Time for a little AEC realism, part 3


Time for a little AEC realism, part 3

Over the previous two issues we have covered a few of the general concerns of those on the outside looking in at the approaching AEC, which is now just 28 months away.

One of these independent operations (cariasean.org) published a fairly comprehensive paper in April this year outlining what it saw as some of the negatives which were being glossed over by both governments and interested parties and largely ignored by the local media.

The areas of AEC Blueprint implementation that businesses had identified as being among the least satisfactory concentrated around five key points.

These were:

1. Increasing foreign equity participation in the services sector

2. Overall government and agency consultation with all concerned businesses

3. The development and implementation of mutual recognition of professional qualifications

4. The development or enhancement of national competition policies ancarid, finally,

5. The dissemination of information.

The areas where the gap between importance and satisfaction was widest were the protection of investment by entrepreneurs, the simplification and clarification of customs procedures, and enhancing the transparency of non-tariff barriers.

As cariasean.org has noted, the primary goal of the ASEAN Free Trade Area (AFTA) which was agreed in 1992 was to ‘increase ASEAN’s competitive edge as the production base for the world market by decreasing intra-regional tariff rates to 0–5% through the Common Effective Preferential Tariff (CEPT) scheme within a 15-year period.’

Yet, the completion date was, and has been, progressively advanced. AFTA succeeded in lowering the average tariff rates from 11.44% in 1993 to 2.39% in 2003 for the ASEAN-6 (that is, without Laos, Cambodia, Myanmar, and Vietnam).

In 2000, the original goal of 0–5% was changed to zero tariff on all products by 2010 for the ASEAN-6 and 2015 for Cambodia, Laos, Myanmar and Vietnam (CLMV). As at January 2010, the ASEAN-6 had eliminated import duties on 99.65% of their traded tariff lines under CEPT, bringing their average tariff rate to 0.05%. On the other hand, 98.86% of the tariff lines of Cambodia, Laos, Myanmar and Vietnam (CLMV) have been reduced to 0–5%.

Again, as cariasean.org notes, ‘In pursuing the goal of establishing a single market and production base, the ASEAN Trade in Goods Agreement (ATIGA) was signed in 2009. ATIGA consolidates and streamlines all provisions in CEPT-AFTA and other protocols related to trade goods into one single legal instrument. It was entered into force in 2010 and supersedes CEPT-AFTA5.

‘Given the – on paper – impressive achievements in implementing AFTA/ATIGA, why has intra-ASEAN trade (as a percentage of the overall trade of the AMS) not increased markedly since 2003 and by a mere 4.4% since 1998?’
Perhaps 2015 might not be the panacea many are hoping it will be.