JoonJoon LianLian WANWANExternal Economic Relations DivisionExternal Economic Relations Division

ASEAN SecretariatASEAN SecretariatASEAN SecretariatASEAN Secretariat

Managing Regional and Global Governance (MRGG) in Asia: Opportunities and Challenges for the ASEAN Economic Community

5 October 2011, Jakarta

ASEAN Economic Integration Framework

Internal Integration – ASEAN Economic Community– Single market and production baseSingle market and production base– Competitive economic region– Equitable economic developmentq p– Integration into the global economy

External – FTAs and CEPs– Enhance market access– To remain competitive vis-à-vis countries/blocs

directly competing with ASEANdirectly competing with ASEAN– ASEAN Centrality

US$ billionASEAN’s TOTAL TRADE 2005-2010

US$ billion

2 042 8

2,500

1,610.8

1,897.2

2,042.82,000

1,224.9

1,404.8

,1,536.9

1,500

1,000

500

02005 2006 2007 2008 2009 2010

ASEAN’s Trade with Plus 3 (2005-2010)US$ million

600,000.0

Plus 3

US$ million

400 000 0

500,000.0Intra ASEAN

300,000.0

400,000.0

200,000.0

China

Japan

100,000.0Korea

0.0

2005 2006 2007 2008 2009 2010

Source of FDI into ASEAN 2010

Rest of the

Intra ASEAN,16.0%

USA, 11.3%

Rest of the World, 30.7%

EU 27,

Korea,5.0% ,

22.4%Japan,11.1%

China, 3.6%

FDI Flows into ASEAN 2005-2010US$ million

14 000

16,000

Plus 3

US$ million

12,000

14,000

Intra ASEAN

8,000

10,000ASEAN

Japan

4 000

6,000

Korea

2,000

4,000

China

02005 2006 2007 2008 2009 2010

ASEAN Economic Communityy

A Historical Account TowardsASEAN Economic Community (AEC)ASEAN Economic Community (AEC)

ASEAN Vientiane

ASEAN Framework

Cha-am Hua Hin Declaration on the Roadmap for the ASEAN

I t tHanoi Plan ofPreferential

Trading Arrangement

Vientiane Action

Programme

Framework Agreement on Services

(AFAS)

ASEAN Community (2009-

2015)

Investment Agreement

(AIA)

Plan of Action (HPA)

1967 1992 1997 2003 20071998 20091977 1995 2004 2008200720021967 1992 1997 2003 20071998 20091977 1995 2004 200820072002

Birth of ASEAN ASEAN Free Trade Area

(AFTA)

ASEAN Vision 2020

ASEANEconomic

Community Bl i t

Bali Concord II

Entry into Force of ASEAN Ch tInitiative(AFTA) Blueprint

(Acceleration of AEC to 2015)

CharterInitiative for ASEAN Integration

(IAI)

Main Elements of AEC

AEC Progress and Achievements

• Phase I (2008-2009) and Phase II (2010-2011)73 43% f l t d b d f J l 201173.43% of measures completed by end of July 2011.

AEC Scorecard:2008-2009: currently at 83 8%2008-2009: currently at 83.8%2010-2011: currently at 64.1%A total of 114 measures yet to be implemented by end

f 2011of 2011.

• Phase III (2012-2013)

• Phase IV (2014-2015)

AEC Progress and Achievements

As of 1 January 2010 tariff liberalisation within ASEAN:

ASEAN 6: 99 65% tariff lines eliminated (0%)ASEAN-6: 99.65% tariff lines eliminated (0%)CLMV: 98.86% tariff lines reduced to 0-5%

AEC Progress and Achievements

• Self-Certification Pilot Project - Brunei Darussalam, Malaysia, Singapore and Thailand y g

• The FOB value in the Certificate of Origin will be waived.

