• December 19, 2014

By James Wallar \r\n

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Malaysia will assume the chair of ASEAN in 2015, the year\r\nthe grouping has pledged to achieve the ASEAN Economic Community (AEC).\r\nObservers should not expect a ?big bang? in November 2015 when ASEAN heads of\r\nstate declare that their AEC goals have been achieved. Many of the agreed\r\nelements of the AEC are already in place. Much, however, remains to be done for\r\nASEAN to achieve a resilient, competitive economy with equitable economic\r\ngrowth.

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Malaysia is in a strong position to push through several\r\nimportant features of the AEC and set the stage for the next phase of ASEAN\r\ncommunity building to 2025. Under its theme of ?Our People, Our Community, Our\r\nVision,? Malaysia could take measures to reduce trading costs, harmonize\r\ninvestment policies, provide new opportunities for low and medium-skilled\r\nworkers, and set a pathway for regional economic integration beyond ASEAN.

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The vision that Malaysia articulates for ASEAN 2025 should\r\nbe bold, building on the ?Consolidated Central Elements of an AEC Post-2015\r\nVision? fashioned under Myanmar?s chairmanship, and driving ASEAN to deeper\r\nintegration.

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Following is a ?wish list? of measures at the ASEAN level\r\nthat is within reach by the end of next year. Malaysia holds the key not only\r\nbecause of its position as chair, but also because it has provided policy and\r\ntechnical leadership on these issues for many years.

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  1. Reduce trade costs within ASEAN by launching the ASEAN\r\nSingle Window (ASW), trade repositories, and self-certification of rules of\r\norigin. The ASW is composed of national single windows that collect and\r\nelectronically disseminate information required for customs declarations. A\r\nsuccessful pilot exchange of information involving seven ASEAN states took\r\nplace two years ago. Rather than continuing with a pilot, ASEAN needs to ?go\r\nlive,? at least for a few sectors, to make the ASW operational, and then\r\ngradually expand its coverage. Trade repositories contain information and\r\ndocumentation about imports, such as tariff rates and licensing requirements.\r\nThe information can be publicly assessed through websites. Laos already has\r\ngone live and Indonesia?s website is well developed. The link between\r\ninformation in trade repositories and the customs declaration process in the\r\nASW is key to reducing trade costs. Similarly, ASEAN has operated two pilot\r\nprojects to allow importers to self-certify that relevant goods meet ASEAN\r\nrules of origin. This cuts out bureaucrats and middlemen, allowing small\r\nimporters to save time and costs. By the end of 2015, ASEAN should agree on a\r\nunified regime and a clear timetable to roll it out.
  2. Harmonize key policies on investment by declaring that any\r\nlegal entity established in ASEAN can benefit from the provisions of the ASEAN\r\nComprehensive Investment Agreement (ACIA) and by providing investors in\r\nservices the same protections as the ACIA. Questions have arisen whether\r\nforeign-owned firms could benefit from the national treatment provisions of the\r\nACIA. If the firm is a legal entity in an ASEAN country, the answer should be a\r\nclear yes. This will allow direct investors in ASEAN to pursue regional\r\nstrategies.The ACIA has solid protections for investors, including dispute\r\nsettlement and prompt, adequate compensation in the event of expropriation.\r\nUnfortunately, the ACIA does not apply to investment in services. This should\r\nbe remedied in the new ASEAN Trade In Services Agreement under negotiation.
  3. Spread the benefits of the AEC to migrant workers by\r\nagreeing to implement the ASEAN Declaration on the Protection and Rights of\r\nMigrant Labor. The declaration dates from 2007, and negotiations for its\r\nimplementation have stalled. The number of migrant workers across ASEAN has\r\nswelled to 6.5 million and will continue to grow as low and moderate skilled\r\nworkers seek new opportunities that arise in the AEC. Securing agreement would\r\nprovide a safe, more transparent, and predictable channel for these workers and\r\nwould be a major accomplishment.
  4. Set a pathway for regional integration beyond ASEAN by\r\nsetting clear minimum objectives for the Regional Comprehensive Economic\r\nPartnership (RCEP), a trade arrangement currently under negotiation between\r\nASEAN and six of its free trade agreement partners (Australia, China, India,\r\nJapan, Korea, and New Zealand) Negotiations have been lagging, and transparency\r\nof the process and targets has been non-existent. Importantly, leaders of the\r\n21-country Asia-Pacific Economic Cooperation grouping, agreed in November to\r\ndevelop a roadmap for the Free Trade Area of the Asia Pacific (FTAAP). A\r\nclearly defined, ambitious goal for RCEP could offer an important\r\nstepping-stone to the FTAAP.

Vision 2025

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In setting the tone for 2025, Malaysia would set an\r\nambitious target by declaring an ASEAN customs union as a goal and placing\r\nsustainable, equitable economic growth as a central ASEAN objective. A customs\r\nunion would require a common external tariff and harmonized customs procedures,\r\nkey to further reducing the cost of trading within ASEAN.

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At their November summit in Myanmar, ASEAN leaders noted\r\ndownside risks to growth due to the economic slowdown in China, the European\r\nUnion, and the United States. They agreed these risks could be mitigated\r\nthrough deeper economic integration. Finance ministers should be given a\r\nstronger role within ASEAN to drive the integration agenda. This would be\r\nnatural given their responsibilities for customs, investment, financial\r\nservices, and budget issues.

\r\n\r\nA study by the International Labor Organization\r\nand the Asian Development Bank released in August suggests that ASEAN\r\nintegration could raise the region?s gross domestic product 7.1 percent above\r\nbaseline by 2025 and generate 14 million new jobs. Achieving deeper integration\r\nwould benefit the people of ASEAN by creating a meaningful economic community\r\naligned to a clear, ambitious vision. That sounds right in line with Malaysia?s\r\ntheme for the year. Now it is up to Malaysia to deliver.

This\r\narticle originally appeared on the CSIS Asia policy blog, cogitASIA.

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