EU and ASEAN seek to cement closer ties through FTA

The Jakarta Post

Although some of the European Union (EU) member states have strong historical ties with most ASEAN members through colonization, political and economic links between the two regions have become weak.

This is due primarily due to the fact that a number of ASEAN member nations that were colonized by major European powers have detached themselves, to one degree or another, from their former masters.

"The planned FTA is part of the efforts by the EU to increase not only its economic influence, but also its political influence," said Winand L.E. Quaedvlieg, deputy director of international economic affairs for the Netherlands Industry and Employers Confederation (VNO-NCW).

While ASEAN was busy exploring relations with other countries and regions, the EU has been preoccupied with its internal development, and tended to prioritize trade relations with other regions.

However, the EU has now realized that it is falling behind its main trading competitors, such as the United States, Japan, South Korea and Australia, in developing business and trading relations with ASEAN.

Although a number of cooperation agreements have been entered into by the two blocs, relations are not as close as they could be.

A cooperation agreement between the EU and ASEAN was signed in 1980 with the aim of providing a forum for political and economic dialog, but little progress was made until 1996 when the first Asia-Europe meeting (ASEM) was held.

The EU's trade relations with ASEAN were upgraded in 2003, following the entry into effect of TREATI -- the Trans-Regional EU-ASEAN Trade Initiative -- which seeks to expand trade and investment flows and provide a framework for dialog and regulatory cooperation.

TREATI was intended to pave the way for a free-trade agreement as the EU realizes that several major studies on long-term developments in international trade have predicted that by 2020 the center of gravity of the world economy will have shifted to the Asia Pacific region, with ASEAN emerging as the world's largest exporter.

In spite of the uncertainty surrounding such long-term predictions, there is no doubt that Southeast Asia will increasingly be one of the most dynamic growth engines of the global economy.

At the sixth consultation meeting between ASEAN and EU trade ministers in Vietnam in April 2005, both regions decided to establish the Vision Group on ASEAN-EU Economic Partnership.

The Group is tasked with assessing the feasibility of a possible EU-ASEAN FTA.

During the eighth consultation meeting between the EU and ASEAN trade ministers in Bandar Seri Begawan, Brunei Darussalam, in May 2007, the two regions confirmed their shared desire to enhance economic relations by establishing an FTA, providing for comprehensive trade and investment liberalization.

Both regions are now in the process of preparing a number of points that will be brought to the negotiating table next year.

-- JP/Rendi Akhmad Witular

General points of the planned FTA

1. The proposed FTA will include a full elimination of tariffs for 90 percent of trade and tariff lines within seven years of the entry into force of the agreement. Other products would be subject to either partial liberalization or full elimination within a longer time frame.
2. Exceptions to full liberalization should be kept to a minimum and mutually agreed. As regards trade in services and investment, the agreement should have substantial sectoral coverage, and provide for the absence or elimination of substantially all discrimination.
3. Recognizing the different levels of development between ASEAN and the EU, special and differential treatment for the less developed ASEAN countries should be accorded, and differentiated time frames for implementation of the agreement should be adopted.
4. The agreement should constitute a single undertaking, implemented by the parties as an indivisible whole. The organization of the negotiations should take into account the resource constraints faced by some partners.
5. The progressive and reciprocal liberalization of trade in goods and services, aiming at achieving substantial liberalization which goes beyond the level of existing commitments in the WTO within an agreed time frame, consistent with the relevant WTO provisions.
6. The liberalization and facilitation of investment and creation of an open and non-discriminatory climate for establishment, including allowing the transfer of funds for foreign investment.
7. The elimination of barriers to trade and the creation of clear, stable and transparent rules for exporters, importers and investors, including provisions which aim at the facilitation of trade and reduction of transaction costs in particular in the customs and related areas, as well as provisions on standards, technical regulations, conformity assessment procedures, and sanitary and phytosanitary measures.
8. Setting up a pragmatic approach for addressing government procurement by enhancing transparency, as well as possible improvements in market access opportunities on a plurilateral basis, in view of varying levels of development amongst all parties concerned
9. The adequate and effective protection and enforcement of intellectual property rights.
10. Technical assistance and capacity building measures should be established to facilitate negotiations and implementation of the agreement and to ensure that all partners can fully benefit from the agreement.

Source: Report of the ASEAN-EU Vision Group: Transregional Partnership For Shared and Sustainable Prosperity
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