• ASEAN Single Window - Legal framework for the ASW Pilot Project is in

placeplace. - The implementation of the ASW Pilot Project will

take place by September 2012, involving the exchange of ATIGA Form D and ASEAN Customs Declaration Document (ACDD) among 7 Member States.

AEC Progress and Achievements

Trade in Services8th P k hi h l l f lib li ti i• 8th Package: higher levels of liberalisation i.e. towards 70% foreign equity for priority sectors and 51% for all the other sectors.51% for all the other sectors.

ASEAN Comprehensive Investment Agreement

• Continuous efforts are underway to further liberalise investment regimes in ASEAN through the ASEAN Comprehensive Investment Agreement (ACIA).

AEC Progress and Achievements

Finance• Aseanexchanges.org website: an initiative to link

seven stock market exchanges launched at the 15th

AFMM in April 2011.AFMM in April 2011.

Malaysia Singapore

PhilippinesPhilippinesViet Nam

IndonesiaThailand

AEC Progress and Achievements

Finance• Discussion is underway for the establishment of an

ASEAN Infrastructure Fund (AIF).

ASEAN+3• Chiang Mai Initiative Multilaterisation (CMI) US$120Chiang Mai Initiative Multilaterisation (CMI) US$120

billion fund – 24 March 2010• ASEAN+3 Bond Market Forum (ABMF) and the ( )

Credit Guarantee and Investment Facility (CGIF).

AEC Progress and Achievements

Transport

• Brunei Action Plan (BAP) - referred to as ASEAN Strategic Transport Plan 2011-2015, charting t t t t i ti t t th li titransport strategic actions to support the realisation of the AEC and the Master Plan on ASEAN Connectivity.y

• ASEAN Open Skies: Completion of the framework.• ASEAN-China Air Transport Agreement: unlimited 3rdASEAN China Air Transport Agreement: unlimited 3

and 4th traffic right freedoms.

AEC Progress and Achievements

SME Development

• Strategic Plan of Action for ASEAN Small and Medium Enterprises (SME) Development 2010-2015Enterprises (SME) Development 2010 2015

• SME Advisory Board

• ASEAN SME Awards (in collaboration with ASEAN Business Advisory Council)

• Directory of Outstanding ASEAN SMEs 2011

Integrating into the Global Economyg g y

ASEAN External Economic Relations

ASEAN-CanadaASEAN-Russia

Global Engagement is KeyGlobal Engagement is Key

ASEAN-Korea FTA

ASEAN-Japan CEP

ASEAN-China FTAASEAN-EU FTA ASEAN-US

ASEAN-India FTA

ASEAN-GCC

ASEAN-MERCOSUR

ASEAN-Australia-New Zealand FTA

ASEAN-GCC

FTAs in ASEAN

• ASEAN Free Trade Agreement (AFTA) – 1993ASEAN Free Trade Agreement (AFTA) 1993• ASEAN-China Free Trade Agreement (ACFTA) – 2005• ASEAN-Korea Free Trade Agreement (AKFTA) – 2007• ASEAN-Japan Comprehensive Economic Partnership

(AJCEP) – 2008ASEAN A t li N Z l d F T d A t• ASEAN-Australia-New Zealand Free Trade Agreement(AANZFTA) – 2010

• ASEAN-India Free Trade Agreement (AIFTA) – 2010ASEAN India Free Trade Agreement (AIFTA) 2010

ASEAN Free Trade Area

Established in 1992, realised on 1 January 2010 (ASEAN 6) as 99% of total tariff lines eliminated for(ASEAN-6) as 99% of total tariff lines eliminated for intra-ASEAN tradeAverage tariff for ASEAN-6 is now 0.95% from 12% in g1992AFTA for CLMV will be realised as early as 1 January 2015 (part of the S&D given to CLMV as new ASEAN2015 (part of the S&D given to CLMV as new ASEAN members and as least developed ASEAN Members)Ultimate goal is free flow of goods in 2015 as ASEAN g grealises the ASEAN Economic Community

ASEAN Trade in Goods Agreement (ATIGA)

