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Taking ASEAN+1 FTAs towards the RCEP
Ikumo Isono Economist
Economic Research Institute for ASEAN and East Asia (ERIA)
October 30, 2013, S.C. Tsiang Memorial Hall, CIER, Taipei
What is RCEP?
“New” FTA negotiation among the ASEAN+6 countries.
o ASEAN10, Australia, China, India, Japan, Korea and New Zealand
Negotiation starts in 2013.
Conclusion in 2015, as an ambitious goal.
Three official documents have been issued:
o “ASEAN Framework for Regional Comprehensive Economic Partnership” (November 2011)
o “Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership” (August 2012)
o “Joint Declaration on the Launch of Negotiations for the Regional Comprehensive Economic Partnership” (November 2012)
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8 Principles of RCEP
1. WTO consistency
2. Significant improvements over the existing ASEAN+1 FTAs
3. Facilitation of trade and investment and transparency enhancement
4. Consideration of the different levels of development
(e.g., special and differential treatment)
5. Continued existence of the ASEAN+1 FTAs
6. Open accession
7. Technical assistance and capacity building
8. Comprehensiveness (parallel negotiation of trade in goods, trade in services, investment and other areas)
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RCEP Guiding Principles and Objective
“The objective of launching RCEP negotiations is to achieve a modern, comprehensive, high-quality and mutually beneficial economic partnership agreement among the ASEAN Member States and ASEAN’s FTA Partners.”
Principle 2:
“Significant improvements over the existing ASEAN+1 FTAs”
Why we want RCEP?
RCEP can…
Economic Reasons
1. Deepen the liberalization commitments (goods, services and ROO);
2. Ease the “noodle-bowl” situation (not only in ROO but huge number of tariff schedules, and different rules) and thus enhance the utilization of FTA;
3. Further ease the use of FTAs via “accumulation”;
4. Deepen economic cooperation for facilitation measures; and,
5. Prevent the potential loss from competing initiatives (e.g., CJK FTA).
+ Political Reason for ASEAN
1. Maintain and strengthen the “ASEAN Centrality” (politically) under the pressure from TPP and CJK.
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AANZFTA ACFTA AIFTA AJCEP AKFTA Average
BRN 99.2% 98.3% 85.3% 97.7% 99.2% 95.9%
CAM 89.1% 89.9% 88.4% 85.7% 97.1% 90.0%
IDN 93.7% 92.3% 48.7% 91.2% 91.2% 83.4%
LAO 91.9% 97.6% 80.1% 86.9% 90.0% 89.3%
MLS 97.4% 93.4% 79.8% 94.1% 95.5% 92.0%
MYA 88.1% 94.5% 76.6% 85.2% 92.2% 87.3%
PHI 95.1% 93.0% 80.9% 97.4% 99.0% 93.1%
SGP 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
THA 98.9% 93.5% 78.1% 96.8% 95.6% 92.6%
VTN 94.8% n.a. 79.5% 94.4% 89.4% 89.5%
AUS 100.0%
CHN
94.1%
IND
78.8%
JPN
91.9%
KOR
90.5%
NZ 100.0%
Average 95.7% 94.7% 79.6% 92.8% 94.5%
Notes: HS2007 version, HS 6-digit base. Data on Viet Nam under the ASEAN-China are missing.
Data on Myanmar under the ASEAN-China FTA are also missing for HS01-HS08. Source: ERIA FTA Mapping Study
Tariff Elimination (1) All the ASEAN+1 FTAs (except AIFTA) provide higher than 90% tariff elimination. Yet, there are room for improvement when it comes to country-specific.
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Tariff Elimination (2)
Common concession is a key feature in the ASEAN+1 FTAs.
(a) common concession --- e.g., Indonesia has single tariff schedules giving the
same preferences to all the RCEP members.
(b) non-common concession --- e.g., Indonesia gives different preferences to RCEP members (max. 15 different tariff schedules).
Common concession will bring additional liberalization even if the level of ambition remains the same (e.g., 90%).
Thus, ASEAN can gain additional liberalization even though it has FTAs with all the RCEP members .
