Southeast Asia in the WTO

8. Southeast Asia’s Future in the WTO

8. Southeast Asia’s future in the WTO 81© 2004 Institute of Southeast Asian Studies, Singapore 81 Chapter 8 The ASEAN-5 are bowling alone with different degrees of effectiveness in the WTO. Participation in the WTO is more effective than it is for the bulk of developing countries, but with big differences among the ASEAN-5. Chief among the factors hindering ASEAN co-operation in the WTO are differences in national trade policies and trade policy capacities, exacerbated by the Asian crisis, and an enlarged, internally unwieldy ASEAN with slow-moving regional economic co-operation. Such differences were clearly on display in the Doha Round and in Cancun. This state of affairs still leaves an important question unanswered: is there room for stepped-up ASEAN cooperation in the WTO post-Cancun, especially if the Doha Round is put together again? Even in an optimistic scenario, ASEAN co-operation in the WTO is bound to be more limited than it was in the Uruguay Round: the common denominators of the past are no longer extant and there will be less hanging together. A final glance at the negotiating issues in the present round illustrates the point: • Market access: Effective ASEAN co-operation is unlikely: national differences on agriculture and services are too large. Differences are narrower on industrial goods: all ASEAN-5 Southeast Asia’s Future in the WTO 82 Southeast Asia in the WTO© 2004 Institute of Southeast Asian Studies, Singapore countries have a stake in multilateral reductions in tariff peaks, tariff escalation, and non-tariff barriers. However, manufacturing protectionism on the home front remains, particularly in Thailand. • Rules: Here there is more potential for ASEAN co-operation, following Uruguay Round precedent. Then, ASEAN members shared common ground on tightening GATT disciplines on anti-dumping and countervailing measures, safeguards, and subsidies. Now, ASEAN members remain sparse users of trade remedies but their exports still suffer from contingent protection elsewhere. Thus they have a common interest in stronger WTO rules coming out of this round, particularly on anti-dumping measures and subsidies. Indeed, this issue-cluster is perhaps the biggest common denominator remaining for ASEAN in the WTO. • Developing country issues: The ASEAN-5 will not be able to return to the common ground they shared on S&D during the Uruguay Round. Internal divisions on this issue-cluster are reinforced by membership of different multi-country coalitions (Malaysia and Indonesia in the LMG, Singapore and Thailand in Friends of the New Round). Nevertheless, Malaysia has been relatively pragmatic in the LMG. One could imagine ASEAN members converging on mid-range compromise positions: dealing with remaining implementation issues; and S&D based on differential transition periods for implementing WTO agreements and with increased technical assistance, but without a return to blanket exemptions and carve-outs from common rules and obligations. However, Indonesian and Philippine defensiveness in agriculture, particularly their insistence on Special Product exemptions from liberalization commitments, makes such intra-ASEAN compromises difficult to achieve. The general polarization of debate along North- 8. Southeast Asia’s future in the WTO 83© 2004 Institute of Southeast Asian Studies, Singapore South lines on display in Cancun also does not help matters. • Singapore issues: Here there have been divisions between Singapore and the more sceptical rest, with Thailand occupying a pragmatic position in between. However, as with the developing country issues, converging positions on compromise solutions are imaginable. This would probably entail negotiations on soft, evolutionary, not overly intrusive agreements on trade facilitation, with the other three issues placed outside the Single Undertaking. Moreover, trade facilitation is the one Singapore issue where there is common interest among the ASEAN-5. On the latter, ASEAN cooperation in the WTO could be stronger and move in tandem with AFTA and APEC initiatives. Malaysia’s post-Cancun flexibility, in line with an emerging WTO consensus to focus core negotiations on trade facilitation alone, should make intra-ASEAN convergence on the Singapore issues easier. • Trade and environment: Next to rules, this is perhaps the other remaining common denominator among the ASEAN-5. All except Singapore are agricultural exporters and have a common interest in ensuring that health and safety measures (covered by the SPS and TBT agreements) are not used as backdoor regulatory barriers to restrict imports. Taking stock, stepped-up but limited ASEAN co-operation is within the bounds of the possible — if the Doha Round is put back on the rails. It would focus on rules, trade...