Beyond the Bali Headlines

The major headlines of the Bali summits were of course the decision to allow Myanmar  to serve as the 2014 ASEAN chair, the announcement of US Secretary of State Hillary Clinton’s visit to Myanmar and various other items related to the U.S. “pivot” towards Asia.  From the ASEAN Economic Community viewpoint, the major announcement was the issuance of ASEAN’s framework for closer economic relations with its trading partners, an economic Treaty of Amity and Cooperation, as one observer put it. 

However, there were other significant developments during the summit season which also affect the AEC:

ASEAN Secretariat – ASEAN Secretary General Surin Pitsuwan announced that the Indonesian government had donated land with two existing buildings to the ASEAN Secretariat.  The additional space will be welcome by the ASEAN Secretariat, whose current physical plant has become very cramped and dated.  Of course, without additional funds this additional space will not be functional, with regard to personnel or resources.  This needs to be remedied by additional budget contributions from ASEAN members, including a rethink of the principle of equal contributions that limits the total amount to what the poorest member can pay.   Dr. Surin has also stressed that much of the Secretariat’s functions are supported by development aid missions from the EU, US, Australia and others. With Myanmar taking over as ASEAN chair in 2014, these donors need to relax the Burma sanctions so that funding of AEC-related activities are not hampered.  However, it looks like that may happen soon.

Timor Leste – ASEAN announced that it has formed a working group to review Timor Leste’s application to join the regional bloc. The Jakarta Post reported that Singapore opposed Timor Leste’s application as it would complicate the formation of the AEC by 2015.  Singapore later denied this report as “inaccurate and misinformed,”  stating that it welcomed the application of countries such as Timor Leste, Fiji and Papua New Guinea to join ASEAN.  Of course, the latter two countries arguably are not part of southeast Asia (whereas Timor Leste was part of Indonesia), so collapsing the three countries together does Timor Leste no favors in its application, despite the denial by Singapore.  Admitting Timor Leste before the AEC formation in 2015 would tax ASEAN’s institutions, this blog argues, particularly at a time when the smaller (but capable in economic policy) countries of Cambodia and Brunei become ASEAN chair in 2012 and 2013, and the completely inexperienced Myanmar becomes ASEAN chair in 2014 (along with all of the attendant potential for distraction over its domestic political situation).  In any event, the working group’s investigation and analysis will likely require considerable time, preventing East Timor from joining before 2015.

ASEAN FTAs – There were many technical developments in ASEAN’s bilateral FTAs.

•  ASEAN and China announced a second protocol to implement the services aspect of the ASEAN-China FTA.  The revised protocol expands the scope and depth of coverage beyond the initial 10 sectors covered by the first protocol, including commercial services, telecommunication, construction, distribution, finance, tourism and transportation, and takes effect on January 1, 2012.   

• Hong Kong (which is a separate customs territory under the WTO) applied to join the ASEAN-China FTA.  

• India set a deadline of March 2012 to conclude the services negotiations under the ASEAN-India FTA.  Talks have stalled for several months.  

•  ASEAN and Korea agreed to amend the ASEAN-Korea FTA to “clearer provisions for tariff reduction or elimination, and incorporates provisions to prevent any potential back-tracking of unilateral tariff commitments,” according to the Singapore government.   The amendment will take effect 90 days after Korea and one other member have started implementation. 

•  Indonesia announced that it had completed domestic procedures to implement the ASEAN-Australia-New Zealand FTA fully by January 10, 2012.

ASEAN Trade in Goods Agreement – Seven ASEAN members (Indonesia, Singapore, Malaysia, Thailand, the Philippines, Vietnam and Brunei) announced they would participate in a pilot program to implement the ASEAN Single Window.  This represents a major and necessary development in AEC formation, as the complexity involved in dealing with various national agencies hinders trade in goods.   Meanwhile, the Philippines tabled a proposal to implement self-certification of goods (although it is not clear how the Philippine proposal will mesh with the existing pilot program administered by Singapore, Malaysia and Brunei).  Finally, ASEAN announced that the ASEAN harmonized tariff schedule would be revised effective January 1, 2012.  There are additional tariff lines for fishery, machinery and vehicle products.

Private Sector Integration – the Philippine Stock Exchange announced it was delaying its participation in the ASEAN Trading Link (which will see Indonesia, Malaysia, Singapore, Thailand and Vietnam cooperating to allow cross-trading in their stock exchanges by mid-2012).  Meanwhile, ASEAN telecommunications ministers announced that they had reached an agreement in principle to eliminate cellphone roaming charges within ASEAN.

Whew! That was a lot.  Perhaps the most immediate impact will come from the elimination of cellphone roaming charges.  Hopefully this will apply not just to voice services, but to data roaming as well (a smartphone becomes a handheld bundle of unlimited liability when one crosses a border!).