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Tariff Elimination (3)
% of "eliminated to
all" products
% of "depends on
FTA" products
% of "protected to
all" products
Brunei 84.1 15.9 0.0
Cambodia 64.3 35.3 0.4
Indonesia 46.0 52.8 1.2
Lao PDR 68.0 31.6 0.4
Malaysia 76.0 22.9 1.1
Myanmar 66.6 31.8 1.6
Philippines 74.6 24.4 1.0
Singapore 100.0 0.0 0.0
Thailand 75.6 24.3 0.1
Viet Nam 78.1 19.1 2.8
Average 73.3 25.8 0.9
Note: Based on HS2007 version, HS 6-digit base. Data on Viet Nam under the ASEAN-China FTA are missing. Data on Myanmar under the ASEAN-China FTA are also missing for HS01-HS08. Source: ERIA FTA Mapping Study 8
ASEAN countries have opened up 99.1% of products to at least one FTA Partner. ASEAN needs to streamline their commitment / protection in order to realize a regional FTA with “common concession”.
Rules of Origin
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HS ATIGA AANZFTA ACFTA AIFTA AJCEP AKFTA
“RVC(40) or CTH” or more flexible RVC40 Others
1-5
25-27
39-40
50-63
68-70
86-89
72-83
6-14
16-24
28-38
41-43
47-49
84-85
90-92
95-96
Note: “co-equal” rules give more options for business. Source: ERIA FTA Mapping Study
ATIGA AANZFTA ACFTA AIFTA AJCEP AKFTA
Differences exist in ROO which may create “noodle-bowl” effects. Most common ROO is “RVC40 or CTH”.
Total WTO+ Total WTO+ Total WTO+ Total WTO+
Brunei 0.23 0.20 0.18 0.15 0.06 0.03 0.08 0.06
Cambodia 0.41 0.04 0.51 0.14 0.38 0.01 0.38 0.01
Indonesia 0.36 0.30 0.29 0.22 0.08 0.03 0.18 0.11
Laos 0.34 NA 0.24 NA 0.04 NA 0.07 NA
Malaysia 0.34 0.24 0.31 0.21 0.19 0.05 0.20 0.10
Myanmar 0.36 0.33 0.26 0.23 0.07 0.04 0.06 0.03
Philippines 0.33 0.23 0.26 0.17 0.18 0.09 0.17 0.08
Singapore 0.39 0.28 0.44 0.33 0.37 0.26 0.33 0.22
Thailand 0.50 0.26 0.36 0.12 0.29 0.06 NA NA
Vietnam 0.38 0.11 0.46 0.19 0.34 0.06 0.32 0.05ASEAN
Average 0.36 0.22 0.33 0.20 0.20 0.07 0.20 0.08
Australia 0.52 0.18
New Zealand 0.51 0.26
China 0.32 0.07
Korea 0.31 0.09
AFAS(7) AANZFTA ACFTA (2) AKFTA
Services Liberalization
Notes: The higher the figure, the more liberal commitments are (min. 0; max. 1). AFAS is based on the 7th package.
ACFTA is based on the 2nd Package.
Source: ERIA FTA Mapping Study
Some ASEAN+1 FTAs provide only minimal “WTO plus” contents.
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2.3
9.5
5.8
3.0
5.0
3.3 2.9
8.3
13.4
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
ASEAN
Coexistence of Five ASEAN+1 FTAs
Coexistence of Five ASEAN+1 FTAs and CJK FTA
ASEAN+6 FTA (RCEP)
Potential Economic Impact on GDP of RCEP (Percentage Point, accumulated from 2011 to 2015)
Note: Percentage Point, Accumulated from 2011 to 2015. Assumptions are: (a) complete elimination of the tariffs over the specified period of time, (b) reduction of ad valorem equivalents of service trade barriers, and (c) improvements in logistics cutting the ad valorem time. Source: Itakura for ERIA’s AEC Mid-term Review Study
RCEP will have the largest positive economic impacts on ASEAN.
How can we maximize the economic gains?
Trade in Goods
“Common concession” in tariff schedules: common in A+1 FTA
Consolidated ROOs with “co-equal” rules
Cumulation rules: common in A+1 FTA
Higher level of tariff elimination, e.g., 95%
Trade in Services
Substantive “WTO Plus” components (more than A+1 FTAs)
Trade Facilitation
Meaningful programs (many in ASEAN; but rare in A+1 FTAs)
Speed
Speedy conclusion the key for “ASEAN Centrality”
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Some more potential implications
1. RCEP and TPP: Can we converge the two towards an FTAAP? Which one is higher quality? (common tariff schedule and liberal ROOs?)
2. Expansion of ASEAN++ agreements in non-trade economic areas?
3. RCEP Secretariat? Implication to the ASEAN Secretariat?
4. Open accession in RCEP. Who may join? What are the conditions?
