Committee on Trade and Tourism

The Fourteenth Meeting of the Committee on Trade and Tourism (COTT) was held in Singapore on 8-10 September 1982 and the Fifteenth Meeting in Pattaya, Thailand on 17-19 March 1983.

Trade Liberalisation

Various significant developments took place in the field of trade liberalisation. Under the PTA, another 24 items were exchanged at the Fourteenth COTT Meeting and this was approved by the Fourteenth AEM Meeting bringing the number of items on which preferences were exchanged under the matrix and voluntary approach to 8564. Another 26 items were success- fully negotiated at the Fifteenth COTT Meeting and awaits the approval of the AEM.

The Twelfth AEM Meeting, upon the recommendation of COTT, had discontinued the voluntary approach as it was felt to have outlived its usefulness. In another significant move, the Fourteenth AEM Meeting, upon the recommendation of COTT, decided to replace the matrix approach with bilateral negotiations. This was because the framework of matrix exchanges, based on a limited number of offers and request per country per negotiation, was felt to be too restrictive in view of its need for an immediate balancing of benefits. Under the new approach, member countries will submit request lists for the purpose of negotiations on a bilateral basis.

In the across-the-board tariff cuts, the AEM at its Fourteenth Meeting also agreed to the COTT recommendation that the ceiling value for such cuts be raised to US$ 10 million based on 1978 statistics with an exclusion list. The Fifteenth COTT Meeting recommended that this be implemented from 1 July 1983.

With the successive raising of value ceilings in the across-the-board approach, a broad range of new items has come under the PTA. It is estimated that after taking into account the overlapping of product coverage under the various approaches, the total number of items under the PTA as of 1 March 1983 was welI in excess of 1 2,000.

The extension of the across-the board approach has, however, also added urgency to the need for agreed guidelines on items to be covered in the exclusion lists. The lack of such guidelines, coupled with the need to meet various inter- departmental demands within each. member country, has in the past led to an escalation in the restrictiveness of exclusion lists. Because of this, the Fourteenth AEM Meeting had directed COTT to draw up, as a matter of priority, guidelines on the drawing up of such lists. This was subsequently achieved at the Fifteenth COTT Meeting. As agreed, the criteria for excluding items must be verifiable and/or quantifiable. These criteria cover products that are listed in official documents as under investment promotion, products in which imports are controlled for safeguarding or promoting national interest, products of substantial revenue importance, products of substantial employment significance and products in sectors sensitive to competition from ASEAN and/ or where ASEAN member countries have demonstrated competitiveness vis-a-vis non- ASEAN suppliers; this last criteria being based on agreed percentage market shares. In addition to such specific criteria, the guidelines also allow member countries to exclude 10% of items under any agreed import value ceiling. This is accordance with the spirit of AEM instructions that while, as a general principle, exclusion lists should be kept as short as possible, there is a need for the guidelines/criteria to be flexible enough to accommodate the circumstances and needs of each member country, Needless to say, the guidelines presently formulated would be further refined and improved upon on the basis of experience gained in their operation.

In their constant search to improve the workings of the PTA, the AEM had, at their Thirteenth Meeting, agreed to a wider use of the sectoral approach. One of the sectors on which early attention has been focused was the food sector where it was proposed that a 50% tariff reduction should apply to all products currently under the PTA. Subsequent explorations revealed difficulties in such a simple tariff-cutting exercise in this sector because of possible adverse effects on the rural economy of some member countries. Hence other avenues for trade liberalisation in the food sector had to be explored. In this connection, the Fourteenth AEM Meeting instructed COTT to explore other areas in which the sectoral approach may be applicable, and in this regard suggested the four areas of textiles, chemicals, rubber and rubber products, and cement and cement products for the consideration of COTT. At its Fifteenth Meeting COTT agreed to study the matter with the private sector with a view to finding a comprehensive approach. Meanwhile, the four sectors suggested by the AEM would be taken up in the context of bilateral negotiations.

Besides extending the scope of PTA product coverage, much effort has also been put into the other dimension of preferential treatment - i.e. depth of tariff cut. Avery important decision in this regard was taken when the Fourteenth AEM Meeting, upon COTT's recommendation, agreed that tariff cuts on non-food items already under the PTA and on future exchanges should be deepened to a maximum of 50 percent. In addition, COTT has also agreed to the need of reducing and removing non-tariff barriers. The Trade Preferences Negotiating Group has been directed to consider means towards their reduction and removal.

Tourism

The Sub-Committee on Tourism (SCOT) held its Eleventh Meeting in Singapore on 1-3 September 1982 and its Twelfth Meeting in Manila, Philippines, on 7-9 February 1983. The ASEAN Heads of National Tourism Organizations (NTO's) held their Second Meeting in Manila on 6 February 1983.

One of the significant events of the year was the ASEAN Tourism Forum (ATF) 1983 held in Manila on 7-11 February 1983. The main constituent of the ATF was the ASEAN TRAVEX which brought under one roof the international buyers of tourism services and the ASEAN suppliers of such services. More than 100 buyers from some twenty-two countries transacted business with an equal number of ASEAN suppliers. The ATF 83 also included a promotional Travel and Cultural Fair and an ASEAN Night of cultural and culinary presentations. Under the umbrella of the Forum, the ASEAN Tourism Association (ASEANTA), the Federation of ASEAN Travel Association (FATA) and the ASEAN Hotel and Restaurant Association (AHRA) also held their annual conferences.

