UPDATE AND STATUS OF AEC, RCEP AND TPPA - jcci.or.jp and status of AEC, RCEP, TPPA.pdf · UPDATE AND STATUS OF AEC, RCEP AND ... Engineering, Nursing, Achitectural, Medical Practitioners,

‘Driving Transformation, Powering Growth’

Datuk Hiswani Harun

Ministry of International Trade and Industry, Malaysia

UPDATE AND STATUS OF AEC, RCEP AND

TPPA

Establishment of the ASEAN Community

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• Formation of AEC on 31 December 2015 - lays the foundation for creating a more cohesive economic bloc.

• The AEC has now entered into the second phase - towards deepening and broadening the region’s economic integration.

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Huge Market:

625 million people,

3rd largest market

FDI:

USD 136 billion

Steady economic

growth rate

2007-2015: 5.1%

GDP:

USD 2.5 trillion, 7th

largest economy

External Trade:

US$2.5 trillion

Highly Connected Region and

Globally Engaged: Free Trade Agreements

with major regional economies.

Young, educated

labour force

70% < 35 years of

Age

ASEAN: A Community of Opportunities

2014

(%)

2015 (%) 2016 (%) 2017

(%)

World 3.4 3.1 3.2 3.5

Advanced

Economies

1.8 1.9 1.9 2.0

Developing Economies 4.6 4.0 4.1 4.6

ASEAN 4.6 4.4 4.5 4.8

4th largest by 2050 (McKinsey &Co)

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Economy Ease of Doing Business Ranking Starting a Business

Brunei Darussalam 84 74

Cambodia 127 180

Indonesia 109 173

Lao PDR 134 153

Malaysia 18 14Myanmar 167 160

Philippines 103 165

Singapore 1 10

Thailand 49 96

Viet Nam 90 119

Why AEC is Important ? ASEAN doing Business Index

Source: Doing Business 2016 Report (World Bank)

AEC will lead to streamlining of processes, rules and regulations in the

region

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AEC Blueprint 2025

The focus of AEC Blueprint 2025 is to ensure:

• a well integrated and connected within the global economic system;

• a business-friendly, trade-facilitative, market driven and predictable environment;

• a region with a key role in global value chains and increasing participation in high value added and

knowledge-based activities;

• a competitive and dynamic region that inspires innovation and where businesses of all sizes thrive,

and where consumers’ rights are protected; and

• a connected region where improvements in transport linkages and infrastructure help peoples and

businesses move efficiently and work more productively across borders, expand market reach and

strategically source goods and services.

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Goods(ASEAN Trade in Goods Agreement)

96% of goods traded in the region are duty-free: ASEAN -6 : 99.20 % tariff lines eliminated; and

CLMV : 90.86 % tariff lines eliminated (remaining lines by 2018)

Services(ASEAN Framework Agreement on

Services)

9 AFAS Packages: Liberalisation of 101 subsectors;

foreign equity up to 70%

AEC 2015: What Have We Achieved?

Focus on trade facilitation initiatives and reduction of non-tariff barriers (NTBs)

8 MRAs – Engineering, Nursing, Achitectural, Medical Practitioners, Accountacy, Dental,

Surveying Qualifications, Tourism Professionals

MNP - Business/Corporate Visitors

9 packages for air transport (e.g : open skies , single aviation market, aircraft repair & maintenance, aircraft

leasing, cargo handling)

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Integrated financial system

Progressive liberalization of Financial services and capital market integration (e.g: Banking

Integration Framework, operational flexibilities, insurance).

Signed 6 AFAS Financial Services liberalization packages.

Integrated ASEANLiberalization of passenger and cargo air transport services - Open Skies Policy and ASEAN

Single Aviation Market

Global ASEAN Linkages FTAs with Dialogue Partners

Investment (ASEAN Comprehensive Investment Agreement)

ACIA - investment liberalization, protection, promotion and facilitation – provides business

confidence.

