Breaking down Asean's trade barriers: The Star columnist

Malaysian Prime Minister Datuk Seri Najib Tun Razak was at the 30th Asean Summit in Manila.
Malaysian Prime Minister Datuk Seri Najib Tun Razak was at the 30th Asean Summit in Manila.PHOTO: AFP

PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Just before his press conference at the end of the 30th Asean Summit in Manila recently, Malaysian Prime Minister Datuk Seri Najib Tun Razak did a quick check with government officials on the latest number of trade tariffs among the 10 Asean countries.

An officer mentioned a number and the Prime Minister, being the precise and meticulous person that he is, looked at the officer, unconvinced.

"I think my figure is correct. You want to bet?" he jokingly told the officer. After a quick check, it turned out that the Prime Minister was right. He laughed and told the officer: "You lost the bet."

The Prime Minister was in an extremely good mood throughout his three-day working visit.

Although the main objective of his visit to Manila was to attend the summit, Mr Najib, as usual, took time off to meet Malaysians living in the countries he visited.

He tweeted to his nearly 3.5 million followers about his visit to Malaysian-owned Naah!im Bakery in the city, showing his support for the fledgling bakery.

Naah!im is an inspiring effort of four partners, all under 40 years old, who recovered their RM1 million (S$324,306) investment in four months after opening their bakery.

The success of this bakery is just one example of how Asean economic integration is opening doors for Malaysian businesses to venture out­side Malaysia.

However, 30 minutes before his bakery visit, Mr Najib in a keynote address at an Asean business summit, spoke on the alarming number of trade barriers among the 10 Asean members, impeding economic integration.

Between 2000 and 2015, non-tariff barriers (NTBs) and non-tariff measures (NTMs) rose from 1,634 to 5,975.

It was not the first time the Prime Minister raised the subject.

At the World Economic Forum on Asean in Kuala Lumpur last year, he said Asean needed a complete transformation of rules, procedures and habits to achieve its potential to become one of the brightest stars of the Asian Century.

So serious was he about reducing the number that Mr Najib proposed a scorecard to monitor each member's efforts to reduce trade barriers to his counterparts at the Manila summit.

His concern is valid. Currently, intra-Asean trade is US$600 billion (S$847 billion) or 24 per cent of the US$2.6 trillion total Asean external trade. Intra-Asean trade can be increased to over 30 per cent or more of total Asean trade if barriers are reduced.

The irony of this is that Malaysia is the biggest culprit. For a good reason, said a senior trade official.

"We declare and publish every­thing on trade and customs laws in the Asean Trade Repository (ATR). When we impose, we give prior notification and do public notification," he said.

The ATR is intended to provide transparency on the trade and customs laws and procedures of all Asean members.

It is an electronic interface through which the public can freely access the information available on the National Trade Repositories (NTRs) of each Asean country.

The problem with NTBs or NTMs, according to the official, is some countries hide, fail to declare and impose without notification or public consultation.

"Because of our transparency, our list is high. There are countries that don't declare or hide their rules and regulations.

"When an investor or trader wants to conduct business in Malaysia, he is already aware of the existing rules. But when he deals in other countries, he may face problems when these rules are not made public."

Giving an example of a trade barrier, he said a Malaysian exporter wanted to export frozen curry puffs to Indonesia, having met all the conditions in Malaysia, including the halal logo by the Malaysian Islamic Development Department.

"The problem is, when he exports to Indonesia, the local authorities do not recognise the halal logo and instead ask the exporter to get the Indonesian halal logo.

"This will take time and it add costs for the exporter," he added.

Will the implementation of a scorecard help reduce the list of NTBs and NTMs? Not if it is non-binding, said an official.

"How are you going to enforce this when other countries have not done so in the past? If they don't declare, what are you going to do about it?

"Asean works by consensus and even before you reach consensus, we need to remind ourselves to put national interest first. Here we are admitting the problem, but are we helping in solving the problems of our local businesses doing business in Asean?" asked the officer.

Another trade officer said a scorecard can work only if the NTBs are clearly identified and a specific time established for the removal.

"As you reduce in some areas, new ones will emerge. NTBs are deliberate measures introduced by governments to protect domestic industries that are not efficient, and opening up will lead to the industry sinking.

"It is deliberate measures that are deemed to accord protection for inefficient industries," he said.

Non-tariff barriers is a complex area.

Just as Malaysia floated the scorecard idea at the Asean Summit, senior Asean officials are meeting in Manila this week for the 18th round of Regional Comprehensive Economic Partnership (RCEP) negotiation.

The trade deal, now the biggest with the collapse of Trans-Pacific Partnership Agreement after the United States withdrew, is closely watched as the deadline for it to conclude has been extended by another year.

The negotiation between Asean and six of its dialogue partners (Australia, China, India, Japan, New Zealand and South Korea) is now entering the fifth year amid growing protectionism in some countries.

Like any free trade deals, the Asean-led RCEP is supposed to reduce trade barriers, but it is a binding agreement.

But if one is to make a benchmark of what is happening within Asean, RCEP still has a long way to go.

How is Asean supposed to set the right environment and bring investors confidence, when members themselves are not being transparent?

The objective of the Asean Economic Community is to have a single market economy, which also means transparency in terms of rules.

That goes for RCEP negotiations too. It will be meaningless if they are concluded without meeting the objective of breaking the walls of trade barriers.