Signed in Thailand on 26 February 2009 and entered into force on 17 May 2010into force on 17 May 2010Supersedes the 1993 Agreement on Common Effective Preferential Tariff Scheme (CEPT)( )Provides the legal framework to realise free flow of goods in the ASEAN Economic CommunityC ffCovers more than tariff liberalisation; includes substantive Chapters on enhanced ROO, trade facilitation work programme, Customs p g ,procedures, STRACAP (standards, technical regulations and conformity assessment procedures)and SPSand SPS

ASEAN-China Free Trade Agreement

• Negotiated using a “sequential approach” • ASEAN’s only FTA that provided for an Early Harvest

Programme, implemented in 2004• Trade in Goods Agreement signed in 2004 and

implemented in 2005; ROO enhanced in 2011implemented in 2005; ROO enhanced in 2011• Trade in Services Agreement signed 2007; 2nd

Package of Specific Commitments to be signed in August 2011

• Investment Agreement signed in 2009• ACFTA realised on 1 January 2010• ACFTA realised on 1 January 2010• Total population of 1.91 billion with a combined

GDP of US$7.6 trillion (2010)

ASEAN-Korea Free Trade Agreement

• Negotiated using a “sequential approach” • Introduced the concept of Product Specific RulesIntroduced the concept of Product Specific Rules• Trade in Goods Agreement implemented in

2007, without Thailand• Trade in Services Agreement signed 2007, without

Thailand • Thailand acceded to both the Goods and ServicesThailand acceded to both the Goods and Services

Agreements in 2009• Investment Agreement signed in 2009• AKFTA realised on 1 January 2010• Total population of 632.1 million with a combined

GDP of US$2 8 trillion (2010)GDP of US$2.8 trillion (2010)

ASEAN-Japan Comprehensive Economic PartnershipPartnership

• Negotiated as a single undertaking although services and investment part of a built in agendainvestment part of a built-in agenda

• Unique: bilateral EPAs (7) vis-à-vis regional CEP• AJCEP Agreement signed in April 2008 and entered into g g p

force in December 2008• First FTA to have an elaborate section on trade

facilitation SPS STRACAP and economicfacilitation, SPS, STRACAP and economic cooperation, among others

• Agreements on Services and Investment being negotiated• Total population of 711.2 million with a combined GDP of

US$ 6.56 trillion (2010)• FTA to be realised 10 years upon entry into forceFTA to be realised 10 years upon entry into force

ASEAN-Australia-New Zealand Free Trade AgreementAgreement

Negotiated as a single undertaking g g gAgreement establishing the AANZFTA signed in Feb 2009 and entry into force on 1 Jan 2010Considered the most comprehensive, most ambitious FTA ASEAN has to-dateIncludes chapters not in any of ASEAN’s FTAs:Includes chapters not in any of ASEAN s FTAs: IP, MNP, electronic commerce and competitionFTA to be realised in 2015Total population of 626.2 million with combined GDP of US$3.2 trillion (2010)

ASEAN-India Free Trade Area

Negotiated using a “sequential approach” similar to ACFTA and AKFTAACFTA and AKFTATrade in Goods Agreement signed in August 2009 and entry into force on 1 January 2010 y yGeneral ROO: 35% + CTSHAgreement on Services and Investment currently being negotiatedFTA to be realised by 2016Total population of 1 8 billion with combined GDP ofTotal population of 1.8 billion with combined GDP of US$3.3 trillion (2010)

Emerging Regional Architecture

• Next step: EAFTA (?)R id i l d l b l d l t• Rapid regional and global developments

• Ministerial decision: pragmatic and ASEAN Plus FTAs as building blocksFTAs as building blocks

• Consolidation exercise – priority given to ROO; Customs-related matters; tariff nomenclature and economic cooperation

• Narrowing the development gap critical to ensure less-developed countries benefit from economicless developed countries benefit from economic integration

Thank you