Locating ASEAN in the Network of Trading Arrangements

1
Locating ASEAN in the Network of Trading
Arrangements

• Regional Conference on Civil Society Engagement
  in the ASEAN
• Jenina Joy Chavez / Focus on the Global South
• Bangkok, 3-5 October 2005

2
ASEAN Free Trade Area (AFTA)

• Established in 1993
• The ultimate goal of the AFTA is the complete
  abolition of tariffs for the ASEAN-6 by 2010 and
  2015 for the newer members, with flexibility on
  some sensitive products until 2018.
• By the beginning of 2003, 99.55 of tariff lines
  in the inclusion list of ASEAN-6 have been
  reduced to the 0-5 range 60 of these tariff
  lines were committed to be brought down to 0 by
  end 2003.
• Only products transferred from the general
  exception and sensitive lists maintain tariffs
  above 5.
• CEPT tariff levels are far lower than those
  committed by the ASEAN members to the WTO. In
  some instances, WTO commitments are realigned to
  CEPT rates, as in the case of Singapore (complete
  liberalization) and the Philippines (many CEPT
  rates become the Most Favored Nation (MFN)
  rates).

3
Average AFTA/CEPT Rates, 1998 and 2003
1998 2003
Brunei 1.35 0.87
Indonesia 7.04 3.71
Laos 5.00 5.00
Malaysia 3.58 2.06
Myanmar 4.47 3.19
Philippines 7.96 3.75
Singapore 0.00 0.00
Thailand 10.56 4.64
Vietnam 6.06 2.02
ASEAN 5.37 2.68
4
ASEAN in the WTO
Brunei Darussalam Acc. 1 Jan 95
Cambodia Acc. 13 Oct 04 (newest member)
Indonesia Acc. 1 Jan 95
Malaysia Acc. 1 Jan 95
Myanmar Acc. 1 Jan 95
Philippines Acc. 1 Jan 95
Singapore Acc. 1 Jan 95
Thailand Acc. 1 Jan 95
Lao PDR Applied July 97, still in initial stages
Vietnam In process (expected 2005?)
5
ASEAN in the WTO (2)

• Involvement in Disputes
• As Complainants
• Indonesia
• SM on Footwear vs Argentina (1998, stopped 1999)
• Dumping (CDSOA 2000) vs US (2000, mutual
  agreement 2004)
• ADD on paper vs Korea (2004)
• Malaysia
• Ban on shrimp/shrimp products vs US (1998, 2001)

6
ASEAN in the WTO (3)

• Philippines
• CVD on dessicated coconut vs Brazil (1999)
• Ban on shrimp/shrimp products vs US (1996, 2001)
• NTB on fresh fruits and vegestables vs Australia
  (2002)
• NTB on pineapple vs Australia (2002)
• Singapore
• Petrochems vs Malaysia (1995, withdrawn)

7
ASEAN in the WTO (4)

• Thailand
• Rice vs EC
• Agri export subsidy vs Hungary
• Import restrictions on textile and clothing vs
  Turkey
• Prohibition on shrimps and shrimp products vs US
• SM on polyester filament vs Colombia
• Prohibition on canned tuna with soybean oil vs
  Egypt
• Dumping and Subsidy Act of 2000 vs US
• GSP vs EC
• Customs classification of chicken cuts vs EC
• AD on shrimps vs US

8
ASEAN in the WTO (5)

• As Respondents
• Indonesia
• Automobile (National Car Program) vs Japan, EC,
  US, Japan ( 1996, 1999 Automotive Policy)
• Malaysia
• Prohibition of some petrochems vs Singapore
  (1995, settled same year)
• Philippines
• Pork and poultry (MAV) vs US 2 cases (1997, 1998)
• Motor vehicle (MVDP, CDP, CVDP, MDP) vs US (2000)
• Dumping of petrochem vs Korea (2000)
• Thailand
• Dumping of some steel products vs Poland (2000,
  2001)

9
Proliferation of FTAs and other Economic
Partnerships

• ASEAN
• ASEAN-Japan Comprehensive Economic Partnership
  (CEP) ( 8 October 2003, FTA 2012)
• ASEAN-China FTA (4 November 2002, FTA 2010/2015,
  EHP 2004)
• ASEAN-India (8 October 2003, 2011)
• EU-ASEAN Trade and Investment Initiative / TREATI
  (4 April 2003)
• US Enterprise for ASEAN Initiative (2002) (basis
  for TIFA with Indonesia, the Philippines,
  Thailand, Brunei Darussalam and Malaysia)

10
Proliferation of Bilateral FTAs (2)

• Singapore
• FTAs with the US, NZ, EFTA, Japan, Australia
• negotiating FTAs with Canada, Mexico, India
• Thailand
• FTA with Australia, July 2004
• FTA with US started negotiations in June 2004
• 10 other FTAs expected to conclude in 2004 (incl.
  EPA with Japan)
• Vietnam
• BTA with the US, October 2001
• Malaysia
• EPA with Japan under negotiations
• Philippines
• EPA with Japan under negotiations
• private consultations for RP-US FTA being held
• Vietnam bilateral trade agreement with US,
  October 2001 (not FTA)

