Trade Integration in ASEAN: - PDF Free Download

Trade Integration in ASEAN: Economic and Institutional Dimensioni Sachin Chaturvedi Managing Regional and Global Governance in Asia: OPPORTUNITIES AND CHALLENGES FOR THE ASEAN ECONOMIC COMMUNITY (AEC) Regional Workshop for Young Professionals from ASEAN+3 Jakarta, October 5 th 2011

Structure Broad Trends in Integration Limitations Deep and Shallow Integration Food dtrade and Institutions i Impediments Trade Facilitation and Food Trade in ASEAN

Regional Trade Cooperation Success of regional cooperation in Europe and North America stimulated similar ideas in mid 1980s in Asia. Particular were the RTAs like NAFTA and EU which deepened their regional cooperation through preferential free trading arrangements loaded with strong rules of origin and mobility of (labour) and capital. After accomplishing economic integration EU moved towards monetary integration with a single currency.

Free/Regional Trade Cooperation Under WTO rules, the goods and services aspects of RTAs have to be notified separately, so they are counted separately. However, putting the two together, th the 484 notifications to end-december 2010 involved 376 individual RTAs, of which 198 are currently in force. Total Number of FTAs Countries of the region are involved in (both intra regional and extra regional) - North America: 28 - South America: 25 - Africa: 18 - Europe: 70 - Middle East: 21 - West Asia: 11 - East Asia: 47

ASEAN: Asian Engine for Trade After East Asia Crisis of 1997 regional economic integration came in with new force ASEAN expedited implementation of AFTA Chiang-Mai Initiative was launched with ASEAN+3 (Japan, China and South Korea) Japan, China, South Korea and India became dialogue partners FTAs talks are on with all the dialogue partners and with New Zealand and Australia s which are at various different stages Extent of Sub-regional cooperation and complementarities are directly related.

ASEAN: Asian Engine for Trade Full potential of regional economic integration can only come with optional base, when downsides of bilateral and sub-regional cooperation are avoided. Fresh stimulus for growth in the Asian region is coming from within Existing capacities in the region would be most optimally used with greater regional integration. Aggarwal (2002) shows that the lost output because of under utilisation of capacity in Japan and South Korean construction and engineering i industries i could ldbe of the order of 10-15 per cent of GDP of the regional or about a trillion dollar a year.

Regional Trade Cooperation Important stimulus for regional integration is Asia has come from growing intra-regional trade and value chains across ASEAN and with other leading regional economies. Synergy within Asia, like labour scarcity in Japan and South Korea is matched by many members from ASEAN. This also matches resource base of these economies. We also learn that there are several regional initiatives even before the ones that we can check now.

Regional Trade Cooperation Bangkok Agreement Agreement name:: Asia Pacific Trade Agreement (APTA)( Formerly known as "Bangkok Agreement") Coverage: Goods Date of signature: 7/31/1975 Date of entry into force: 6/17/1976 Current signatories: Bangladesh; China; India; Korea, Republic of; Lao People's Democratic Republic; Sri Lanka. Original signatories: Bangladesh; India; Korea, Republic of; Lao People's Democratic Republic; Sri Lanka. Are all Parties WTO members? No Type: Partial Scope Agreement Notification under: Enabling Clause

Regional Trade Cooperation Asian Clearing Union (ACU) ACU was established in 1974 at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) Governments and central banks from India, Iran, Nepal, Pakistan, and Sri Lanka. Then Bangladesh, Myanmar Bhutan and Maldives joined. The Asian Monetary Units (AMUs) is the common unit of account of ACU and is denominated as ACU Dollar and ACU Euro, which is equivalent in value to one US Dollar and one Euro, respectively.

Regional Trade Cooperation Asian Clearing Union (ACU) All instruments of payment under ACU have to be denominated din AMUs. Settlement of such instruments may be made by AD Category-I banks through the ACU Dollar Accounts and ACU Euro Accounts, which should be distinct from the other U.S. Dollar and deuro accounts, respectively maintained for non ACU transactions

Regional Trade Cooperation Chiang Mai Initiative (CMI) CMI is a multilateral currency swap arrangement among the ten members of the Association of Southeast Asian Nations (ASEAN), China, Japan and South Korea. Began in May 2000 in Chiang Mai, Thailand, at an annual meeting of the Asian Development Bank. The CMI is a landmark liquidity support facility in East Asia, which is intended to reduce the risk of currency crises and manage such crises or crisis contagion.

ASEAN Free Trade Area ASEAN Free Trade Area (AFTA) is a trade bloc agreement by the Association of Southeast Asian Nations signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. Latecomers were required to sign the AFTA but were given longer time frames for tariff reduction obligations.

