Thursday, March 14, 2013

Wrap-up of the ASEAN Economic Ministers Informal Retreat in Hanoi (Updated)

Last week the ASEAN Economic Ministers (AEM) conducted their informal retreat in Hanoi.  Although termed an “informal” meeting, substantive decisions are made at AEM retreats.  The EU also conducted bilateral talks with ASEAN, including a business summit on the sidelines of the meeting. 

The AEM conducted a general overview of ASEAN Economic Community developments.  Of note, the AEM adopted a revised protocol to the ASEAN Trade in Goods Agreement (ATIGA) and the ASEAN Comprehensive Investment Agreement (ACIA).  In addition the AEM signed off on the scoping papers for ASEAN’s Regional Comprehensive Economic Partnership (RCEP) talks with ASEAN’s bilateral FTA partners.  This will allow the RCEP talks to get underway soon (coincidentally another round of the Trans Pacific Partnership (TPP) negotiations took place in Singapore at the same time; the impending participation of Japan in the talks may delay the conclusion of the TPP talks beyond this year).  ASEAN intends to conclude RCEP talks by end 2015.

The EU also announced the start of FTA talks with Thailand.  The EU has already completed FTA talks with Singapore and is engaged in FTA talks with Vietnam and Indonesia, with the Philippines also interested in FTA talks. 

Also, according to Kyodo news service, Hong Kong failed to convince all ASEAN members to allow it to accede to the ASEAN-China FTA (ACFTA).  As discussed in an earlier post, Hong Kong is treated as separate from China under WTO rules and as such is not part of the ACFTA.  Kyodo reported that Singapore, the Philippines and Vietnam objected to accession. Officially, the AEM stated that the ACFTA was based on agreements made with China, and that as China was not willing to re-open the ACFTA, including Hong Kong in the agreement could result in an ACFTA that favored China/Hong Kong; the AEM also cited the potential effects on RCEP.  In my view, the reasons could be as varied as labor market access into Hong Kong, cigarette regulation and the competitive position of Singapore being eroded by Hong Kong’s entry.   Instead, ASEAN suggested that Hong Kong conduct negotiate a separate FTA with ASEAN, with Kyodo citing ASEAN officials who said that such talks could not take place under after the AEC was completed by end 2015.  What this means is effectively, Hong Kong will eventually be allowed to accede, but only after the RCEP talks are completed by end 2015 as well.  China thus will be negotiating in the RCEP not only for itself but for Hong Kong as well.

On non-tariff barriers (NTBs) the AEM encouraged the setting up of interagency body in each ASEAN Member State so that progress can be reported to the April 2013 ASEAN Summit. The AEM also tasked SEOM and CCA to identify and undertake 3 to 5 case studies to examine how to reduce NTB, with  standards (e.g. repetitive testing for different importers) specifically mentioned.  The AEM directed that SEOM should conduct a cross-cutting analysis of the case studies and draw up a set of general principles that could be applied to similar NTBs appearing in different guises in future. The AEM also noted that ASEAN should have a standardized way of notification and evaluation of the NTBs, so that the business community would know that there was a due process in place within ASEAN.

Finally, Brunei continued its welcomed streamlining of ASEAN meetings. It eliminated the preparatory meetings that used to be held before ASEAN Summits, starting with the April 2013 summit.