Cooperation in Trade
In 1997, ASEAN focused a major part of its energies on making the necessary preparations for the accession of Laos and Myanmar to the CEPT Agreement and the finalisation of their CEPT package for tariff reduction beginning 1 January 1998.
Efforts were also made to strengthen the rules and disciplines of the CEPT Agreement. The interpretative notes of the article on emergency measures of the CEPT Agreement were amended to make them consistent with relevant provisions of the WTO Agreement on Safeguards. A protocol on notification procedures was formulated, obliging member countries to provide early notification of actions or measures that may nullify existing benefits enjoyed by other members.
Facilitation work in the areas of customs and elimination of technical barriers to trade also continued. Plans of action to implement Customs Vision 2020, are scheduled for completion by the Sixth ASEAN Summit in Hanoi in December 1998. ASEAN is also drafting a Framework Agreement on Mutual Recognition Arrangements, which will provide the basis for accelerating the development of both bilateral and regional mutual-recognition agreements on standards and conformance among ASEAN member countries.
Finally, in response to the financial turmoil in the region, ASEAN is working on accelerating the implementation of the CEPT Agreement so that the goal of achieving free trade in the region will be achieved earlier than originally planned.
Accession of Laos and Myanmar to the CEPT scheme for AFTA
On 23 July 1997, Laos and Myanmar acceded to 10 key ASEAN economic agreements, including the CEPT Agreement.
The two main commitments required from Laos and Myanmar for their accession to the CEPT Agreement are (i) tariff reductions under the CEPT scheme for AFTA commencing on 1 January 1998, and (ii) the removal of all quantitative restrictions on products on the Inclusion List. Table 1 provides the list of key economic agreements acceded to by Laos and Myanmar upon joining ASEAN.
Laos and Myanmar submitted their CEPT packages to the 11th AFTA Council held in October 1997 in Subang Jaya, Malaysia, and to the 29th ASEAN Economic Ministers’ Meeting in October 1997.
Laos’ package includes 533 tariff lines on its Inclusion List, 2,822 on its Temporary Exclusion List, 96 on its Sensitive List and 102 on its General Exceptions List.
Myanmar’s package comprises 2,356 tariff lines on its Inclusion List, 2,987 on its Temporary Exclusion List, 21 tariff lines on its Sensitive List and 108 tariff lines on its General Exceptions List. Table 2 provides a summary of Laos’ and Myanmar’s respective CEPT packages endorsed by the AFTA Council.
The timeframe given to both Laos and Myanmar for completing tariff reduction under the CEPT scheme is 1998-2008. Both countries will start phasing in the annual installments of Temporary Exclusion List products into the Inclusion List on 1 January 2001. This process will be completed by 2005.
With the accession of Laos and Myanmar, the total number of tariff lines in the CEPT Inclusion List for 1998 is 45,996.This represents about 83% of all tariff lines in all nine ASEAN countries. Table 3 shows the composition of the 1998 total CEPT package.
Other developments in the CEPT Scheme for AFTA
A major development in 1997-1998 was the formulation of the Protocol on Notification Procedures to promote transparency and to improve the operation of notification procedures for all ASEAN economic agreements. The protocol obliges member countries to notify other members, with at least 60 days’ notice, of any action or measure that they intend to take which may nullify or affect any benefit to other member countries directly or indirectly under any ASEAN economic agreement; or when the action or measure may impede the attainment of any objective of an ASEAN economic agreement. However, it does not apply to actions taken under emergency or safeguard measures of an ASEAN economic agreement. Instead, amendments were made to the Interpretative Notes of Article 6 of the CEPT Agreement to strengthen the conditions under which emergency measures may be invoked by making it consistent with the WTO Agreement on Safeguards.
Intra-ASEAN trade
Using export trade values of the first six ASEAN countries as an indicator, intra-ASEAN trade grew from US$36.8 billion to US$44.78 billion (a growth of 21.9%) during the first six months of 1997, compared with the same period in 1996 (Table 4). This is still in line with the 28.8% annual growth in intra-ASEAN exports from 1993 to 1996.
