Minutes of the Workshop in Bangkok for the Trade SIA of the FTA between the EU & ASEAN

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1 Minutes of the Workshop in Bangkok for the Trade SIA of the FTA between the EU & ASEAN Date: 27 October 2008 Location: Pathumwan Princess Hotel, Bangkok, Thailand Present: Study team and partners: Drs. Paul Wijmenga (project director, ECORYS); Dr. Floor Smakman (team leader, ECORYS); Dr. Koen Berden (ECORYS); Drs. Saara Tamminen (ECORYS); Dr. Adam McCarthy (Mekong Economics Vietnam); Dr. Nimfa Mendoza (CATIF, Philippines); Dr. Charit Tingsabadh (Centre for European Studies, Thailand); Prof. Suthipand (CES, Thailand); Mr. Tulus Tambunan (PT Incaon, Indonesia) Participants: See annex A EC Delegation: Mr. Jean-Jacques Bouflet (Head of Trade and Economic Section, EC Delegation, Thailand); Mr. Pekka Pentilla (Trade and Economic Section, EC Delegation, Thailand); Mr. Srimaserm Udomdech (Trade and Economic Section, EC Delegation, Thailand); Mr. Dusit Meksingvee (Trade and Economic Section, EC Delegation, Thailand); Mrs. Editha Therese Yosuico (EC Delegation to Philippines). Opening Speech by Mr. Bouflet outlining the principles for solid and mutually beneficial trade- and investment relationships between EU and ASEAN as well as the purpose of trade sustainability impact assessments and the objectives of the workshop. In addition Mr. Bouflet provided an update on the process of the FTA negotiation, explaining that the progress is slower than anticipated. Decision-making in ASEAN is based on consensus which is not easy for those that are more ready and ambitious. Introduction of the team and outline of the day by Paul Wijmenga. Session 1 The Trade SIA in progress Presentation of the study team on methodology, application of methodology, analysis of results, expected input of civil society (see slides in annex B) Q&A and Discussion Q. Mr. Buntoon Wongseelashote (Thai Chamber of Commerce & Board of Trade of Thailand; Sub-Committee on ASEAN-EU FTA): What are the actual factors behind the gains that you presented as outcomes from the model? A. Koen Berden (KB):The factors are the main macro-economic relations in open economies that trade, summarized in a CGE model (see report for full explanation). There are consumers and producers. Consumers consume domestically produced products and imported goods. Producers produce for the domestic markets and for exports. Typically, we alter the tariff structure for goods and barriers to services as well as nontariff barriers and then look at the effects of these policy changes for macro-economic variables like output, employment, imports, exports and wages. All variables are linked in general equilibrium. Q. Roy Cabonegro (Sustainability Watch Asia):

2 a) Is the TSIA study meant to just formulate mitigating measures or does it also define whether and how certain things should be taken up within the FTA (the actual agreement)? b) Why does the CGE model only take a trade perspective? Clearly you can not measure social and cultural issues and impacts. Would it also be possible to take a community approach? c) Why is ASEAN not doing its own studies? At national level, conducting SIAs would also make it easier to engage civil society (there is less interest at regional level) d) How does ASEAN find unity, how do we deal with our disparities? A. Floor Smakman (FS): On certain issues the TSIA may indeed guide the actual negotiations and agreements, e.g. which sectors are sensitive, how to incorporate sustainability issues into the agreement proper. Many of the mitigating measures would lie in national policy areas though and cannot be covered under a trade agreement. As for community based approaches, these will be used in the second phase of the project, but for CGE modelling it is not possible due to data limitations and the fact that we take a regional approach as a starting point and work with a general equilibrium model. Your points on ASEAN studies and finding unity, these are more questions and issues to be solved at ASEAN level. We hope the current SIA can inspire and encourage further work in this area within ASEAN. Q. Maria Elena Rebagay (AsiaDHRRA): Are the results of the public meeting in Brussels available? It would be good if we can somehow establish a people to people dialogue across the two regions. A. Saara Tamminen (ST): The minutes of the Public Meetings in Brussels and the presentations kept in the meetings are all published in the project website, and can be downloaded from there. A meeting with stakeholders from both regions is, unfortunately, not possible due to budget limitations. However, there are possibilities for ASEAN NGO s to attend the Public meetings in Brussels and meet European colleagues. In addition, our website has a forum, which provides possibilities for dialogue between the ASEAN and European NGO s and the Consultants. A. FS: If you visit our website you will also find a link to the website of DG Trade, which organises regular civil society dialogue meetings. There are possibilities to attend such meetings for civil society organizations (CSO) from outside the EU, if they are introduced by EU CSO. The website provides a lot of information. If needed, we can also assist in establishing contacts and helping you further. Q. Patuan Natigor Siagian (Indonesian Farmer Association (HKTI)): The study should really focus on those sectors and commodities that relate closest to the poor in the region. In the end it all happens on the ground. A. FS: This point is well taken by the study team Q. Jacques-Chai Chomthongdi (Focus on the Global South): Is there a reason for not including NTBs in your presentation? A. PW: NTBs will be presented and discussed in session 3 of the workshop in the afternoon Q. David L Diwa (Fair Trade Alliance): a) Is it possible to include one more services sector? b) With respect to horizontal issues, please also consider Special and Differential Treatment issues.

