Asean must tackle non-tariff barriers: Panel

Ms Alpana Roy (right), director of the Asean division at Singapore’s Ministry of Trade and Industry, at an Asean roundtable discussion, with Apec Secretariat executive director Rebecca Fatima Sta Maria (centre) and CIMB Asean Research Institute cha
Ms Alpana Roy (right), director of the Asean division at Singapore’s Ministry of Trade and Industry, at an Asean roundtable discussion, with Apec Secretariat executive director Rebecca Fatima Sta Maria (centre) and CIMB Asean Research Institute chairman and Asean Business Club president Munir Majid. ST PHOTO: JASON QUAH

Stronger political will needed to remove them as they can inhibit trade and hurt SMEs more

Asean countries need stronger political will to tackle non-tariff barriers - which range from high taxation to policies that favour domestic manufacturers - and these tend to hurt small and medium-sized enterprises (SMEs) more, said a panel yesterday.

Mr Chris Humphrey, executive director of the European Union-Asean Business Council, said Asean is at risk of failing to fulfil its potential unless more proactive action is taken on economic integration, including the removal of such barriers.

There are about 6,000 non-tariff measures in Asean, with many being potential barriers to trade and this number continues to grow, he told an Asean roundtable discussion with six experts, organised by the CIMB Asean Research Institute.

Yet, not a single barrier has been removed via Asean processes since 2015, the year the Asean Economic Community (AEC) was set up, said Mr Humphrey. Under the AEC, member states are obliged to allow the free flow of goods, services, capital and labour among their countries, in line with agreed terms.

Non-tariff barriers can inhibit trade, and panellist Kaewkamol Pitakdumrongkit gave the example of how foreign firms in Thailand have to set up two entities if they want to provide both warehousing and distribution services. This is because a licence is needed for each of these services, said the assistant professor at the S. Rajaratnam School of International Studies.

Such measures hurt micro-enterprises and SMEs more as they have fewer resources to absorb the added costs, she noted.

Thus, the participation of smaller businesses in transnational production networks is limited.

Asian Trade Centre trade policy analyst Juan Sebastian Cortes-Sanchez said other solutions include improving the systems that identify non-tariff measures, and collecting information through an open and comprehensive database.

There could also be a system to inform member states of new measures and an institution set up to reduce non-tariff barriers, and Asean could strengthen its work with the private sector to overcome the problem.

Ms Alpana Roy, director of the Asean division at Singapore's Ministry of Trade and Industry, said: "While Asean continues to work on addressing non-tariff measures, one possible way is... to focus on the difficulties that businesses are facing in accessing Asean markets."

She added that non-tariff measures tend to be unilateral and efforts must be accompanied by the will to address them at the national level as well.

Mr Humphrey said that even as some non-tariff barriers have been resolved through Asean processes, this often means they are taken offline as a bilateral discussion between Asean member states, rather than being removed completely.

A version of this article appeared in the print edition of The Straits Times on April 03, 2019, with the headline 'Asean must tackle non-tariff barriers: Panel'. Print Edition | Subscribe