AEC 2015: What Have We Achieved?

Intra-ASEAN investment reached from $19.4 billion in 2013 to $24.4 billion in 2014 and

ASEAN is now the 2nd largest investor in its own region, with 18% of total FDI into the

region.

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Trade Facilitation and Reduction of Non-Tariff Barriers

Non-Tariff Barriers

Reducing NTB’s by enhancing trade facilitation initiatives. Comprehensive database been developed in collaborationwith UNCTAD / ERIA.

Full implementation ASEAN Single Window (ASW) is a regional initiative which complements, connects andintegrates National Single Window (NSW) of AMS.

Full implementation of the Self-Certification System that will allow the exporters to declare and self-certify ASEANproduct content in their exported products through an invoice declaration.

ASEAN Customs Transit System (ACTS) is a computerized Customs transit management system to increase theefficiency and effectiveness of transit procedures.

Liberalization of Tariffs and Trade

Facilitation

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The National Trade Repository (NTR Portal) contains the trade and customs laws and procedures of all AMSs and

trade-related information such as:

i. tariff nomenclature;

ii. MFN tariffs, preferential tariffs offered under this Agreement and other Agreements of ASEAN with its

Dialogue Partners;

iii. rules of origin;

iv. non-tariff measures;

v. national trade and customs laws and rules;

vi. procedures and documentary requirements;

vii. administrative rulings;

viii. best practices in trade facilitation applied by each Member State; and

ix. list of authorized traders of AMSs.

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Trade in Services

• Full liberalization of Services sub-sectors (128 sub-sectors) and reducing domestic restrictions / regulations.

Sub-sectors for liberalization:

Business Services

Communication Services

Construction & Related Engineering Services

Transport Services

Financial Services

Distribution Services

Educational Services

Environmental Services

Health Related & Social Services

Tourism & Travel-related Services

Recreational, Cultural & Sporting Services

Other Services

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Standards and Conformance

Harmonization of standards and technical requirements on:

20 priority products & 81 standards for safety and specification

requirements covering electrical and electronics equipment, rubber

gloves and condoms, rubber-based and prepared foodstuff products;

MRAs have been established for Electrical and Electronic Equipment, ASEAN

Cosmetics Directive, ASEAN Medical Device Directive, Traditional Medicines

and Health Supplements.

MRAs for completion by 2016:

Type Approval of Automotive Products;

Prepared Foodstuff Product;

Building and Construction Materials; and

Bio-Equivalence Study (Pharmaceuticals).

AEC 2025

Harmonization of standards and technical regulations in ASEAN

through MRAs.

Enhancing mobility of professionals by streamlining procedures and

removing unnecessary restrictions.

Work plan (2016-2025) under the Strategic Action Plan is being developed

for implementation

AEC 2025 New Focus Areas: e-Commerce

• The proportion of the ASEAN population using the Internet rose from 12.6% to 25.8% between 2009 and 2014.

• Currently e-commerce only contributes less than 1% of total retail sales in ASEAN.

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Malaysia• 30 m

inhabitants• 20 m netizen

~1.5Indonesia• 253 m


~2.2 Singapore• 5.5 m

inhabitants• 4.2 m netizen

~1.9

Philippines• 100 m


~1.2

Viet Nam• 93 m


~1.1

Thailand• 67 m


~1.1

Source: A.T. Kearney estimates, 2015 (IMF, eMarketer, eCommerceMILO, DigitalFilipino, Frost & Sullivan, Hybris, VECITA, Euromonitor)

ASEAN retail e-Commerce market size(2014, USD B)

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AEC 2025 New Focus Areas: GVC

• Global Value Chains (GVCs) play a vital role in enhancing economic integration and liberalising trade.

• According to World Bank and OECD, GVC-driven policies have been shown to drive productivity growth, create jobs

and improve living standards.

• GVCs provide ASEAN with the opportunity to take on a more ambitious policy agenda and become a more integral

part of global trade.

