ASEAN

Five Obstacles to Creating Asia’s New World Order

Five Obstacles to Creating Asia’s New World Order

RCEP was certainly not launched in late 2012 with the intention of managing trade in a system of collapsing global rules.  It is struggling to get across the finish line in November after years of fraught negotiations.  Getting RCEP done is imperative.  Asia needs RCEP more than it ever could have imagined at the outset. There are at least five key challenges ahead in meeting the rapidly approaching November deadline for closure:

1: Japan and South Korea are currently embroiled in a rapidly escalating trade and security dispute.  The original problem stems from long-simmering historical grievances that have typically been tempered by the intervention of the United States.  However, the breakdown of the global order means that there is currently no handbrake stopping these two neighbors from continuing to intensify their disagreements.  It has already spilled over from trade to the security realm. 

Tackling Non-Tariff Barriers in ASEAN

Tackling Non-Tariff Barriers in ASEAN

As ASEAN continues to make progress toward the goals of the Blueprint 2025, the dream of creating a highly integrated and cohesive economy with enhanced connectivity and sectoral cooperation is potentially at risk.   One important source of risk comes from ASEAN’s difficulties in effectively tackling the proliferation of non-tariff barriers to trade.  As tariffs have fallen, member states have responded by placing an increasing number of new obstacles in place.  Not all trade actions taken by ASEAN member states are an automatic trade barrier.  States have legitimate policy objectives to achieve in protecting public health and safety, for example.  But it is possible for such actions to cross over and become barriers to trade or for governments to design measures from the beginning to obstruct foreign firms from participating fully in domestic marketplaces. In spite of repeated commitments to eliminate such barriers to trade, ASEAN has struggled to identify non-tariff measures (NTMs) and non-tariff barriers (NTBs), much less assess the impact of these challenges, nor to stop the continued rise in obstacles of all sorts across the region. Failure to effectively address the increase of unjustified, difficult and costly trade issues undermines the progress towards the ASEAN Economic Community’s Blueprint goals and objectives.   This report is designed to assist ASEAN members in achieving deeper integration in the region. It examines barriers to trade in three sectors: automotive, agri-food (alcoholic drinks, biscuits and seafood) and healthcare (pharmaceuticals and medical devices). The study complements existing NTM and NTB literature by identifying and assessing specific barriers to trade faced by businesses trading today across the ASEAN region. The results give policymakers a better understanding of the range of company concerns and helps officials devise and implement appropriate strategies to assess and reduce NTBs.

The Need for Multilateralism: Remarks of Singapore's PM Lee (Part 2)

The Need for Multilateralism:  Remarks of Singapore's PM Lee (Part 2)

From PM Lee’s speech: Thus, short of universal trade agreements, we should at least strive for regional or pluri-lateral arrangements. This may be a second best solution, but it is a practical way to incrementally build support for lower trade barriers and higher standards, which can then be adopted by other countries. This was the rationale behind the Trans-Pacific Partnership (TPP). The US originally came on board the TPP because it saw the strategic benefits, although it ultimately withdrew. Fortunately, the remaining 11 members were able to preserve nearly all that had been negotiated, and so the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is now in force. I am glad that more countries have expressed interest to join the CPTPP, including South Korea, Thailand and the UK. China is also watching the CPTPP carefully. They are not ready to join now, but I hope that they will seriously consider doing so sometime in the future. Similarly, I hope one day it will become politically possible for a US administration to rethink the US’ position, and recognise that it stands to gain, economically and strategically, from becoming a member of the partnership that it played such a leading role in designing. Meanwhile, countries in the Asia Pacific are working on the Regional Comprehensive Economic Partnership (RCEP). The RCEP has a different footprint from the CPTPP. It covers all the key countries on the western side of the Pacific, including Northeast Asia and Southeast Asia, and also importantly India, Australia and New Zealand. This inclusive configuration minimises the risk of the RCEP being misperceived as a bloc that excludes the US and its friends. With such a wide range of participants, RCEP standards are naturally less ambitious than the CPTPP’s, and the deal is also much harder to negotiate. Nonetheless, I hope the participants can take the final step to complete the RCEP by this year, or if not, as soon as the domestic politics of the key players allow.

ASEAN’s E-Commerce Agreement

ASEAN’s E-Commerce Agreement

The Southeast Asian digital economy is already estimated to be worth US$72 billion.  The digital economy is on track to hit $240 billion by 2025, more than $40 billion higher than originally projected in a Google/Temasek study.  The region is increasingly home to important unicorns like Grab, GoJek, Lazada, Sea and Tokopedia.  Getting these firms and others that follow to flourish requires a nurturing policy framework.  So far, ASEAN member states have had limited experience in crafting complementary digital regulations.  At the domestic level, many ASEAN countries are headed in problematic directions—creating policies in various areas that could dramatically impede the ability of future unicorns to grow and thrive and strangling the prospects for smaller firms along the way. Hence the necessity for ASEAN to start to tackle e-commerce and digital trade in a regional manner.  The agreement reached in November puts in place some useful provisions to get going.  It urges member states to use paperless trading schemes and the use of information (other than financial services) via electronic means.  It encourages members to be transparent about consumer protection measures and urges online personal information protection.

Window of Hope Towards ASEAN Economic Integration

There is unfortunately no ‘stick’ to compel member states to meet deadlines. Nonetheless, the trade community in each member state can pressure trade policymakers. Reduced red tape in cross-border trade, especially eradicating the submission of repetitive information, will be of extra benefit to small and medium enterprises (SMEs), who are often resource strapped. Since SMEs account for more than 95% of business establishments in ASEAN, the opportunities brought about by the ASEAN Single Window (ASW) makes it a cause worth fighting. Given that ‘a chain is only as strong as its weakest link,’ the success of the ASW is dependent on the quality of NSWs of each member state. The ASW has only experienced incremental progress thus far. Member states should take advantage of digitalization and be relentless in accelerating the progress of the ASW. The grit needed to underpin the ASW will be worthwhile as success of this milestone will bring the region closer to the coveted goal of establishing an integrated market and regional platform.