Asean integration not happening in 2015

The Association of Southeast Asian Nations (Asean) will not likely achieve all the targets it had set out to have a fully integrated regional economy given the difficulties in implementing the measures to institute and harmonize the so-called “nontariff barriers.”

“It’s highly unlikely that the Asean will meet all the targets by 2015. That’s quite clear. Even the Asean scorecards show that. A more realistic deadline, keeping in mind the new member-countries, will be 2025,” said Jayant Menon, lead economist from the Office of Regional Economic Integration at the Asian Development Bank (ADB).

Speaking at the Management Association of the Philippines (MAP) general membership meeting Tuesday, Menon noted that the tariff targets would likely be met as the Asean has already achieved about three quarters of the targets set out for the establishment of the Asean Economic Community (AEC) by the end of next year.

By virtue of the Asean Trade in Goods Agreement (Atiga), most of the import duties in Asean have fallen to zero since January 2010. More than 99 percent of goods traded in Malaysia, Thailand, Philippines, Singapore, Indonesia and Brunei are already at zero tariff, while Cambodia, Laos, Burma (Myanmar) and Vietnam have been offering 0-5 percent duties on 98.6 percent of goods sourced within the region. Only a few products are still protected by tariffs within Asean, among them rice, sugar, swine and chicken.

The remaining targets, however, would be the hardest to complete as these pertain to the nontariff barriers, including the adequacy of infrastructure, intellectual property rights (IPR) protection, Customs automation and modernization, addressing red tape and other forms of corruption, streamlining business procedures and implementing a competition policy, Menon said.

The harmonization of such policies across the 10 member-states of Asean might prove to be difficult as in some cases, it would require a country to embark on constitutional changes, he further explained.

“In terms of nontariff barriers, it varies country by country. In the new member-countries, there is still a lot of red tape. A lot of the Customs procedures, for instance, are not yet automated, which leaves a lot of room for corruption,” Menon said. “In the Philippines, the biggest nontariff barrier would be infrastructure, which is still relatively weak so the trade costs associated with infrastructure remained high. And also, there is still a lot of red tape, while there are still business procedures that can be simplified.”

The establishment of the Asean Economic Community (AEC) by end-2015 is seen to herald “a new era for borderless competition” across industries. It is expected to transform the Asean countries into a single market and production base, to be characterized by the free flow of goods, services, skilled labor, investments and capital.