Centre for International Law ASEAN Law and Policy Curriculum and Training Programme

ASEAN Economic Community: Overview of the Progress of the AEC to Date and Evaluating the AEC Blueprint 2015

Dr Chia Siow Yue

© Centre for International Law, ASEAN Law and Policy Curriculum and Training Programme This curriculum is freely available online for educational purposes. Any use of the curriculum must be accompanied by attribution to the Centre for International Law, ASEAN Law and Policy Curriculum and Training Programme. The material may not be used for commercial purposes and if modified may not be distributed.

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Overview of the Progress of the AEC to Date and Evaluating the AEC

Blueprint 2025

CHIA Siow Yue, Singapore Institute of International Affairs for NUS-CIL Course

Objective and contents of this module: The objective of this module is to prepare participants to understand the economic

imperatives and contents of ASEAN regional economic integration and to evaluate the

outcomes and challenges of such economic integration.

I. Introduction: ASEAN diversities

II. Why do countries/regions pursue economic integration?

1. Reasons for concluding free-trade agreements

2. What are the economic benefits of economic integration?

III. ASEAN economic integration through formal trade agreements

1. Conceptual framework

2. The WTO rules governing free-trade agreements

3. Scope and content of free-trade agreements

IV. ASEAN economic integration through production networks and value chains

1. What is global production network (GPN) or global value chain (GVC)?

2. GPNs/GVCs in ASEAN and East Asia - determinants, benefits and concerns

V. Progression in ASEAN economic integration before the AEC

1. ASEAN economic cooperation in the pre-AFTA period, 1977-1991

2. ASEAN economic integration in the AFTA period, 1992-2006

VI. ASEAN economic integration under the AEC 2015

1. Why the ASEAN Economic Community (AEC)?

2. The 2007 AEC Blueprint

3. Benefits of the AEC

4. Assessment of AEC 2015

VII. ASEAN economic integration under the AEC 2025

1. The AEC Blueprint 2025

2. Implementation of AEC Blueprint 2025

VIII. Conclusion

IX. Readings

I. Introduction: ASEAN Diversities

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Various aspects of ASEAN diversity impact on the direction and speed of ASEAN economic

integration, as well as on the political-security and socio-cultural dimensions:

-Huge differences in size, eg land mass, population, GDP: result in varying resource

endowment, labour force size, market size, and trade-dependency.

-Huge geographic dispersion, with archipelagic states and distant borders: impact on national

cohesion and common national interests, and compliance to ASEAN commitments.

-Different economic systems eg market-based versus state-based, globalised versus

nationalistic: impact on the direction and speed of ASEAN economic integration.

-Different historical traditions, eg Dutch, British, French, American: impact on legal

systems, institutions, traditions and fluency with international lingua franca.

-Different political systems, eg communism, capitalism, authoritarian, military, theocratic,

democratic: impact on the role of the state in economic development, role of the market,

state enterprises and industrial policies.

II. Why Do Countries/Regions Pursue Economic Integration?

Table 1: ASEAN: Some Aspects of ASEAN Diversity, 2016

Land area Popula- GDP GDP Goods Trade/ FDI Thousand Tion Current per capita Trade GDP Inflow

sq km Million US$bill. US$ US$bill. ratio % US$bill. Brunei 5.8 0.4 11.2 26943 7.5 67 0.0.2

Indonesia 1913.6 258.7 931.2 3600 280.8 30 3.5 Malaysia 330.3 31.6 299.6 9464 357.8 119 11.3

hilippines 300.0 103.2 311.5 3017 142.3 46 7.9

Singapore 0.7 5.6 297.0 52963 630.0 217 53.9

Thailand 513.1 67.5 407.0 6034 410.0 101 2.6

Cambodia 181.0 15.2 19.2 1266 22.4 141 2.3

Laos 236.8 6.6 15.9 2402 7.2 46 1.1

Myanmar 676.6 52.9 68.6 1297 27.2 40 3.0

Vietnam 331.0 92.7 198.2 2138 351.0 177 12.6

ASEAN 4488.8 634.5 2559.5 4034 2236.3 87 98.0

Source: ASEAN Secretariat database

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1. Reasons for concluding free-trade agreements

Economies increasingly conclude regional and bilateral free-trade agreements at the same

time as they continue to participate in multilateral trade negotiations in GATT/WTO.

-Consider a free-trade agreement when an economy could obtain benefits earlier than

otherwise under the GATT/WTO multilateral system or when the benefit is unavailable under

the GATT/WTO multilateral system because it has no relevant rules, such as on Investment.

-The economy must assess carefully the benefits it can obtain from various options including

unilateral policy actions, because free-trade agreements are fairly demanding in resources,

both human and financial.

Reasons for embarking on free-trade agreement negotiations include economic, political and

strategic factors, such as improved market access; promotion of domestic economic policy

reforms; faster trade liberalisation than possible under multilateral negotiations; fostering

strategic linkages with other countries; and because of fear of being left out and

disadvantaged (domino effect) when competitor countries enter into such agreements.

2. What are the benefits from economic integration?

a) With liberalisation of trade in goods:

-Removal of tariffs and non-tariff barriers: Boosts intra-ASEAN trade, economic growth and

employment, leads to more efficient resource allocation and productivity gains, encourages

foreign and domestic investments, lower business costs and improve economic

competitiveness, lower consumer prices and widen consumer choice.

-Trade facilitation measures (customs, standards, transport and telecommunications

connectivity): promotes trade and investment and integration into global production

networks/global value chains (GPNs/GVCs).

b) With liberalisation of trade in services:

-Improves service efficiency, thus lowering production and distribution costs and service

costs to consumers as well as widening consumer choice.

c) With liberalisation of behind-the-border measures (competition policy, intellectual

property protection, infrastructure development):

-Reduce business costs and raise competitiveness.

d) With liberalisation of investments, especially FDI:

-FDI brings financial, technological and managerial resources and participation in

GPNs/GVCs

e) With liberalisation of skilled labour mobility:

-Facilitates services and FDI with inflows of intra-corporate transferees and other skilled

professionals; skilled inflows facilitate transfer of knowhow, experiences and best practices.

f) With financial and capital market development:

-Leads to more efficient markets to finance trade, investment and corporate development

g) With narrowing the development gap:

-Improves ASEAN economic integration and social cohesion

Questions:

1. Under what situations should governments seriously consider entering into bilateral

or regional free-trade negotiations? What are their political, security, economic and

social concerns?

2. US President Donald Trump is advocating and implementing an “America First”

policy, arguing for fair and reciprocal trade. Would you advocate the same for your

country ---why or why not?

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III. ASEAN Economic Integration through Formal Trade Agreements

1. Conceptual framework

a) Theoretical stages of economic integration:

-Preferential trading agreements (PTAs): when countries agree to reduce/eliminate tariff

barriers on selected goods imported from each other.

-Free trade agreements (FTAs): when countries agree to remove trade tariff barriers on all

goods originating among themselves. Each economy retains the right to set its own MFN

tariffs and the conduct its commercial or trade policy. Preferential rules of origin have to

be crafted to identify originating goods. It is increasingly common for FTAs to also

include provisions liberalising trade in services and investment flows.

-Customs unions (CUs): when in addition to removing trade tariff barriers on all goods

originating among themselves, the countries also negotiate a common external tariff and

conduct a common commercial policy vis-à-vis the rest of the world. Since all members

of a CU apply the same external tariff on goods, there is no need to develop preferential

rules of origin. As with FTAs, a CU agreement can also contain provisions for services

and investment. Integration in the CU is deeper than under the FTA.

-Common market (CM): when countries remove all barriers to trade in goods and services

and movement of capital and labour and adopt harmonization of micro-economic policies,

common rules regarding anti-competitive practices, common policies affecting key

industries. The result is deep integration.

-Monetary and economic union: when countries adopt a common single currency and

pursue common macro-economic policies such as exchange rate, monetary policy,

harmonised tax systems, public sector spending and borrowing levels and jointly agreed

national budget deficits/surpluses. As with the CM, there is also unrestricted flows of

goods, services and investment and factor flows.

In addition to the above preferential trade arrangements, there are also Trade and Investment

Framework Agreements (TIFAs) and other economic cooperation agreements as a first step

towards free-trade agreements. Such agreements typically do not contain any market access

provisions, though they often establish mechanisms for the promotion of trade liberalisation.

In the ASEAN region, there is the Greater Mekong Subregion (GMS) which focuses on

infrastructure development among the countries that straddle the Mekong River. There is also

the ASEAN growth areas.

b) Choosing between Customs Union and Free Trade Area

-Reduced national flexibility of a common commercial policy in a CU: First, formation of

CU with a common external tariff may lead in some cases to some higher tariffs towards

other WTO members and redress have to be sought in the WTO procedures. Second, there

may be a need to consider whether to impose anti-dumping or safeguards measures against

third countries; if only one of the partners imposed such measures, they could easily be

circumvented. Third, any proposed adjustments to the tariff schedule by any CU member

would need to be discussed together to maintain the common external tariff. Fourth, in

ASEAN, a Customs Union is not possible because of zero duty rates for almost all goods

imposed by Singapore and Brunei, a level of openness which other ASEAN countries did not

want to follow; likewise, free ports, Singapore and Brunei as free ports did not wish to

increase their tariff rates to the level of other ASEAN countries to achieve a CU. -Difficulties with implementing preferential rules of origin in an FTA: First, rules of origin have to be enforced, which can be costly in terms of time and resources. Second, there is the “spaghetti-bowl" effect arising from numerous and overlapping FTAs that add to trade and

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administration costs. Third, there is the erosion of tariff preferences as the margin of preference available through the zero-tariff of an FTA becomes much smaller through successive rounds of GATT/WTO multilateral trade negotiations and with the increasing number of FTAs concluded among and between countries. Preference erosion is a major reason why FTAs need to go beyond tariff elimination to ensure substantive benefits for member economies.

