Tuesday, March 11, 2014

ASEAN Willing to Resume FTA Talks with the EU

ASEAN Secretary General Le Luong Minh yesterday stated that ASEAN could resume its free trade agreement (FTA) talks with the EU. According to the Nation, ASEAN could pick up its FTA talks with the EU after the formation of the ASEAN Economic Community (AEC) in 2015:

"Currently, ASEAN is too busy moving towards a single market under the 2015 target," he said. "But after the AEC has been achieved, then we should be ready for tighter cooperation with others, and the FTA negotiation with the EU is one of the top priorities after 2015."

Of course, the end of 2015 is also the target for completion of ASEAN’s Regional Comprehensive Economic Partnership (RCEP) talks with its trading partners.  Hence by then ASEAN should have achieved greater progress on the operation of intra-ASEAN trade (e.g., the AEC), as well as reached a common position in dealing with trading partners (e.g., the RCEP), including the EU.  Indeed, the AEC and RCEP are self-reinforcing, as trading partners will use the RCEP talks to prod ASEAN members to administer the AEC more effectively.

The EU had initiated FTA talks in 2006 with ASEAN, but they stalled.  Reasons cited included opposition in Europe on human rights grounds to negotiating with the Myanmar government, as well as insufficient negotiating infrastructure on the ASEAN side (e.g., who speaks for ASEAN?).  Eight years later, Myanmar has changed to the satisfaction of most Europeans and the EU has spent millions of Euros in development assistance for ASEAN to develop its institutions.    

With the assistance of the EU, optimistically, the RCEP talks and AEC implementation will have progressed sufficiently for ASEAN to be able to resume its FTA talks with the EU after 2015.   The loss of Generalized System of Preferences trade privileges for Malaysia and Thailand’s exports to the EU also should motivate these ASEAN members to the negotiating table.

Or perhaps not.   Although several ASEAN member states have entered into FTA negotiations with the EU on a bilateral basis, only Singapore has achieved an FTA with the EU, and even that was somewhat delayed.  Without a fully functioning government, Thailand cannot enter into FTA talks with anyone at the moment; FTA negotiations require authorization from the Thai parliament.  Malaysia’s FTA talks with the EU have also stalled amid domestic pressures, and EU FTA negotiations with Indonesia, the Philippines and Vietnam are at varying levels of preliminary progress. 

Secretary General Minh is correct in his assessment that ASEAN can only resume FTA talks with the EU only after 2015.  Hopefully by then ASEAN will have augmented its regional institutions sufficiently, and the ASEAN member states will have resolved the domestic political issues blocking an EU-ASEAN FTA.  It may take a few more years to reach that goal, but at least the EU and ASEAN are willing to put an FTA on the table, something that the US can only offer in partial form (via the Trans Pacific Partnership) and without a full mandate at the moment.