DEVELOPMENTS IN ECONOMIC COOPRATION

Propelled by the sustained growth of their economies, ASEAN Member Countries intensified their efforts to harness their full potential for closer economic integration. Economic cooperation during the year was focused on the implementation and rapid actualization of the ASEAN Free Trade Area (AFTA). Economic cooperation in other areas went through a process of adjustment with the dissolution of the economic committees and their subsidiary bodies becoming effective on I January 1994, in line with the Fourth Summit and 25th ASEAN Economic Ministers Meeting decisions to streamline the ASEAN machinery for economic cooperation. The following Committees were affected :
  1. Committee on Food, Agriculture and Forestry (COFAF);

  2. Committee on Industry, Mineral and Energy (COIME);

  3. Committee on Finance and Banking (COFAB);

  4. Committee on Transportation and Communication (COTAC); and

  5. Committee on Trade and Tourism (COTT). Except for cooperation in food and agriculture, and minerals and energy which continued under the umbrella of the respective Ministerial Meetings, cooperation in other sectors was streamlined.

The mechanics of economic cooperation under the Senior Economic Officials Meeting (SEOM) was finalized during the year. The 25th AEM vested SEOM with the responsibility of overseeing cooperation in areas once under the purview of the five Economic Committees and gave it the mandate to convene meetings of the subsidiary bodies or form new working groups to carry out necessary functions. Consistent with the objective of streamlining economic cooperation activities, the meetings of these bodies will be governed by specific terms of reference based on the priorities spelt out in the Framework Agreement on Enhancing Economic Cooperation, as well as a specific time frame and level of attendance.

The 25th AEM recognized the importance of Ministerial and Senior Officials meetings in the sectoral areas, in particular, the ASEAN Ministers on Agriculture and Forestry (AMAF) and the ASEAN Economic Ministers on Energy Cooperation (AEMEC). These sectoral Ministerial Meetings and their SOMs would continue to hold their meetings independently under the umbrella of the AEM. However, the subsidiary bodies under the supervision and coordination of the sectoral ministerial bodies and their respective SOMs were dissolved as of I January 1994. On-going projects implemented by these bodies would now be implemented under the coordination and supervision of the Secretary-General of ASEAN.

To manage its task of supervision more effectively, the ASEAN Secretariat organized the implementation of projects and activities into four categories. Under the categorization scheme. projects could be implemented either
  1. directly by the ASEAN Secretariat alone or in collaboration with a specific agency;

  2. with the assistance of a working group;

  3. by a subsidiary body to be temporarily reactivated; or 4) through inter- governmental agency collaboration network.
To ensure continuity, ancillary bodies that were formed through formal agreements among ASEAN Member Countries, or between ASEAN and Dialogue Partners or other third countries were allowed by the AEM to continue until the expiry of their agreements or project periods.

Exchange of views on macro economics policies will begin this year through the Policy Exchange Mechanism (PEM) established by the ASEAN Economic Ministers who met informally at Genting Highlands, Malaysia in April 1994. The PEM is intended to be a forum for informal discussions on policies and issues of common interest to Member Countries in the field of economic development. The first PEM session, which will be held back-to-back with the 26th AEM in September 1994, will discuss industrialization policies of ASEAN.

The ASEAN private sector, through the ASEAN Chambers of Commerce and Industry (ASEAN-CCI), continued to play a significant role in enhancing ASEAN economic cooperation. ASEAN-CCI�s efforts are presently geared to- wards the successful implementation of AFTA as well as industrial cooperation. The 46th Meeting of the ASEAN-CCI Council held at Bandar Seri Begawan in March 1994, considered the reports of the five working groups on industrial cooperation, namely, trade; agribusiness and agro-industry; transportation, communications and tourism; and finance, banking and insurance. The progress reports of the various business councils of ASEAN and Australia, Canada, EC, Japan, Republic of Korea, New Zealand and the US were also discussed. The Meeting agreed to establish a Steering Committee to look into the restructuring of the ASEAN-CCI, including the setting up of a permanent secretariat. The proposal to establish the ASEAN-India Business Council (AIBC) was also endorsed.

The year under review saw signifi cant strides in the implementation of AFTA.



The year under review saw significant strides in the implementation of AFTA. The final coverage of CEPT products and their schedules of tariff reduction were approved by the 25th AEM in Singapore in October 1993 following the endorsement of the Fourth AFTA Council Meeting. The final lists represented an expansion from the indicative lists that were exchanged among Member Countries in December 1992. Subsequently, in November 1993, the consolidated version of the product lists and tariff reduction programs was made available by the ASEAN Secretariat to non- member countries, the GATT Committee on Trade and Development, the private sector, and other interested parties.

