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Locating ASEAN in the Network of Trading Arrangements

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. ASEAN Free Trade Area (AFTA). Established in 1993

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Locating ASEAN in the Network of Trading Arrangements

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  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). Trade Arrangements and ASEAN

  3. Average AFTA/CEPT Rates, 1998 and 2003 Trade Arrangements and ASEAN

  4. ASEAN in the WTO Trade Arrangements and ASEAN

  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) Trade Arrangements and ASEAN

  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and vegestables vs Australia (2002) • NTB on pineapple vs Australia (2002) • Singapore • Petrochems vs Malaysia (1995, withdrawn) Trade Arrangements and ASEAN

  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 Trade Arrangements and ASEAN

  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) Trade Arrangements and ASEAN

  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) Trade Arrangements and ASEAN

  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) Trade Arrangements and ASEAN

  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 Trade Arrangements and ASEAN

  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%). Trade Arrangements and ASEAN

  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) Trade Arrangements and ASEAN

  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 Trade Arrangements and ASEAN

  15. What’s 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 Trade Arrangements and ASEAN

  16. What’s 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? Trade Arrangements and ASEAN

  17. What’s 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 Trade Arrangements and ASEAN

  18. A Note on Poverty Reduction • The Assertion: • Liberalization => growth => 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 Trade Arrangements and ASEAN

  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. Trade Arrangements and ASEAN

  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 region’s 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. Trade Arrangements and ASEAN

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