The Straits Times says

Asean must step up pace on freer trade

Asean has always championed free trade and open regionalism, which as Prime Minister Lee Hsien Loong pointed out in his opening address to the Asean Foreign Ministers' meeting on Thursday, has supported peace and stability in the region. But the emergence of protectionism - particularly directed at China - makes it all the more important for Asean to put trade issues at the top of its agenda. The United States is threatening to escalate its tariff war against China, which could disrupt many of the supply chains in which thousands of producers in Asean also participate.

So far, Asean has responded constructively, by pushing for freer trade both within the grouping and with like-minded partners outside it. Within the grouping, Asean has already picked the low-hanging fruit of tariff reduction: more than 96 per cent of tariff lines are already at zero per cent. However, non-tariff barriers (NTBs) have been increasing. According to the Asian Development Bank, they went up from 1,634 to 5,975 during 2000-2015. NTBs, which are typically imposed for reasons that include health, security, and environmental and consumer protection, tend to increase the cost of business, constrain the growth of supply chains and inhibit foreign direct investment. NTBs, which also affect services, have slowed the pace of Asean integration as envisioned in the Asean Economic Community. Dismantling them, which is not as easy as reducing tariffs, should be the top priority for trade policy within Asean.

Part of the problem relates to the economic and administrative disparities between Asean members. Thus, it is timely and appropriate that Singapore will, as Mr Lee announced at the foreign ministers' meeting, enhance its support for the Initiative for Asean Integration, which is aimed at helping newer Asean members implement commitments and agreements with a view to speeding up regional integration.

A more closely integrated Asean will boost trade and investment flows, both within the grouping and between Asean and the rest of the world. So while pursuing this goal, Asean must simultaneously work for broader trade liberalisation. The top priority here will be to accelerate the conclusion of the Regional Comprehensive Economic Partnership, which will include six major economies of the Asia-Pacific in addition to the 10 members of Asean. The conclusion of this agreement, hopefully by the end of this year, will create the world's largest economic bloc and take Asean's open regionalism to an altogether new level.

At the same time, having affirmed its commitment to a rules-based framework for multilateral trade and investment, Asean must lend its weight to speeding up the reform of the World Trade Organisation, which China and the European Union have already committed to do.

A version of this article appeared in the print edition of The Straits Times on August 04, 2018, with the headline 'Asean must step up pace on freer trade'. Subscribe