ASEAN Economic Community Scorecard: Performance and Perception

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

3 Towards aEC 2015: Free Flow of Goods within asEaN Pratiwi Kartika and Raymond Atje 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. Towards AEC 2015: Free Flow of Goods within ASEAN 29 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. After all, a scorecard report is supposed to provide all information about the progress made in the implementation of the AEC Blueprint, i.e., whether the listed measures have been properly implemented as scheduled or whether there have been deficiencies in the implementation process and if so, why. This information is not, however, to be found in the AEC Scorecard II report. For instance, according to Rillo (2012) there are 47 measures associated with the free flow of goods that have to be implemented during the period under consideration. Furthermore, only 23 of them have been fully implemented. The report does not, however, provide these numbers, let alone information about what those measures are and the reason or reasons for the shortcomings in the implementation. This deficiency in the report may be traced to the unwillingness of the AEC Scorecard to put the blame on any party. This chapter consists of seven sections including the introduction. Section II offers some comments on the AEC Scorecard. Section III provides a short review of the removal of tariffs. Section IV concerns the 30 Pratiwi Kartika and Raymond Atje removal of non-tariff barriers, while Section V pertains to trade facilitation and Section VI surveys other beyond border issues. Section VII gives concluding remarks. It should be noted that in its attempt to elucidate the Scorecard report, the chapter complements the report with relevant information that the authors have obtained from various sources. II. some Notes on the aEC scorecard II To keep track of the progress in the implementation of the AEC Blueprint, the ASEAN Secretariat has designed and periodically published an AEC Scorecard. The Scorecard is supposed to provide all the necessary information regarding the implementation of the Blueprint during the period under consideration. That is, it is meant to inform readers as to whether measures, as stipulated in the Blueprint have been implemented on schedule by all member states, thus identifing any non-compliance, and explaining the reasons behind it. So far, the ASEAN Secretariat has published two scorecard reports, one for the 2008–09 period (Phase...