Trade costs threaten Asean integration

PUTRAJAYA, Malaysia—The supposed integration of Southeast Asian economies by 2015 is being threatened by high non-tariff costs of importing and exporting goods within the region that member countries, including the Philippines, have so far failed to ease.

This was according reports of the Association of Southeast Asian Nations (Asean) secretariat, which noted that although tariffs on most products have been reduced over the past years for the benefit of intra-regional trade, non-tariff barriers remain significant.

Substantial reduction, if not total elimination, of non-tariff costs to trade is one of the pre-requisites of regional integration. Its proponents have said that the free flow of goods is necessary to boost trade, which in turn is aimed at achieving the overarching goal of increasing incomes.

The report, titled “Asean Brief 2012,” said the non-tariff costs, which member-countries are urged to reduce, include documentation fees, administrative fees for customs clearance, customs broker fees and terminal handling charges, among others.

“Barriers to integration still exist, slowing down the integration process and preventing the economic gains of integration to be shared more effectively,” the report said.

Figures from the report showed that the average non-tariff cost of importing goods from Asean countries rose from $435 per 20-foot container in 2005 to $2,035 in 2010. More current data are still being compiled, but the average figure is believed to have continued to rise since 2010.

Reflecting a similar trend, the average non-tariff cost of exporting goods rose over the same period from $450 per 20-foot container to $1,880.

The report noted that the non-tariff costs of importing and exporting goods within the region have declined from 2005 to 2010 in real terms (or when inflation is factored out). However, it stressed, the reduction was minimal.

Meantime, the report showed an increase in intra-regional trade over the past years.

In particular, exports by member countries to each other more than doubled from $141 billion in 2004 to $328 billion in 2011. Similarly, imports also more than doubled from $120 billion to $271 billion over the same period.

Asean integration proponents, however, believe there remains substantial room for growth in intra-regional trade. They believe trade could have increased by a much faster rate if the non-tariff costs of importing and exporting goods had been reduced.

“Ongoing barriers to trade… hinder the process of integration, and thus, the scope of the region to benefit more rapidly,” the report said.