• Work is in progress to upgrade GVCs by creating an enabling policy environment and forward-looking policies to

support GVCs in the region.

ASEAN recognizes the need to continue engaging the various stakeholders to build a more

dynamic AEC 2025:

i. Greater transparency in the public sector and in engaging with the private sector; and

ii. Enhance engagement with the private sector as well as other stakeholders.

GRP in ASEAN

o ASEAN is collaborating with OECD and New Zealand to enhance work on regulatory

reforms in the region.

o Intensive engagement undertaken with individual ASEAN Member States.

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AEC 2025 New Focus Areas: Good Governance

STRATEGIC PARTNERS OF ASEAN

AEC

ASEAN-China ASEAN-Korea

ASEAN-Australia & New Zealand

ASEAN-Japan

ASEAN FTAs: Complementing AEC Integration

ASEAN-India

ASEAN-Hong Kong SARRCEP

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Eurasian Economic Union ?

European Union ?

ASEAN-BAC

ASEAN

EUASEAN BC ASEAN Industry &

Business Associations

EABCFJCCIA

Enhancing Role of Private Sector in AEC

CABC

USABC AIBC

AKBC

ERIA, CIMB CARI

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Transformation of ASEAN Business Advisory Council (ASEAN-BAC) – options -recruiting companies to be direct members to overcome funding constraints and

setting up of a permanent secretariat equipped with professional staff.

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Regional Comprehensive Economic

Partnership (RCEP)

10 ASEAN Member States

China

Japan

Korea

India

Australia

New Zealand

Global Scale

• 30% of Global GDP.

• More than 3.3 billion people (almost 50% of world population).

• Biggest set of producers and consumers.

• Growing economies in Asia & Oceania.

• Connected through ASEAN +1 FTAs.

• Top economies in the world (China-2,

Japan-3, India-10, Australia-13, South Korea-15, Indonesia-16, Thailand-30,

Malaysia-36).

• Collective ASEAN is the 7th largest economy in the world.

GUIDING PRINCIPLES AND OBJECTIVES FOR NEGOTIATING RCEP

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• Build upon existing ASEAN+1 FTAs (ASEAN-China,ASEAN-Korea, ASEAN-India, ASEAN-Japan andASEAN-Australia-New Zealand), but with significantimprovements and deeper and broader engagements;

• Recognize individual and diverse circumstances of allparticipating countries;

• Include provisions to facilitate trade and investment andparticipating countries’ engagements in global andregional supply chain;

• Allow accession of other Parties after completion.

Disclaimer: This document is for information purposes only, and does not constitute legal advice

SCOPE OF NEGOTIATIONS

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The current scope of the RCEP covers 15 key areas:• Trade in Goods;• Rules of Origin;• Sanitary and Phytosanitary

Measures;• Standards, Technical Regulations,

Conformity Assessment Procedures;• Customs Procedures and Trade

Facilitation;• Trade Remedies;• Trade in Services (Malaysia chairs)

including financial services and telecommunication services;

• Investment;• Competition;• Intellectual Property;• E-Commerce;• Economic and Technical

Cooperation with focus on SMEs;• Dispute Settlement Mechanism; and• Legal Provisions (preamble, general

provisions and exceptions, institutional provisions and final provisions)

• Small and Medium Enterprises

• Negotiations are on-going. Next Round of negotiations will be held in Auckland, NewZealand in June 2016.

• Target for conclusion: End of 2016.• Key challenge to overcome: Varying levels of ambition involving diverse group of

countries.


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WHY RCEP

Strengthening existing trade and investment linkages. For example: Malaysia’strade with RCEP countries accounts more than 60% of Malaysia’s external trade.

Expanding and facilitating market access to all RCEP participating countries underone FTA - market access to almost 50% of global population.

Sources of raw materials and minerals, knowledge sharing, technology and othereconomic cooperation- leveraging on the advantages and strength of regionalism.

