201511.17
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TPP and AEC Making Progress, Slowly but Surely

By Daniel Bellefleur

America and fellow signatories promote the Trans-Pacific Partnership as the modern day free trade agreement that extensively liberalizes and supports the free flow of goods and products and the way these countries interact economically with each other.

Regarding whether the TPP conflicts with the ASEAN Economic Community (AEC), the TPP can actually support or augment the competitiveness of representative nations. Vietnam, one of Indonesia’s largest competitors for trade and investment, has already experienced an uptick in foreign direct investments, and FDI announcements due to the country being part of TPP. This will be a significant benefit for the early entrants.

The TPP can certainly stimulate ASEAN’s economies and open up markets to give better access to America and other Pacific nation signatories. Not entering into the TPP may not harm a country, but it may keep them behind or more focused on Asian trade partners. There has been a debate between whether countries should go along with the RCEP or the TPP, but they are not exclusive of each other. Countries can utilize both trade pacts together and work with numerous countries under the respective trade pacts.

Indonesia would need to put in a lot of work to reach the standards to work within the TPP framework especially in the areas of transparency, non-tariff trade barriers and some of the protected industries.

AEC will contribute to the TPP, which is a more extensive trade pact. In order to progress within the AEC framework, countries and their legislators will need to get more accustomed to these trade pacts and having to conform domestic policy to fit within the evolving international trade arena.

Considering our region’s (ASEAN) diversity, one of the primary focus areas will be harmonizing the logistics to support free trade. Our region must work together to streamline the processes of cross border trade, modes of transportation and develop a more efficient distribution network in order to promote ease of access and trade between nations. Part of the solution entails simplifying the paperwork necessary to cross borders which will generate significant efficiency improvements, for international trade parties outside of ASEAN as well as for the countries within ASEAN.

In addition to logistics, allowing for the free flow of skilled labor as well as the free flow of goods and services will support our region’s (ASEAN) economic prospects.

We will certainly have challenges going forward for ASEAN, but there are also many aspects strengthening our region’s (ASEAN) remarkable potential. Singapore is the most developed in advanced manufacturing, trade and finance. We have Malaysia as a middle income country, and a strong labor basis here in Indonesia and Vietnam. We have significant growth capacity with abundant natural commodities and while some expansion is dependent on the Chinese economy, we don’t see ASEAN taking a large dip as the potential going forward is still strong and we see this improving in the coming years.

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