Total exports of the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) grew from US$153.9 billion to US$167.4 billion (a growth of 8.8%) during the first six months of 1997, compared with the same period in 1996. As a result of the rapid expansion of intra-ASEAN exports, ASEAN exports grew from 23.9% in 1996 to 26.7% in 1997 (Table 5).
Countries experiencing rapid growth in intra-ASEAN exports during the first half of 1997 were Malaysia (41%), Thailand (36.1%) and the Philippines (20.2%). In absolute terms, Malaysia’s intra-ASEAN exports grew by US$4 billion; Singapore’s by US$2.3 billion and Thailand’s by US$1.9 billion. Both Malaysia and Singapore continued to account for the bulk of intra-ASEAN trade. In the first half of 1997, Singapore accounted for 39.9% of intra-ASEAN exports, and Malaysia, 30.8%.
The source of much of this growth was the expansion in exports of electrical appliances and machinery. This sector makes up almost 54.7% of intra-ASEAN exports. Other important contributions to growth of intra-ASEAN exports were made by chemicals and prepared foodstuffs (Table 6).
Acceleration of AFTA in response to the financial crisis
The financial turmoil that hit the region in mid-1997 led to the decision of the Second Informal ASEAN Summit to accelerate the implementation of AFTA.
Tasked to look into the matter, the ASEAN Senior Economic Officials have agreed that acceleration of the implementation of AFTA should not be limited to a timeframe, but should aim to cover both trade liberalisation and facilitation activities. It should also involve all ASEAN members. Currently, a number of proposals are being considered which include:
• reducing the list of products in General Exception
• fully implementing the Fast Track
• accelerating the transfer of products
from the Temporary Exclusion List to the Inclusion List
• reducing CEPT tariff rates to 0%-5% by 2000
• reducing CEPT tariff rates to 0% by 2003
• establishing mutual recognition arrangements (MRA) in standards and conformance
• accelerating customs harmonisation.
SEOM agreed that participation should be on a voluntary basis and that member countries would put up individual proposals on their acceleration packages. In addition to the unilateral acceleration move, SEOM also reiterated that the existing commitments should proceed as planned and that no member country should backtrack on their CEPT/AFTA commitments.
Trade facilitation measures through customs harmonisation and simplification
Efforts to remove barriers at customs points through the simplification and harmonisation of customs procedures continued; specifically, through measures such as the harmonisation of tariff nomenclature and the accelerated implementation of the WTO/GATT Valuation Agreement. These efforts, on-going since 1995, are targeted for completion by 2000 and will see the introduction of the ASEAN Harmonised Tariff Nomenclature and the implementation of the WTO/GATT Valuation Agreement by all member countries.
Customs cooperation was intensified as part of the ambitious work programme being developed under the Customs Vision 2020, which aims to enhance efficiency, professionalism and services to promote trade and investments and the protection of the health and well-being of the ASEAN countries. Fifteen elements, identified as representing the main building blocks of customs, will be developed under the Plan of Action. They are:
• Training and human resources development
To enhance the training activities undertaken by customs authorities of member countries and to develop the potential of human resources of the ASEAN customs authorities through training and other mechanisms.
• Partnership with the business community
To establish a close relationship with the business community for the mutual benefit of customs control, revenue collection, trade and commercial activity.
• Mutual assistance
To establish a cooperative framework for ensuring the proper application of customs laws, in particular for the prevention, investigation and repression of smuggling, the trafficking of narcotics and psychotropic substances, and other customs offences.
• International customs fora
To promote awareness of international conventions, guidelines and best practices among members and to ensure greater coherence and proactiveness of the customs authorities of member countries in relevant international fora.
• Technical assistance programmes for customs authorities of member countries
To promote equal levels of development among customs authorities of member countries in order to enhance regional efficiency, effectiveness and uniformity.
• Transparency enhancement
To promote the accessibility of information on customs procedures and requirements in member countries.