Member Countries demonstrated anew their political resolve to move ahead with AFTA by starting the implementation year of tariff reductions on 10,761 tariff lines (representing 25 per cent) of the CEPT Inclusion List in 1994 instead of taking the option to start the tariff reduction by 1996. The legal instruments to implement the 1994 package of tariff reduction in accordance with the agreed schedules have been promulgated by Member Countries. They have confirmed that there are no remaining quantitative restrictions on the products covered in the 1994 package.

ASEAN Member Countries continued to work hard to ensure the successful implementation of the CEPT Scheme. The three SEOM meetings held following the 25th AEM began the tasks of harmonizing tariff nomenclature, preparing the concessions exchange manuals, monitoring the trade values implied by the CEPT products, and monitoring the elimination of quantitative restrictions (QRs) and non-tariff barriers (NTBS) on products that have begun to enjoy CEPT concessions. SEOM has prepared a comprehensive work programme detailing the immediate and medium-term tasks required not only in relation to the CEPT, but also to other areas of cooperation under AFTA, such as product standards and quality, customs valuation, transportation and communications, and finance and banking, among others.

The ASEAN Economic Ministers, at their informal meeting, also agreed to review the implementation of AFTA towards its rapid actualization. The Ministers also agreed to look into the possibility of cooperation to services and intellectual property rights.


ASEAN customs officials began to play an important role in ASEAN economic cooperation resulting from the implementation requirements of the CEPT Scheme. To perform the functions of the defunct ASEAN Working Group on Customs Matters (AWGCM) in a manner consistent with the guidelines under the new mechanism for economic cooperation, SEOM established an ad hoc Experts Group on Tariff Nomenclature (EGTN) to address specific problems in the implementation of the CEPT that could arise from differences in tariff nomenclature as well as differences in the timing and levels of tariff reduction. The Experts Group has begun the immediate task of preparing concessions exchange manuals that would specify the Member Countries entitled to concessions for each product listed in the CEPT. Over the medium-term the Experts Group will undertake the task of harmonizing tariff nomenclature up to the HS 9-digit level.


ASEAN industrial cooperation through the ASEAN Industrial Joint Venture (AIJV) Scheme went through important improvements during the year. Scheme were designed by the ASEAN economic officials, in cooperation with the ASEAN- CCI, to make them more compatible with the CEPT Scheme. While all existing AIJVs will be subject to the old rules, new AIJVs will be subject to new modalities to bring the scheme in line with the CEPT. The AIJV scheme will be amended to allow the AIJV tariffs to slide in tandem with the CEPT tariffs, thus preserving the margin of preference. The third protocol to amend the Basic Agreement of the ASEAN Industrial Joint Venture Scheme is in the final stages of preparation and is expected to be initialled by the ASEAN Economic Ministers in September 1994 and subsequently signed by the ASEAN Foreign Ministers.

ASEAN industrial cooperation through the ASEAN Indus trial Joint Venture (AIJV) Scheme went through important improvements dur ing the year.

ASEAN cooperation in intellectual property was enhanced with the assistance of the World Intellectual Property Organization (WIPO). Following the first consultative meeting between ASEAN and WIPO in January 1993, various programmes and activities were implemented during the year. These Included:
  1. the comparative study on ASEAN legislation on intellectual property;

  2. the forum on the role of intellectual property in the development of ASEAN economies; and

  3. the seminar on the enforcement of intellectual property rights.

During the year, the ASEAN Consultative Committee on Standards and Quality (ACCSQ) streamlined its operations for a more effective implementation of its work programme. Three working groups on standards and information, conformance and assessment, and testing and calibration replaced the five ad hoc task forces. A formal notification to establish a formal relationship between the ACCSQ and the International Organization on Standards in Geneva was made by the Secretary-General of ASEAN in June 1994. The formal relationship will allow ACCSQ to invite the ISO to its regular meetings to discuss matters relating to standards.


ASEAN cooperation in minerals and energy continued under the purview of the Energy Ministers Meeting. However, given the new guidelines for economic cooperation under SEOM, ASEAN energy officials saw the need to review the mechanism for the implementation of its various action programmes. The review not only examined ways of maintaining the momentum but also of enhancing the prospects, of cooperation in the sector.

