KUALA LUMPUR: ASEAN economic ministers will gather here this week for what is set to be a crucial meeting to finalise the agenda for advancing intra- and extra-regional trade and investment, which will then be forwarded to their leaders and dialogue partners for endorsement at next month’s summit.
This entails Southeast Asian economies taking definitive measures to deepen economic integration, liberalise trade by reducing barriers, and position the region as an attractive destination for global trade and investment – in the process strengthening their economies to cushion against the long-term impact of United States tariffs.
There is no denying that the 57th ASEAN Economic Ministers’ Meeting (AEM) and related meetings, chaired by Investment, Trade and Industry Minister, Tengku Datuk Seri Zafrul Abdul Aziz, are timely in consolidating the region against efforts to dismantle the existing global trading order.
Malaysia, as ASEAN chair, has had its hands full not only in successfully securing regional buy-in to deal with tariffs, tackle protectionist tendencies, expand trade, and explore new markets, but also in stepping in decisively to resolve brewing military conflicts between neighbours Thailand and Cambodia – for which Putrajaya received widespread commendation.
As Senior Economic Officials Meetings (SEOM) get underway today, issues that will take centre stage include the implementation of the 18 Priority Economic Deliverables (PEDs), which will operationalise regional integration commitments endorsed by member countries when their ministers met informally in Desaru in February this year.
Among the 18 PEDs, one has been fully completed: the joint declaration on ASEAN-Gulf Cooperation Council (ASEAN-GCC) Economic Cooperation, which was adopted on May 27, when leaders met to foster greater economic cooperation.
This was a success for both Malaysia as chair and the ASEAN bloc, as it will undoubtedly serve as a stepping stone towards deepening economic cooperation with the six oil-rich states, while also initiating linkages in areas of mutual interest, particularly in diversifying the grouping’s and the GCC’s supply chains.
Other PEDs, focusing on regional economic integration, inclusivity, sustainability, and digital trade, are still in progress, with their status ranging from substantially completed and partially completed to ongoing.
Eyes will also be on the Regional Comprehensive Economic Partnership (RCEP) ministers’ meeting as they prepare the agenda for leaders when they meet in October, coinciding with the 47th ASEAN Summit.
The ASEAN-led initiative is the world’s largest trade pact, encompassing 15 member countries, including the 10 ASEAN nations as well as China, Japan, South Korea, Australia and New Zealand.
Prime Minister Datuk Seri Anwar Ibrahim pointed out in August that RCEP remains the largest free-trade area in the world, covering 30 per cent of global gross domestic product, emphasising that the grouping “must not remain a legal text on paper but must be renewed with political energy”.
The 3rd RCEP Summit, held in Bangkok, Thailand, in 2019, underlines the timeliness for the 15 economies to initiate trade-deepening measures, particularly by galvanising resources to advance their regional potential in the face of America’s protectionist tariffs.
Alongside meetings with ASEAN dialogue partners, member countries will also hold consultations with the US Trade Representative (USTR), Jamieson Greer, to further discuss pertinent issues regarding the implementation of US tariffs, with hopes of finding middle ground for industries such as semiconductors and commodities, which are vital to ASEAN’s economies.
Since the announcement of Liberation Day tariffs in April, many of America’s trading partners – including Malaysia – have been hit with tariffs of up to 19 per cent, along with Cambodia, the Philippines, Thailand and Indonesia.
Vietnam was subjected to a slightly higher rate of 20 per cent, followed by Brunei at 25 per cent, while Singapore received the lowest tariff among ASEAN nations at 10 per cent, unchanged since its initial implementation.
Laos and Myanmar were the worst affected, each facing tariffs of 40 per cent.
As member nations grapple with the adverse cost effects of the tariffs on their economies, there is a need to revisit ASEAN’s own potential, particularly in increasing intra-ASEAN trade, which has yet to reach its full capacity.
Despite significant growth over the years, intra-ASEAN trade currently accounts for about 22 to 23 per cent of regional trade, which could be further expanded through greater trade liberalisation initiatives between member countries.
It is hoped that Malaysia’s chairmanship will set the stage to galvanise the political will of fellow ASEAN members, as well as that of dialogue partners, to push bold initiatives that could make Southeast Asia a potentially lucrative global destination for trade and investment. – BERNAMA
