Wednesday, August 21, 2013

Update from the ASEAN Economic Ministers' Meeting

Yesterday the ASEAN Economic Ministers (AEM) held their annual meeting in Brunei.  The AEM noted the usual bright spots in ASEAN’s formation of the ASEAN Economic Community (AEC), namely that ASEAN grew by 5.7% in 2012, and the AEC Scorecard rating had improved slightly to 79.4% in 2012.  Foreign direct investment was stable in 2012 at US$ 108.2 billion.

The following is a summary of highlights:
  •  Ministers from ASEAN and India finally settled on the legal text for the services section of the ASEAN-India Free Trade Agreement (AIFTA).  This had been long delayed but will reach final resolution with leaders' signing during the ASEAN summit to be held later this year in Brunei.
  • ASEAN members agreed on a Protocol to Amend the ASEAN Comprehensive Investment Agreement (ACIA).  This allows ASEAN members to modify the reservations made by individual members when they signed/ratified the ACIA.
  • Negotiations will start on an enhanced ASEAN Framework Agreement on Services (AFAS). This is important as the current AFAS has not been updated to reflect developments in the services trade in the ASEAN + 1 FTAs.
  • Vietnam, Malaysia and Indonesia continued to delay their tariff reduction for alcohol and tobacco products.  Other ASEAN members complained that tariffs on those products had already been reduced/eliminated under the ASEAN bilateral FTAs with trading partners.
  •  New co-equal rules of origin for 25 tariff lines involving automotive products will be introduced, pending consultations with Thailand (I worked on an ASEAN-EU study recommending co-equal rules of origin for this sector).
  • FOB value will no longer be required for Form D certificates of origin when change in tariff classification or wholly originating rules are invoked. FOB value was not relevant to those approaches and had resulted in ASEAN customs authorities engaging in unnecessary queries.  Also, Form D documents issued before shipment will be accepted, ending another point of challenge for ASEAN customs authorities.
  • Work is almost completed on Protocol 2 (Designation of Frontier Posts) of the ASEAN Framework Agreement on the Facilitation of Goods in Transit.  More importantly, all ASEAN members except Thailand and the Philippines had signed onto Protocol 7 (Customs Transit System).  Introduction of Protocol 7 will eliminate a lacuna in the ATIGA.
  • The waiver on rice and sugar trade for Indonesia and the Philippines was continued for another year.   Cambodia and Vietnam were urged to liberalize tariffs on petroleum products consistent with their ASEAN Trade in Goods Agreement (ATIGA) commitments.
  • ASEAN members will coordinate their Sanitary and Phytosanitary  (SPS) measures by establishing an SPS information management system and guidelines for consultations.
  • ASEAN members are negotiating mutual recognition agreements for automotive and prepared foodstuff products.  The former will be based on the Regulations of the United Nations Economic Commission for Europe (UNECE).  Harmonization for Medical Device regulation is being finalized while discussion is on-going for the ASEAN Agreement on traditional medicines and health supplements.
  • ASEAN is setting up a pilot program to identify actual non-tariff measures (NTMs) for review and resolution on a regional basis. An ASEAN Framework of Methodologies for Notifying, Identifying, Classifying, Evaluating, and Eliminating of trade barriers is in development.
  • The list of superseded ASEAN economic agreements will be finalized and
  • the Protocol to Amend Certain ASEAN Economic Agreements Related to Trade in Goods will be ratified soon. 

That’s it for now. I will update this post when I get more details.