Non-tariff measures (NTMs), including sanitary and phytosanitary (SPS) and technical barriers to trade (TBT) represent some of the more difficult areas for the AEC. Unlike tariff measures, which are applied by definition only at the border, NTMs can be applied after the goods have crossed the border. The potential for discrimination against imported goods through NTMs that are actually non-tariff barriers (NTBs) is thusly persistent, and can involve all aspects of government policy, not just border measures.
As a matter of administration, NTMs present three fundamental problems:
- Identifying the NTMs that are actually NTBs. This includes both existing NTBs and NTBs that have been newly created.
- Rectifying the NTBs so that the barriers to trade are eliminated.
- Sanctioning in cases where the rectification efforts have not been satisfactorily undertaken.
The combined effect of achieving these goals would be to harmonize ASEAN national regulations so that goods are treated consistently within the AEC. Furthermore, should an ASEAN member state adopt or implement a regulation in a manner inconsistently with the rest of ASEAN, the relevant ASEAN institutions could take measures to ensure compliance. These provisions thus support the creation of both the single production base and the single market. With regard to the former, investors in ASEAN could be certain that inputs purchased from anywhere in ASEAN would meet minimum standards and would be mutually compatible. With regard to the latter, companies would be certain that their goods would be accepted anywhere within ASEAN, their goods having met the minimum standards.
Unlike the EU or NAFTA, however, ASEAN is attempting to tackle the complex issues of NTBs without sufficiently strong institutions. In the EU, the European Commission has broad powers to investigate internal market conditions and to identify NTBs. The Commission and private actors can also seek dispute resolution through the European courts against an EU member state not in compliance with the EC treaty. NAFTA’s NTBs have been largely addressed at the intergovernmental level, but the possibility that regulatory measures can be brought before a NAFTA arbitration panel under Article 11 of the treaty also helps ensure compliance.
Hence the ASEAN experience with regard to NTBs has been somewhat mixed, particularly with regard to the three issues raised earlier.
First, the identification of existing NTBs has been an extended process in ASEAN, involving both self-reporting by ASEAN member states and original inquiries by the ASEAN Secretariat. However, without coercive authority, the ASEAN Secretariat may have difficulties in its investigations. Although there exists a mechanism for the private sector to complain about alleged NTBs, the process is slow and hampered by the ASEAN Secretariat’s relative lack of authority.
Second, the process of eliminating NTBs through harmonized standards can be very lengthy. The ASEAN cosmetics directive was issued in 2002, itself the result of years of industry lobbying of the ASEAN member states and the ASEAN Secretariat. Yet without any legally authority to force the ASEAN member states to adopt the directive in their national regulations, it took almost a decade for region-wide implementation of the directive. In the EU, by comparison, European Commission directives on standards are implemented relatively quickly, as the Commission’s directives have much greater force of law.
Third, ensuring compliance with ASEAN standards or that national standards are not used to block the flow of goods is difficult. The AEC Scorecard has the limited force of negative publicity and peer pressure. Dispute resolution under the EDSM is not available to private actors and ASEAN member states are reluctant to invoke it. As a result, implementation at the national level in ASEAN is relatively haphazard. For example, national standards in steel products vary, and are interpreted inconsistently (and often administered with lengthy delays) such as to constitute a non-tariff barrier. In another example, a company faced with an ASEAN member state’s deviation from the ASEAN cosmetics directive has no legal recourse to seek relief.
The complexity of NTBs thus presents ASEAN with major challenges. NTBs go beyond national borders, making investigation and monitoring of ASEAN member states’ internal policies and regulations vital. Furthermore, ensuring compliance and rectifying NTBs also requires ensuring that various levels of ASEAN member states’ government authorities actually understand and follow ASEAN-wide measures. Yet the limited powers of the ASEAN Secretariat, along with ASEAN’s long tradition of non-interference in the internal matters of its members, make the challenges of dealing with NTBs that much more difficult. If the AEC is to achieve a single production base, NTBS must be addressed on a continuing, effective basis.