As an initial effort in this direction, the 12th ASEAN Economic Ministers on Energy Cooperation (AEMEC) held in April 1994 in Bandar Seri Begawan requested Senior Officials Meeting on Energy Cooperation (SOMEC) and the ASEAN Secretariat to establish ad hoc working groups to review the 1991 Medium Term Programme of Action and a Two-Year Work Plan on Energy Cooperation. The working groups have completed the review of all ongoing projects and identified the steps that would be further required to proceed with their implementation. The 12th AEMEC also directed SOMEC to review the Agreement on ASEAN Energy Cooperation and to propose the necessary amendments to take into account the changes in the policies and priorities in ASEAN economic cooperation.

Recognizing the significance of energy and power development in sustaining the growth of ASEAN economies, the 12th AEMEC agreed that concerted efforts should be made to pursue energy cooperation in the field of power generation and utilization. Measures have been laid out to strengthen the power interconnection among Member Countries leading to the realization of the ASEAN Power Grid.

ASEAN cooperation and forestry went through a period of adjustment as a result of the restructur ing of the economic cooperation mecha nism under SEOM.

With regard to cooperation in minerals, the ASEAN Experts Working Group Meeting on Minerals in August 1993 approved the Framework of Cooperation in Minerals, as well as a two-year work plan, which focuses on the development and utilization of industrial minerals. An ad-hoc working group to oversee the implementation of the work plan has yet to be established. In the meantime the activities in the sector are being implemented by the ASEAN Regional Development Center for Mineral Resources (ARDCMR) in close collaboration with the ASEAN Secretariat.


ASEAN cooperation in food, agriculture and forestry went through a period of adjustment as a result of the restructuring of the economic cooperation mechanism under SEOM. The 15th Meeting of the ASEAN Ministers of Agriculture and Food (AMAF) held at Bandar Seri Begawan in October 1993, agreed on modalities that changed the implementation of ASEAN cooperative activities in these sectors. At that Meeting, the Ministers adopted a Memorandum of Understanding (MOU) identifying the priority areas of cooperation in food and agriculture on the basis of which ASEAN Member Countries would develop action programmes. To assist in this task, the Meeting requested the ASEAN Secretariat to establish ad hoc working groups to prioritize sectoral programmes and to develop a strategic work plan for consideration of the 16th AMAF to be held on 24-26 August 1994. The working groups to be established are on crops, livestock, fisheries, forestry, training and extension, and agricultural cooperation.

On food security, the Ministers approved the amendments to the Agreement on the ASEAN Food Security Reserve Board, taking into consideration the admission of Brunei Darussalam into ASEAN and the restructuring of the ASEAN machinery. Accordingly, the Ministers agreed to adjust the initial ASEAN Emergency Rice Reserve (AERR) to 53,000 metric tonnes. The Ministers also directed SOM-AMAF and the ASEAN Food Security Reserve Board (AFSRB) to work out acceptable criteria for determining the size of the AERR to meet future requirements and to determine the corresponding contribution of each Member Country.

The 15th AMAF adopted an important policy with regard to ASEAN projects involving cooperation with Dialogue Partners. The Meeting agreed that the establishment of ASEAN institutions resulting from Dialogue-funded projects was to be encouraged and that the initial phase of setting up these institutions should be funded through the ASEAN machinery. Thereafter, these institutions should evolve into self-sustaining national institutions while retaining their regional character.


Cooperation in transportation and communi- cations came under the supervision and coordina- tion of the ASEAN Secretariat with the dissolu- tion of the Committee on Transport and Commu- nications (COTAC) and its subsidiary bodies effec- tive I January 1994. Cooperation in the sector was carried out mainly through on-going projects and intergovernmental agency collaboration.

In the field of land transportation, preparations continued for the establishment of two centers of excellence - one on railways to be located in Ma- laysia, and one on inland waterways and ferries to be located in Indonesia. Member Countries have also agreed to conduct studies and draft regulatory guidelines on the transportation of hazardous materials, as well as a feasibility study on the development of ASEAN ferry transport services. In the area of shipping and ports, follow-on work- shops on the ASEAN Cargo Transport Study were conducted. Participants from Member Countries also underwent Dialogue-funded training programmes on port planning and financing, port marketing and container shipping, among others.

Cooperation in civil aviation and related mat- ters involved continuing consultation by Member Countries about future air navigation systems and coordination of their activities under the ASEAN Multilateral Agreement on Commercial Rights for Non-Scheduled Air Services. In the area of posts and telecommunications, Member Countries continued to undertake activities towards the establishment of the ASEAN Postal Track and Trace System to improve the quality of ASEAN express mail service.