Southeast Asia in the WTO

7. Other ASEAN Countries and WTO

7. Other ASEAN Countries and WTO 77© 2004 Institute of Southeast Asian Studies, Singapore 77 Chapter 7 Of the ASEAN members not of central concern to this study, Myanmar and Brunei are members of the WTO, Cambodia has recently been accepted into the organization, and Laos and Vietnam are still in the queue for accession. Myanmar, a founding member of the GATT and the WTO, is almost totally inactive. Its small mission in Geneva seems to concentrate on other international organizations in town while neglecting the WTO. There has been no Trade Policy Review (TPR) of Myanmar to date. As a least developed country it is not subject to regular TPRs. Brunei Darussalam is hardly active in the WTO, though, unlike Myanmar, it has had one TPR. Its average MFN tariff is 3.1 per cent, the lowest in ASEAN next to Singapore. However, non-tariff barriers are not insignificant and there are restrictions on FDI. Brunei is basically an oil-dependent economy controlled by the state. New legislation depends on Emergency Orders issued by the sultan. Government regulation, by international standards, is not exactly transparent and predictable. Brunei has not even formally ratified its Uruguay Round commitments through adoption in national legislation. Cambodia concluded negotiations to accede to the WTO Other ASEAN Countries and WTO 78 Southeast Asia in the WTO© 2004 Institute of Southeast Asian Studies, Singapore before Cancun, while Laos and Vietnam are still negotiating. Working Parties for accession negotiations were set up for Cambodia in 1994, Laos in 1998, and Vietnam in 1995. WTO membership makes sense for all three countries, in the first instance as a means of reinforcing and accelerating their transition from Plan to Market. This entails further liberalization of trade and FDI, and implementation of market-compatible trade procedures, all legally bound in WTO agreements. This should help to reallocate domestic resources more efficiently, especially by removing the protectionist bias against agriculture in the rural areas, and thus feed into higher growth and poverty reduction. Moreover, WTO membership will increase export market access and reduce exposure to non-tariff protection, underpinned by dispute settlement mechanisms. Progress in accession negotiations has been slow, partly due to the sluggishness of domestic economic reform programmes, and partly to the complexity of WTO accession procedures and the increasing demands placed on acceding members. The long drawn-out accession negotiations with China (and to a lesser extent Taiwan) illustrate the point. Accession depended on national political will to undertake deep-seated market-oriented reforms, not only in reducing external barriers to trade and FDI but also concerning the domestic regulatory infrastructure. In addition, accession procedures were onerous: established WTO members made tough and relentless demands in order to gain market access for their firms; and the process of reviewing domestic legislation and regulatory mechanisms, and bringing them into line with WTO agreements, was complicated and protracted. Since late 2002, it appears that Cambodia was put on a fast track to WTO accession. WTO members manifestly relaxed their demands and lowered the bar to Cambodia’s prospective accession. Accession negotiations were concluded in mid-2003 and 7. Other ASEAN Countries and WTO 79© 2004 Institute of Southeast Asian Studies, Singapore Cambodia, along with Nepal, was welcomed into the fold at the Cancun Ministerial Conference — as the first least developed countries to accede since the organization came into being in 1995. This is intended as a symbolic gesture to developing countries, especially when many of them are complaining that their needs and demands are not being taken seriously in the Doha Round. Vietnam is different. Unlike Cambodia, it is a big and promising market of great interest to exporters and investors from existing WTO member countries. Negotiations are, therefore, likely to follow a China-style trajectory: demands for market access and regulatory reform as a condition of WTO membership will be tough — much tougher than those for Cambodia. A higher bar for accession points to protracted negotiations lasting to 2005 and perhaps beyond. Lao accession negotiations are some way behind. 80 Southeast Asia in the WTO© 2004 Institute of Southeast Asian Studies, Singapore ...