Talks to solidify Southeast Asia into an economic community slowed as negotiations progressed to more difficult reforms, an updated Asian Development Bank report released Thursday said, reinforcing its earlier prediction ASEAN is unlikely to meet its self-imposed 2015 deadline.
“Progress has slowed since negotiations progressed to the more difficult reforms: eliminating nontariff barriers, liberalizing service trade, improving the business climate and competition policy, strengthening the protection of intellectual property rights, and narrowing development gaps,” according to the updated Asian Development Bank Outlook 2014.
While Association of Southeast Asian Nations members are progressing toward establishing an economic community, the report says they still needs to overcome many challenges for the ASEAN Economic Community to become a reality as scheduled at the end of next year.
“Indonesia, Malaysia, the Philippines, Singapore, and Thailand in particular can claim noteworthy achievements in tariff reduction, trade facilitation, and investment liberalization, but the newer members — Cambodia, Laos, Myanmar, and Vietnam — are lagging,” the report says.
Although ASEAN has come a long way toward realizing its goal, the report says “the challenges that remain suggest that the AEC will not meet its approaching deadline.”
The report says the AEC scorecard, or ASEAN’s self-assessment mechanism, suggests that the region achieved only 76.5 percent of its AEC targets that were due by March 2013, the cutoff date for the most recent scorecard.
“Moreover, this does not take into account the additional targets falling due from April 2013 to December 2015 (except for 15 tasks completed in advance),” the report says.
It says the scorecard further reveals the pace of reform seems to have slowed rather than accelerated, partly because the process reached the more difficult parts of the reform agenda.
Even if the pace picked up now and ASEAN managed to hit its remaining targets and meet its deadline for inaugurating the AEC, the report says the real test for the community would lie in the years beyond 2015.
“Accommodating AEC accords will not be easy when they require changes to domestic laws or even national constitutions,” the report says. “The flexibility that characterizes ASEAN cooperation, the celebrated ‘ASEAN way,’ may hand member states a convenient pretext for noncompliance. How to enforce the accords remains an issue, and giving the commitments more teeth is a challenge to overcome toward ensuring that the AEC is realized as more than a display of political solidarity.”
“The 2015 deadline, whether or not it is met, should therefore be viewed not as the final destination but as a milestone on the long journey to the AEC — a journey whose direction is collectively ensured by constant engagement and active peer review,” the report says.
It emphasizes that cross-border production networks thrive where the direct and indirect costs of moving goods between countries are low.
“Reforms undertaken to establish the ASEAN Economic Community are dismantling trade barriers, facilitating the movement of goods, and harmonizing standards and regulations. These efforts will strengthen ASEAN members’ existing ties with global value chains and help them forge new links,” states the report. “The blueprint for achieving the goal envisages the AEC as a single market and production base that is highly competitive as it pursues equitable economic development and full integration into the global economy.”
“Progress has been achieved on several fronts, but many hurdles remain along the road to the AEC in 2015,” it says.
The ASEAN Economic Community, a market with a gross domestic product of more than $2.2 trillion and a population of 620 million, hopes to promote the flow of goods, services, investments and skilled labor among its 10 member countries.
At the 13th ASEAN summit in Singapore in November 2007, the ASEAN leaders adopted the blueprint for an AEC which defines four pillars — single market and production base, competitive economic region, equitable economic development and integration into the global economy — and contains 17 “core elements,” as well as 176 priority actions to serve as a guide.
The blueprint also contained agreed goals and specific commitments to be carried out within definite timelines, with a “strategic schedule” over four two-year periods from 2008 to 2015.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
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