3 c) What are the differences between the different FTA s EU has made? A. PW: Our selection is only preliminary, so if we receive enough feedback on other (services) sectors to include, we will take this into account in our final selection. Your point on horizontal issues is well taken. B. See the answer under A. C. The differences between the EU s various FTAs lie in the level of ambition, with the more recent ones being increasingly ambitious in terms of including services and NTBs. The new generation FTA s all require reciprocity, but there are of course differences in the extent of reciprocity expected and the timeframes that the EU would require according to the level of development of the trading partner concerned. For a formal comparison, we refer to the website of the EC, DG Trade, where other TSIA studies are presented. Session 2: Sectoral Impact Short introduction by the Session s Chair, Mr. Adam McCarthy (AMC) Presentation by study team on FTA impact on different sectors of industry, FTA impact on conducting business between the EU and ASEAN, FTA impact on agriculture, FTA impact on manufacturing, FTA impact on services (see Annex C) Short speeches by discussants (see Annex C): Mr. Vincente Fabe - Asian Farmers Alliance (AFA): Touched on issues such as trade distorting subsidies in the agricultural and fisheries sectors; poverty effects of FTA measures; land use policies; the cost of compliance with EU standards (SPS); and the plight of small scale rice and sugar farmers. Mrs Nelia Halcon - Chamber of Mines of the Philippines: Discussed the opportunities that green and clean investments may provide to the mining sector; raised the issue whether corporate social responsibility should be part of an agreement or not and questioned whether ASEAN has to comply with EU standards or whether there are other options. Q&A and Discussion Comment: Roger Tan (Thaipore GMT MFG CO Ltd., Cambodia): Cambodia really only has one industry: garment manufacturing. It is a major source of employment generation. It would not be good for Cambodia if strict RoO would be included in an FTA, as it would have negative impacts on employment creation in Cambodia. Q. Arnel Mateo (Initiatives for Dialogue and Empowerment through Alternative Legal Services (IDEALS)): In our view there are three important sectors: 1. Fisheries, and specifically issues related to tariffs, SPS and restrictions in terms of investments and foreign involvement in the sector (it should be to some extent protected) 2. Textiles and garment manufacturing (same argument as made by Mr. Tan before) 3. Automotives: There should be differences in tariff reductions for different ASEAN member states, as their respective industries have different levels of competitiveness. Even if we include social and environmental issues in an agreement, how will this be enforced? Q. Department of Trade Negotiations, Ministry of Commerce, Thailand In our view the criteria for selection of sectors should be those where barriers are currently high and substantial reductions and impacts can thus be expected. Therefore we wonder why you chose electronics, as barriers in this sector are already very low. A. ST: We use different criteria in the selection of the sector in order to find the sectors where the impacts will actually be substantial. The impact of current tariff reductions is covered under