Question:

1. What are the common and different features of Free Trade Areas and Customs

Unions? Why did ASEAN not conclude a Customs Union among themselves?

2. The WTO rules governing free-trade agreements

Free-trade agreements among WTO countries permit departures from the non-discriminatory

rules of the WTO, and are governed by Article XXIV of GATT, Article V of GATS and the

Enabling Clause.

Article XXIV of GATT contains the rules for trade in goods: It defines a free-trade area as “a

group of two or more customs territories in which the duties and other restrictive regulations

of commerce . . . are eliminated on substantially all the trade between the constituent

territories in products originating in such territories.”

-What is meant by "substantially all the trade"? A widely accepted view is that an

agreement should cover at least 90% of trade. Calculation of "substantially all the trade"

would consider both actual trade flows and the number of tariff lines involved.

-Tariff elimination applies only to goods originating in the free-trade area, and for this, rules

of origin are necessary to identify such goods

Article V of GATS contains the rules for trade in services: WTO members may enter into a

free-trade agreement to liberalize trade in services if the Agreement has “substantial sectoral

coverage” , expressed in terms of numbers of sectors, volume of trade affected, and modes

of supply; eliminates/eliminates substantially discrimination in national treatment in the

sectors covered and/or prohibits new or more discriminatory measures in these sectors; and

does not raise barriers against non-members. A service supplier from a third country

incorporated in one of the parties to the free-trade agreement will also enjoy preferential

treatment within the free-trade area as long as it engages in substantive operations within the

territory of the parties; if the agreement involves developing countries only, they may

continue to give better treatment to firms owned or controlled by their own nationals.

The Enabling Clause allows developing economies to negotiate preferential trade agreements

among themselves under more flexible provisions in terms of sectors covered and tariff

elimination/reduction than would be possible between developed countries. When developing

countries enter into agreements with developed countries, they have more flexibility in terms

of substantial coverage and the extent to which they must eliminate discriminatory measures.

Questions:

1. Is the AEC reported to the WTO under GATT and GATS or under the Enabling

Clause?

2. Are the ASEAN+1 FTAs with China, Japan, South Korea, Australia-New Zealand

and India reported to the WTO under GATT and GATS or the Enabling Clause?

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3. Scope and content of free-trade agreements

-Comprehensiveness: The content of free-trade agreements has become very wide, going

beyond tariff measures and now usually covers services and investment. They deliver the

maximum economic benefit when they are comprehensive in scope and sectors. A

comprehensive FTA would have the following content

-Trade in goods, including trade remedies (safeguards, anti-dumping measures and

countervailing duties), customs procedures, rules of origin, technical barriers to trade and

sanitary and phytosanitary(SPS) measures, electronic commerce;

-Trade in services, including financial and telecommunications services;

-Investment liberalization, facilitation and protection;

-Other provisions: Movement of natural persons; Intellectual property; Competition policy;

Government procurement; occasionally also Labour and Environment.

-Mechanisms for consultation and dispute settlement: These mechanisms are to prevent and

resolve disagreements expeditiously through consultation, mediation or arbitration, avoiding

duplication with the WTO dispute settlement mechanism.

-Provision for periodic review: Periodic reviews ensure full implementation and take into

account changing economic circumstances, maintain momentum for domestic reform and

revisting old concerns and visiting new concerns

-Transparent administration of laws and regulations: Once they have been signed,

agreements are made public. Making theme readily available ensures that businesses

understand and take advantage of the liberalized trade conditions. Member economies notify

their agreements in line with WTO obligations and procedures

Question:

1. What are the pros and cons of widening and deepening the coverage of free-trade

agreements?

2. Would you “recommend” that your country enter into a Customs Union or a Free-

Trade Area in regional or bilateral agreements? Why?

IV. ASEAN Integration through Production Networks and Value Chains

1. What is global production network (GPN) or global value chain (GVC)?

a) Concept:

GPNs/GVCs break up the production process so that different stages or segments can be

carried out in different locations across countries. For example, many smart phones and

televisions are designed in the United States or Japan, but have sophisticated inputs, such as

semiconductors and processors produced in South Korea or Taiwan, and assembled in China.

They are then marketed in the US and Europe.

These complex global production arrangements have transformed the nature of trade and the

analysis of trade patterns and trade data. Traditional trade analysis uses trade data based on

gross value as collected in international and national statistics. But this can be misleading

regarding value added from trade and bilateral trade balances. TiVA data, together with

global input-output tables segment trade value added into the following:

-Pure domestic value-added (DVA) production activities are those that are completely

produced and consumed within one country. When these goods and services are exported to

another country, classical trade takes place, with production occurring completely in one

country and consumption in another.

-GPN/GVC activities involve value added created by production across national borders

(embodied in intermediate trade flows), which can be further decomposed into simple and

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complex cross-border production-sharing activities based on the number of border crossings.

b) Figure 1: Segments of value chain as represented by Smile Curve

-Left-hand side upstream segment ---high-value added R&D, branding, design

-Right-hand side downstream segment --- high value added logistics (distribution, marketing,

after-sales service)

-Middle centre segment ---lower value added manufacturing and assembly.

The logic of the smile shape is as follows. Research and design activities for critical

components occur early in the production process. These knowledge activities tend to be

high- value-added activities in GPNs/GVCs and tend to be carried out in more advanced

economies. The bottom point of the curve, reflects manufacturing and assembly activity at

low wages. Marketing, logistics, and after-product servicing are high value added market

knowledge activities found at the upward-sloping part of the smile curve on the right. And

they tend to be carried out in advanced economies, where the mass consumption products are

eventually purchased by households

c) Developing country participation in GPNs/GVCs:

GPNs/GVCs provide new opportunities for developing countries to increase their

participation in global trade and to diversify their exports from raw materials into industrial

goods. Without them, a developing country wishing to industrialise and export would need

the capability to produce a complete industrial product, e.g. parts of the computer keyboard

rather than the whole computer. The PRC is an example par excellence.

Developing countries wishing to be more involved in GPN/GVC and moving to higher value-

added activities within the chains over time need to note the following.

Geography matters: There are 3 interconnected production hubs for trade in parts and

components, centering respectively on the United States, China-Japan-South Korea, and

Europe (especially Germany). Proximity to these hubs matter.

Unit labor costs: There is a distinction between low wages and low unit labour cost. Low

wage countries do not have a production advantage unless there is labour productivity that is

low unit labour cost.

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Trade costs: Trade costs vary with countries and comprise transportation, insurance and other

fees, information costs, regulation and licensing barriers, insecure contracts, and weak trade

governance. While weak transportation links, inefficient customs clearance, bureaucracy, and

red tape all tend to impede trade, their effects are most pernicious in sectors requiring that

parts move back and forth across borders, eg in complex value chains such as motor vehicles,

computers, and machinery.

Fig 2: ASEAN Logistics Performance Index

The World Bank's Logistics Performance Index shows how infrastructure and bureaucracy

work together to move goods through the production process and on to consumers. Countries

with very high trade costs will not be able to participate in GPNs/GVCs. Developing

countries try to address this problem by establishing special export processing zones, which

have superior logistics and expedited customs clearance. A better approach is to improve

trade facilitation for all firms in the economy

2. GPNs/GVCs in ASEAN and East Asia - Determinants, benefits and concerns

a) Determinants:

GPNs/GVCs in East Asia originated in the 1980s in the clothing and electronics industries

and have since embraced an ever-widening range of industries and services.

-FDI from US, Western Europe and Japan moved to set up production in the first-tier Asian

NIEs (Hong Kong, South Korea, Taiwan, Singapore) in the 1980s, followed by FDI into

second-tier of Indonesia, Malaysia, Philippines, Thailand and PRC, and then into the third-

tier countries of CLMV.

-The determinants of participation are differential costs of production, procurement-

distribution, and cross-border coordination. In each geographical shift, the attractions of host

countries were, abundant low-wage young trainable labour, and good transport connectivity

with low risks of supply chain disruption and a conducive policy framework for FDI inflows.

In ASEAN, measures to implement AFTA, AFAS, AIA and the AEC facilitate participation

in GPNs/GVCs.

b) Benefits of participation:

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-Fosters industrialisation of the developing country, as country needs to develop capabilities

in specific tasks only, rather than capabilities to produce an entire industrial product(s).

-Encourages trade liberalisation, trade facilitation, and transport and ICT connectivity to

ensure smooth and open trade flows of imported inputs and exports of intermediate and final

goods.

-Leads to growth of intra-industry trade, intra-regional trade and FDI

-Strengthens the AEC

c) Concerns with participation

-For countries not into GPNs/GVCs, the main concern is how to join. In ASEAN, Cambodia,

Laos and Myanmar are desirous of more participation. They can take advantage of the PRC

relocation of some industrial activities as it undertakes structural reforms and upgrades.

Necessary condition is to provide a business-friendly investment climate.

-For countries already engaged in GPNs/GVCs such as Indonesia, Malaysia, Philippines,

Thailand and also Vietnam, the concern is how not to remain trapped in the low-value-added

segments, but to increase domestic value-added, skill content, and domestic linkages of

participation.

-For countries already in the high-value-added segments of GPN/GVC, such as Singapore,

the concern is how to retain its competitive leads in innovations and transportation -logistics.

Questions:

1. What policies and measures must countries such as Cambodia, Laos and Myanmar

undertake to increase participate in GPN/GVCs?

2. What policies and measures must countries such as Indonesia, Malaysia, Philippines,

Thailand and Vietnam undertake to increase domestic-value-added content?

3. What policies and measures must Singapore undertake to maintain its position in the

high-value-added segments of the GPN/GVC?

