ASEAN Economic Ministers form united position on trade issues

ASEAN Economic Ministers (AEM) convened a face-to-face special meeting, a first since COVID-19 lockdowns started two years ago, to tackle key trade concerns of ASEAN Member States (AMS). They had extensive discussions on challenges faced by the region and that of individual countries brought about by global developments such as the COVID-19 lock downs in China and the Russia invasion of Ukraine.

“We should focus on enhancing international cooperation, going beyond trade and pursuing other initiatives such as boosting investment, and strengthening the rules based multilateral trading system. On the first, it is important that we [ASEAN] strengthen economic cooperation efforts and bring about real, and honest to goodness integration,” the trade chief challenged.

“Most importantly at this time, we need to ensure that there are no restrictions on trade so as to allow the unhampered flow of goods, especially essential food, fuel, medicines, and medical equipment,” he added.

The DTI Secretary raised this in line with concerns among AMS on recent export bans implemented in the region such as on rice, coal and palm oil. He highlighted the Philippine policy during the pandemic where even the export of face masks was not banned. This led to good outcomes for the Philippines as manufacturing capacity for medical-grade, internationally-certified face masks expanded multiple times and equally important, it encouraged investment in a very critical melt-blown filter facility. He also acknowledged efforts by other countries that have eventually removed such measures and called for the remaining bans to be lifted.

“I thank Indonesia for lifting the export ban on coal and studying the issue on palm oil, including the possibility of lifting the export ban by as early as the end of the month. We are one ASEAN, one family. We must care and support each other as our economies and peoples become even more closely linked,” he said.

The Ministers also agreed to deepen economic relations with external partners such as the US and EU. A key topic discussed was the Indo-Pacific Economic Framework of the US (IPEF). It is the proposed vehicle for strengthened US economic engagement in the Indo-Pacific region, seeking to operationalize shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest.

The IPEF is set to be launched by the Leaders of participating countries when US President Biden visits the region next week. It is viewed that the objectives of the said initiative are worth pursuing especially since it addresses inclusive growth, supply chain resilience, and digital trade, among others, which are key elements in crafting new generation economic partnership.

Similar with some other ASEAN member states (AMS), the Philippines confirmed that it will join the discussion in IPEF, “We will continue to champion more inclusive and diverse participation from other interested countries in the region especially the ASEAN Member States,” the DTI Secretary said. “Further, as we move forward with our existing and new external engagements, we should adopt an ‘ASEAN as one’ framework where we champion the ASEAN Community’s priorities and interests in these other partnerships,” he added.

Ministers also exchanged views on emerging unilateral actions related to the environment and climate change that may potentially affect trade activities in the region.

The trade chief shared the experience of the Philippines, “Our President Duterte raised concerns on efforts of some countries in applying trade and environment requirements across the board. There has to be considerations and more discussions on how these are to be implemented as developing countries such as ourselves are not the cause of climate change.  We should be careful in applying these to developing economies as they are precisely still undergoing development and will need all the support. They also usually lack the capacity to immediately meet climate change requirements. Let us utilize our dialogue mechanisms with external partners to get support on this front, especially for MSMEs, as well as call on them to avoid applying trade measures that act as barriers against developing economies.”

Lastly, the AEM revisited the implementation of ASEAN Industrial Projects (AIP) from the early days of the regional grouping. The AIP was part of ASEAN’s regional industrialization efforts that entailed resource-pooling, market-sharing, networking, and complementation. These industrial development projects primarily aimed to promote sharing of the region’s vast resources and capitalize on each AMS’s comparative advantage in order to achieve economic growth and development at both the national and regional levels.

“We support revisiting this program but the private sector, particularly the leading companies in major sector should drive this.   It should follow the principle of developing an ASEAN value-chain so that various stages of production can be distributed to several member-states to spread the benefits of industry development.  We may consider tapping the ASEAN Business Advisory Council to look into possible projects in critical sectors such as food, health infrastructure, climate sustainability, and clean energy. Then let us approach this along the lines of public-private sector partnership, with the government responsible for providing the right business environment,” The DTI Secretary shared.

Recent legislative reforms of the Philippines, namely, the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act), and amendments to the Retail Trade Liberalization Act (RTLA), Foreign Investments Act (FIA) and Public Service Act (PSA) are expected to put the Philippines at the forefront of investors’ interest for AIPs.

On the WTO, the Philippines forwarded the view that other rules-based mechanisms must be allowed to function including allowing for majority decision-making subject to a certain floor threshold, instead of always requiring a consensus. This may assist in solving long-standing issues like the impasse on the selection process for the Appellate Body.

Altogether, the Ministers acknowledged that there would need to be concrete steps taken on the outcomes of the discussions at the Special Meeting, and the next steps should be pursued with haste as all these initiatives will support post-pandemic recovery efforts across the ASEAN community. They tasked senior officials to continue the work inter-sessionally, in preparation for the 54th ASEAN Economic Ministers Meeting and Related Meetings to be hosted in September 2022 by this year’s Chair, Cambodia.