ASEAN Free Trade Area Basic feature: liberalization of trade in the region, done through the elimination of intra-regional regional tariffs and nontariff barriers. Common Effective Preferential Tariff (CEPT) Scheme is the main mechanism. Intra-regional tariffs: 0-5% tariff band by 2002; 2006 Viet Nam; 2008 Lao PDR and Myanmar; 2010 Cambodia. Non-tariff barriers will also have to be eliminated under the CEPT Scheme.

Vision for an ASEAN COMMUNITY 2015 ASEAN Community by 2015 to be based on 3 pillars ASEAN Security Community ASEAN Economic Community ASEAN Socio Cultural Community ASEAN Economic Community (AEC) as the end goal of regional economic integration (Bali Concord II).

Policy Options: Institution Building Committee on Food, Agriculture and Forestry (COFAF) and ASEAN Consultative Committee on Standards and Quality (ACCSQ) Good Agricultural Practices (GAP) GoodCll Collection Practices (GCP), Good Agriculture and Collection Practices (GACP)

ASEAN Integration Initiatives Priority sectors for integration identified: Agro Based Products Automotive Electronics Fisheries Rubber Based Products Textiles and Apparels Wood Based Products Air Travel e ASEAN (ICT) Healthcare Tourism Logistics 17

Patrice, Deboyser (2011). Market share of world agricultural IMPORTS

Food Trade : Global Trends Global economy is witnessing a radical shift in the composition of food trade for last four decades Efforts for trade integration may give further fillip to this sector. South Asia would be no exception to this Processed food is gaining importance over other food trade due to changing dietary habits globally. Consequence of rapid industrialisation, globalisation, and the development of communication systems as well as of food technology

Global Trends

Equivalence (SPS S Agreement, gee e Article tce 4) 1. Members shall accept the sanitary or phytosanitary measures of other Members as equivalent, even if these measures differ from their own or from those used by other Members trading in the same product, if the exporting Member objectively demonstrates to the importing Member that its measures achieve the importing Member's appropriate level of sanitary or phytosanitary protection. For this purpose, reasonable access shall be given, upon request, to the importing Member for inspection, testing and other relevant procedures. 2. Members shall, upon request, enter into consultations with the aim of achieving bilateral and multilateral agreements on recognition of the equivalence of specified sanitary or phytosanitary measures.

Equivalence in Codex CAC/GL 53-2003 Guidelines on the Judgement of Equivalence of Sanitary Measures Associated with Food Inspection and Certification Systems General principles for determining equivalence Objective basis of comparison Procedure for determining i equivalence Judgement

Benefits of Equivalence Allows more flexibility in the use of current or improved practices or practices that better reflect the country s situation/environment Provides greater consistency in national food control systems which can lead to a more efficient system

EU Provisions * EU imports of agricultural and dairy products * Regulation (EC) 178/2002 Article 11 Equivalence: q different approaches Equivalence: different types of agreements Mutual Recognition Agreements (MRAs) Veterinary Agreements Association Agreements Free Trade Agreements Equivalence: in absence of a bilateral agreement Conclusion

Status of Accreditation Systems of ASEAN Member States (Ramesh Shirley V (2011) Member State Accreditation Body Recognition Brunei Darussalam - - Cambodia - - Indonesia National Accreditation Committee (KAN) Lao PDR - - ILAC / IAF Malaysia Standards Malaysia ILAC / IAF Myanmar - - Philippines Philippines Accreditation Office (PAO) ILAC / IAF Singapore Singapore Accreditation Council (SAC) ILAC / IAF Thailand National Standardization Council ILAC / IAF (Agricultural Commodity and Food Standards, Department of Medical Sciences and Office of the National Accreditation Council) Viet Nam Bureau of Accreditation ILAC / IAF

Policy Options: Harmonisation As is evident from the trade statistics the South Asian region is gradually moving in the direction of food trade which is largely value added. In order to facilitate it further, it may be explored if basic agreement on harmonisation of various elements is accomplished. This may involve various stages like the principles governing inspection and certification. This may follow Codex or any other international organisation, whose membership is open to all the countries. Important to recognise that the countries that certify exports of food and those importing countries which rely on export certificates should take measures to assure the validity of certification; confidence that official or officially recognised inspections systems have verified that the product or process referred to in the certificate conforms with requirements. Measures by importing countries may include point of entry inspection y p g y p y p systems, audit of exporting inspection systems, and ensuring that certificates themselves are authentic and accurate.

Policy Options: Agreement on Equivalence There is need to recognise that different inspection or even certification i systems may be capable of meeting the same objective and therefore the idea of equivalence. With equivalence, even if imported food products must meet the same safety standards as domestically produced foods, international trade rules permit a foreign country to apply its own, differing, regulatory authorities and institutional systems in meeting such standards, under an internationally recognized concept known as equivalence. Under the Article 4 of the SPS Agreement it has scope to identify the roadmap that the member countries need to follow while implementing the agreement. The SPS Committee in 2001 adopted a decision clarifying implementation of the Article 4 of SPS (G/SPS/19).