V. Progression in ASEAN Economic Integration before AEC

1. ASEAN Economic Cooperation in the Pre-AFTA Period, 1977-1991

Prior to the late-1980s, consideration of regional economic integration remained taboo in

Southeast Asia for a number of reasons.

-First, is the reluctance of some countries to undertake trade and investment liberalisation due

to the pursuit of industrial policies of import substitution. However, as the limitations of

import substitution in other regions became increasingly apparent, more ASEAN economies

switched to an export-oriented development strategy with greater acceptance of trade and

investment liberalisation.

-Second, was the lack of economic complementarity among ASEAN economies at that time,

as they were primarily producing and exporting similar raw materials and labour intensive

manufactures.

-Third was the diversity in size, resource endowment, level of economic development,

technological capability, and trade and investment regimes among ASEAN countries which led

to differing perceptions of benefits and costs of economic integration. This period was

characterised by pre-occupation with commodity trade problems, the ASEAN Preferential

Trading Arrangement (PTA) and industrial cooperation schemes.

a) ASEAN Preferential Trading Arrangement (PTA) 1977

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Each ASEAN country would grant to imports from other ASEAN States a margin of

preference on MFN tariffs. The PTA would cover “basic commodities” particularly food and

energy, products of the industrial cooperation schemes and lists of goods to be negotiated

among the parties. The PTA was generally considered a failure, with considerable negotiating

resources expanded producing only a limited impact on intra-ASEAN trade. With tariff

liberalisation based on time-consuming product-by-product negotiations, the lack of

seriousness to liberalise intra-ASEAN trade was evident by the inclusion of snow ploughs

and nuclear plants in the negotiations and by the long national exclusion lists.

b) ASEAN Industrial Cooperation (AIC)

This covers the ASEAN Industrial Projects (AIP 1976), ASEAN Industrial Complementation

(AIC 1981) and ASEAN Industrial Joint Ventures (AIJV 1983). The AIV schemes failed

because ASEAN countries were engaged in import substitution and building national

champions resulting in conflicting national interests. The schemes did not contribute

significantly to industrial development of ASEAN countries, except for B-to-B

complementation in automotive and Nestle’s multi-country plants.

2. ASEAN Economic Integration in the AFTA Period, 1992-2006

From the late 1980s dramatic global and regional developments were pressuring ASEAN to

move towards regional economic integration so as to compete effectively for global markets

and investments. The Uruguay Round was completed in December 1991 and GATT was

being reorganised into the WTO; the EU was being created by the Treaty of Maastricht in

February 1992; the North American Free Trade Area (NAFTA) was being negotiated and

finally signed in December 1992; radical economic reforms were taking place in China and

followed by India, laying the foundation for their accelerated economic growth in the coming

decade. The ASEAN Free Trade Area (AFTA) was established in 1992, followed by the 1995

ASEAN Framework Agreement on Services (AFAS) and by the 1998 ASEAN Investment Area

(AIA) agreement.

a) AFTA: Trade in Goods Liberalisation and Facilitation

Tariff elimination:

AFTA was established in January 1992, with intra-ASEAN tariff liberalisation and elimination

under the Common Effective Preferential Tariff (CEPT) scheme. A customs union with

common external tariffs was ruled out due to marked differences in MFN tariff levels among

ASEAN economies. There were Temporary Exclusion List (TEL), Sensitive List (SL)

comprising unprocessed agricultural products, and General Exclusion List (GEL) covering

products permanently excluded from liberalisation for reasons of national security, protection of

human, animal or plant life and health, and articles of artistic, historic and archaeological value.

In September 1994 it was agreed to eliminate the TELs by 2000 for ASEAN6 and by 2003 for

CLMV. The SL has a longer time-frame for liberalisation, with 2010 for ASEAN6 and 2013-17

for CLMV. In January 2003 ASEAN agreed that tariffs would be completely abolished on

trade among ASEAN6 by the beginning of 2010 and for CLMV by the beginning of 2015

with some exceptions expiring by 2018. In November 2004, the target dates for removing

tariffs were advanced to the beginning of 2007 for ASEAN6 and 2010 for CLMV for priority

sectors.

Removal of non-tariff barriers:

The 1995 ASEAN Summit directed the removal of NTBs from January 1996. NTBs include

import quotas and anti-dumping actions as well as technical, administrative, health and safety

regulations usually imposed for quality assurance and safety standards, but also for

protectionism. It took considerable time for ASEAN even to compile its NTB database.

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Trade facilitation - customs improvement:

Inefficient and ambiguous customs rules, regulations and procedures and their lack of

harmonisation result in arbitrary and corrupt application across ASEAN countries and add to

business transaction costs. In 1983, Indonesia, Malaysia, Philippines, Singapore and Thailand

adopted the ASEAN Code of Conduct and in 1997 the ASEAN Agreement on Customs

formalised the code. In 2003, ASEAN adopted the ASEAN Customs Valuation Guide and the

ASEAN Post-Clearance Audit Manual. In August 2003 ASEAN adopted the ASEAN

Harmonised Tariff Nomenclatures (AHTN) to provide a common system to classify and

designate all goods for customs purposes. A December 2005 agreement to establish the

ASEAN Single Window commits all ASEAN countries to set up National Single Windows

by 2008 for ASEAN6 and 2012 for CLMV; there would be only one point where customs

data and information are submitted and processed and customs decisions are made, thus

obviating the need for importers to shuttle a number of agencies to have their shipments

approved.

Trade facilitation- standards and mutual recognition:

To minimise business transaction costs, product standards are either harmonised across ASEAN

or mutual recognition arrangements (MRAs) negotiated to obviate multiple testing and

certification. However, standards harmonisation and even MRAs could be difficult to achieve in

view of the wide development gap among ASEAN countries and overall, progress was very

slow.

Trade facilitation - transportation and logistics:

Transportation development includes the development of physical infrastructure as well as

removal of administrative-political and regulatory obstructions. In 1995 ASEAN adopted the

Singapore-Kunming Rail Link to facilitate trade on mainland Southeast Asia and ease the

access to and from China. In 1999 ASEAN formalised the programme of developing the

ASEAN Highway Network. In 1998 ASEAN concluded a framework agreement for the

facilitation of transit passage of goods traded in the region: it commits the parties to ensure

that goods being transported from one ASEAN country to another through a third would not

be subjected to unnecessary delays, restrictions, taxation or customs inspection in the transit

country. The 1998 Hanoi Plan of Action called for the development of a Competitive Air

Services Policy as a prelude to an ASEAN Open Sky Policy; the rapid growth of budget

airlines in the region was already breaking up the monopolies of ASEAN national airlines. In

2002 ASEAN agreed to allow one another to deliver air cargo services to their respective

territories up to 100 tons a week. However, some countries restricted the operation of cargo

services from other ASEAN countries.

ASEAN Industrial Cooperation (AICO):

In 1996 ASEAN also adopted AICO with the objective of promoting joint manufacturing

between ASEAN-based companies. The qualifying criteria for AICO are a minimum of two

companies in two different ASEAN countries and a minimum of 30% national equity. AICO

allows the private sector to select the products for which to seek tariff concessions, subject to

approval of AICO status by the governments immediately involved. AICO products

immediately enjoy AFTA end-tariff rates of 0-5% as well as local content accreditation and

investment incentives offered by ASEAN national authorities. AICO has successfully

promoted production networks in automobile and electronics industries, by reducing the

preferential tariff rate to 0-5 % and liberalising equity restrictions for foreign investors.

b) AFAS: Trade in Services Liberalisation

AFAS was concluded in December 1995 to eliminate discriminatory measures, market access

limitations and other restrictions on trade in services. What is the rationale? First, services

are an increasingly important part of ASEAN national economies. Second, integrating the

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services sector is an essential component of other regional economic integrations such as

NAFTA and NAFTA-type bilateral FTAs. Third, an ASEAN-wide agreement will help lock

in the unilateral liberalisation measures already undertaken by individual ASEAN States and

prepare them for services liberalisation in other ASEAN and bilateral FTAs.

AFAS aims at liberalising trade in services beyond the GATS commitments and improve the

efficiency and competitiveness of ASEAN service suppliers. Services negotiations under

AFAS follow the WTO mode of request and offer and no agreement is reached until all

members agreed to the totality of the package offered. ASEAN later adopted the more

flexible “ASEAN minus X” approach to accommodate members unable to move at the same

pace, allowing them to join in at a later stage.

Services trade liberalisation involves four modes of supply: Mode 1 (cross-border supply),

Mode 2 (consumption abroad), Mode 3 (commercial presence) and Mode 4 (movement of

natural persons). The general reluctance to liberalise services under Mode 3 and Mode 4 led

to modifications which resulted in liberalisation of all limitations for Mode 1 and Mode 2 but

only progressive liberalisation for Mode 3 and Mode 4.

AFAS requires negotiations to be conducted sector by sector. Services trade liberalisation is

achieved through rounds of negotiations, with each round resulting in a package of

commitments by ASEAN States in each agreed sector /sub-sector and mode of supply.

Countries have so far negotiated and agreed on 7 packages of commitments under AFAS which

covers business services, professional services, construction, distribution, education,

environmental services, healthcare, maritime transport, telecommunication and tourism.

ASEAN has also concluded MRAs for professional services covering engineering, architecture,

accountancy, surveying, medical practitioners, dental practitioners, nursing services and tourism

services.

Assessment of AFAS: Many negotiations are extremely cautious either because of their

uncertainty about the impact of liberalisation and fear of the loss of regulatory control in

some service sectors (such as financial services) or because of the power of domestic

interests. Assessment made in the mid-term review of Hanoi Plan of Action noted progress in

negotiations has been slow and indicative offers have been slow in coming. In September

2005, ASEAN declared 2015 as the end-date for liberalisation of all services sectors.

c) AIA: Investment Liberalisation, Facilitation and Promotion

FDI inflows have played a crucial role in the economic development of ASEAN economies,

and particularly in the switch to an outward development strategy and participation in

GPNs/GVCs.