• Strategic planning and management:
To take enlightened approaches to the management of customs by defining corporate objectives and strategic plans in order to strike the right balance between customs control and trade facilitation; to make better use of resources, strengthen management capabilities and devise appropriate systems, processes and structures; to ensure the highest level of integrity and professional standards and the provision of quality service.
• Procedures for goods in transit and temporary admission
To facilitate the free movement of goods in transit and those admitted under a temporary import regime in ASEAN through simplified and harmonised customs procedures and requirements, and to secure greater growth in the long term through more predictable customs requirements and lower business cost.
• Automation
To ensure maximum use of state-of-the-art information technology to assist in the efficient performance of all international trade and customs functions and activities.
• Cargo processing
To enhance facilitation, simplicity and uniformity in cargo-clearance processing and to establish benchmarks to measure the effectiveness of current cargo-clearance procedures.
• Tariff classification
To promote transparency, consistency and uniformity in the classification of goods within ASEAN through the implementation of a harmonised tariff nomenclature, and to facilitate trade within ASEAN through predictable and assured classification rulings and decisions.
• Valuation
To promote transparency, consistency and uniformity of valuation methods and rulings through the implementation of the WTO Valuation Agreement and the harmonisation of its implementation within ASEAN.
Work in customs cooperation was consolidated under the ambitious work programme being developed for Customs Vision 2020
• Rules of origin
To promote transparency and uniformity of application of the rules of origin used in intra-ASEAN trade.
• Audit
To apply post-entry audits and to develop ASEAN guidelines for post-audit systems, based on best practices.
• Enforcement
To apply risk-management techniques and check a small percentage of consignments.
Another development taking shape is the formulation of an ASEAN customs transit system for the facilitation of goods in transit, which will form part of the ASEAN Framework Agreement on the Facilitation of Goods in Transit. This is a coordinated effort among ASEAN bodies covering customs, trade and transport. The agreement is expected to contribute further to the facilitation of goods transport within ASEAN, particularly among geographically contiguous countries, thus taking full advantage of the synergies of the region’s economies.
The ASEAN Customs Vision places emphasis on partnership and cooperation with the private sector in encouraging and ensuring the smooth flow of goods across borders in the region. The Sixth Meeting of the ASEAN Directors-General of Customs held in Jakarta in February 1998 also held its second dialogue with representatives of the private sector. This series of dialogues contributes to a better understanding between customs authorities and the private sector. It is also a useful mechanism for improved communication between the two parties. To date, cooperation with the private sector has led to several joint efforts: the publication, The ASEAN Handbook on Customs Procedures, the exchange of information on trade facilitation measures and the provision of support by ASEAN customs authorities at the international forum to the ASEAN-CCI’s proposal on the ATA Carnet system for temporary admission.
Work on eliminating non-tariff barriers in ASEAN
As customs surcharges affecting ASEAN products under the CEPT Scheme have been removed since the end of 1996, work has now focused on the elimination of Technical Barriers to Trade (TBT) and the harmonisation of Sanitary and Phytosanitary (SPS) measures.
Progress made in eliminating Technical Barriers to Trade (TBT)
Member countries have agreed to complete the harmonisation of national standards with international ones such as those of the International Standards Organisation (ISO), the International Electrotechnical Commision (IEC) and the International Telecommunications Union (ITU) for 20 priority product groups by 2000. Harmonised standards for these products could be implemented by 2001.
MRAs on conformity assessment could be a good means of eliminating TBT. Some member countries have already concluded bilateral MOUs and arrangements to reduce the costs of retesting and trade transactions. The following bilateral arrangements have been achieved:
• An MOU on technical cooperation between Indonesia’s Standardisation Council (DSN) and the Philippines’ Bureau of Product Standards (BPS).
• An arrangement between the DSN and the BPS on Product Certification and Approval Schemes.
• Arrangements between the Standards and Industrial Research of Malaysia (SIRIM) and the Superintending Company of Indonesia (SUCOFINDO) on ISO 9000 audits.
• An MOU between the Singapore Productivity and Standards Board (PSB) and SIRIM Sdn Bhd, Malaysia, covering among other things, cooperation to work towards mutual recognition of ISO 9000 certification.
