FOUR years ago, ten leaders representing the member countries of Asean adopted the Asean Economic Community (AEC) blueprint to chart a comprehensive path for the economic integration of Southeast Asia. Today, we mark the midpoint of the blueprint’s implementation. This presents us an opportunity to review and assess our achievements. Have we met our targets to date and more importantly, will we achieve the goals laid out for 2015?
A good way to start is by revisiting our goal. When answering questions on what constitutes the economic community we envisage, I have often found it easier to begin by answering the question of what the AEC is not. The AEC does not aim to be a Customs Union, whereby all member states have common external tariffs, neither does it aim to be a common market, whereby all barriers to movement of goods, people and resources are abolished.
A common misconception is that Asean aspires to establish a common market similar to the European Union (EU). In fact, the EU is but one of several forms of regional integration. Other examples include the Gulf Cooperation Council, the South American grouping Mercusor, the South Asian grouping SAARC or Nafta – all of which have unique sets of principles and goals.
Like these groupings, Asean has its own goals and principles suited to the characteristics and interests of member states. Thus Asean’s integration achievements must be assessed against its expressed goals rather than that of other models.
So what is the AEC? The AEC is, in a nutshell, the realisation of a competitive and dynamic region which allows for free flow of goods, services and investment, and freer flow of capital and skilled workers by 2015. Tariff and non-tariff barriers are to be gradually eliminated.
In its external relations, the AEC is to observe open regionalism. This means that as a regional entity, Asean will negotiate joint trade agreements with external dialogue partners. At the same time, member countries are free to sign individual trade arrangements.
To take it a step further, we note two crucial differences between AEC’s goals and the European model that it is so often compared with. Firstly, while Asean members aspire to greater economic cohesiveness, they recognise that they are not ready to form a common market. The development divide within the region imposes different policy demands on different countries.
Second, European economies were sufficiently dissimilar in specialisation to enable closed regionalisation. Asean member countries, on the other hand, have similar industrial development histories built on the influx of foreign investment capital. For these reasons, the AEC has inbuilt mechanisms to allow individual countries space in policy-making and in maintaining external economic relations.
This path has not limited the degree of integration in Asean. Indeed, we have achieved considerable progress in eliminating tariffs. To date more than 95 per cent of intra-regional trade in goods is tariff-free while the services sector will be significantly liberalised by 2015. Transparent investment rules are being implemented to attract extra-regional investments and to increase intra-regional investment flows.
Member countries are now focusing on lowering business transaction costs and reducing non-tariff barriers through gradual synchronisation of administrative and procedural requirements.
Work is going on to create a common trade repository system that will increase transparency in trade rules. Customs procedures are also being reviewed and improved. The Self-Certification Scheme and the Asean Single Window to expedite goods’ clearance are in their pilot phase of implementation. The Asean Committee on Conformance, Quality and Standards is working on harmonising product standards and procedures to speed up registration of regionally-traded products.
While many of these measures are aimed at increasing intra- regional trade, they also have a real impact on making the region more attractive to extra-regional players. In addition, Asean has made substantial progress in integrating other economic sectors. These include transport, telecommunications, agriculture and forestry, healthcare, tourism and in the area of science and technology.
For example, in the area of transport Asean is now operationalising a number of key transport agreements to promote the seamless movement of goods. The region will also have a single aviation market by 2015 with the implementation of the “open skies” policy.
Eight (8) Mutual Recognition Arrangements are being operationalised in stages to facilitate the movement of skilled workforce and professionals such as engineers, architect, surveyors, nurses, medical practitioners and dental practitioners. Asean is now working on an agreement to facilitate the temporary movement of skilled labour across the region.
By strengthening collaboration and cooperation in areas such as competition policy, consumer protection, intellectual property rights, taxation, infrastructure development and SME development, Asean increases its appeal as a single market of 600 million as opposed to being a region of 10 countries of varying levels of development. With the realisation of the AEC, Asean faces the prospect of becoming a significant economic power in Asia.
To monitor compliance, member countries use a Scorecard mechanism which combines quantitative and qualitative assessment methods. Individual Country Scorecards are then tabled at the Annual Leaders’ Meeting so that Heads of Governments are apprised of the overall progress and can take measures to address any implementation shortfall.
According to the latest assessment, 83.8 per cent of the measures identified in the AEC Blueprint for the two-year period covering 2008-2009 have been implemented. Member countries are now in the process of implementing the remaining measures from phase one and the second phase of the blueprint covering 2010-2011.
The immediate beneficiaries of Asean economic integration are the region’s business communities. Private sector members are engaged through regular dialogues and outreach sessions which serve to not only provide updates on developments but also feedback for improvements. The AEC is a plan for the future of Asean. This plan will be realised when we have all stakeholders on board.
With the progress made thus far, Asean economic integration is irrefutable. Asean is well on its way to realise the AEC.
Datuk Dr Rebecca Fatima Sta Maria is the secretary general of the Ministry of International Trade and Industry –Rebecca Fatima Sta Maria, http://findarticles.com/p/news-articles/new-straits-times/mi_8016/is_20110228/asean-economic-community-myth-reality/ai_n56967869/
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