4 criterion 2; the economic impact is mostly larger the higher the current barriers are. However, in addition to the economic impacts, the actual size of the sector and social and environmental impacts should be considered. Electronics sector was selected to the pre-selection, since in many ASEAN countries it is a rather large sector and e.g. in Indonesia and Singapore it has also large economic impacts, mainly due to the expected reductions in NTBs. Q. Thailand Development Research Institute: It appears the benefits from the FTA may be overestimated. To which extent, for instance are structural changes in terms of social adjustments included and what about the preference loss of the current GSP system? A. KB: The model outcomes reflect the upper limits of what can be expected in terms of direct economic and related social and environmental impact. Through an in-depth assessment in phase 2 of the study the model results therefore need to be qualified and then it may turn out that some effects are indeed overestimated (e.g. some employment effects). The Social Accounting Matrices included in the model represent the structures of the economies involved and as such reflect longer term trends. They tend not to change substantially over shorter periods of time. Structural transformations in societies are thus included, however, short terms shocks are not. In terms of social adjustments (social protection system) we need to go beyond the model, which is exactly what we will do in the next phase of the study. However, in addition to this question we must note here that an important omission of the CGE model is the fact FDI is not incorporated. So the benefits of the FTA may in fact be larger than presented because of inflows of foreign capital and increased efficiencies that result from it. Preference erosion from the loss of GSP status is already included in the model. Comment Roy Cabonegro (Sustainability Watch): We fail to see the value of discussing the sustainability issues and problems in our mining sector in the context of the FTA. These issues should be resolved at local and national levels and not dragged into an FTA. Comment Patuan Natigor Siagian (Indonesian Farmer Association (HKTI)): Please include more details in the study on the screening of commodities such as cereals and grains, particularly rice, corn, soy and sugar. Also consider Special and Differential Treatment in terms of tropical products. Session 3: Horizontal Impact Issues Short introduction by Chair Ma. Nimfa Mendoza (NM) Presentation by study team on FTA impact on different horizontal issues (see slides Annex D) Short speech by discussant: Mr. Buntoon Wongseelashote (Chair, Thai Chamber of Commerce & Board of Trade of Thailand; Sub-Committee on ASEAN-EU FTA): Touched on the importance of non-tariff measures in agriculture (e.g. domestic production subsidies in EU); raised issue of RoO, arguing that EU is much larger and has better access to raw materials; indicated he is in favour of RoO system based on change of tariff heading or substantial transformation and that an agreement should leave flexibility on which regime to chose; stressed that FTA benefits often go only to large corporations, as SME can t comply with stringent requirements; wished that FTA would not worsen the situation of the poor; felt that Government Procurement would be hard to tackle as it is an important source of earnings for politicians, but if an FTA could help tackle this issue this would be positive for Thai businesses; felt that liberalisation of capital markets would not be wise; concluded by saying that they are in principle in favour of IPR protections, but that it should come with a control of prices.