The ASEAN Promotional chapters abroad, in Los Angeles, Sydney, Tokyo, London and Frankfurt had another active year promoting ASEAN as a tourist destination through multifarious marketing projects and activities such as shows, workshops, exhibitions and distribution of brochures and gifts.

With regard to the ASEAN Travel Film, SCOT is still in the process of evaluating proposals. The budget for the Film was raised from an estimated US$ 75,000 to a ceiling of US$ 125,000.

SCOT has established working links with the ASEAN Promotion Centre on Trade, Investment and Tourism which has agreed to provide assistance for SCOT's Japanese Market Study Project.

International Economic Issues

The past year has seen a continuation of the worldwide economic recession that began in mid 1980, with only sporadic indications of possible recovery. This has fuelled protectionist sentiments and put increasing strains on the international free trade system. The recession has also rudely unmasked the problem of Third World indebtedness and the fragility of the international financial system under which the free flow of goods and investible funds take place. The resulting crisis has, as never before since Bretton Woods, forced the free enterprise nations to focus on fundamental questions of international economic interdependence. In the various international fora that have addressed such questions, ASEAN has always endeavoured to adopt a joint stand, not just to protect its legitimate interest but, just as importantly to contribute more effectively and constructively towards the creation of an equitable and prosperous international economic order.

In the very important GATT Ministerial Meeting held in Geneva in November 1982, member countries forged a common position on the basis of nine ASEAN priority topics. These were as follows:

Safeguards : that ASEAN maintain its position on the principle of non-discrimination in conformity with Article XIX and to place all safeguarding measures taken outside the GATT under the GATT discipline.

Dispute Settlement Procedure: that ASEAN reaffirm the importance of improving the adjudication, more than the conciliation, process of the Dispute Settlement Procedure.

Agriculture: that ASEAN propose the launching of a round of negotiations for the liberalization of trade in agriculture which shall include tariff and non-tariff barriers. In this connection that ASEAN support the establishment, within the GATT, of an institutional body to undertake urgent preparations for such negotiations; to examine trade problems, practices and policies affecting agriculture (such as those practised by the EEC with regard to products such as sugar and palm oil) and to provide effective solutions to problems and distortions affecting competition; to improve transparency in agricultural trade and to review Article XVI dealing with agriculture.

Tropical Products: that ASEAN support the proposal that the terms of reference of the Committee on Trade and Development be extended to become the permanent negotiating body to conduct continuing consultations and negotiations to facilitate the liberalization of trade tropical products as a special and priority sector. Non-Tariff Measures: that ASEAN propose the following:

Export Credits: that ASEAN take the position that provisions on minimum interest rates and maximum repayment terms of international undertakings on official export credits not apply to developing countries' imports of capital goods. This is designed to facilitate the expansion of these imports consistent with the trade and development need of these countries.

Structural Adjustment: that ASEAN propose stricter disciplines to be adopted by the GATT when restrictive measures are imposed to solve fundamental structural problems. However, in case of serious market disruptions, Contracting Parties could resort to safeguard measures on a temporary basis. If these temporary measures could not succeed in rectifying the matter, the party concerned should resort to structural adjustment measures and refrain from continuing the safeguard measures. In addition, ASEAN should support the creation of a Sub-Committee on Structural Adjustment under the Committee on Trade and Development for the purpose of facilitating the exchange of information and speeding up the implementation of structural adjustment measures.

In the realm of commodities, the year under review has been a difficult one. The prolonged global recession has severely depressed the prices of, and earnings from, ASEAN commodity exports upsetting the developmental aspirations of various member countries.

ASEAN cooperation in international commodity trade dates back to the Bangkok Declaration of 1967, but was given its fullest articulation in the ASEAN Concord of 1976. The basic principles governing such cooperation were further refined at the Kuala Lumpur Summit of 1977 and subsequent meetings of ASEAN Economic Ministers.

The basic framework governing ASEAN's joint approach on international commodity issues since 1976 was the Integrated Programme for Commodities (IPC), adopted by UNCTAD IV in May 1976, as the objectives the IPC coincide with ASEAN's main objectives in respect of commodities. Though coming two years after the UN resolution on the New International Economic Order (NIEO), the IPC has been regarded by developing countries as the very cornerstone of the NIEO programme. Briefly, the IPC aims to reduce the fluctuations in price and supply of some 18 major commodities, including cocoa, coffee, rubber, copper, tin, vegetable seeds and oils and tropical timber, which are of interest to ASEAN. These objectives are to be achieved, inter alia, by means of international commodity agreements using buffer stocks as the chief instrument and financed out of a Common Fund, In addition, it envisages improved compensatory financing to stabilise export earnings of developing countries. The IPC is to be implemented through the cooperation and joint effort of developed countries, which are the main consumers, and developing countries, which are the main producers. To enable such cooperation, the guiding principle behind price stabilisation is that prices must be both remunerative for producers and equitable to consumers.

In the year under review ASEAN has continued to strive hard and constructively, both in the context of its Dialogues as well as in other international fora, to galvanise the support of both consumers and producers in giving substance to the objectives of the IPC. To date while some progress has been achieved in specific commodity areas, no significant breakthrough seems, as yet, in sight. Much work remains to be done in this area, and ASEAN would need to ponder upon its joint approaches to these issues with continued resolve and imagination.

In the area of Economic Cooperation Among Developing Countries (ECDC) the Fifteenth COTT adopted basic guidelines for ASEAN's participation in the Generalised System of Tariff Preferences (GSTP). The basic principle behind such guidelines is that while ASEAN should participate more actively in ECDC activities, such participation should not adversely affect intra - ASEAN preferences.