Expert views

The ASEAN experience in using trade deals to slash trade costs

1 December 2018
Sofia Baliño, Editor, International Centre for Trade and Sustainable Development , Emily Bloom, Project Officer, International Centre for Trade and Sustainable Development

What prospects for greater trade cooperation among Southeast Asian countries?

Southeast Asia has become an increasingly dynamic region in terms of international trade activity. This is true particularly as a coalition of 10 countries looks to become more integrated with each other, as well as with a wide community of partners in the region and farther afield. Notably, the Association of Southeast Asian Nations (ASEAN) has pursued a multi-pronged approach to slash trade costs and border lag times both within their grouping and with other countries. This includes efforts to establish and strengthen an economic community; forge regional trade agreements with other countries; and implement global trade rules. 

ASEAN brings together countries of different development levels, political systems and economic approaches. The group began with just five members in 1967 and over the years its mission and membership have grown rapidly. The 10-country group includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. The group is now in the process of implementing the ASEAN Economic Community Blueprint 2025, a 10-year roadmap aimed at facilitating intraregional and interregional trade and investment. 

Trade facilitation, an essential component of ASEAN’s work, was one of ‘five economic thrusts’ the Singaporean presidency of the group focused on this past year.
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Trade facilitation, an essential component of ASEAN’s work, was one of ‘five economic thrusts’ the Singaporean presidency of the group focused on this past year. It is also one of the areas ASEAN has identified in its Blueprint 2025 for progress, with the group committing to ‘accelerate and deepen the implementation of trade facilitation measures.’ Along with implementing the World Trade Organization (WTO) Trade Facilitation Agreement (TFA), ASEAN members have identified a series of steps, such as developing national single windows and national trade repositories in each member state, that would help meet the goal of ‘convergence in trade facilitation regimes’ that would be comparable to those seen in other parts of the world. 

Notably, the rise of digital trade has added a new dimension to trade facilitation efforts in the ASEAN region. According to a recent United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) report, full implementation of the TFA, together with other digital trade facilitation or paperless trade measures, would cut trade costs in the Asia-Pacific region by 26% ($673 billion) every year. This would include potential trade cost reductions for all ASEAN countries in excess of 15%, with Cambodia, Indonesia and Viet Nam enjoying the highest cuts. 

Regional trade accords

Along with the efforts to build an economic community and improve TFA implementation, ASEAN has also crafted free trade agreements (FTAs) with a host of partners which feature detailed provisions on trade facilitation. These accords, sometimes referred to as ASEAN+1 arrangements, involve Australia, New Zealand, China, India, Japan and South Korea. This is against the backdrop of a broader web of customs and trade facilitation measures embodied in other bilateral and regional agreements concluded by individual ASEAN members. 

Common provisions aimed at cutting trade costs in the ASEAN+1 FTAs pertain to greater transparency in trade policies and regulations; interagency cooperation; and harmonization and mutual recognition of technical standards.

For example, the ASEAN-Japan and ASEAN-Australia-New Zealand deals both underline the importance of ‘predictability, consistency, and transparency’ as guiding principles for customs procedures to accelerate customs clearance. Both FTAs require the designation of enquiry points for each country and include commitments to make regulations and administrative procedures publicly available. 

The deal with Australia and New Zealand contains detailed provisions on customs procedures cooperation including the exchange of assistance among customs administrations; providing advance notice of changes to relevant laws and regulations; advancing technical skills of customs workers; and the application of technology. The agreements with Japan, Australia, New Zealand and India each include commitments to harmonise customs procedures consistent with World Customs Organization standards. 

The ASEAN-Australia-New Zealand and ASEAN-China FTAs each contain provisions dedicated to the development of mutual recognition arrangements, enabling conformity assessments performed in country of origin to be accepted and applied in the importing country.

Common provisions aimed at cutting trade costs in the ASEAN+1 FTAs pertain to greater transparency in trade policies and regulations; interagency coop.
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On the horizon

Members have also turned to mega-regional agreements to enshrine their commitment to cooperate on trade facilitation. The Regional Comprehensive Economic Partnership (RCEP), six years in the making, unites all ASEAN economies and their six major FTA trading partners. The trade facilitation and customs procedures portions of the pact have already wrapped up, though the text is not yet publicly available. 

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) boasts a sophisticated trade facilitation chapter and features 11 signatories, including ASEAN members Brunei, Malaysia, Singapore and Viet Nam. It spans significant customs cooperation provisions including many areas of overlap with ASEAN+1 FTAs such as information sharing and transparency measures; enhanced use of technology (such as automated systems for risk analysis); provisions for technical assistance between parties; and commitments to conform with international standards. 

By comparison the CPTPP surpasses the scope of the ASEAN-wide FTAs in several areas, including commitments to release goods as far as possible within 48 hours of their arrival and to provide for electronic processing and submission of customs information in advance. The CPTPP also contains digital trade facilitation provisions, including encouraging interoperability of electronic authentication methods. On paperless trade, the CPTPP incorporates a soft commitment to make trade administration documents available to the public in electronic form and to accept trade administration documents submitted electronically as the legal equivalent of the paper version.

The entry into force of the CPTPP is imminent, though Singapore and Viet Nam are so far the only ASEAN members to have ratified the deal. RCEP negotiations are set to continue into 2019.