Leaders of the ten-member Association of Southeast Asian Nations are confident that the ASEAN Economic Community is ready for full implementation by January 1, 2016. The AEC was originally scheduled to launch this year.
The leaders met for the 26th ASEAN Summit in Malaysia on April 26-27. During the meeting, they discussed the progress of the ASEAC and the ongoing free trade agreement negotiations with Hong Kong, among other topics.
As it now stands, there is a 90.5% ASEAN-wide implementation rate of the 506 measures within the AEC Scorecard. The ASEAN leaders therefore expressed their optimism that the AEC will be ready for full implementation next year.
Chief among the trade measures of the economic community is the elimination of tariffs. The ASEAN-6 countries – Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand – have already eliminated tariffs on 99.65% of tariff lines.
Cambodia, Laos, Myanmar and Vietnam have reduced tariffs to the zero-to-5% range 98.6% of their tariff lines. They aim to eliminate tariffs on these goods by the end of this year.
Free Trade with Hong Kong
The ASEAN Summit also included discussions related to the ongoing negotiations on the Hong Kong-ASEAN Free Trade Agreement. Negotiations on the FTA were opened in July 2014 and the third round was concluded last month.
According to Hong Kong Chief Executive C Y Leung, the trade talks are progressing smoothly and he expects them to conclude early next year.
The trade relationship between the two parties is already significant. In 2014, trade in goods between ASEAN and Hong Kong was valued at US$106 billion, a 10% year-on-year increase.
ASEAN is Hong Kong’s second largest goods trading partner and fourth largest service trading partner. For their part, Hong Kong is ASEAN’s eight largest goods trading partner.
Once implemented, the ASEAN-Hong Kong FTA will:
- Eliminate or reduce tariffs and non-tariff barriers
- Provide preferential rules of origin
- Liberalize trade in services
- Liberalize, promote, and protect investment
- Provide a dispute settlement mechanism (still under negotiation)
ASEAN is also engaged in ongoing negotiations for the Regional Comprehensive Economic Partnership (RCEP) – a trade agreement between ASEAN, China, South Korea, India, Japan, Australia, and New Zealand. It is hoped that negotiations will be finished by the end of this year.