The pace-setting Asean economies are facing the challenge of aligning their policies for more inclusive growth and consumer protection as they pursue liberalized trade in an integrated region, while rapid global technological changes usher in the Fourth Industrial Revolution.
The Chairman’s Statement issued at the conclusion of the 30th Asean Summit held Saturday night in Manila reflected renewed commitment from member economies to boost trade and investment, pursue growth through partnerships and eradicate poverty by cross-sectoral collaboration in the region.
This time, however, it stressed the group’s recognition of the role of rapidly developing technologies as the leaders work toward such targets.
“Acknowledging that the global economy is undergoing a transformational phase brought about by rapid technological and scientific advancements, we recognized the need for Asean to be well prepared and able to maximize the opportunities from the ‘4th Industrial Revolution, so as to foster the region’s economic growth, and promote inclusive and equitable economic development,” the Chairman’s Statement said.
The Fourth Industrial Revolution is described by professor Klaus Schwab, founder and executive chairman of the World Economic Forum, in his book of the same title, as being “characterized by a range of new technologies that are fusing the physical, digital and biological worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human.”
The Asean Chairman’s Statement pointed out that changing consumption trends and the rise of the digital economy, which will require the realignment of consumer rights and policies to ensure compatibility with such developments within society and the economy.
“We urged the expeditious finalization of the Asean High-Level Principles on Consumer Protection to provide a broad framework for consumer protection in tandem with the economic developments in the Community,” the leaders said in the statement.
“We emphasized the importance of continuing to promote initiatives that directly benefit the people of Asean, including the need to redouble efforts to increase intra-regional trade and investment,” they said in the earlier part of the statement.
The region’s merchandise trade was viewed as resilient, reaching $1.06 trillion in the first half of 2016, of which 24.02 percent was intra-Asean.
The bloc also attracted a total of $52.94 billion foreign direct investment (FDI) inflows in the first half, of which 23.36 percent also came from within the region.
The Asean leaders welcomed the progress in negotiations over the Regional Comprehensive Economic Partnership (RCEP), which aims to link Asean to six partner countries, creating a bigger market of 3.5 billion people. These partners are Australia, China, India, Japan, South Korea and New Zealand, with which Asean has free trade agreements (FTAs).
“We emphasized that the sluggish economic environment and trends toward protectionism increase the need to achieve a modern, comprehensive, high-quality and mutually beneficial RCEP Agreement, which has the potential to boost global economic growth, deepen regional economic integration and facilitate equitable economic development for all RCEP Participating Countries (RPCs),” the statement said.
The RCEP covers trade in goods and services, investment, economic and technical cooperation, intellectual property rights, competition policy, and dispute settlement, among other issues. It does not cover labor, environment and state-owned enterprises
“We urged our Ministers and negotiators to redouble efforts in building on the good momentum achieved thus far and reiterated our call to uphold Asean Centrality in finding resolutions to outstanding issues,” the Chairman’s statement said.
It also reiterated Asean’s commitment to work together in a cooperative manner in line with the guiding principles and objectives for negotiating the RCEP toward the swift conclusion of the RCEP negotiations.
Vital to trade liberalization
Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, said the commitment of Asean leaders to a rapid conclusion of the RCEP is very important in order to maintain progress towards trade liberalization in the Asia-Pacific.
“Following the US withdrawal from the TPP [Trans-Pacific Partnership] Agreement, the RCEP has become the main focus for near-term progress for trade liberalization in the Asia-Pacific region,” he said.
In terms of merchandise exports, RCEP is larger than the Trans-Pacific Partnership (TPP), as China alone exported $2.3 trillion worth of goods as of 2014—larger than the combined exports of the US ($1.6 trillion) and Canada ($474 billion), the two lead members of the Trans Pacific Partnership.
Biswas added that Asean leaders also noted good progress on bilateral FTA talks with Hong Kong, as well as discussions with the European Union (EU) for a framework for negotiating an Asean-EU FTA. They also highlighted the importance of the World Trade Organization Trade Facilitation Agreement, and affirmed the Asean target to reduce trade transaction costs by 10 percent by 2020.
“This will help to accelerate efforts by the Asean nations to streamline customs procedures and reduce technical barriers to trade, which should boost Asean trade flows over the medium to long term,” he said.
The Asean Chairman’s Statement commended the initiatives of member states to develop their rural areas and eradicate poverty in line with the implementation of the Asean Community Vision 2025 and the United Nation 2030 Agenda for Sustainable Development.
“We looked forward to a closer cross-sectoral collaboration among Asean bodies on rural development and poverty eradication, agriculture, social welfare and development and health, among others, to ensure sustainable and inclusive development in Asean,” it said.
The leaders also acknowledged the initiatives on developing capacities to enhance the accountability of local governments in delivering social protection through community-driven development, as well as on the regional study on food security and price spikes, which take stock of responsive social protection policies for the vulnerable poor.