The 1998 ASEAN Investment Area (AIA) agreement aimed at providing a policy

environment to facilitate the free flows of investment and participation in global and regional

production networks. It grants national treatment to ASEAN investors by 2010 and to non-

ASEAN investors by 2020, with some exceptions specified in the TEL, SL and GEL. This

was later changed to full realisation of the AIA to 2010 for ASEAN6 and 2015 for CLMV

and parity treatment for ASEAN and non-ASEAN investors. Also, each ASEAN country is

to grant all other ASEAN countries on an MFN basis, the investment privileges that it would

accord to non-ASEAN countries under bilateral agreements. Sectoral coverage of the AIA

includes manufacturing, agriculture, fisheries, forestry and mining, and services incidental to

those sectors. ASEAN6 and Myanmar agreed to phase out their TELs in manufacturing by

2003, Vietnam, Cambodia and Laos by 2010. Malaysia and Singapore did not have TELs.

13

To improve the investment climate, the AIA agreement calls for reduction/elimination of

regulations and conditions impeding investment flows and investment project operation, such

as ensuring transparency and consistency in application and interpretation of their investment

laws, regulations and administrative procedures. ASEAN countries are to exchange their

action plans on facilitating, promoting and liberalising inflows of investments. The AIA also

contains an investment promotion programme, which includes joint investment promotion

missions to target countries, creation of investment websites and databases and timely

publication of investment information.

Assessment of AIA: According to the Mid-Term Review of the Hanoi Plan of Action, some

countries faced difficulties in drawing up the TEL and SL for services that are incidental to

manufacturing, agriculture, fishery, forestry and mining. The extent and type of investment

barriers are evident from the length and content of the various TEL, SL and GEL. The

deadlines for phasing out the TELs in manufacturing were brought forward to January 2003

for the ASEAN6 and Myanmar, and to January 2010 for CLV. The deadlines for phasing out

the TELs in agriculture, fishery, forestry, mining and related services are 2010 for the

ASEAN6 and Cambodia, 2013 for Vietnam, and 2015 for Laos and Myanmar. The GEL

consists of industries and investment measures that are not open to FDI for reasons of

national security, public morals, public health and environmental protection.

Question:

1. From your country perspective, what were the main concerns and challenges in

implementing the commitments under AFTA, AFAS and AIA?

VI. ASEAN Economic Integration under AEC 2015

1. Why the ASEAN Economic Community (AEC)?

At the November 2002 ASEAN Summit, it was decided to move on to the next stage of

regional economic integration. There was concern over the weakened ability of ASEAN

countries to attract FDI in the aftermath of the 1997-8 Asian Financial Crisis as well as the

rise of China and India as competing FDI destinations. Hence ASEAN has to deepen

economic integration to persuade investors that an integrated ASEAN would have a

prospective market size that can compete with the large Asian economies.

The AEC is based on the 1997 ASEAN Vision 2020, calling for a stable, prosperous and

highly competitive ASEAN economic region in which there is free flow of goods, services,

investment and a freer flow of capital, equitable economic development and reduced poverty

and socio-economic disparities in year 2020. The 2002 High Level Task Force on ASEAN

Economic Integration made proposals and recommendations. The November 2004 Vientiane

Action Programme (VAP) lay down goals and strategies for bringing the ASEAN

Community to reality. The ASEAN Framework Agreement for the Integration of Priority

Sectors formalised the measures agreed upon in the VAP, with protocols for the 11 priority

sectors. The 2007 AEC Blueprint outlined the various measures and strategic schedules for

implementation.

2. The 2007 AEC Blueprint

The AEC has often been inappropriately compared to the EU Single Market in the media.

But it is neither a Customs Union (with common external tariff) nor a full Common Market

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(with free mobility of capital and labour and some policy harmonisation). Instead, it is an

FTA Plus with 4 pillars as shown in Table 3:

Table 3: 2007 AEC Blueprint - Four Pillars and Core Elements

Pillars Core elements

A. Single Market and Production Base A1. Free flow of goods: 9 strategic approaches

A2. Free flow of services: 3 strategic approaches

A3. Free flow of investment: 5 strategic approaches

A4. Freer flow of capital: 7 strategic approaches

A5. Free flow of skilled labour

A6. Priority integration sectors

A7. Food, agriculture and forestry

B. Competitive Economic Region B1. Competition policy

B2. Consumer protection

B3. Intellectual property rights

B4. Infrastructure development: 10 strategic approaches

B5. Taxation

B6. E-commerce

C. Equitable Economic Development C1. SME development

C2. Initiative for ASEAN Integration

D. Integration into Global Economy

D1. Coherent approach toward external economic

relations

D2. Enhanced participation in global supply networks

Source: ASEAN Secretariat (January 2008), ASEAN Economic Community Blueprint

3. Benefits of the AEC

The economic literature lists several benefits of economic integration, including an enlarged

market with economies of scale and scope, improved resource allocation and resource pools

with inflows of investment, other capital and labour, and competition leading to improved

efficiency and innovation. Plummer and Chia (2009) discuss the benefits from establishment

of the AEC for various ASEAN stakeholders (government, business, labour, consumers) and

these are outlined below.

a) Benefits from Goods and Services Trade Liberalisation under ATIGA and AFAS

-The creation of a single market and production base should enable ASEAN to benefit from

economies of scale and efficiency in production network processes, while other aspects of the

AEC will boost competitiveness, strengthen ASEAN institutions, and improve the region’s

socio-economic environment.

-The removal of intra-ASEAN tariffs and NTBs plus trade-facilitation measures will boost

intra-ASEAN trade, promote participation and expansion of production networks in ASEAN

and plug ASEAN economies into global supply chains.

-Services is both an input into further production of other economic sectors and for direct

consumption. Services facilitate trade and competitiveness and reduce cost and widen

consumer choice.

-Behind-the-border policies such as competition policy and intellectual property rights

protection, as well as infrastructure connectivity affect ASEAN competitiveness. Competition

15

policy not only improves economic efficiency but also income distribution. Consumer

protection improves living standards. Better IPR protection encourages technology transfer

and local innovations and protect indigenous technologies and property rights. Adequate

transport and communications infrastructure lowers the costs of distribution and

communication in trade and facilitate movements of peoples for business and tourism.

b). Benefits from Liberalisation of Investment and Skilled Labour Flows under AIA and

ACIA

-FDI inflows brings benefits of financial resources, technological and managerial knowhow, and

participation in GPNs/GVCs. A favourable investment climate includes political and economic

stability; large market size and favourable economic prospects; available educated, well-

disciplined low-cost labour; well-developed soft and hard infrastructure; and business-friendly

policies and practices. The ASEAN Comprehensive Investment Area (ACIA) builds on the

earlier AIA and has the 4 components of FDI liberalisation, facilitation, promotion and

protection.

-Skilled labour mobility (including professionals) is essential for effective implementation of

services and FDI liberalisations as well as for deeper economic integration. A free flow of

skilled labour will increase ASEAN’s attractions for foreign MNCs, particularly as it meets

their need for intra-corporate transferees of management and technical personnel. The easier

movement of ASEAN professionals within the region will also facilitate people-to-people

contact and enable transfers of knowhow, experiences and best practices.

c). Benefits of Financial and Capital Market Development

Developing financial resilience is a high priority for ASEAN countries since the Asian

Financial Crisis. This has led to reforms of domestic financial and banking systems, better

macroeconomic management and accumulation of foreign exchange reserves to hedge against

external shocks. As a result the ASEAN region was better able to withstand the onslaught of

the US financial crisis in 2008. Financial and capital market development is seen as providing

more efficient markets to finance trade, investment and corporate development in ASEAN

countries and contributes to Singapore’s role as a financial centre. Cooperation in ASEAN

and in ASEAN+3 (China, Japan and South Korea) have resulted in the Chiang Mai Initiative

(now Chiang Mai Initiative Multilateralisation CMIM), Asian Bond Market, and Regional

Surveillance Mechanism (now ASEAN+3 Macroeconomic Research Office AMRO).

d). Benefits from Narrowing the Development Gap

As highlighted at the outset, the ASEAN economies are characterised by wide diversity. When

the CLMV joined ASEAN in 1995-1999, they had per capita incomes lower than the older

ASEAN members and they were doubly handicapped by being less developed and by being

transitional economies. A wide development gap would lead to negative spill-over effects

between rich and poor neighbourhoods as well as hindering consensus building and the speedy

progress towards the ASEAN Community. “Special and differential treatment” were accorded

the CLMV in terms of delayed time-lines and flexibilities in meeting ASEAN liberalisation

commitments, and in provision of development and technical assistance from the ASEAN6 (as

well as from ASEAN Dialogue Partners) under the Initiative for ASEAN Integration (IAI). The

IAI also embodies the transfer of knowhow, development experience and best practices from the

more advanced ASEAN members.

4. Assessment of AEC 2015

In April 2009 ASEAN adopted the Declaration on the Roadmap for the ASEAN Community

(2009-2015) and agreed on the accelerated time table for realisation of the AEC to 2015. In

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April 2012, against a background of great uncertainty and bleak outlook for the global

economy, ASEAN committed to redouble efforts and set priority activities and concrete key

actions to realise the AEC by 2015. Evaluation of the AEC can be done through: What is its

implementation record? Has it realised the objectives it sets out to achieve? What are some of

the common metrics of measuring success of an economic integration project?

a) Asessment through the AEC Scorecard:

The ASEAN Secretariat’s Scorecard (first published in 2012) tracks implementation rates of

the AEC pillars, measures and strategic schedules in the 2007 AEC Blueprint.

