According to an economic study released by General Motors earlier this month, the removal of non-tariff measures (NTMs) in the automotive industry that prevent free trade within ASEAN would create up to 500,000 new jobs as well as an increase economic output.
The study, commissioned by GM and carried out by Oxford Economics, reveals that while import tariffs have progressively fallen, almost 190 additional NTMs were implemented across ASEAN member countries between 2009 and 2013, and these remain a significant impediment to achieving the fundamental aims of the ASEAN Economic Community (AEC) to establish the free movement of goods across borders.
Oxford Economics found that the automotive sector lags behind other sectors in removing NTMs, with over 70% of imports of motor vehicles and auto parts subject to some kind of non-tariff barrier in Indonesia, Malaysia, the Philippines, Singapore and Thailand.
The most common NTMs are technical barriers to trade, followed by quantity control, affecting 25% of the automotive sector. Excise taxes are also often used as an NTM across ASEAN to implicitly or explicitly discriminate against imports.
This is accomplished through the application of differential rates or thresholds that favour domestically produced vehicles or via reference to different tax bases (for example, by using CIF prices for imports versus ex-factory prices for domestic producers).
Opening trade would support a globally competitive automotive industry in the region and give ASEAN motorists greater choice of vehicles, said GM international vice president of government relations and public policy, Matt Hobbs.
“ASEAN motorists are missing out because of non-tariff barriers. NTMs deny them choice because they prevent the majority of imported vehicles from being sold in ASEAN markets at a competitive price, or getting to those markets at all,” he said.
He said that with the December 31, 2015 deadline fast approaching for regional economic integration under the AEC and many Free Trade Agreements (FTAs) in place within ASEAN as well as between ASEAN and other countries, motorists in the region should be spoiled for choice.
“But across many ASEAN countries, automotive industry policy is being used to prevent large-scale imports of vehicles from other ASEAN members and countries outside the region. This also makes it very difficult for new market entrants to industrialise in ASEAN countries,” said Hobbs.
He added that while the ASEAN automotive industry has the potential to be globally competitive and access major markets outside the region, it is being held back by not operating as a single market.
“Almost four million vehicles were produced in ASEAN in 2014. This is on par with South America, India and South Korea. But it does not act as one market. If it did, ASEAN would have the size, scale and expertise to become a globally competitive automotive manufacturing base that could export to major markets around the world,” Hobbs said. By Anthony Lim /
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