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EU-ASEAN trade

Event Report - Prospects for EU-ASEAN Trade

5 March 2018

On 27 February the EU-Asia Centre and Borderlex organized a panel discussion on the prospects for EU-ASEAN trade. Fraser Cameron, Director of EU-Asia Centre, said that it was a timely opportunity to take stock of ASEAN-EU trade as Commissioner Malmstrom was about to meet her ASEAN counterparts in Singapore. 

For Dr Suthad Sethboonsarng, Board Member, Bank of Thailand, trade and investment flows from external partners largely outweigh intra-regional trade and investment (25% and 20%). Therefore, the priority of the ASEAN Economic Community (AEC) was integration into the global economy and building on the bilateral FTAs with China, Japan, South Korea, India, Hong Kong, Australia and New Zealand. ASEAN companies do not see the various trade schemes in Asia such as RCEP (Regional Comprehensive Economic Partnership) and TPP (Trans-Pacific Partnership) as competing, but rather complementary. TPP was about to be signed but RCEP was some way behind. There was still too much domestic protection in some sectors such as finance and pharma.

Pedro Velasco-Martins, Cabinet Malmström, said that his Commissioner would be discussing the prospects of a region to region FTA in Singapore. The joint working group on the issue had met twice but there were still several outstanding issues, not least the huge discrepancies between the ASEAN economies, and the commitment to public procurement and sustainable development. Meanwhile the EU had signed bilateral deals with Singapore and Vietnam which were awaiting ratification. There had been four rounds of talks with Indonesia. Talks with Thailand and the Philippines had been suspended for political reasons. An investment agreement with Myanmar was nearly finalized but there were also political problems there. Talks with Malaysia might re-start after the elections.

Reinhard Bütikofer, MEP, Delegation for relations with the ASEAN, argued that the EU should move quickly to sign a region to region FTA for political reasons – otherwise we were leaving the field open to China. The EU should try and fill the void created by the US walking away from TPP. He was critical of the Commission decision to take the Singapore FTA to court. It was unfair treatment. He considered there was a case for pre-ratification deals eg on labour standards for the Vietnam FTA. 

For Eleonora Catella, Senior Advisor, Business Europe, the EU business community has a major stake in the ASEAN, given the large market and its significant growth potential. But it wanted predictability and a rules-based approach. Delays in concluding FTAs were placing EU business at a disadvantage and she urged the EU to speed up ratification of the Singapore and Vietnam deals. The inconsistencies in non-tariff barriers, public procurements and intellectual property rights within the ASEAN were seen as the main challenges for an EU-ASEAN FTA.

In her concluding remarks, Iana Dreyer, Editor, Borderlex, pointed out that the EU’s enhanced engagement in Asia was geopolitically motivated. To strengthen the relationship with such diverse ASEAN countries, the EU needs to be more flexible, without making any compromises on its standards.

During the Q&A, the discussion was focused on the FTA ratification process within the EU, which was slowed down by the disputes over competences. Questions were also raised about protectionism within ASEAN (underpinned by national security concerns), the future economic integration model of ASEAN, the role of business communities in the negotiation of FTAs, ASEAN’s attitudes towards the Belt and Road Initiative, and the need to save the multilateral system (WTO Appellate Board).