In the process of integrating the region’s economies, ASEAN plans to consolidate free-trade agreements with the region’s trading partners in a move that would relax export procedures and boost trade volume within what may be the world’s biggest regional bloc.
The move also is seen as a counter-reaction to the US-led Trans-Pacific Partnership (TPP), which many fear will erode ASEAN’s centrality in the regional economic structure.
Dialogue partners for the so-called “ASEAN framework for regional and comprehensive partnership” plan include six nations that currently have free-trade pacts with the region, namely China, Japan, India, South Korea, Australia and New Zealand, Indonesian Coordinating Economic Minister Hatta Rajasa said on Wednesday.
The planned “ASEAN+6” trade pact, according to Hatta, would have a market of half of the world’s population (3 billion people) with a combined gross domestic product (GDP) of US$20 trillion in a region of which the middle class is rapidly growing as the economies emerge.
Free-trade agreements poise challenges for domestic industries as imported goods and services are sometimes cheaper and better than local ones, with Indonesian critics calling for a review of the country’s participation in the ASEAN-China Free Trade Agreement (ACFTA) as, earlier this year, Indonesia’s trade deficit with China grew and local businesses claimed to have been hurt.
But policymakers throughout the world are moving into that direction anyway, as the Doha global trade negotiation remains in limbo, to boost exports, create jobs and spur economic growth.
“Now, Chinese products cannot enter [South] Korea, and the others have other limitations too. With the partnership, all 16 countries would be interconnected in terms of the movement of goods and services. This would be a very dynamic zone,” Gusmardi Bustami, the Indonesian trade ministry’s director general for international trade cooperation, told a news briefing.
ASEAN will adopt the agreement on Thursday at the 19th ASEAN Summit in Nusa Dua, Bali, and discuss the terms with partner countries afterwards, including the time line, model and whether there will be a joint secretariat to study and implement the plan, he added.
Hatta said the agreement was reached during an ASEAN Economic Community Council Meeting on Wednesday with 10 principal points as preliminary guidelines in laying out the trade deal.
“The first point is comprehensive and mutually beneficial, the second is about the process, the third is on open sessions, the fourth about transparency, the fifth on economic and technical cooperation,” he told the press conference after the meeting.
The next points, Hatta added, comprise providing facilitation, moving toward economic integration, a clause on special and differential treatment and a requirement of periodic review on the free-trade plan.
The plan was made just after US President Barack Obama announced that the “Trans-Pacific Partnership (TPP)” pact had progressed and would be signed in July next year after Japan, the world’s third-largest economy, expressed interest in joining the US, Australia, New Zealand, Singapore, Malaysia, Vietnam, Brunei, Chile and Peru in the pact.