What Does “2 x ASEAN – 6” Equal?

Reportedly four ASEAN members (Indonesia, Laos, the Philippines and Vietnam) are preparing a pilot program to implement self-certification for exporters to qualify their goods as originating in ASEAN for the ASEAN Trade in Goods Agreement (ATIGA).  This would represent an application of the “ASEAN – X” concept  contained in the ASEAN Charter, which allows a subset of ASEAN to proceed with an economic policy without waiting for participation by other member states.  I discussed this in a post last year.

This would be uneventful but for the fact that there is already an existing ASEAN pilot program on self-certification involving Malaysia, Singapore and Brunei, which Thailand joined in December 2011.  Hence if the new pilot program comes into fruition, there would be two pilot programs for self-certification, each with four ASEAN members.  In other words, we would have two “ASEAN-6” groups operating at the same time.   

At first glance, this would appear to be an absurd situation.  It would be as if the EU had decided to have two “common” currencies, one with the Euro and one with the ECU, each competing to be the common currency of the EU.    Is this the “buffet” system of selectively picking and choosing economic policies?

The answer is no. 

A closer examination of the reasons for creating a second pilot program demonstrates that a competition of ideas is not necessarily a bad thing.  In my post last year on self-certification, I explained the fundamental disagreement between the Malaysia-Singapore-Brunei-Thailand group and the Indonesia-Laos-Philippines-Vietnam group:

Indonesia has publicly stated that it would participate in the pilot program only if participating companies were limited to manufacturers, and if the authorized signatories per company were limited to three persons.  This reflects a general suspicion among certain ASEAN customs authorities that companies, and in particular trading companies, could abuse the system to obtain FTA origin wrongly.   These countries also expressed skepticism about the success of the pilot program.

Hence the incumbent group allows trading companies to participate whereas the potential new group would not allow for this.   This issue will need to be resolved for self-certification to be applied universally throughout ASEAN in ATIGA.

However, I think having two pilot programs would allow for that.  So long as the pilot programs remain just that – temporary programs to test the merits of a policy -- they will be useful. 

The potential new group is very skeptical of self-certification.  Having a pilot program that they can administer on their own terms will give them confidence that self-certification can work.  They can administer the program in their own way (e.g. for manufacturers only) and review their own data. 

Meanwhile, the incumbent group will have data for comparison purposes, based on both quantitative and qualitative approaches.  After the pilot programs have generated sufficient data, a proper debate can be held on which approach is best, given the various policy priorities and administration issues that will have arisen.

Thus, the intent of ASEAN-X, to allow a pathfinder group to move ahead with a policy and letting the others catch up later at their own pace, can be applied properly in this case.  However, doing so will require that the pilot programs run their course and proper policy debate proceed.  If the pilot programs become entrenched, with each group running its own way, then “buffet” style policymaking will also take root in the ASEAN Economic Community.  Such confusion must not be allowed to happen.  I still look forward to hearing more good news about the pilot program(s) and the increased use of self-certification.

NUS Class On-Site Seminar in Jakarta

Today I led my National University of Singapore law school class on an on-site seminar at the ASEAN Secretariat and US MIssion to ASEAN.  Despite delayed flights and heavy Jakarta traffic, I think this was a success!  The students got great insight from the Secretariat and the Mission. Many thanks to ASEAN Deputy Secretary General Pushpanathan and US Ambassador David Carden. I hope that we can repeat this again in next year's course, which will be in August 2012.

 Ed and ASEAN DSG Pushpanathan

The class at the ASEAN Secretariat

Ed and the class with Ambassador Carden

The class at the US Mission to ASEAN

The ASEAN Secretariat has a more detailed write up on the on-site seminar here, and NUS has some more here.

AEC Developments Recap

Last night I spoke at the National University of Singapore Students’ Political Association 2012 forum on the ASEAN Economic Community, along with former ASEAN Secretary General Rodolfo Severino and Sulaimah Mahmood from the Singapore Ministry of Trade and Industry.  Over 250 university and junior college (high school) students attended, which is quite good and reflects on the excellent organization skills of the association!

My presentation riffed on my comparison of ASEAN to the English Premier League.  I did add that not all sports leagues have weak central offices; notably, the American professional leagues have strong central offices that can impose penalties on both players and teams,  and the players and teams have access to binding arbitration and judicial systems.  However, the American leagues also have had 3 strikes over the past 7 years whereas the EPL rarely has labor problems and is also financially successful.  The point is that even without strong central leadership, entities such as ASEAN or the EPL can succeed, but that decisionmaking can be slow.  The key is in providing good conditions for competition, which will attract both “players” and “fans” (e.g., investors and customers).

Here are some more updates on AEC developments:

• ASEAN Secretary-General – multiple sources indicate that Vietnam has identified its proposed candidate to replace ASEAN Secretary General Surin Pitsuwan at the end of 2012.  The vetting process is now being conducted by the ASEAN member states on a confidential basis. 
• Chiang Mai Initiative - The ASEAN+3 Macroeconomic Research Office (AMRO) officially opened in Singapore  as an independent macroeconomic surveillance unit of the Chiang Mai Initiative Multilateralization Agreement.  The Chiang Mai Initiative is a currency swap agreement among the finance ministries and central banks of ASEAN, China, Japan and Korea. AMRO will conduct financial surveillance in ASEAN+3 and provide informational support to the ASEAN+3 central banks and finance ministries.  The AMRO head suggested doubling the size of the swap arrangement to at least US$ 240 billion.
• ASEAN Single Window – Laos announced a road map to implement its national single window.  The effort is funded by the USAID.
• ASEAN-EU – the first meetings of the EU’s program to support ASEAN capabilities to negotiate free trade agreements (FTAs) with the EU were held in Cambodia.  ASEAN-EU FTA talks had stalled a few years ago due to Myanmar sanctions and perceived deficiencies in ASEAN’s negotiating infrastructure.
• Myanmar – Singapore and Myanmar signed a memorandum of understanding for Singapore to provide technical support.  Meanwhile, the EU lifted some Burma sanctions, ending visa bans on Myanmar regime officials and allowing some development aid.  The EU and US are waiting for the results of the April by-elections before further lifting sanctions.