Initial Scorecard covers 2008-2011. Implementation rates are very modest except for

integration into global economy --Single market and production base 65.9%; Competitive

economic region 67.9%; Equitable economic development 66.7%; Integration into global

economy 85.7%. Problematic areas in implementation of the single market and production

base and competitive economic region are services liberalisation, trade facilitation and free

flow of skilled labour, competition policy and intellectual property protection. Problematic

area ini equitable economic development is the uneven distribution of benefits and costs of

liberalisation, marginalisation of local MSMEs and the need mechanism to compensate losers

among businesses and workers. The scarcity of information in the Scorecard for an analytical

evaluation of the AEC shows the need to strengthen monitoring capacity at ASEAN

Secretariat and at national levels.

Table 4: AEC Scorecard

Key areas Phase I (2008-2009) Phase II (2010-2011) Total Measures

Fully Not fully Fully Not fully Fully Not fully

Implemente

d

Implemente

d

Implemente

d

implemente

d

implememte

d

implemente

d

Single market and production

base:

Free flow of goods 9 0 23 24 32 24

Free flow of services 10 3 13 17 23 20

Free flow of investment 5 1 5 8 10 9

Freer flow of capital 1 0 5 0 6 0

Free flow of skilled labour . . 1 0 1 0

Priority integration sectors 28 0 1 0 29 0

Food, agric and forestry 8 0 5 6 13 6

Total number of measures 61 4 53 55 114 59

Implementation rate 93.8% 49.1% 65.9%

Competitive economic region:

Competition policy 2 0 2 0 4 0

Consumer protection 2 0 5 4 7 4

Intellectual property rights . . 4 1 4 1

Transport 15 10 6 8 21 18

Energy 0 0 2 1 2 1

Mineral 1 0 7 0 8 0

ICT 2 0 4 0 6 0

Taxation . . 0 1 0 1

e-commerce . . 1 0 1 0

Total number of measures 22 10 31 15 53 25

Implementation rate 68.7% 67.4% 67.9%

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Equitable economic

development:

SME development 1 0 4 3 5 3

IAI 2 0 1 1 3 1

Total number of measures 3 0 5 4 8 4

Implementation rate 100% 55.5% 66.7%

Integration into global

economy:

External economic relations 5 0 7 2 12 2

Total number of measures 5 0 7 2 12 2

Implementation rate 100% 78% 85.7%

Source: ASEAN Secretariat (2012) Economic Community Scorecard

b) Assessment on Realisation of Objectives of AEC 2015

The ASEAN Secretariat released in 2015 A Blueprint for Growth. ASEAN Economic

Community 2015: Progress and Key Achievements.

(1.1) Single market and production base- Free flow of goods

Tariff elimination: ATIGA came into force in 2010 and consolidated and streamlined all the

provisions in AFTA-CEPT and relevant ministerial decisions and commitments in the AEC

Blueprint into a single legal instrument. In 2014, average ATIGA tariff rate stood at 0.54%,

with 0.04% for ASEAN6 and 1.33% for CLMV versus the 2007 rates of 2.58%, 1.32% and

4.44%, respectively. By 2015 the share of ATIGA 0% tariff lines across ASEAN reached

96.0%.

Rules of origin (ROO): There has been continuous reform and enhancement of ROO, such as

advance rulings, simplification of Operational Certification Procedures and harmonisation or

alignment of national procedures. ROO may follow the RVC, CTC, specific processes rules

(PSR) and combinations with the co-equal rule allowing exporters a choice of rules. ROO

self certification enables exporters/producers to self-declare the origin of their goods and thus

reduce cost, especially for smaller exporters located at a distance from the regulatory

authority.

Trade facilitation: This aims at simplifying, harmonising and standardising trade and customs

processes, procedures and related information flows.

-ASEAN Trade Repository (ATR): The ATR provides regulatory transparency and greater

certainty in business dealings and thus reduce business costs. However, some ASEAN States

have yet to complete their National Trade Repository (NTR) web portals. The ATR is

expected ultimately to contain information such as MFN tariffs, preferential tariffs under

ATIGA and other ASEAN FTAs, ROOs, NTMs, national trade and customs laws and rules,

as well as comprehensive procedures and documentary requirements, administrative rulings,

best practices and a list of authorized traders.

-Non-Tariff Barriers (NTBs): NTBs were to be eliminated for ASEAN6 (except Philippines)

in 2008-2010, for Philippines in 2010-2012, for CLMV in 2013-2015 with flexibilities to

2018.

--The NTM database made initial progress with submissions of national NTM lists posted on

the ASEAN website. Currently these databases are being updated and interagency bodies

established to strengthen coordination when addressing NTMs and NTBs.

--ASEAN Single Window (ASW): ASW connects and integrates the 10 national single

windows (NSWs) enabling electronic data exchange for cargo clearance and release to

facilitate intra-regional trade. The AEC Blueprint targeted the operationalization of NSWs in

ASEAN6 by 2008 and CLMV by 2012. Implementation of the full- fledged ASW Pilot

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Project began in early April 2015 and due to end in December 2016.

--Customs integration: The ASEAN Agreement on Customs entered into force in November

2014. It simplifies and harmonises customs valuation tariff nomenclature and customs

procedures; ensures consistency, transparency and fair application of customs laws,

regulations and procedures; and ensures efficient administration and expeditious clearance of

goods. However, degree of implementation varies with 9 ASEAN States implementing.

ASEAN has developed the ASEAN harmonized tariff nomenclature (AHTN) which

facilitates trade negotiations, calculation of tariffs on trade transactions and collection of

trade statistics. Protocol 2 of the ASEAN Framework Agreement on Facilitation of Goods in

Transit (AFAFGIT) has been finalised, while Protocol 7 on Customs Transit System is

undergoing ratification.

--Standards, technical regulations and conformity assessment procedures (STRACAP): Their

harmonisation is now largely in place. ASEAN has also concluded three sectoral MRAs

covering EEE, cosmetics and medicinal products while yet others are being developed.

(1.2) Single market and production base- Free flow of services

The AEC Blueprint sets out specific goals to lift restrictions on trade in services — for the

four PIS sectors (air transport, e-ASEAN, healthcare, tourism) by 2010, for logistics by 2013,

and for all other services sectors by 2015. The target is to schedule a minimum number of

new sub-sectors based on GATS W/120 classification with 10 in 2008, 15 in 2010, 24 in

2013 and 24 in 2015.

Nine packages of commitments have been concluded under AFAS. ASEAN

commitments in terms of numbers of subsectors and depth of commitments have pro-

gressively and significantly improved. AFAS targets evolve with each package along with

increased numbers and types of thresholds. However, commitments under AFAS, while

significantly above those offered under GATS and Doha Round, do not go beyond the

applicable non-preferential regimes of many ASEAN states and across sectors. Hence the

impact of AFAS is more in ensuring certainty of regional policy rather than delivering

additional preferential service liberalization. Replacement of AFAS by ATISA has been

delayed.

Free flow of skilled labour: AFAS provides for MRAs for professionals so as to facilitate free

flow of skilled labor in ASEAN while taking into account relevant domestic regulations and

market demand conditions. The challenge is realigning domestic laws, regulations and

practices to enable skilled labor flows facilitated by MRAs. So far 8t MRAs have been

concluded, covering engineering services, nursing services, architectural services, surveying

qualifications, medical practitioners, dental practitioners, accounting services and tourism

professionals. The MRAs adopted different approaches, reflecting the varying nature of these

services and realities of regulatory regimes. Progress in implementing MRAs on architectural

services and engineering services are the most advanced.

(1.3) Single market and production base- Free flow of investment

The AEC Blueprint spelt out specific actions to achieve objective of fostering a free and open

investment regime. The 2012 ACIA anchored on investment liberalization, protection,

promotion and facilitation marked a key milestone towards the objective of free and open

investment regime. ACIA improves on the earlier IGA and AIA and covers 5 main sectors of

manufacturing, agriculture, fisheries, forestry, mining and quarrying and related services.

There are reservations on national treatment obligation and senior management and board of

directors’ obligation. ACIA is also cobbled by extensive national exclusion lists and lim-

itations on foreign equity and land ownership.

19

(1.4) Single market and production base- Freer flow of capital

Under the AEC Blueprint, the financial integration framework sets out to achieve a well-

integrated and well-functioning regional financial system with more liberalized financial

services, capital account regimes and inter-linked capital markets. Adoption of the 2011

ASEAN Financial Integration Framework (AFIF) further strengthens this.

(2) Competitive economic region

Infrastructure development:

An integrated transportation network is essential for competitiveness, as it facilitates

movement of goods, services and people and enhances resource allocative efficiency. The

2004 ASEAN Transport Action Plan (2005-2010) provided the basis for broadening co-

operation in regional transportation networks. This was followed by the Master Plan on

ASEAN Connectivity (MPAC) 2010-2015, and the ASEAN Strategic Transport Plan (ASTP)

2011-2015.

Land transport connectivity includes construction of missing railway links

(Singapore- Kunming Railway Link or SKRL) and upgraded roads under the Asian Highway

Network (AHN). Maritime transport connectivity involves adoption of the Roadmap towards

an Integrated and Competitive Maritime Transport in ASEAN which sets framework for

progressive development of integrated ASEAN ports and shipping sectors and an ASEAN

Single Shipping Market (ASSM). Aviation transport connectivity involves implementation of

the ASEAN Aviation Single Market (ASAM) which aims at providing competitive space for

expansion and opportunities for regional air travel. The physical transport infrastructure has

to be supported by an improved regulatory framework or transport facilitation to simplify and

harmonize international transport procedures, reducing time and cost of logistics involved in

transporting cargo and passengers. Three specific initiatives are the ASEAN Agreement on

the ASEAN Facilitation of Goods in Transit (AFAFGIT), ASEAN Framework Agreement on

Facilitation of Inter-State Transport (AFAFIST) and ASEAN Framework Agreement on

Multimodal Transport (AFAMT).

