor


Sectors

Food, Agriculture

and Forestry

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7. Food, Agriculture and Forestry

Aim: Enhance intra- and extra-ASEAN trade and long-

term competitiveness of ASEAN’s food, agriculture and forestry products/commodities.

Harmonize best practices, SPS, safety & quality standards, chemical use, regulation of products derived from biotechnology

Promote cooperation, joint approaches & technology transfer among ASEAN member countries and international, regional organizations & private sector.

Promote ASEAN agricultural cooperatives to enhance market access of agricultural products.

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B. Competitive Economic Region

1. Competition Policy

Introduce competition policies in all ASEAN member countries by 2015.

Only Indonesia, Singapore, Thailand and Vietnam have competition law & competition regulatory bodies. Malaysia has not passed national competition law but relied on sector-level regulation to enforce competition in markets. Philippines has its Fair Trade Act Bill pending in Congress.

Encourage capacity building programs/activities for ASEAN member countries in developing national competition policy

Develop regional networks and guidelines by 2010, based on country experience and international best practices to create a fair competition environment.

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2. Consumer Protection

Establish the ASEAN Coordinating Committee on Consumer Protection (ACCCP)

Develop regional networks and guidelines

Organize regional training courses for consumer protection officials & consumer leaders to an integrated ASEAN market.

3. Intellectual Property Rights (IPR)

Promote regional cooperation in IPR via (a) cultural, intellectual and artistic creativity and their commercialization; (b) efficient adoption and adaptation of more advanced technologies; and (c) continuous learning to meet the ever-rising threshold of performance expectations

Implement ASEAN IPR Action Plan 2004-2010 & Work Plan for ASEAN Cooperation on Copyrights

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4. Infrastructure Development

Transport Cooperation

Land Transport

Maritime & Air Transport

Information Infrastructure

Energy Cooperation

Mining Cooperation

Financing of Infrastructure Projects

5. Taxation

Avoid double taxation among all member countries by 2010

6. E-Commerce

Implement e-ASEAN Framework Agreement to enable on-line

trade on goods

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C. Equitable Economic Development

1. SMEs development

Implement the ASEAN Policy for SME Development 2004-

2014.

Promote networking of SMEs & participation in building the

regional production & distribution networks; promote best

practices.

2. Initiative for ASEAN Integration (IAI)

Narrow the gap not only within ASEAN but between ASEAN.

Technical assistance & capacity building in CLMV countries.

Coverage: infrastructure, human resource development,

information & communications technologies (ICT), capacity

building for regional economic integration, energy,

investment climate, tourism, poverty reduction &

improvement in quality of life.

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D. Integration into the Global Economy

1. Coherent approach towards external economic relations

Review FTAs and CEP commitments

ASEAN shall work to maintain “ASEAN Centrality” in its external economic relations, including, but not limited to, its negotiations for FTAs and CEPs

2. Enhanced participation in global supply networks Adopt international best practices & standards in production,

distribution

Develop a comprehensive package of technical assistance for less developed ASEAN Member Countries to upgrade their industrial capability & productivity

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Implementation

ASEAN Economic Ministers (AEM) – Ministers-in-

Charge of Economic Integration in the Council of ASEAN Economic Community; and to implement the AEC Blueprint

Principles/Measures:

Transparency & improve the operation of notification procedures under all ASEAN economic agreements through Protocol on Notification Procedures.

Ratification of ASEAN legal instruments shall be made within 6 months of signing.

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Implementation

Principles/Measures:

Decision-making process by economic bodies shall be made by consensus, and where there is no consensus, ASEAN to consider other options with the objective of expediting decision-making process.

Utilize the Enhanced Dispute Settlement Mechanism (DSM) to promote rule-based community.

The ASEAN Minus X formula can be invoked to accelerate the implementation of agree economic initiatives.

Flexibility should be accorded in the implementation of AEC, shall be pre-agreed, & not delay the overall progress & implementation of AEC.

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Potential Gains . . .

Increase RP real GDP Expansion in exports

Goods: agricultural, industrial Professional services (medical care, accountancy)

Increased investments and technology transfer Priority Integration Sectors Tourism & travel industry

Improved business environment for jobs and income generation Mechanism for addressing business concerns

Greater Mobility of professionals, skilled labor & students

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Costs….

Foregone government revenues

Immediate

Short-term

Long-Term

Possible trade diversion

Professional out-migration

Stronger ASEAN influence

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Thank you

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