Member countries agreed to develop the ASEAN Framework Agreement for MRAs, which should serve as a basis for the development of MRAs for specific products and/or sectors.
At the Eleventh Meeting of the ASEAN Consultative Committee on Standards and Quality (ACCSQ) in Kuala Lumpur in March 1998, member countries agreed to set up a special working group to draft the ASEAN Framework Agreement on MRAs. Following this, the group will look into sectoral MRAs and the possibility of MRAs with other countries and regional trade groupings. Member countries are also working on the harmonisation of standards, conformity assessment procedures and technical regulations for the priority products as well as the harmonisation of conformity assessment procedures for cosmetic products.
Member countries actively conduct consultations and undertake collaborative projects with counterparts from other parts of the world, including Japan, the EU, the United States, Australia and New Zealand. An ACCSQ-CER Action Plan has been developed to implement the MOU concerning Cooperation on Standards and Conformance signed between ASEAN and the Closer Economic Relations (CER) countries in September 1996. A Total Quality Management (TQM) Project, a collaboration between ACCSQ and Ministry of International Trade and Industry (MITI) of Japan, is being implemented to assist companies in ASEAN to implement the TQM concept to improve the quality of their products. The ASEAN-EU Regional Cooperation Programme on Standards, Quality and Conformity Assessment is being prepared.
Progress in the harmonisation of SPS measures
Member countries developed principles for the harmonisation of phytosanitary measures in ASEAN, which include the facilitation of intra-ASEAN trade, consistency with international standards, transparency and technical justification of phytosanitary measures.
Fourteen agricultural products have been prioritised for harmonisation. They are rice, mango, coconut, ginger, dendrobium, groundnuts, round cabbage, black pepper, potatoes, onions, oranges, coffee, pineapple and bananas.
Progress has also been made in the harmonisation of maximum residual limits (MRLs) of pesticides in vegetables:
• Principles of harmonisation of MRLs for ASEAN vegetables are being finalised.
• National committees on MRLs are being set up in all member countries in order to collect information, submit a list of priority vegetables and establish national mechanisms to implement the ASEAN harmonised MRLs.
• The harmonisation of MRLs is currently focused on two commodities: tomato and cabbage for five important pesticides.
Member countries have also agreed to expand the list of vegetables and pesticides for harmonisation of MRLs—at least five more pesticides could be considered in 1998.
OTHER AREAS OF ECONOMIC COOPERATION
Services
The Coordinating Committee on Services (CCS) completed its negotiations and arrived at an initial package of commitments by 30 June 1997. The initial package contains commitments by member countries in five service sectors: air transport, business services, maritime transport, telecommunications and tourism (see Table 8 for a summary of the commitments). For the most part, the initial package consists of new commitments in service subsectors that were not included in the General Agreement on Trade in Services (GATS) and a binding of existing regimes.
All countries contributed to the initial package of commitments. Despite joining ASEAN only in July 1997, Laos and Myanmar made initial commitments in tourism.
The package was endorsed by the Economic Ministers during the 29th AEM held in Subang Jaya, Malaysia in October 1997.
Efforts are now focused on completing the final package of commitments by 31 December 1998, with commitments in construction and financial services sectors expected. Furthermore, all member countries are expected to work towards making commitments in all seven priority service sectors identified at the Fifth ASEAN Summit.
Cooperation in Food, Agriculture and Forestry
Food
June 1997-May 1998 marked a period of commendable progress in the implementation of ASEAN cooperative activities in the area of food, agriculture and forestry. The implementation of projects in sectoral and subsectoral areas generally proceeded according to schedule under the charge of the respective sectoral working groups and other subsidiary bodies of the Senior Officials Meeting of the ASEAN Ministers on Agriculture and Forestry (SOM-AMAF). Member countries forged joint approaches on a number of international and regional issues on trade and the environment.
