In a move described as “unprecedented”
by the Malaysia
Star, the national steel associations of Indonesia, Malaysia, Philippines,
Singapore, Thailand and Vietnam, e.g., the ASEAN countries with steel
manufacturing, made a joint appeal to the ASEAN Secretariat and ASEAN member
states to revisit the ASEAN-China FTA.
Under the rubric of the ASEAN Iron & Steel Council (AISC), the steel
associations complained about a surge in steel imports from China, now at 9.1
million MT for Jan-Sept 2012, up 47.3% when compared with the same period in
2011.
This move represents the
continuing frustration of ASEAN manufacturers with ASEAN’s FTAs, which I
described in an
earlier post. During the FTA
negotiations, steel and other industries felt that they had limited
opportunities to present their case to ASEAN negotiators. From their point of view, the resulting FTAs
shortchanged their interests. On the
other hand, the ASEAN governments can also respond that the ASEAN steel
industry did not comprehend what the FTAs would entail and did not adequately
prepare themselves for increased competition from China and other trading
partners.
Both are correct. The political-economic dynamic during the
ASEAN FTA negotiations was relatively undeveloped. The sort of government-business interaction
seen in FTA negotiations conducted by the US and other countries was missing in
ASEAN during the ASEAN FTA negotiations.
This arose both because of a lack of opportunity and a lack of
awareness.
In any event, the ASEAN
manufacturing industries now face heightened regional competition from Chinese
industries who have had to divert shipments from a weakened Europe and
relatively slow domestic market. The
Chinese government’s VAT rebate policy further encourages exports.
The AISC move also reflects
the continuing development of the ASEAN-level political economy. The national steel associations are seeking
relief through trade remedies and non-tariff barriers from individual ASEAN
member states. That is nothing new and has been going on in ASEAN for
years. In fact, as the ASEAN-China FTA
is actually a collection of 10 FTA agreements (e.g., Brunei-China, Cambodia-China,
etc.), any legal action actually undertaken will necessarily be at the national
level, whether through a renegotiated ASEAN-China FTA (unlikely),
antidumping/antisubsidy cases (more likely) or under the safeguard provisions
of the ASEAN-China FTA (quite possible).
Collective action by ASEAN
industry associations is also not new. For example, the ASEAN Federation of
Textile Industries (AFTEX) coordinated textile and apparel policy in the days
of the Multilateral Fiber Agreement.
What is new is that the AISC
went to the ASEAN Secretariat. By
working together at the ASEAN-level to deal directly with the ASEAN
institutions, the AISC correctly understands that it is not enough in the ASEAN
Economic Community to work at the national level. The ASEAN institutions must also be involved,
not only to bolster confidence among the ASEAN member states to tack action,
but to coordinate policy on a regional level.
The AISC is a long ways from
becoming as powerful as Eurofer in Europe.
But the AISC’s policy approach at the ASEAN-level will be adopted by
other ASEAN industries, as they cope with the continuing development of the
ASEAN Economic Community. Expect similar initiatives to come as the AEC
matures.
