Asean has always championed free trade and open regionalism, which as Prime Minister Lee Hsien Loong pointed out in his opening address to the Asean Foreign Ministers’ meeting on Thursday, has supported peace and stability in the region. But the emergence of protectionism – particularly directed at China – makes it all the more important for Asean to put trade issues at the top of its agenda. The United States is threatening to escalate its tariff war against China, which could disrupt many of the supply chains in which thousands of producers in Asean also participate.
So far, Asean has responded constructively, by pushing for freer trade both within the grouping and with like-minded partners outside it. Within the grouping, Asean has already picked the low-hanging fruit of tariff reduction: more than 96 per cent of tariff lines are already at zero per cent. However, non-tariff barriers (NTBs) have been increasing. According to the Asian Development Bank, they went up from 1,634 to 5,975 during 2000-2015. NTBs, which are typically imposed for reasons that include health, security, and environmental and consumer protection, tend to increase the cost of business, constrain the growth of supply chains and inhibit foreign direct investment. NTBs, which also affect services, have slowed the pace of Asean integration as envisioned in the Asean Economic Community. Dismantling them, which is not as easy as reducing tariffs, should be the top priority for trade policy within Asean. / PUBLISHED / 3 HOURS AGO
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