Food security and food handling
With the accession of Laos and Myanmar to the Agreement on the ASEAN Food Security Reserve (AFSR), the total earmarked quantity of rice for the ASEAN Emergency Rice Reserve (AERR) is now 84,000 tonnes (see Table 7). ASEAN is exploring the possibility of establishing a food-security information system for the region. At a roundtable in Bangkok in August 1997 financed by the Food and Agriculture Organisation several recommendations were made on this issue for consideration by member countries.
In the area of food handling, member countries have approved the draft of the ASEAN General Guidelines on the Preparation and Handling of Halal Food in the hope of further expanding intra-ASEAN trade in meat and meat products. The Draft Guidelines will be submitted to the 20th AMAF Meeting in Hanoi in September 1998 for endorsement. Member countries have also approved the Model protocol for the use of irradiation for the phytosanitary treatment of fresh fruits and vegetables for export to the United States and harmonised regulations on the use of food irradiation in ASEAN. In addition, two workshops-cum-training sessions were conducted under the ASEAN-Australia Economic Cooperation Programme: Phase III Project on Quality Assurance Systems for ASEAN Fruits ó Fresh and Minimally Processed. The objective of these activities is the facilitation and expansion of trade in agricultural products.
Agriculture
Crops
Member countries continued joint activities in harmonising phytosanitary measures for mangoes and rice, and maximum residual limits (MRLs) of pesticides for vegetables to facilitate intra-ASEAN trade in these agricultural products.
A regional Pest Risk Analysis Workshop on the harmonisation of phytosanitary measures was held in Subang, Selangor, Malaysia in June 1997. Member countries are preparing a comprehensive endemic pest list for mangoes and rice. They are also reviewing their current phytosanitary legislation to see if amendments are necessary in order to make the legislation consistent with the WTO and the International Plant Protection Convention (IPPC). Member countries have also agreed on a two-year work programme (August 1997-July 1999) to harmonise phytosanitary measures on 12 other products — coconuts, ginger, dendrobium, groundnuts, round cabbage, black pepper, potatoes, onions, oranges, coffee, pineapples and bananas which are extensively traded within the ASEAN region.
Member countries have selected round cabbage and tomato as the first two types of vegetables on which MRLs will be harmonised, focusing on five priority pesticides, namely Chlorpyrifos, Methamidophos, Monochrotophos, Dimethoate and Dithiocarbamates. Good Agricultural Practice (GAP) and/or label information for the five pesticides on the two selected vegetables are being reviewed. More vegetables will be selected for future harmonisation and lists of vegetables of interest to the member countries will also be compiled.
Livestock
Member countries are about halfway through the harmonisation of sanitary measures to promote and facilitate intra-ASEAN trade in animal vaccines and in livestock and livestock products. Four manuals on animal vaccines have been published for use by relevant government agencies and the private sector under the following titles:
• ASEAN Standards for Animal Vaccines (38 vaccines)
• ASEAN Standards of Good Manufacturing Practice (GMP) for Animal Vaccines
• ASEAN Rules and Procedures for the Registration of Animal Vaccines
• ASEAN Criteria for Accreditation of Animal Vaccine Testing Laboratories
The ASEAN Sectoral Working Group on Livestock is currently working on manuals of accreditation criteria for establishments engaged in the livestock and livestock products industry.
ASEAN continued to cooperate with the Office International des Epizootics (OIE) in the control and eradication of foot-and-mouth disease (FMD) of bovine animals in the region. With the admission of Laos and Myanmar into ASEAN, specific regions of these two member countries will need to be inspected in order to declare them FMD-free zones or otherwise. The spread of diseases through crossborder movements of live animals is also being monitored through bilateral arrangements between member countries. A database on equine diseases, populations and movements in ASEAN member countries is available for use by member countries to develop further activities which would facilitate international movement of horses.
Fisheries
Cooperation in fisheries continued to be focused on the development and improvement of fisheries post-harvest technology and the harmonisation of quality assurance on fishery products. A hazard analysis and critical control point (HACCP) training programme has been developed for use by member countries. The ASEAN-Canada Fisheries Post-Harvest Technology Project, which ended in June 1997, contributed much towards this end. The activities of this project are sustai
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