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Economy

ASEAN's economic unity is being threatened by nontariff barriers

From second from left, Deutsche Post DHL's Carsten Hess, ERIA's Lili Yan Ing, CP Foods' Sombat Thiratrakoolchai and the US-ASEAN Business Council's Alexander Feldman take part in a discussion moderated by Nikkei Asian Review Chief Editor Gwen Robinson, far left. (Photo by Nozomu Ogawa)

VIENTIANE The spread of nontariff barriers could leave ASEAN stuck with only superficial economic integration, experts warned at a symposium on Sept. 7 in Vientiane.

Although the Association of Southeast Asian Nations has lowered its average tariff from 8.9% in 2000 to 4.5% in 2015, the number of nontariff measures implemented by member states has jumped 3.6 times over the same period. There are now 5,975 such regulations, according to Lili Yan Ing, an economist at the Economic Research Institute for ASEAN and East Asia.

Speaking at a session of the ASEAN Business and Investment Summit 2016, Ing said these restrictions make cross-border production less cost-effective. Citing local content rules, she said many nontariff measures are "poorly designed," and that companies view them as unnecessary complications.

The session, moderated by Nikkei Asian Review Chief Editor Gwen Robinson, was held on the sidelines of the ASEAN summit.

Also on the panel was Sombat Thiratrakoolchai, senior vice president at Charoen Pokphand Foods. He warned that unless ASEAN moves quickly to dismantle nontariff barriers, it risks "tracing back 49 years" of progress since its formation.

Case studies show that implementing a single trade facilitation measure can boost a country's gross domestic product by as much as 4%, said Carsten Hess, Deutsche Post DHL Group's vice president for the Asia-Pacific, Eastern Europe, the Middle East and Africa.

The ASEAN Economic Community, launched at the end of 2015, seems to be doing little to break down barriers so far. To speed up market integration, Ing suggested each member state should form a national economic council that would answer to the president or prime minister.

This, she said, would help ASEAN governments quickly find common ground on crucial issues, such as the implementation of trade facilitation measures and the elimination of barriers.

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