The realisation of land connectivity, ASEAN Single Shipping Market and ASEAN

Single Aviation Market are still “work in progress” not only because of infrastructure

construction bottlenecks but also because of existing national policy restrictions regarding

foreign carriers and barriers at frontier posts and customs transits. Considerable collective

effort is needed to accelerate implementation of outstanding measures.

The ASEAN Plan of Action for Energy Cooperation with 6 out of 16 power

interconnection projects for the ASEAN Power Grid have been implemented, with additional

6 schedules for completion in 2017, aiming for a regional renewable energy target of 15% in

total installed capacity by 2015 and promoting development of R&D for renewable and alter-

native energy initiatives.

Master Plan on ASEAN Connectivity 2025 (MPAC 2025)

The MPAC 2025 succeeded the Master Plan on ASEAN Connectivity 2010, focuses on 5

strategic areas of sustainable infrastructure, digital innovation, seamless logistics, regulatory

excellence and people mobility. If implemented effectively, the MPAC 2025 will only bring

more economic and educational opportunities for ASEAN

-Sustainable infrastructure: Given that ASEAN needs at least US$110 billion of

infrastructure investment each year to support future growth, MPAC 2025 aims to help

investors seize opportunities in sustainable infrastructure by improving project preparations,

enhancing infrastructure productivity and supporting cities in adopting sustainable practices.

-Digital innovation: Digital technologies in ASEAN could potentially be worth up to US$625

billion by 2030, which may be derived from increased efficiency, new products and services.

Capturing digital innovation requires the establishment of regulatory frameworks for the

20

delivery of new digital services; support for the sharing of best practices on open data; and

equipping MSMEs with the capabilities to access these new technologies.

-Seamless logistics: Improving logistics competitiveness will facilitate movement of goods

and increase business opportunities. MPAC 2025 aims to support this by identifying and

addressing key bottlenecks on important trade routes in ASEAN.

-Regulatory excellence: MPAC focuses on standards harmonisation, mutual recognition and

technical regulations, as well as trade-distorting non-tariff measures in order to achieve

regulatory excellence.

-People mobility: The number of tourists from outside ASEAN could reach 150 million by

2025. MPAC 2025 will focus on providing comprehensive information on travel options and

simplifying visa application processes; develop high-quality qualification frameworks in

critical vocational occupations, which ASEAN States could implement according to their

national circumstances, and encourage greater mobility of intra-ASEAN university students.

Competition policy, consumer protection, and intellectual property protection:

Competition policy and law is supposed to provide a “level playing field” for all producers,

suppliers and consumers and the challenge is how to minimise the anti-competitive behaviour

of state-enterprises and of discriminatory government procurement practices. Currently there

are competition laws and competition authorities in place in Indonesia, Malaysia, Singapore

and Thailand while other states are in process of drafting and implementing competition-

related laws. There is need to foster greater harmonisation of competition policies and laws in

ASEAN.

All but one ASEAN state has consumer protection law. Achievements to date include

establishment of an ASEAN Consumer Portal and development of a strategic ASEAN Action

Plan on Consumer Protection. With the rise of e-commerce and digital transactions, consumer

protection is even more difficult to enforce.

Although most intellectual property rights (IPR) legislations and procedures are

already in place in several ASEAN states, challenge remains in states implementing them.

Strengthening regional cooperation in IPR drafting legislation and enforcement procedures

would help. A major highlight is establishment of ASEAN TMView, an online platform that

provides users with a practical tool to obtain data on trademarks.

(3) Equitable economic development

ASEAN put in place measures to augment CLMV capabilities to participate in the integration

process and provide flexibilities for implementing regional commitments such as longer

implementation time frames and lower thresholds for compliance. ASEAN has not reached

the stage where mandating compulsory transfers from richer to poorer regions is politically

acceptable. Pursuit of equitable economic development is undertaken through SME

development and IAI for CLMV. Various indicators show a narrowing of the development

gap between the ASEAN6 and the CLMV. In the past decade, economic growth has been

much more buoyant in the CLMV, particularly Vietnam, than in the ASEAN6. The CLMV

are also participating in regional production networks and undertaking economic

restructuring and human resource development and attracting sizeable investment inflows.

However, absolute gaps between ASEAN’s middle-income and low-income countries remain

sizeable and more efforts and action programmes are called for.

Small and medium enterprises:

Strategies to enhance SME growth and capabilities such as access to finance, markets,

information, and dissemination and supporting services have been developed. The Strategic

Action Plan for SME Development for 2010-2015 has key strategies to support SME access

to finance, market and internationalisation, human resource development, information and

advisory services, and technology and innovation. Some of these initiatives have been

21

completed while some will continue beyond 2015. Successful implementation of initiatives

includes ASEAN Benchmark for SME Credit Rating Methodology, SME Service Centre,

ASEAN SME Policy Index and ASEAN Common Curriculum for Entrepreneurship. Need to

improve policy and regulatory environment, finance and technology access, and SME

capacity to participate effectively and proactively in GPNs/GVCs.

Integrated ASEAN initiative (IAI):

IAI Workplan I was implemented through a collection of projects proposed by ASEAN

States and were either self-funded or funded with support of donor partners. IAI Workplan II

designed to assist CLMV meet specific AEC commitments and mostly comprised training

and capacity building initiatives. . Since the first IAI Work Plan, more than 600 projects and

activities worth over US$102 million have been implemented. The 2011 ASEAN Framework

for Equitable Economic Development (AFEED) provide guiding principles for inclusive and

sustainable growth for all sectoral and ministerial bodies under the AEC Pillars. The 2014

ASEAN Equitable Development Monitor focused on identifying development gaps within

ASEAN with significant progress in reducing development gaps through rapid economic

growth. Issues that remain include access to formal banking systems and savings rates and

access to water sanitation and electricity

The development gap has been narrowed. In 2006-2015 average GDP growth rate of CLMV

was 6.0%-8.7%, compared to the region’s average of 5.2%; CLMV merchandise trade grew

2.5-5.8 fold. CLMV also played an increasing role in the regional trade, contributing to

16.9% of ASEAN’s total merchandise trade in 2015 as compared to 6.4% in 2006. However,

CLMV still have the lowest incomes among ASEAN States, while the scale and complexity

of ASEAN’s commitments and agreements have grown substantially

(4) Integration into the global economy

ASEAN is increasingly participating in GPNs/GVCs but needs more pro-active measures to

enhance participation, such as strengthening standards, compliance capacity, infrastructure

connectivity, and innovation, technology and skills transfer. ASEAN is also forging external

linkages through FTAs/CEPs. ASEAN has entered into FTAs/CEPs with China, Japan,

South Korea, Australia-New Zealand and India, and more recently with Hong Kong. It is also

negotiating agreements with the EU. ASEAN external trade with the non-ASEAN regions

has grown over the decades pari passu with the growth of intra-ASEAN trade. FDI inflows in

the ASEAN region are dominantly from the OECD countries. Some ASEAN members are

participating in the CPTPP (TPP11). Negotiations on RCEP (involving ASEAN10 plus

China, Japan, South Korea, Australia-New Zealand and India) started in 2013, but has yet to

be concluded.

In sum, the AEC has made substantive progress in implementing measures outlined in the

AEC Blueprint and in subsequent initiatives such as ASEAN infrastructure connectivity. The

AEC was established on 3l December 2015. However, not all the AEC Blueprint measures

were fully implemented, such as NTB elimination, trade facilitation measures, services and

investment liberalisations, IPR, competition policy, SME development, capital market

development, and transport and logistics development. Also, to fully achieve a single market

and production base, ASEAN would have to overcome issues arising from implementing

rules of origin, include government procurement and circumscribed the role of state

enterprises.

c. Intra-ASEAN Trade Share and Preferential Tariff Utilisation Rate as Metrics of AEC

Success?

22

Intra-ASEAN trade share:

Many analysts measure the success or otherwise of regional economic integration projects by

the extent of intra-regional trade and investment. On those metrics, the ASEAN economic

integration through AFTA-AFAS-AIA and AEC cannot be considered a success. Intra-

ASEAN trade grew rapidly in the 1990s but has remained at around 25% of ASEAN total

trade for almost two decades. In contrast the intra-regional trade share of NAFTA and EU

are much higher. Likewise, barely 20% of FDI inflows into ASEAN countries originates

within ASEAN.

However, advocates of ASEAN economic integration often argue that the raison-d’etre of

AFTA-AFAS-AIA and AEC is to practice “open regionalism” and build competitive

economies that can compete in international trade and international investment markets.

ASEAN has been fairly successful using those metrics. Most of intra-

ASEAN trade is related to GPN/GVC trade in parts and components with final markets

outside of ASEAN. And most FDI inflows are from the OECD countries and largely in

GPN/GVC related activities. ASEAN’s trade with the rest of the world has grown as fast as

its intra-regional trade. ASEAN has become the 4th largest exporting region in the world,

trailing only the EU, NAFTA and China.

ASEAN preferential tariff utilisation rate:

Critics of ASEAN economic integration also use the metric of low preferential-tariff

utilisation of AFTA and ATIGA. Various surveys had shown that the ASEAN preferential

tariff utilisation rate is surprising low, including JETRO (2007) and Kawai and Wignaraja

(2011). Several reasons account for the low utilisation rates. First, is the low margin of

preference (MOP) between MFN and AFTA-CEPT rates and the prevalence of NTBs.