11
Investments

• various modes
• multilateral agreements (WTO, APEC)
• regional and sub-regional agreements (ASEAN,
  GMS)
• bilateral mode subsumed in FTA/BTA
• or stand-alone BIT/BIA
• the significance of BITs/BIAs
• more than 2000 BITs linking 170 countries
• ASEAN-10, Japan, China and South Korea signed
  475 BITs
• power dynamics in the international investing
  community
• powers invested in the TNCs
• dispute settlement litigation outside
  national jurisdiction,
• thru international tribunal or ad hoc
  arbitration
• TNC power to sue governments

12
Is ASEAN relevant as a grouping in these
initiatives?

• With AFTA, there had been marginal increases in
  intra-ASEAN trade in the 1990s (exported only
  20.1 of total in Sept 2002-Sept 2003), but share
  remains less than a quarter of total ASEAN trade
  pales in comparison with ASEAN trade to East Asia
  (27.6) and China (59).

13
Is ASEAN relevant as a grouping in these
initiatives? (2)

• WTO
• ASEAN is not known to carry common positions
  (with exception of group push for DG Supachai)
• ASEAN members membership in country coalitions
  in the WTO
• Cairns (big agri exporters)
• G20 (Indonesia, Philippines, Thailand)
  (restricted focus on agri)
• G33 (Indonesia, Philippines) (SP and SSM)
• Predicament of new WTO members (Cambodia)

14
Is ASEAN relevant as a grouping in these
initiatives? (3)

• ASEAN-China Free Trade Area (ACFTA)
• Absence of mechanism for common positions to be
  developed negotiations on a bilateral basis
• Are bilateral FTAs a dilution of AFTA?
• The pitfalls of bilateral negotiations and
  arrangements, esp. between a developed (e.g. US,
  Australia, Japan) and a developing country (ASEAN
  members)
• Negotiations capacity and mismatch
• Covering more areas than are covered in
  multilateral agreements, where developing
  countries have expressed unreadiness to make
  commitments on (investments, IPRs, ervices, etc.)
• Impact on multilateral commitments etc. Note the
  mutual agreement between US and Australia,
  Thailand and Indonesia on DSB findings re CDSOA
  complaint

15
Whats Missing?

• No strong identification and articulation of
  regional interest.
• Too much competition? Too much diversity? Lack of
  economic complementarity?
• Absence of wide-ranging participation from CS,
  including even the business sector (even at the
  national level)
• Limited to bigger business sector groups
• No mechanism for timely access to relevant
  information
• No systematic access to timely relevant
  information re negotiations and implementation

16
Whats Missing? (2)

• Broader objectives beyond opening up are left
  behind.
• ASEAN as platform for third country exports, and
  eventually investments, take primacy over the
  development of an ASEAN market (never a serious
  goal).
• Regional import substitution abandoned in favor
  of more nationalistic initiatives now, such
  space becomes more limited by the day
• Is an ASEAN identity relevant?

17
Whats Missing? (3)

• Variable learning from history?
• Fastest growth in Asia came from various
  experiments patently not neo-liberal particularly
  in the late 1970s, the 1980s and up until early
  1990s.
• Process of preparation and maturation
• Why then are new members committing so much, not
  only to AFTA but also to WTO? What are older
  members doing to assist them in the process of
  integration?
• No catch-up mechanism and/or programs

18
A Note on Poverty Reduction

• The Assertion
• Liberalization gt growth gt poverty reduction
• The Challenge
• Liberalization / growth
• Experience of Japan, NIEs (1st and 2nd tier), and
  China contested globalization experience
• Latin America and Africa growing less now than
  when they were import substituting
• Vulnerabilities brought about by liberalization
  East Asian financial crisis
• Academic challenge Rodriguez and Rodrik (2001),
  Stiglitz (2001)
• Serious questions on methodology and measurements
  of openness
• Globalization risks
• Growth / poverty reduction
• Income based approach
• inequality

19
A Note on Poverty Reduction (2)

• Inequality is higher in the newly-rich countries
  than in the Japan and South Korea which have
  broader bases of growth.
• distribution of the growth achieved in the last
  20-30 years had been highly skewed.
• In Malaysia, the richest 10 captures a
  proportion of income that is 22.1 times more than
  the poorest 10. For Hong Kong it is 17.8, and
  Singapore, 17.7.
• In contrast this inequality measure is only 4.5
  in Japan and 7.8 in Korea.
• The differences can be attributed to the relative
  broader base of growth and planning in Japan and
  South Korea, and the more financial base of the
  nouveau prosperity of the Malaysia, Hong Kong and
  Singapore.

20
A Note on Poverty Reduction (3)

• The Employment Crisis
• Underemployment and unemployment are marked
  characteristics of high growth Asia and Pacific.
  According to the ADB, at least 500 million people
  in the region are unemployed or underemployed.
  This represents almost 30 of the regions labor
  force.
• The share of formal employment, either total or
  outside of agriculture, has declined or stagnated
  in a number of countries in recent years,
  including India, Indonesia, the Philippines and
  Thailand.