5 Q&A and Discussion Q. Theerada Suphapong (independent researcher): Will the study touch upon regulatory issues with regards to the movement of labour and will it consider the extent to which wages and labour standards for immigrant labour will be upheld? A. FS: Migration issues are more relevant intra-asean, simply because of the distance. It is unlikely that EU will open up markets for temporary labour in low and semi-skilled professions (it will only be negotiated in context of mode 3 liberalisation), as it does not even do this for the recently acceded EU member states. But given its ageing population it may be something it will (have to) consider in the future. As for labour standards, the arguments run both ways: in EU there is fear of immigrant labour bringing standards and wages down, while examples within ASEAN prove the vulnerability of immigrant labour to abuse in these areas. Comment Andriyono Kilat Adhi (Indonesian Seafood Development Center): Considering the many problems we have had with SPS issues, capacity building should be a part of the agreement. Q. Kannikar Kijtiwatchakul (Medecins Sans Frontieres): How do you define counterfeiting in relation to pharmaceuticals? How will you look at IPR enforcement? This enforcement may be a large burden for countries in ASEAN. E.g. will it be dealt with under civil or criminal law? A. FS: We won t engage in discussions on the legal systems that will govern IPR. However, we can make assumptions on different ways to address and define IPR issues and the possibly different outcomes (impacts) this may give. Comment Anni Mitin (SEACOM (South East Asian for Food Security and Fair Trade), Malaysia): When looking at SPS you should carefully consider the real issues. In Malaysia the problems we had with SPS were not due to the producers, but rather to the relevant authorities, who failed their accreditation. Session 4 part 1: The FTA and Sustainable Development Short introduction by Chair Prof. Suthipand (PS) Presentation by study team on Civil Society and its role in reaching FTA Agreements: Social and environmental impacts of the FTA (see slides Annex E) Short speeches by discussants: Mr. Rafael Mapolo - ASEAN Trade Unions Council: Indicated that if the FTA helps to recognize workers rights and will create employment the ASEAN Trade Unions Council would be happy. Mrs. Maria Elena Rebagay - AsiaDHRRA: Emphasized that any job losses in the electronics sector would be detrimental to the position of females as they are relatively more engaged as workers in this sector. Mr. Roy Cabonegro - Sustainability Watch Asia: Brought up the dilemmas of developing organic industries versus the development of GM technology, and development of biofuels against food security. Mr. Ha Le Van - Centre for Development & Integration Vietnam: Stressed that an FTA will require a lot of changes in national laws and that therefore the participation of various Ministries and CSO is needed. Mrs. Maria Encarnacion - ACWO and NCWP: Stated that she had reservations in promoting the FTA. This is because she had observed negative consequences of the EU-Mexico FTA a.o. doubling trade deficits for Mexico. It was questionable for her whether this FTA was

6 moving towards development and how the FTA affected regional integration. For ASEAN she expected that Singapore will gain but other ASEAN countries would suffer. She recommended to have an own ASEAN TSIA in a parallel process with this TSIA which would create more ownership. Hand-out of Survey Session 4 part 2: The FTA and Sustainable Development - Discussion Short introduction by the Chair, Mr Tulus Tambunan (PT Inacon, Indonesia), who argued that economic growth through productivity increases that come from more capital-intensive production methods would not benefit isolated poor ethnic groups. He confirmed that gender inequality in employment is an issue as well as environmental pressures e.g. due to illegal logging; in that connection Mr Tulus Tambunan pointed at insufficient cooperation between ASEAN governments and underpaid staff to effectively combat illegal logging. Finally he mentioned slowing urbanization and how to create clean megacities as major challenges. Q&A and Discussion Comments Mrs. Kejpiroon Kohsuwan (Department of Trade Negotiations Ministry of Commerce, Thailand) on selection of sectors and horizontal issues: Almost all horizontal issues are important, but the question is whether you can negotiate on them. For instance, rules and regulations are a domestic issue. SPS and Trade facilitation are more plausible. You should only select if there is a clear message for the negotiators. Similarly for social and environmental issues, carefully consider what are domestic issues and what can be solved through an FTA. Look at where the FTA is the actual cause so we can formulate mitigating measures. We, as MoT in Thailand, are in a learning process as well as far as consultations with civil society are concerned. There are known examples of where an FTA has resulted in technology transfer and mergers & acquisitions. Comment Anni Miti (SEACON): Focus on sectors where job creation issues are at play. Other issues to take into account in phase 2 include rural-urban migration and rising food prices. Comment Roger Tan (Thaipore Gmt. Mfg.): A word of caution with regards to labours standards and rights as part of an FTA, as propagated by ETUC; the experience of Cambodia shows this has been used as a protectionist measure by developed countries as well. Session 5: Wrap up and Conclusions Short summary and conclusions of the day by Mr. Paul Wijmenga (see slides Annex F) Thank you to all participants, discussants and presenters. We look forward to your continued engagement in the study The day was closed by Dr. Charit Tingsabadh from the Center of European Studies of Chulalongkorn University.

The EU-ASEAN FTA: Gender Issues and Advocacy. Naty Bernardino International Gender & Trade Network - Asia

The EU-ASEAN FTA: Gender Issues and Advocacy Naty Bernardino International Gender & Trade Network - Asia Association of South East Asian Nations 1967 establishment of ASEAN with the 5 original members: