Thursday, August 27, 2015

Common ASEAN Driving License vs. Mutual Recognition of Driving Licenses

Today's Jakarta Post reports on an ASEAN initiative to create an ASEAN driver's license:

The Transportation Ministry's director general for land transportation, Santosa Eddy Wibowo, said the common driving license was aimed at facilitating cross border transport between ASEAN member countries. "[The license] will be for all citizens of ASEAN countries. It will be an international standard license at the ASEAN level," Santosa said as quoted by tempo.co.
He further said that in Indonesia, the document will be bilingual, in Bahasa Indonesia and English. "It is our obligation now to translate [the existing Indonesian driving license forms] into English," he said, adding that the same would go for the KIR (vehicle road worthiness test) certificate. "But we should first consult the police."
I have noted earlier that ASEAN already has a mutual recognition agreement on driving licenses. It just doesn't seem to be implemented properly.  Hence creating a common driving license is a reasonable approach to what should be a mundane, yet important issue in cross-border movement of vehicles.

The real question is the infrastructure that ASEAN will establish to verify and keep track of driving licenses.  Sharing information among the ASEAN countries, particularly electronically, has proven difficult over the years, whether dealing with the ASEAN Single Window, self-certification of origin, common visas or even e-mail.  Full connectivity is dependent on improving both the physical and virtual infrastructures of ASEAN.

Wednesday, August 26, 2015

American Companies Upbeat on SE Asia and TPP, Not So Much on RCEP and AEC

Today the American Chamber of Commerce in Singapore and the US Chamber of Commerce released their annual ASEAN Business Outlook, a survey of top-level executives in American companies in the region.  Although the survey respondents were generally optimistic, the level of optimism has fallen in recent years, according to a Singapore Business Times article:

In a poll of 471 senior executives representing US companies in all 10 Asean countries, 72 per cent reported that their companies' level of trade and investment in the region has increased over the past two years, and 86 per cent of respondents expect it to increase over the next five years.

"The Asean region continues its solid growth despite regional and global economic headwinds, and this survey demonstrates that US businesses remain confident about prospects in Asean," said Tami Overby, US Chamber of Commerce senior vice-president, Asia, who added that this confidence cannot be taken for granted. "We have also seen a modest, but clear, downward drift over the past several years, in terms of some of overall indicators of optimism."

More than half of those surveyed said that Asean markets have become more important in terms of their companies' worldwide revenues over the past two years - this is 10 percentage points lower than reported two years earlier.  Two-thirds (66 per cent) of respondents this year expect Asean to become more important in terms of worldwide revenues over the next two years. While still high, this is seven percentage points lower than two years earlier.

For me, the survey continues to confirm the mixed sentiment of the US business community regarding the AEC.  Although 75% of respondents said that the AEC was important to their operations, 51% of all respondents indicated that they had not developed an AEC-specific strategy.  Moreover, when asked to cite a specific AEC agreement that was important to their companies’ operations, a much higher percentage of respondents cited AEC agreements dealing with investments and services than agreements dealing with goods:

            ASEAN Framework Agreement on Services                             70%
            ASEAN Comprehensive Investment Agreement                       63%
            Trade Facilitation Workplan and Customs Agreement              66%
            ASEAN Trade in Goods Agreement                                          58%

Again this reflects the American business community in Southeast Asia’s focus on services and distribution/marketing of goods, rather than the production of goods, as I have commented in earlier posts.  In other words, the American business community has much more at stake in the single market to be created by the AEC, rather than the single production base; with the single market taking that much more time and effort to develop, American companies are understandably more reserved about the AEC’s prospects.

For similar reasons, American companies are more optimistic about the Trans Pacific Partnership (TPP) than the Regional Comprehensive Economic Partnership (RCEP).   According to the survey, 46% of ASEAN respondents said that the TPP would have a positive impact on their operations (including 56% of respondents from ASEAN members who are part of the TPP talks).  On the other hand, only 34% of ASEAN respondents said that RCEP would benefit their operations.  These results are understandable, since the TPP will have much wider and deeper regulatory effects on services, investment and market access than the RCEP, which is focused mainly on harmonizing existing obligations under the ASEAN FTAs.

In any event, improving American business sentiments regarding the AEC will require improving governance at the national and regional levels in ASEAN.  That in turn will require improving the legal and institutional foundations of the ASEAN Economic Community.

Tuesday, August 25, 2015

Wrap-up of ASEAN Economic Ministers Meeting

This weekend the ASEAN Economic Ministers (AEM) was held in Kuala Lumpur.  I provide below some highlights from the AEM and related meetings:
  • RCEP – Malaysian minister of international trade and industry Mustapa Mohamed said that the RCEP parties had agreed to a tariff reduction modality for the agreement.  According to Dato Sri Mustapa, 65% of tariff lines would be zero-rated immediately upon the RCEP agreement taking effect, with 80% of tariff lines at zero rates within 10 years. Although ASEAN and its FTA partners already had tariff reduction commitments, this was not the case for all RCEP partners, such as China, Japan and India.  Dato Sri Mustapa said that details would be worked out at the next negotiating session in Korea in October, but that technical issues could lead to RCEP’s conclusion only in 2016.
  • ASEAN+ FTAs – Dato Sri Mustapa also said that ASEAN’s FTAs with Korea and Japan would be expanded to include services and investments, and the FTA with China would be upgraded.   This represents improved coverage for those FTAs, especially when compared with the ASEAN FTA with India, which does not cover investment (the ASEAN-FTA with Australia-New Zealand covers goods, services and investment). It also represents progress in RCEP, as that blanket agreement also includes services and investment.
  • ATIGAIndonesia said that it had the continued support of  the other ASEAN members to exclude alcoholic beverages from the 0% duty rate under the ATIGA.  Indonesia said that the exclusion was consistent with  Article 8 of ATIGA provides a general exception from trade liberalization commitments for measures “necessary to protect public morals.”
  • AEC -- The AEM noted that 91.5% of "prioritized" AEC goals had been met.  This refers to the items which should be completed by end of 2015, not the total AEC Blueprint items (of which the completion rate has not been updated). A new AEC Scorecard report should be released at the November ASEAN summit, along with the ASEAN Trade Repository.  A new AEC Blueprint 2025 will be issued at the November summit as well.


Tuesday, August 18, 2015

Why Bahasa Inggris = Bahasa ASEAN

From today's Jakarta Post comes a report on an Indonesian push to make Bahasa Indonesia the "main language of the AEC":

The Culture and Elementary and Secondary Education Ministry has prepared to make the Indonesian Language the main language of the ASEAN Economic Community (AEC), an official says.  “We have taken a number of steps like communicating with Indonesians living abroad through Indonesian embassies and consulates. [Also,] we will offer Indonesian lessons for foreigners wanting to work in Indonesia,” said the ministry’s inspectorate general Daryanto as quoted by tribunnews.com in Jakarta on Tuesday. According to the official, Indonesian deserves to become the major language of the AEC because Indonesia will be the center of economic development within the group of 10 Southeast Asian countries.

I have covered this subject before, explaining why for the foreseeable future English will remain the working language of ASEAN, due to historical and economic factors.  In fact, the article's emphasis on Bahasa Indonesia as the "major language" instead of the broader concept of a Bahasa that incorporates the variations spoken in Malaysia, Thailand, Philippines and parts of Indochina, or even to suggest that Bahasa could be one of the major languages in ASEAN is perhaps a little off-putting to the other nine ASEAN members. 

Of course, in other regional blocs such as the EU, you have similar national dynamics, with the French government supporting use of the French language.  Yet even the French do not advocate making French the major language of the EU, just a major language. Promoting Bahasa as a lingua franca in ASEAN in a similar way would be beneficial and reflective of the linguistic situation in ASEAN.

In any event, the Jakarta Post article is perhaps better seen as a barometer of attitudes in ASEAN.  I contrast the article with the worries of the Thais and other ASEAN members that they are not proficient in English.  This reflects their concerns with competing in the AEC and the larger world economy. This Jakarta Post article, on the other hand, adds to a growing sense that Indonesia has become more inward looking.  Hopefully, those committed to an ASEAN Community, inside and outside of Indonesia, will step up their efforts to counteract this sentiment.
The Culture and Elementary and Secondary Education Ministry has prepared to make the Indonesian Language the main language of the ASEAN Economic Community (AEC), an official says.
“We have taken a number of steps like communicating with Indonesians living abroad through Indonesian embassies and consulates. [Also,] we will offer Indonesian lessons for foreigners wanting to work in Indonesia,” said the ministry’s inspectorate general Daryanto as quoted by tribunnews.com in Jakarta on Tuesday.
According to the official, Indonesian deserves to become the major language of the AEC because Indonesia will be the center of economic development within the group of 10 Southeast Asian countries.
- See more at: http://www.thejakartapost.com/news/2015/08/18/push-indonesian-be-aec-s-main-language.html#sthash.0PY3K4lI.dpufThe Culture and Elementary and Secondary Education Ministry has prepared to make the Indonesian Language the main language of the ASEAN Economic Community (AEC), an official says.
“We have taken a number of steps like communicating with Indonesians living abroad through Indonesian embassies and consulates. [Also,] we will offer Indonesian lessons for foreigners wanting to work in Indonesia,” said the ministry’s inspectorate general Daryanto as quoted by tribunnews.com in Jakarta on Tuesday.
According to the official, Indonesian deserves to become the major language of the AEC because Indonesia will be the center of economic development within the group of 10 Southeast Asian countries.
- See more at: http://www.thejakartapost.com/news/2015/08/18/push-indonesian-be-aec-s-main-language.html#sthash.0PY3K4lI.dpufThe Culture and Elementary and Secondary Education Ministry has prepared to make the Indonesian Language the main language of the ASEAN Economic Community (AEC), an official says.
“We have taken a number of steps like communicating with Indonesians living abroad through Indonesian embassies and consulates. [Also,] we will offer Indonesian lessons for foreigners wanting to work in Indonesia,” said the ministry’s inspectorate general Daryanto as quoted by tribunnews.com in Jakarta on Tuesday.
According to the official, Indonesian deserves to become the major language of the AEC because Indonesia will be the center of economic development within the group of 10 Southeast Asian countries.
- See more at: http://www.thejakartapost.com/news/2015/08/18/push-indonesian-be-aec-s-main-language.html#sthash.0PY3K4lI.dpuf
The Culture and Elementary and Secondary Education Ministry has prepared to make the Indonesian Language the main language of the ASEAN Economic Community (AEC), an official says.
“We have taken a number of steps like communicating with Indonesians living abroad through Indonesian embassies and consulates. [Also,] we will offer Indonesian lessons for foreigners wanting to work in Indonesia,” said the ministry’s inspectorate general Daryanto as quoted by tribunnews.com in Jakarta on Tuesday.
According to the official, Indonesian deserves to become the major language of the AEC because Indonesia will be the center of economic development within the group of 10 Southeast Asian countries.
- See more at: http://www.thejakartapost.com/news/2015/08/18/push-indonesian-be-aec-s-main-language.html#sthash.0PY3K4lI.dpuf

Monday, August 17, 2015

Trade Facilitation in ASEAN: Putting Text Into Action

After trade agreements are signed by leaders and regulations are published by government ministries, what is left is the prosaic task of putting the agreements into practice.  This is the realm of trade facilitation, where the text is put into action by governments. 

At its core, trade facilitation consists of a change in mindset for national customs authorities.  Historically, the customs authorities were the last line of defense representing the fundamental expression of national sovereignty at the nation’s borders.  This is why the traditional symbol of the customs authority is a gate.  Furthermore, the import duties collected by customs were a major source of revenue for the national treasury.  All of this meant that the customs authorities historically focused on protecting national borders and collecting duties, both reactive, defensive measures.

Trade facilitation, on the other hand, attempts to recast the thinking of customs authorities from a reactive mindset to a proactive mindset, at least in terms in import duties and other aspects of trade.  This modern customs administration approach views expediting trade as a greater priority.  Importers and exporters are to be assisted in legitimate trade, not frustrated by defensive measures to protect national borders. 

Yet despite decades of multilateral and regional trade agreements, there remains a significant gap between the promise of the agreements and their actual implementation on the ground.  Hence more recent trade agreements have explicitly incorporated the concept of trade facilitation in their texts.   The basic commitments of trade facilitation contained in these agreements consist of (1) compliance with agreements, (2) transparency, (3) simplification, (4) harmonization and (5) technical assistance. 

The effectiveness of the ASEAN Economic Community (AEC) will correspond to how ready ASEAN members in trade facilitation.  The ASEAN Trade in Goods Agreement (ATIGA), as well as some of ASEAN’s free trade agreements (FTAs) with its regional trading partners such as Japan, contain trade facilitation term, as do Singapore’s bilateral FTAs.  Finally, the current Trans Pacific Partnership and Regional Comprehensive Economic Partnership negotiations both envision strong trade facilitation commitments as part of their final texts.

The readiness of ASEAN members to take on trade facilitation commitments can be viewed through the WTO Trade Facilitation Agreement (TFA), which was concluded at the Bali Ministerial Conference in December 2013.  The TFA will enter into force once two thirds of the WTO members have completed their domestic ratification process.  To date twelve members – Niger, Nicaragua, Trinidad and Tobago, the Republic of Korea, Hong Kong China, Singapore, the United States, Mauritius, Malaysia, Japan, Australia and Botswana – have notified the WTO that they have done so. 

The TFA has three sections. Section I contains provisions for expediting the movement, release and clearance of goods.  It clarifies and improves Articles V, VIII and X of the GATT 1994.  Section II contains special and differential treatment provisions for developing and least-developed countries aimed at helping them implement the provisions of the agreement.  To invoke the special and differential treatment provisions, countries must submit notifications to the WTO indicating which TFA obligations they are willing to accept immediately upon the TFA’s entering into force, and which obligations which will require additional time to implement.  Section III  establishes a permanent committee on trade facilitation at the WTO and requires members to establish national committees on trade facilitation.

Although it will be quite some time for the TFA to take effect, by analyzing the notifications which had been submitted so far to the WTO, we can see to what extent ASEAN governments feel comfortable with the obligations imposed by the TFA.  A recent ESCAP study has done just that for the region and gives us an indication of which aspects of the TFA will be more likely to be implemented by Asian countries immediately and which will require more time. ASEAN’s notifications are summarized graphically as follows:


Implementation of TFA (12) Articles
Full
Partial
Brunei
5
3
Cambodia
0
0
Indonesia
0
3
Laos
0
0
Malaysia
Fully Ratified
Myanmar
0
0
Philippines
7
4
Singapore
Fully Ratified
Thailand
4
8
Vietnam
2
7

The general commitments of the TFA fall within two classifications, transparency  and fees/formalities. 

Articles 1-5 of the TFA deal with general obligations of transparency.  Under these TFA articles, WTO members agree to publish information and make it generally available, as well as provide the public with the opportunity to comment on measures and submit information before such measures take effect, and allow other members to enter into consultations on the measures.  WTO members also agree to issue advance rulings on customs issues and other cross-border issues before shipments are made, so that exporters and importers have greater certainty in doing business.  Finally, WTO members agree to allow for appeals and review of customs decisions.  Based on the ESCAP analysis, 56% of notifications indicated general readiness to implement these TFA obligations.

Articles 6-12 deal with fees and formalities involved in the customs clearance process.  WTO members are obligated to follow disciplines on fees and penalties. They also must adhere to general principles on the release and clearance of goods. Customs authorities of WTO members under the TFA must cooperate on border measures. Finally, the TFA establishes rules for dealing with goods under customs control, e.g., inward and outward processing of inputs, as well as freedom for goods in transit.  Based on the ESCAP analysis, 51% of notifications indicated general readiness to implement these TFA obligations.

The ESCAP paper conducted a more detailed analysis of the notifications and found that Asian countries were more willing to commit to the TFA’s obligations on procedures for review of appeal (Article 4), and movement of goods under customs control (Article 9), as well as freedom of transit (Article 11).  However, Asian countries were less willing to commit to TFA obligations to cross-border exchanges of information and confidentiality.   Hence there are lower rates of notifications for food safety (Article 5.1), average release times (Article 7.6), authorized operators (e.g., trusted traders) (Article 7.7), single windows (Article 10.4) and customs cooperation on information (Articles 12.2, 12.5 and 12.6). 

ASEAN countries will have quite some time before the TFA takes effect. They will need that time.  ASEAN governments need more capacity building and resource development (in both human resources and information management) if they are to implement all aspects of the TFA. Moreover, they need to change the mindset of customs officials from a defensive posture to a positive, business-friendly approach.  In this way, the promise of trade agreements can be transformed into reality.

Thursday, August 13, 2015

Game Back On: ASEAN's World Cup Bid


The joint ASEAN Football World Cup bid looks alive again, despite fits and starts., with the regional bloc initiating a feasibility study.  I’ve posted on this topic several times, most recently here, and I still think an ASEAN World Cup would bring many benefits for the region.  Of course, one question that should be resolved is which countries would get the automatic World Cup finalist slot(s): that’s quite important because no ASEAN country has ever made the finals (Indonesia participated in 1938 as a Dutch colony).