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ASEAN Economic Community Discussed

Wednesday, March 3, 2010

The Economic Ministers of Association of Southeast Asian Nations (ASEAN), at their recent Retreat held in Malaysia, discussed a range of issues impacting on the region’s competitiveness, Asia’s ability to remain as favoured destination for investors and, in particular, on the progress made towards the establishment of the ASEAN Economic Community (AEC).

The Ministers noted that the implementation of AEC measures especially in trade in goods have been very satisfactory with total compliance. From January 1, 2010, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand can import and export almost all goods across their borders free of tariffs.

For these countries, the so-called ASEAN-6, almost 7,900 additional product lines have been reduced to zero tariffs, bringing the product lines traded under the common effective preferential tariffs for the ASEAN Free Trade Area (CEPT-AFTA) to over 99% of the total. The commitment under the CEPT-AFTA is for tariffs to be reduced to zero by 2010 for ASEAN-6, and by 2015 for the remaining four countries, namely Cambodia, Laos, Myanmar and Vietnam.

The Ministers agreed to intensify efforts to implement other measures in the AEC blueprint, which targets its establishment in 2015. There are specific challenges which need to be addressed expeditiously to ensure the implementation of the AEC is on track.

It was noted that there are gaps in the implementation of some commitments. These, it was said, have affected the free movement of goods, services and investments in the region. Some of the specific areas that were highlighted are eliminating non tariff barriers, increasing efficiency of customs clearance, harmonizing standards and removing duplication of testing and certification procedures within the region.

YB Dato’ Sri Mustapa Mohamed, Malaysia’s Minister of International Trade and Industry, reiterated the need for ASEAN member states to comply and implement their commitments on a timely basis. The deeper integration of the region will lead to stronger inter-industrial linkages within the production chain in the region. This will also enable investors to source their inputs from within the region and contribute to the expansion in intra-ASEAN trade.

He also voiced his concerns over ASEAN member states adopting new trade measures which are deemed to be trade restrictive by the private sector. He proposed a more structural mechanism for Ministers to consult and discuss concerns related to non tariff barriers. The Ministers agreed they should revisit this in future meetings as part of the trade policy review.

Mustapa Mohamed also discussed the need for ASEAN member states to adopt a “self-certification scheme” for preferential trade under the various FTAs entered into by ASEAN. Under this scheme, exporters would no longer need to have endorsements from government authorities. The implementation of this scheme would contribute to lowering business costs and speed up the movement of goods within the region and with counterparties to the respective FTAs.

The meeting was also briefed on the specific issues that need to be resolved to conclude the ASEAN-India agreement on services and ASEAN-India agreement on investment. The Ministers reaffirmed their commitment to conclude the two agreements before the next ASEAN summit in October 2010.