Singapore had zero MOP except for 6 beverage items. Most other ASEAN countries have

positive but low MOP for most products. In particular, electronic products and components

which is a major ASEAN export, had zero MFN tariffs because of the WTO Information

Technology Agreement and the duty-drawbacks for these products in ASEAN export processing

zones. Second, although AFTA has been in existence since 1993, many SMEs were

“unaware” of how to apply for tariff preferences, indicating that considerable outreach effort

is necessary. Third, is the problem with satisfying the ASEAN ROO of 40% of RVC, as

ASEAN exports of industrial goods and parts and components are also heavily dependent on

imported inputs, they often fail to qualify under the RVC ruling. Fourth, is the lack of

consistency in treatment by customs authorities of the Form D Certificate of Origin creating

uncertainty and lengthy processing time that discourage exporters. The issues with ROO and

customs are being addressed in recent years as the ROOs have been revised, self-certification

has been adopted and customs procedures have been streamlined. However, while tariffs are

becoming less of an issue in ASEAN trade, NTBs have emerged as the main obstacle in the

trade liberalisation endeavour.

Questions:

1. Analysts and observers both within and outside ASEAN seem to be divided in

assessing whether the AEC2015 has been a success or failure. What is your assessment?

State your arguments.

2. If applied tariff rates were the primary consideration, would you advise your

country’s rice and sugar producers and motor vehicle assemblers to export to other

ASEAN countries, partner countries of ASEAN+1 FTAs or export to the world and face

MFN applied tariffs and/or GSP preferential tariffs?

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VII. ASEAN Economic Integration under AEC Blueprint 2025

1. AEC Blueprint 2025

With the formal establishment of the AEC on 31 December 2015, the AEC Blueprint 2025

was developed to complete the “unfinished business” of the 2007 AEC Blueprint as well as to

chart new strategic directions for the next decade 2016-2025. The new Blueprint was adopted

in November 2015 and confirms that the AEC will not progress to a Customs Union,

Common Market or Monetary Union, nor would it encompass government procurement and

free movement of unskilled/ semi-skilled labour.

Even as an FTAplus, AEC 2025 continues to exclude government procurement and restrict

free flow of labour only to the skilled.

-Government procurement: This refers to acquisitions by governments or their agencies of

goods and services, but does not generally cover the commercial activities of state-trading

enterprises. Preferential government procurement policies impact on potential trade

opportunities. Inclusion of government procurement in AEC could provide substantial

opportunities to other ASEAN economies. It should be noted that neither GATT nor GATS

apply to government procurement but there is the plurilateral WTO Agreement on

Government Procurement, which has less than 50 members and includes Singapore.

-Free movement of unskilled/semi-skilled labour: The AEC already faces difficulties with

implementing the free flow of skilled labour, so it would seem unrealistic to extend the

coverage to unskilled/semi-skilled labour as well. The difficulty lies in ASEAN diversities

of demographic size and population density and wage levels and unemployment rates. With

free mobility, high-wage ASEAN countries would not be able to cope with the surges of

migrant labour from neighbouring countries. As it is, Singapore, Malaysia and Thailand are

the largest host countries to ASEAN unskilled/semi-skilled migrant workers, including large

pools of undocumented workers in Malaysia and Thailand.

The AEC will remain an FTA-plus with 5 characteristics which basically repackaged the four

pillars of the 2007 AEC Blueprint, namely:

1. Highly cohesive and integrated economy: Establish a more unified market and enhanced

trade and production networks

2. Competitive, innovative and dynamic ASEAN: Enhance competitiveness and productivity,

deepen GVC participation, strengthen regulatory framework and practice, and regional

coherence

3. Enhance connectivity and sectoral cooperation: Enhance connectivity in transport,

telecommunications and energy and integrate in key sectors

4. Resilient, inclusive, people-centred, people-oriented ASEAN: Enhance equitable economic

development

5. Global ASEAN: Further global integration through FTAs and CEPs

The AEC 2025 Consolidated Strategic Action Plan (CSAP) was adopted in February 2017

and lays out 153 strategic measures and 525 specific action lines and expected time lines of

implementation from 2016 to 2025, as well as sectoral work plans and bodies. CSCAP also

provides for a more structured tracking and reporting of the implementation of progress of

Blueprint 2025 by the ASEAN Secretariat.

2. Progress with AEC Blueprint 2025

a) Reporting and monitoring:

In the AEC 2015, the ASEAN Secretariat adopted the AEC Scorecard to monitor compliance.

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Monitoring which is generally regarded as highly inadequate and could be one factor in the

poor implementation record of some countries, sectors and measures. For the AEC Blueprint

2025 and its sectoral work plans, the AEC 2025 Monitoring and Evaluation (M&E)

Framework goes beyond compliance monitoring to incorporate outcomes monitoring and

impact evaluation.

The reporting of ASEAN economic integration progress and outcomes will be

undertaken and tailored for a wide-range of audiences. The progress of outcomes-level KPIs

will be reported periodically, along with progress on compliance monitoring. Some reports

will be directly and exclusively presented to ASEAN Member States, while the ASEAN

Integration Report and the ASEAN Economic Integration Brief (AEIB) will be made

available to the public. These public reports will synthesise and provide analysis of trends

and issues at the overall AEC Blueprint 2025-level as well as for specific sectors under the

AEC. So far, two issues of the AEIB have been released in 2017 covering progress in 2016-

2017.

The AEC Blueprint 2025 will be reviewed periodically, not more than every 3 years,

unless otherwise agreed. Mid-term and end-of-term evaluations covering the periods 2016-

2020 and 2021-2025 will be conducted to monitor progress and evaluate outcomes/impacts,

including achievements and challenges from the implementation of the AEC Blueprint 2025,

with a view towards enhancing the level of economic integration in ASEAN. The review

mechanism for the AEC is conducted through the Country Visit process which is a technical

verification tool for compliance monitoring of the AEC 2025 Monitoring and Evaluation

Framework. The first full Country Visit was held on 9-13 October 2017 in the Philippines,

while the second was held in Indonesia in late 2017.

Pending a more comprehensive report to be released by the ASEAN Secretariat for

public consumption, progress on AEC 2025 can only be gleaned from the AEIB of June 2017

and November 2017.

b) ASEAN Economic Integration Brief, June 2017 issue:

-The ASEAN Economic Ministers (AEM) adopted the ASEAN Trade Facilitation Framework

in 2016 and set the target to reduce 10% of trade transaction costs by 2020 (see November

2017 issue) . The ASEAN Trade Repository (ATR) is a one-stop online database on ASEAN

trade- and customs-related information where the public can also access the information

available on the National Trade Repositories (NTRs) of each ASEAN State. Linked to the

ATR is the ASEAN Tariff Finder, a cost-free search engine for tariff and tariff related

information under ASEAN and ASEAN+1 FTAs.

-The ASEAN Solutions for Investments, Services and Trade (ASSIST) has become fully

operational. ASSIST is a non-binding and consultative mechanism for the expedited and

effective solution of operational problems encountered by ASEAN-based enterprises on

cross-border issues arising from implementation of ASEAN economic agreements.

-The ASEAN Agreement on Movement of Natural Persons (MNP) entered into force in June

2016. It will help establish streamlined and transparent procedures for applying immigration

formalities under the agreement, further facilitating the movement of ASEAN persons

engaging in trade in goods and services and in investment.

-Initiative for ASEAN Integration Work Plan III: This continues to provide technical

assistance to CLMV to enhance their capacity in implementing their ASEAN commitments

and focuses on 5 areas, namely food and agriculture; trade facilitation; MSMEs; education;

and health and well-being. New features include greater involvement of CLMV officials in

developing, coordinating and monitoring of activities as well as a monitoring and evaluation

mechanism to track progress and measure outcomes.

-To stimulate innovation, the revamped ASEAN Intellectual Property Portal provides a

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consolidated platform to access comprehensive IP information, including the databases on

trademarks, geographical indications and case laws.

-With the growing importance of e-commerce, the ASEAN Coordinating Committee on

Electronic Commerce (ACCEC) was established and is in the process of finalising the ASEAN

Work Programme on e-Commerce.

-ASEAN Roll-on Roll-off (RORO) Sea Linkage Route has launched on 30 April 2017 the

maiden voyage between Davao-General Santos in the Philippines and Bitung in Indonesia.

This represents a major milestone in ASEAN transport connectivity.

-The System and Parallel Test Runs of the Pilot ASEAN Customs Transit System (ACTS) was

completed by Malaysia, Singapore and Thailand. This is a computerised customs transit

management system.

-ASEAN tourism development saw the launch of Visit ASEAN@50: Golden Celebration

Campaign, ASEAN Roadmap for Strategic Development of Ecotourism Clusters and

Corridors, and ASEAN Sustainable Tourism Award (ASTA)

-To enhance MSME access to financing, the ASEAN Institutional Framework on Access to

Finance for MSMEs was adopted in August 2016.

-Consultative processes between AEC sectoral bodies and ASEAN-BAC representatives and

lead private sector entities are being institutionalized.

-The Initiative for ASEAN Integration (IAI) Work Plan III was adopted in 2016 and provides

special assistance to CLMV to further regional integration to narrow the ASEAN

development gap.

-On external relations, formal talks on a framework for a future ASEAN-EU FTA was

launched.

c) ASEAN Economic Integration Brief, November 2017 issue:

-ASEAN-wide Self-Certification Scheme: Working towards its implementation by 2018.

Scheme will facilitate utilisation of ATIGA by allowing exporters to issue origin declaration

with lower transaction costs.

-ASEAN Seamless Trade Facilitation Indicators (ASTFI) and Trade-Facilitation Strategic

Action Plan (ASTI-SAP) track reduction in trade transaction cost in the region by 10% in

2020 and doubling of intra-ASEAN trade between 2017 and 2025.

-ASEAN Trade in Services Agreement (ATISA) negotiations are still ongoing.

