Friday, September 9, 2011

ASEAN Needs a Comprehensive Strategic Export Control Policy

Export controls at first blush would appear to have not much relevance to the AEC, being a security issue rather than an economic issue.  After all, export controls are primarily aimed at preventing the proliferation of weapons of mass destruction (WMDs), which are consistent with ASEAN’s Treaty on the Southeast Asia Nuclear Weapon-Free Zone  and Declaration for a Zone of Peace, Freedom and Neutrality (Zopfan).  Both agreements evidence ASEAN members’ commitment to prevent the spread of WMDs into the region.  

Yet the inconsistent and incomplete coverage of export controls in ASEAN actually has an adverse economic impact on the region.   Many high-tech and value-added industries operate in the West in compliance with the stronger export controls there.  The absence of comprehensive export controls discourages certain investments into ASEAN by these industries.

Nevertheless, export controls remain a ticklish issue which is handled at the national level in ASEAN.  Singapore and Malaysia have enacted comprehensive strategic export control laws, and Thailand has indicated that it would like do so as well one day.  The other ASEAN members have varying stances on the issue.

Perhaps this reflects a sentiment that export controls are largely driven by the West, particularly the United States.  Indeed the U.S. has the most comprehensive and actively enforced export control laws, with severe penalties for non-compliance.  Some critics say the U.S. export control laws are too active and comprehensive, discouraging the export of items which do not have proliferation risks.   That is one reason the U.S. is actively discussing the reform of its export control laws.

But other ASEAN trading partners have export control laws, such as Japan and the EU.  The regional and bilateral FTAs signed (or anticipated to be signed) by ASEAN and its members with these partners allow for export controls.   They are also consistent with ASEAN members’ obligations under the UN Charter.

In short, export controls are here to stay.  Failure to introduce effective compliance mechanisms within ASEAN will continue to discourage foreign investment in the region, particularly in those high-tech and value-added industries which frequently encounter export control issues.   Furthermore, if export controls are to be reformed and rolled out, it would be better for ASEAN to discuss these issues as a group, rather than individually.

ASEAN members say that they are looking for post-2015 issues for the AEC.  Well, this should be an area of follow-up, both at the national level and the regional level.   Effective export control compliance is good for ASEAN’s security and economy.