3 - Towards AEC 2015: Free Flow of Goods within ASEAN

Summary

I. Introduction

ASEAN is embarking on an ambitious endeavour to — among other goals — create an ASEAN Economic Community (AEC) by 2015. To achieve this objective ASEAN has adopted the AEC Blueprint, which describes the main features of the AEC and outlines the measures that ASEAN member countries must undertake.

AEC has four pillars, and one of them is to turn ASEAN into a single market and production base. One characteristic of this pillar is free flow of goods within the region. In this context “free flow of goods” implies that “properly defined goods produced in one member country can enter other members’ markets without being subjected to import duties or other non-tariff restrictions”. This requires the ASEAN member countries to remove all tariff and non-tariff barriers.

Note, however, that the removal of all tariff and non-tariff barriers is not an end in itself. There is also a need to expedite the transfer of goods across borders between ASEAN countries. It should be noted that since ASEAN is not a custom union, border inspections remain necessary. There is therefore also a need to minimize the transit costs, i.e., costs resulting from border control/inspection. ASEAN countries have agreed to implement trade facilitation measures that aim at simplifying, harmonizing, and standardizing the trade and customs process, procedures, and related information flows. One of the related activities is to install an ASEAN Single Window (ASW).

The ultimate goal of AEC is to improve the well-being of every ASEAN “citizen”. Again, to appreciate this view, consider the following. In a fully integrated market, the price difference between any two places within ASEAN depends solely on transportation costs and other logistic costs to transfer goods between the two places. Without efficient transportation and logistics services, these costs can be significantly high.

This is, perhaps, one reason why ASEAN members have agreed to include logistics services as a priority sector. This chapter aims to review the AEC Scorecard II report issued by the ASEAN Secretariat in March 2012. It is a report about the implementation of measures listed in the AEC Blueprint for the period 2008–11. That the report needs a review may sound rather odd.