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Summer 2008

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ASEAN Continues Integration

ASEAN sets sights on building stronger cooperatin to facilitate trade i the growing region. Textile World Asia Special Report

ASEAN Focus
Textile World Asia Special ReportASEAN Continues IntegrationASEAN sets sights on building stronger cooperation to facilitate trade in the growing region.

The Association of Southeast Asian Nations (ASEAN) was established in 1967 with five original member countries - Indonesia, Malaysia, the Philippines, Singapore, and Thailand. In 1984, Brunei joined followed by Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. According to ASEAN, the region currently has a population of approximately 500 million in a total area of 4.5 million square kilometers. The combined gross domestic product is $737 billion and total trade is on the order of $720 billion.In late November of 2004, the heads of state and government of the ASEAN gathered in Vientiane, Laos, for the 10th ASEAN Summit with the theme “Towards shared prosperity and destiny in an integrated, peaceful and caring ASEAN Community.”The gathered dignitaries reiterated their commitment to “strengthen efforts to narrow the development gap in ASEAN by building upon existing initiatives such as the Initiative for ASEAN Integration, the Roadmap for the Integration of ASEAN, the Ha Noi Declaration on Narrowing Development Gap for Closer ASEAN Integration of 23 July 2001 and the Vientiane Declaration on Enhancing Economic Cooperation and Integration among Cambodia, Lao PDR, Myanmar and Viet Nam of 28 November 2004.”According to ASEAN, special attention was focused on two areas. The first is the broader integration of the 10 member countries into one cohesive ASEAN community. The second is to identify new strategies to narrow the development gap; to quicken the pace of integration; and for member countries to work closely among themselves and with dialogue partners and others to mobilize political will and generate the required resources for the effective implementation of the Vientiane Action Programme.Textile TradeIn terms of trade integration in the region, textiles and apparel are included in the “Initial Eleven Priority Sectors for Integration” outlined by ASEAN. According to ASEAN, acceleration of economic integration towards a single market and production base will begin with 11 sectors, selected on the basis of comparative advantage in natural resource endowments, labor skills and cost competitiveness, and value-added contribution to ASEAN’s economy. These sectors are expected to demonstrate that integration enhances competitiveness and thereby ASEAN’s attractiveness as an investment destination. As the institutional capacity of ASEAN for economic integration strengthens, more sectors will be included in the accelerated integration program.The following are the 11 priority sectors identified for full integration by 2010: As to why these sectors were selected and the purpose of the integration, ASEAN stated: “The proposed approaches to integrate these priority sectors are premised on combining the economic strengths of ASEAN member countries for regional advantage; facilitating and promoting intra-ASEAN investments; improving the conditions to attract and retain manufacturing and other economic activities within the region; promotion of intra-industry trade and outsourcing within ASEAN; and promoting the development of “Made in ASEAN’ products and services.”
At its most recent summit, ASEAN reiterated its commitment for broader integration of the member countries into one cohesive community.According to ASEAN, the selected sectors accounted for more than 50 percent of intra-ASEAN trade in 2003. In value terms, the priority sectors contributed $48.4 billion and $43.4 billion of intra-ASEAN exports and imports, respectively, in 2003. In terms of implementation, ASEAN said there will be a roadmap to serve as the basis for economic integration for each priority sector.The roadmap aims to: The roadmap includes specific measures that are of direct relevance to each sector, as well as common measures that cut across all priority integration sectors to be implemented with timelines from now on to the year 2010, said ASEAN.
Based on the roadmaps, import duties for products in the priority sectors will be fully eliminated by 2007 for ASEAN-6 and 2012 for the new members of ASEAN. This is three years earlier than the original target set by the ASEAN Free Trade Area. Approximately 4,000 tariff lines or approximately 40 percent of total tariff lines in ASEAN are included in the fast-track integration.According to ASEAN, the roadmaps will also focus on trade and investment facilitation measures, such as the ASEAN Single Window. Electronic processing of trade documents at national and regional levels will be implemented; product standards and technical regulations will be harmonized; and mutual recognition of test reports and certification will be concluded to reducethe transaction costs of doing business in ASEAN. In addition, ASEAN nationals traveling within ASEAN will be exempted from visa requirements, thus facilitating the movement of business people, experts, professionals and talents. It is expected that implementing the measures in the roadmaps will not only accelerate the integration of ASEAN, but the experience also will serve as a showcase for more sectors to be included in future accelerated integration program. ASEAN said “this initial exercise is critical in paving the way for the deeper economic integration of ASEAN and to achieve the objective of the ASEAN Economic Community by 2020 or earlier. It is also critical in preparing ASEAN in the light of the various free-trade area negotiations being pursued with China, India, Japan, Australia and New Zealand and the Republic of Korea.”
Plus ThreeThe ASEAN Plus Three cooperation began in 1997 with the convening of an informal summit among the leaders of ASEAN and their counterparts from China, Japan and Korea. The process was formalized in 1999 when ASEAN leaders issued a joint statement on East Asia cooperation at the 3rd ASEAN Plus Three Summit. The statement expressed resolve and confidence in further strengthening and deepening East Asia cooperation at various levels and in various areas, particularly in economic, social, political and other fields. The latest ASEAN Plus Three Summit was held in late 2004 in Vientiane, during which it was decided that an expert group will be established to conduct a feasibility study on the establishment of an East Asia Free Trade Area.
ASEAN Plus Three Nations:China, Korea, Japan.ASEAN said at the summit, ”We agreed that the establishment of an East Asian Community is a long-term objective. We reaffirmed the role of the ASEAN Plus Three process as the main vehicle for the eventual establishment of an East Asian Community. China, Japan and the Republic of Korea reiterated their support for ASEAN’s role as the major driving force in East Asia cooperation.”
March/April 2005