-Focused and Strategic Action Agenda on Investment (FAST) is aligned with

implementation of ACIA. A business-matching activity between MNCs and MSMEs was

held in October 2017 in Manila

-ASEAN Work Programme on Electronic Commerce (AWPEC) 2017-2025: AWPEC was

adopted in September 2017. It aims to facilitate cross-border e-commerce in ASEAN,

covering multi-sectoral E-commerce initiatives in infrastructure, education and technology

competency, consumer protection, modernization of the legal framework, security of

electronic transactions, payment systems, trade facilitation, competition and logistics. A key

deliverable of the AWPEC is the development of an ASEAN Agreement on E-Commerce

-Inclusive Business (IB): The ASEAN IB Framework was endorsed in September 2017. The

IB initiative of the Philippines is based on the G20 framework that promotes the adoption of

business models that provide goods, services and livelihoods on a commercially viable basis

to people at the “bottom of the pyramid.”

-Women’s Economic Empowerment: The Manila Statement on Mainstreaming Women's

Economic Empowerment in ASEAN, includes a six-point Action Agenda which was agreed

upon by the AEM in September 2017 to be submitted for the Leaders' adoption in November

2017.

-The ASEAN Declaration on Innovation: Adopted in November 2017, it signifies ASEAN's

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commitment towards strengthening the impact of science, technology, and innovation

towards people's empowerment, inclusive growth, and strengthening of the ASEAN

Community.

-ASEAN Regional Guidelines on Food Security and Nutrition Policy: This was endorsed in

September 2017. It serves as a general framework to help ASEAN States build stronger food

security and nutrition cooperation and integration in the region. Also endorsed are several key

frameworks and documents, including the ASEAN Public-Private Partnership Regional

Framework for Technology Development in the Food, Agriculture and Forestry Sectors,

revised ASEAN Criteria and Indicators for Sustainable Management of Tropical Forests, Plan

of Action on ASEAN Cooperation on Halal Food 2017-2020, and the ASEAN Guidelines on

Prudent Use of Anti Microbials in Livestock.

-ASEAN cooperation on transport: Several outputs were delivered at the 23rd ASEAN

Transport Ministerial Meeting in October 2017. ASEAN States have concluded the 10th

Package of Commitments on Air Transport Services under AFAS and signed the Protocol to

facilitate its implementation. Also signed the Protocol 3 on Domestic Code-Share Rights

between points within the territory of any other ASEAN State; adopted the ASEAN Air

Traffic Management Master Plan; and adopted and signed the MRA on Flight Crew

Licensing. Also concluded and signed the ASEAN Framework Agreement on the Facilitation

of Cross Border Transport of Passengers by Road Vehicles, a key regional transport

framework,

-External economic relations: Negotiations for the ASEAN-Hong Kong, China (HKC) FTA

and ASEAN-HKC Investment Agreement were concluded in September 2017. Also in

September 2017, ASEAN and Canada agreed to launch exploratory discussions on an

ASEAN-Canada FTA, and to finalise the Joint Feasibility Study Toward an ASEAN- Canada

FTA. The Report of the Stage One General Review of the ASEAN-Australia-New Zealand

FTA Agreement was completed. On RCEP, 20 rounds of negotiations have been held. The

RCEP Trade Negotiating Committee has agreed on the “RCEP Key Elements for Significant

Outcomes by End of 2017” at the 19th round. Negotiators focused efforts at the 20th round to

achieve the outcomes set out in the paper.

d) 32nd ASEAN Summit in Singapore, 27-28 April 2018:

This first summit with Singapore as ASEAN Chair produced three key deliverables:

(i) Vision for a Resilient and Innovative ASEAN:

10 Key Principles: unity and centrality; rules-based order; peace and security; cooperation

against terrorism and non-traditional threats; economic integration and openness; embrace

technology; investment in youth and elderly; strengthening ASEAN identity; sustainable and

inclusive development; and respect for human rights and fundamental freedoms. Most of the

Principles are on politics-security, indicating the importance of these issues in recent years

and the need for a strong and stable political-security foundation to support the region’s

economic growth and social cohesiveness.

(ii) Leaders’Statement on Cybersecurity Cooperation:

This reaffirms ASEAN’s openness towards intra-regional security cooperation while

earnestly reaching out to its Dialogue Partners to create a secure and resilient cyber

ecosystem in the region

(iii) Establishment of the ASEAN Smart Cities Network (ASCN):

This is a proposal from Singapore to establish an ASEAN Smart Cities Network (ASCN) to

harness technologies in addressing rapid urbanisation across ASEAN. 26 ASEAN cities will

participate as pilot ASCN cities. Apart from the emphasis on “smart solutions,” the ASCN

attempts to open up new “fronts” of regional cooperation.

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Questions:

1. Is ASEAN too cautious and timid in continuing with its FTAplus mode of economic

integration? Give your reasons and your country’s perspective

2. Discuss the benefits and challenges your country would face if there were provisions

of government procurement and free mobility of unskilled/semi-skilled labour in the

AEC.

VIII. Conclusion

While ASEAN celebrated its 50th Anniversary in August 2017, its economic integration

history is much shorter. ASEAN embarked on regional economic integration from 1992 with

implementation of AFTA, AFAS, AIA followed by AEC, ATIGA, ACIA and ATISA. AEC

2015 was established on 31 December 2015 and AEC 2025 was implemented from 2016.

Initially ASEAN economic integration was driven by external developments and crises, with

limited conviction among ASEAN officials of the benefits of regionalisation and

globalisation, so that commitments and implementations were “half-hearted”. Over time there

was growing recognition of the need for regional economic cooperation and integration for

the region to remain cohesive and resilient, internationally competitive, and economically

dynamic.

The AEC 2015 has achieved many milestones but has failed to fully realise the objectives as

set out in the 2007 Blueprint. The AEC remains a work-in-progress, hence the launch of AEC

2025 to complete unfinished business and chart new directions over the next 10 years for the

AEC. AEC 2025 has modest ambitions, remaining an FTAplus and eschewing deeper

integration such as Customs Union or Common Market. It reflects the continuing wide

diversities in economic level and performance among ASEAN countries, the concern over

erosion of national sovereignty and the concern over the costs of deeper economic

integration. Problems faced by the EU and NAFTA in recent years also gave ASEAN pause

over deeper integration.

In the coming decade, the ASEAN region will face serious challenges from the anti-

globalisation sentiments around the world that is gaining traction; threats from terrorism and

cybersecurity; and disruptive effects of climate change, technological advances, geopolitical

shifts in the region and political leadership changes in several ASEAN countries. More than

ever, ASEAN needs to withstand and overcome these challenges by working together rather

than working separately.

XI. Readings - Primary *Chia, Siow Yue (June 2017). “Modalities for ASEAN Economic Integration: Retrospect and

Going Forward”. Singapore Economic Review, Vol.62, No.3, June 2017

*Chia Siow Yue and Michael G Plummer (2015). ASEAN Economic Cooperation and

Integration: Progress, Challenges and Future Directions. UK: Cambridge University Press

Readings – Secondary *Athukorala, Prema-chandra (August 2010). Production Networks and Trade Patterns in East

Asia: Regionalization or Globalization? Asian Development Bank Working Paper Series on

Regional Economic Integration No.56

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*Chia Siow Yue (2011). “Singapore” in Masahiro Kawai and Ganeshan Wignaraja (eds),

Asia’s Free Trade Agreements: How is Business Responding? UK: Edward Elgar.

*Kawai, Masahiro and Ganeshan Wignaraja (eds) (2011). Asia’s Free Trade Agreements:

How is Business Responding? UK: Edward Elgar.

*Plummer, Michael G and Chia Siow Yue (eds) (2009). Realizing the ASEAN Economic

Community, a Comprehensive Assessment. Singapore: Institute of Southeast Asian Studies.

*Severino, Roldofo C. (2006). Southeast Asia in Search of an ASEAN Community: insights from

the former ASEAN Secretary-General. Singapore: Institute of Southeast Asian Studies.

*Singapore Economic Review. Special Issue on ASEAN’s Long-Term Economic Potential

and Vision, Vol.62, No.03, June 2017

*Wignaraja, Ganeshan (2016). “Production networks and enterprises in East Asia”. OECD

Insights 2 February 2016.

*World Bank-IDE-OECD (2017). Global Value Chain Development Report 2017- Measuring

and Analyzing the Impact of GVCs on Economic Development.

Readings – ASEAN Secretariat Documents

*ASEAN Secretariat (2017). ASEAN Community Progress Monitoring System 2017.

* ASEAN Secretariat (2017) AEC 2025 Consolidated Strategic Action Plan

*ASEAN Secretariat (2017). Towards ASEAN Economic Community 2025: Monitoring ASEAN

Economic Integration

*ASEAN Secretariat (2017).ASEAN Economic Integration Brief, No.2, November 2017.

*ASEAN Secretariat (2017). ASEAN Economic Integration Brief, No.1, June 2017

*ASEAN Secretariat (2016). ASEAN Community in Figures 2016. Jakarta: ASEAN

Secretariat.

*ASEAN Secretariat (November 2015). A Blueprint for Growth. ASEAN Economic

Community 2015: Progress and Key Achievements. Jakarta: ASEAN Secretariat.

* ASEAN Secretariat (November 2015). ASEAN Integration Report 2015. Jakarta: ASEAN

Secretariat.

*ASEAN Secretariat (November 2015). ASEAN 2025: Forging Ahead Together. Jakarta:

ASEAN Secretariat.

*ASEAN Secretariat (May 2012). ASEAN Economic Community Scorecard: Charting

Progress Towards Regional Economic Integration. Jakarta: ASEAN Secretariat

*ASEAN Secretariat (Oct 2009). Roadmap for an ASEAN Community 2009-2015. Jakarta:

ASEAN Secretariat.

*ASEAN Secretariat (2008). ASEAN Economic Community Blueprint. Jakarta: ASEAN

Secretariat.

*ASEAN Secretariat (2001). Mid-Term Review of the Hanoi Plan of Action. Jakarta:

ASEAN Secretariat

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