Harmonisation of rules – ‘untangling the spaghetti bowl’ Wider choices for business and consumers - reduce cost of doing business through

harmonisation of rules. Promote global value chain – positioning the region as economic hub.

KEY WORD: FACILITATING TRADE & INVESTMENT

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TRANS-PACIFIC PARTNERSHIP AGREEMENT (TPPA)


Background

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• Negotiations concluded on 5 October 2015.

• A comprehensive FTA comprising binding rules and disciplines and marketaccess commitments , reflected in chapter texts, annexes, schedules and sideletters.

• Membership is open to all APEC economies but can consider non-APECcountries.

• Current membership: Australia, Brunei, Canada, Chile, Japan, Malaysia,Mexico, New Zealand, Peru, Singapore, Vietnam and US.

• Interest shown by Korea, Taiwan, Indonesia, Thailand and Philippines.

• Widely expected to be a building block towards the wider Free Trade Area ofthe Asia Pacific (FTAAP).

4 February 2016 – Signing of TPPA

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• Parliament had approved Malaysia’s participation in TPP and thispaved the way for Malaysia to sign the TPP in Auckland, NewZealand on 4 February 2016.

Current Status

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Domestic Ratification Process

• Signing is an indication that the 12 countries accept the outcome of thenegotiations (final texts) and will start their domestic process to ratify theAgreement in order to bring the Agreement into force.

• On-going outreach and engagements – focusing on sectorial benefits,awareness creation and SMEs capacity building.

• Amendments to relevant laws & regulations – customs, IPR, labour.

Entry into Force• Entry into force when all signatories ratify within 24 months OR at least 6

countries accounting for 85% of combined GDP.

President Obama’s Statement in Vietnam on TPP

“I remain confident we are going to get it done, andthe reason I’m confident is because it is the right thingto do. It’s good for the country, it’s good for America,it’s good for the region, it’s good for the world,“

Obama said during a joint press conference with Vietnamese President Tran Dai Quang in Hanoi

Driving Transformation, Powering Growth 25

Business Opportunities

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Business Opportunities in Malaysia

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TRADE IN SERVICES AND INVESTMENT

What Malaysia has to Offer :

- Business services covering professional services such as legal, engineering,architectural, accounting, services

- Telecommunication services- Education services- Health services- Distribution and retail services such hypermarkets and convenience stores- Transportation covering maritime services and freight- Upstream oil& gas activities- Manufacturing related services- Tourism and tourist related services- Financial services- Environmental services

• Provides greater market access through existing bilateral and regional FTAs (RTAs) and also under the TPP (once implemented).

Business Opportunities in Malaysia (cont…)

GOODS

Malaysia’s Offer

• 85% of tariffs lines to be eliminated upon entry into force.

• Tariffs on sensitive products to be eliminated over 10-15 years - includingalcoholic beverages and tobacco products - (first time in Malaysia’s FTAand was excluded in the MJEPA and AJCEPA).

• Malaysia will eliminate comprehensively import duty for iron & steelproducts within 10 years and automotive products within 12 years. Japanis the main source of imports for both products.

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Business Opportunities in Japan

Japan’s Offer

• Malaysian exporters will benefit from the market liberalisation in certainsectors such as agriculture products, fisheries and wood products. Someof the tariff lines were excluded by Japan in the previous FTAs.

• The ROO for automotive products will give advantage to Malaysian autoparts and components manufacturers. Japanese car makers need tosource auto parts and components from TPP region in order to enjoypreferred duties in main export markets, especially in US.

• There is great potential for Malaysian exporters to strengthen marketshare in Japan for processed food, including halal products.

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Thank you

Menara MITINo. 7, Jalan Sultan Haji Ahmad Shah, 50480 Kuala Lumpur, Malaysia

Tel: 603-8000 8000 | Fax: 603-6201 2337 | Email: [email protected] | Website: www.miti.gov.my

‘Driving Transformation, Powering Growth’

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