ASEAN free trade
ASEAN free trade
The Association of Southeast Asian (ASEAN) trade
liberalization process took further steps forward last week when
the seven-nation grouping's economic ministers agreed to include
all unprocessed farm commodities in the tariff-cut scheme by the
year 2010 at the latest. The move on the farm commodities, which
drew so much attention from the media, was only one of a series
of measures adopted by the ministers to facilitate the ASEAN Free
Trade Area (AFTA) process. In fact, the ministers advanced
further in laying stronger grounds for eventual economic
integration in the region.
That the agreement on farm commodities was preceded by
vigorous discourses and differences of views that spilled over
into the media was simply natural. Each of the seven member
countries always sees the common regional vision from a point of
view which reflects their own national interests. After all,
ASEAN cohesion and resilience should be based on the stability
and national resilience of its individual member countries. The
most important thing is that once they agree on something, they
abide by and implement it fully.
However, the ministers also fully realized that trade
liberalization is not only a matter of tariff cuts. Tariff
reductions would be rendered meaningless if other trade-related
issues were not resolved. Hence, the ministers' efforts at trade
facilitation measures such as the harmonization of customs
services, which are crucial for trade flows, are no less
important. Their initiatives on investment promotion, industrial
cooperation and a dispute settlement mechanism are also essential
to enhance not only free trade, but also eventual economic
integration in the region.
The ASEAN Industrial Cooperation scheme, which the ministers
agreed would be implemented beginning in November, will serve to
strengthen economic linkages between the member countries on the
basis of their respective comparative advantages. The scheme will
contribute to expanding intra-ASEAN trade, since industrial
products manufactured by companies set up under the scheme are
automatically entitled to the 0 to 5 percent tariffs.
The agreement on the ASEAN Investment Area currently being
prepared is another instrument which will enhance the
complimentary relationship of the member countries' economies.
The idea of the common investment area, which was adopted by the
ASEAN summit in Bangkok last December, is that investors looking
for business ventures in ASEAN should no longer shop around from
one member country to another. The investor needs only to analyze
the comparative advantages offered by each member and then
chooses the country that best suits the needs of its investment
project. The advantage is that the products of the investment
venture will be able to freely enter other countries under Afta.
The dispute settlement mechanism is crucial for resolving any
differences of views or interpretations which may take place,
especially in the initial implementation of the various
agreements already adopted. Disputes are unavoidable between
countries, notably between members of such a regional grouping as
ASEAN, in view of the high intensity of their relations and the
convergence of their interests. Differences of views are not only
expected, but are also part of the convergence process within
ASEAN, especially when its membership expands to eventually
include Laos, Cambodia and Myanmar.
On top of all those agreements and instruments already
adopted, there is another area of progress worthy of note within
the accelerated process of economic cooperation in ASEAN: The
higher frequency of meetings of the economic ministers. The
ministers now gather at least twice a year, besides their annual
meeting, at what they call a "retreat" and under the Afta
Council. Such a high number of discourses is warranted in the
run-up to the 2003 launch of AFTA.