On 15 October 2018, a special lecture under the theme ‘Updates on the 50th ASEAN Economic Ministers Meeting and its Implications for ASEAN-Korea Economic Parntership’, was delivered at the ASEAN Hall of the ASEAN-Korea Centre (AKC) by Dr. Aladdin Rillo, Deputy Secretary General of ASEAN for ASEAN Economic Community (AEC). Participants include H.E. Hong-jae Lim, a former Korean Ambassador to Vietnam, H.E. Long Dimanche, Cambodian Ambassador to Korea, H.E. Thura Thet Oo Maung, Burmese Ambassador to Korea and other people from the general public.
Prior to the opening of the lecture, Ms. Jang said that “South Korean President Moon Jae In announced the ‘New Southern Policy’ in November last year. ASEAN has shown considerable growth and the roles of AEC has brought prosperity to Korea. The AKC was honoured to invite Dr. Rillo who has researched at the forefront of the AEC to offer an insight into the future path of ASEAN.”
Dr. Rillo emphasised that to understand the AEC, the history of ASEAN needs to be understood first. ASEAN was created as a form of political union 51 years ago. It has subsequently stabalised the region as the time passes. Officials have advanced the roles of ASEAN to solve economic problems and many ASEAN organisations have been created since then. The AEC aims to create a competitive and transparent business environment, to decrease transaction costs in trade, reduce entry barriers to the market, in which has a similar system to the one in the EU. Nonetheless, ASEAN does not puruse a single currency like Euro but economic cooperation is placed as a priority by 2025. ASEAN has studied three possible scenarios: △tariff elimination, △tariff elimination and service liberalisation, △tariff elimination, service liberalisation, with early adoption of the measures. The result showed that the third option could drive the economic growth rate of ASEAN higher than the remaining two courses of action. For the same reason, ASEAN countries are committed to remove elements making the market entry difficult to create a single market.
Integrated ASEAN attracts promising future to the ASEAN region. The economic output of integrated ASEAN is expected to reach $2.7 bn and will grow as the fourth largest economic bloc in the world. Having higher places in quantitative ranks are the main reason that ASEAN is attempting to be integrated as a single market.
In order to accomplish the AEC, there has been several measures and agreements reached in ASEAN. ASEAN Trade in Goods Agreement (ATIGA), Tariff Elimination on Track (AFTA), to facilitate trade exchanges and tariff minimisation through Rule of Origins (ROOs), minimisation of trade barriers and the establishment of transparent procedures in customs through New Single Window, recognisation of the principle of equivalence in license, national qualification systems, officially authorised documents through Mutual Recognition Agreements. In addition, to promote peaceful settlement of disputes and conflict – ASEAN Institute for Peace and Reconciliation, and ASEAN+1 Free Trade Agreement with non-ASEAN countries in East Asia to facilitate trade and investment.
Moreover, further efforts have been made for integration of service industry. By increasing efficiency and competitiveness of service provision and distribution through diversified sources, ASEAN is trying to maintain high levels of liberalisation of service industry – ASEAN Framework Agreement on Services. Ultimately, it is a stepping stone to implement ASEAN Trade in Services Agreement (ATISA) at ASEAN Summit in November. There are also ASEAN Solutions for Investments, Services and Trade (ASSIST) to provide non-binding guidelines for enterprises that face operational and policy difficulties in investment and trade in ASEAN. This will be dealt with in ASEAN Business and Investment Summit, which is scheduled to be held on 12 November 2018. At the moment, transaction and operation costs constitute 18% of the total cost, but ASEAN aims to reduce it to 10% of the total cost.
In accomplishing the AEC and economic integration, AEC Blueprint 2025 has been revised. There are five core areas to be focused: △integrated ASEAN, △competitive, innovative and dynamic ASEAN, △increasing connectivity between ASEAN and sectoral cooperation, △people-centred ASEAN and resilient economy, △global ASEAN. In recent days, Economic Ministers have gathered in Singapore to monitor the AEC processes. The Ministers have created AEC Blueprint 2025 and 157 implementation programmes have been formed. So far 31 projects have been completed by July and further to be finalised by March 2019. In particular, many tasks place the creation of single market as the focus centre.
The AEC 2025 deals with challenges and problems that ASEAN encounters. There is also a question whether ASEAN is preparing for the 4th Industrial Revolution. The level of preparation shows imbalance, there is a call for need to cooperate in areas of labour mobility, financial integration, electronic commerce, digital economy, energy, agriculture, infrastructure, innovation, regulatory framework, productivity and stakeholder approach.
In ASEAN-Korea relations, an agreement has been reached to offer onsite technical consulting (Implementation of Technical Advice and Solutions from Korea- TASK) for two years to enterprises based in ASEAN. Also through ASEAN-ROK Business Council assists businesses, market information exchange, reducing trade regulations and other trade and investment cooperation. In ASEAN Summit in Singapore in November, various agreements and talks will be adopted, including ASEAN-Japan Comprehensive Economic Partnership (AJCEP) Agreement.
Dr. Rillo explained that ASEAN’s primay focus is on the creation of huge single market and facilitate economies of scale. ASEAN’s population is young, has dynamic economic circumstances with growing number of middle class people. In the end, by creating the AEC, it can reduce costs and expenses in trade and creating favourable business environment. Therefore, ASEAN increases trade flows between the region and enhances access to better infrastructure, transportation, trade, energy, technology and financial market. For the ASEAN market to be competitive, it needs to solidify predictability of micro and macro economic policies. ASEAN wants to make AEC as an engine for market economy rather than the economic community without market economic elements. There will be a need to common grounds with private sectors to realise the ultimate purpose of creating the AEC. A question whether ASEAN will grow like the EU is a matter of time for further consideration.
In a Q&A session, a number of questions in relation to whether ASEAN will be prone to protectionist policies, Are ASEAN officials are aware of the New Southern Policy of the Republic of Korea government, Will ASEAN make an official statement on the New Southern Policy? Dr. Rillo stated that “it is significantly important that ASEAN devises and monitors the systems to avoid government policies being protectionist. ASEAN aims to open their domestic markets to create functioning market economy and increase competitiveness through free trade agreements on international stage. Nonetheless, each country has sectors that are more vulnerable to the free trade and such sensitive industries may still maintain tariff and remain intact. ASEAN’s Economic Ministers believe in creating a single economic bloc to improve economy and solve problems deriving from trade friction. Regarding to the question of the New Southern Policy, ASEAN has not yet made any official statement on the Korean government’s diplomatic approach to ASEAN. Irrespective of the official statement, ASEAN-Korea relations will increase and this is a proof of Korea’s interest in ASEAN and the continuation of the arduously established status quo is of paramount importance.
For further details and recent information about the ASEAN Economic Community, please visit this official website. (https://asean.org/asean-economic-community/)