Policy Options: Agreement on Equivalence The Codex Committee on Food Import and Export Certification and Inspection Systems (CCFICS) has developed a number of guidelines relating to equivalence. Key Areas : (a) legislative framework, including the texts of all relevant legislation, which provides the legal basis for the uniform and consistent application; (b) control programs and operations, including the texts of all the exporting country s pertinent measures that would be the subject of the agreement, as well as other materials that relate to control programs and operations; (c) decision criteria and action; (d) facilities and equipments, communications as well as basic this includes transportation sanitation and water quality; and (e) () laboratories,, including information on the evaluation and/or accreditation of laboratories, and evidence that they apply internationally accepted quality assurance techniques;

Agreement on Equivalence (f) details of the exporting country s systems for assuring competent t and qualified inspection throughh appropriate it training, certification, and authorization of inspection personnel; and the number and distribution of inspectors; (g) details of the exporting country s procedures for audit of national systems, including assurance of the integrity and lack of conflict-of-interest of inspection personnel; (h) dtil details of the structure t and operation of any rapid alert systems in the exporting country As is clear the agreement on equivalence of SPS measures does not require duplication or sameness of measures, but the acceptance of alternative measures that meet an importing partner's appropriate level of sanitary or phytosanitary protection.

Mutual Recognition Agreements (MRAs) The MRAs constitute an important available option to address standards related limitation for countries. Essentially a bilateral process, this arrangement can help in reducing the cost of retesting or recertification, apart from reducing the time span for trade approvals. The MRAs may also cover non-harmonised national legislations which require independent testing and or certification and or even marking by a third-party. The MRAs are accomplished through a procedure comprising clearly following aspects: (i) Standard operating procedures (SOP); (ii) Regulation of testing procedures; (iii) Method of sampling (incidentally this is one of the major challenges most of the developing countries face while standardizing di i their hi approval mechanisms), and (iv) Accreditation of laboratories.

Mutual Recognition Agreements (MRAs) The MRAs may take several forms depending upon which of the above steps are covered in the agreement. Several MRAs which cover only SOPs or testing procedures or are even just confined to accreditation of laboratories. However, some of them cover all the features mentioned above in thatt case the domestic requirements of the importing countries are considered as equivalent. Conformity Assessment Bodies (CABs) These detailed product-specific agreements are directed at specific markets. In a way an MRA may be seen as an advanced version of harmonisation (or approximation) as it attempts to achieve the same though at various stages of testing and certification

Food Exports and Trade Facilitation Trade Facilitation By improving transparency and quick clearance By using electronic service delivery channels Reduce interface between Trade and Custom Officers Protect domestic industry from injury Valuation concerns Commercial frauds Timely and accurate trade statistics Address public safety and security concerns arising out p y y g of international trade Use of Risk Management techniques

Trade Facilitation Challenges Allocation of adequate financial resources Trade facilitation nested in various agencies making comprehensive approach difficult lacks ownershiplacks ownership Delay in transposition of regional commitments into national regulationcommitments regulation Lack of understanding/capacity building

TF and Food Import Procedures - Scope of Automation - Product Registration - Accreditation of Establishments - Licensing of Imports - Issuance of Import Permits - Risk Management

Automated Customs Clearances with Risk Management E-Filing through gateway Post Clearance Audit Risk Management System Delivery Examination

Recommendations South East Asia has to be vocal about NTBs Database on Experiences Regional Cooperation and MRAs Focus on Select commodities to begin with Learning from Other regional Groupings like ASEAN Activating Institutional Frameworks Role of Multilateral Institutions

References Chaturvedi Sachin (2011) MRAs and Food Exports, paper presented at the Sub-Regional Consultation Workshop on Equivalence and Mutual Recognition Agreements to Facilitate trade of safe and quality food for countries of SouthAi 28 Asia, 28-2929 September, Bangkok. k Patrice, Deboyser (2011). EU Experience-the motivation, the process, the problems, the pay-offs and the cost, paper presented at the Sub-Regional Consultation Workshop on Equivalence and Mutual Recognition Agreements to Facilitate trade of safe and quality food for countries of South Asia, 28-29 September, Bangkok. Ramesh Shirley V (2011) Regional integration towards trade facilitation in y ( ) g g ASEAN, paper presented at the Sub-Regional Consultation Workshop on Equivalence and Mutual Recognition Agreements to Facilitate trade of safe and quality food for countries of South Asia, 28-29 September, Bangkok.