Regional pact eyes further elimination of non-tariff barriers

01/03/2015 12:00 - 474 Views

KOTA BHARU, Malaysia -- Economic ministers of the Association of Southeast Asian Nations agreed on Sunday to further dismantle non-tariff trade barriers in a bid to promote integration of their economies. The move follows ASEAN's steps to lower nearly all import duties that previously applied to intra-regional trade.

The ministers met at an informal retreat in Kota Bharu, an east coastal town of peninsular Malaysia, ahead of a leaders' meeting next month.

The ministers also discussed proposals to establish an ASEAN bank to assist micro and small enterprises, and in a statement after their talks expressed confidence that the region's economies will maintain their momentum in 2015 "despite the global economic and geopolitical challenges." They further emphasized that deepening economic integration in the region would serve as a buffer in helping ASEAN "progress and prosper."

The regional pact to facilitate intra-ASEAN trade and tackle non-tariff barriers was a key development in the group's plans to form the ASEAN Economic Community (AEC) by Dec. 31. The group's leaders have pledged that the AEC will see closer integration of regional economies, especially in trade and movement of people.

Currently, 97.3% of intra-ASEAN trade is free of import duties. While the 10 ASEAN member countries are aiming for zero duty to promote freer trade, each country maintains protective measures in the form of non-tariff barriers to shelter their industries, especially those of strategic importance.

The group has identified 69 of these non-tariff barriers and resolved 45 of them, ASEAN officials said. One breakthrough hinges on an agreement involving the testing of electrical and electronic goods based on a single test and uniform standards. Once a product passes the test, in one of the 16 test laboratories set up within the ASEAN region, it will be issued a certificate that will be recognized region-wide.

Such an initiative will reduce the time and cost of doing business within the region, said officials at the meeting. Other trade reforms agreed by ASEAN countries include simplification of customs procedures and adoption of common product labeling. The alignment of these national standards and procedures are intended to facilitate the export of goods within ASEAN and beyond in the lead-up to the launch of the AEC.

However, officials are at pains to stress that the AEC will not be a single economy entity which operates as a free trade zone. Instead, the ministers said in their joint statement, ASEAN will continue to send "a strong signal that positive measures have been put in place towards a more liberalized and integrated economic region beyond 2015."

As part of the push for greater integration, the ministers received feedback and proposals from leading regional private sector representatives on how to promote regional business in the AEC era. One key proposal is to establish an ASEAN-wide bank dedicated to assisting micro and small enterprises in the region. The ministers undertook to study and further discuss the proposal.

"It is something which cannot be resolved in a few months," Mustapa Mohamed, Malaysia's minister of trade, told a press briefing after the meeting.

There are large economic discrepancies within ASEAN, which groups more developed economies of Singapore, Thailand, Indonesia, Malaysia, the Phillipines and Brunei with the less developed states of Cambodia, Laos, Myanmar and Vietnam.

While Sunday's agreement resolves to further liberalize trade by eliminating import taxes, there are still many barriers put up by each country to safeguard strategic industries. Malaysia, which is the only car-producing country in the region, for example, imposes excise duties on imported vehicles - essentially on vehicles coming from outside ASEAN, though import duty is already zero for cars made within ASEAN.

Source: Nikkei