Asean must cut nontariff barriers

Malaysian Prime Minister Najib Razak wants the Association of Southeast Asian Nations (Asean) to reduce nontariff barriers by at least half for the regional bloc to become the fourth-largest economy by 2050, a tall order that seeks to reverse the rising protectionism within the ten-member group.

Nontariff barriers (NTB), or sometimes called nontariff measures (NTM), are restrictions to imports or exports through means other than the imposition of tariffs. These usually take the form of import quotas or customs delays. These NTBs have increased more than threefold between 2000 and 2015, according to the top Malaysian government official, creating a hurdle that prevented the Asean economy from achieving its potential.

Najib said that the Asean economy could reach $9.2 trillion in the next three decades if member-states could drastically bring down trade barriers. As of 2015, the Asean was the sixth-richest economy in the world, according to the latest Asean Economic Community Chartbook.

“For Asean to reach that target economic total of US$9.2 trillion, NTBs and NTMs have to be reduced by at least 50 percent. There is no alternative if we wish to be able to seize that prize. So huge, coordinated efforts are required to deal with this problem,” he said in his keynote speech during the Asean Prosperity for All Summit in Manila.

On the sidelines of the event, Trade and Industry Secretary Ramon M. Lopez told reporters that he supported the target, but he noted that he could not determine a realistic timeline to achieve the goal to reduce barriers.

However, he said that he was in discussion with different Asean Economic Ministers (AEMs) to reduce NTBs, adding that the leaders agreed in “principle” but has not reached consensus on the actual policy yet.

He said they wanted to come up with a parameter that would help Asean member-states to justify the trade barrier.

“What I’m saying is that we should have some guidance or parameters to test if one could justify setting up the nontariff measure,” he explained.

Lopez said he raised this proposal during their previous meetings and that he expected to engage into a deeper discussion on this in November.

“As a general rule, that would apply to all. It’s time for us to assess certain guidelines that we will all accept as a basis for the NTBs and NTMs,” he added.

When asked how the Philippines fared in terms of nontariff barriers, he said the country did not have as many as compared to other countries. He did not elaborate.

The Philippines has already brought down a number of tariff rates to zero. One commodity that remains protected, however, is rice. Importation of the national staple remains restricted.