Assessment of East and Southeast Asian PTAs

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Assessment of East and Southeast Asian PTAs

• Gloria O. Pasadilla
• Senior Research Fellow, PIDS

November 18, 2005 New Delhi, India
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Outline

• Features of PTAs in East and
• Southeast Asia
• Focus on ASEAN Multi-speed Economic Bilateralism
• Experience of ASEAN AFTA and Agriculture
  Liberalization
• Other Non-tariff problems

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PTAs involving East and Southeast Asia
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PTAs do not have the same coverage
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PTAs also vary in other substantial issues

• Coverage and approach
• Contingency measures
• SPS measures

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Coverage of RTAs
Source OECD
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Contingency Protection in RTAs
Source OECD
8
SPS in RTAs
Source OECD
9
But similar in not addressing Subsidy Provisions
and Domestic Support
Source OECD
10

• Different pace of industry vs agriculture

e.g. Korea-Chile
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Focus on ASEAN different levels of enthusiasm
for bilateral agreements
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Tale of two ASEAN economic philosophies

• Region- convergent bilateralism
• Latticed foundation and the domino effect
• Provides initial momentum for regionalism
• Region-divergent bilateralism
• Competitive bilateralism vs. regional cohesion
• Subverts ASEAN as collective mechanism for
  negotiating with non-ASEAN
• Development divide

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Aggressive bilateralism pragmatic response to
foot-dragging in ASEAN

• catch up with the faster, not be dragged down
  by the slower
• Performance of AFTA in increasing trade volumes
  within region lacked luster
• Case of Agriculture

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Experience of FTA AFTA Agriculture

• Even as protection structure had rapidly
  declined
• Trade flows showed lukewarm improvement

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Effect of AFTA on Trade

• Past studies show that AFTA is a building block,
  not a stumbling block for multilateral
  liberalization
• Both intra- and extra-ASEAN trade grew over the
  period
• Increase in intra-ASEAN trade came mostly from
  industry, not from agriculture
• Agriculture exports are mostly due to extra-ASEAN
  agriculture trade

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Direction and percent share of ASEAN 10 trade
1995, 2000 and 2003
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Effect of AFTA on Protection Structure

• Mean CEPT tariffs are significantly lower than
  MFN
• Concentration of 0-5 tariff rates for CEPT and
  5-20 tariff rates for MFN
• Low tariff concentration is greater in industry
  than in agriculture

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Comparative tariff structure of ASEAN 6 in
agriculture based on MFN and CEPT rates at HS 8
digit level

• Mean CEPT tariffs are significantly lower than
  MFN

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Percent distribution of CEPT and MFN tariff
rates, ASEAN

• Concentration of 0-5 tariff rates for CEPT and
  
• 5-20 tariff rates for MFN

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Bringing down tariffs does not necessarily
translate to much higher trade flows

• Margin of preference
• NTMS

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Margin of Preference by type of commodities (in
)
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Non-Tariff Measures in ASEAN
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Liberalization Measurement IndexRank for
measures covering
ASEAN-FTA 11 16 14
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Summary and Conclusion

• Varied types of PTAs in East and Southeast Asia
• Multi-speed bilateralism in Asia may lead to
  either region-divergent or region-convergent
  bilateralism
• ASEAN experience had not been all that
  encouraging poor utilization
• Lesson PTAs must also focus on issues other than
  tariffs trade facilitation capacity and NTMs

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Thank You!