International Trade Blocs
By Chris Devonshire-Ellis, Andrew Salzman, and Edward Barbour-Lacey, Dezan Shira & Associates
Known as the “Lone Star State”, Texas is the second largest American state and the second most populous. The state also has the country’s second largest GSP (gross state product), amounting to US$1.6 trillion. If Texas were its own country, it would have the 12th largest economy in the world. Major industries in Texas include: agriculture, aeronautics, defense, computer technology, energy, tourism, entertainment, and healthcare.
The ten nations that make up the Association of Southeast Asian Nations (ASEAN) are becoming increasingly important trade partners for Texas. Below, we take an in-depth look at this blossoming trade relationship between Texas and ASEAN.
On November 12th, the 25th Association of Southeast Asian Nations (ASEAN) Summit held its opening ceremony in Myanmar’s capital Naypyidaw. The Summit is ASEAN’s highest policy-making body. This gathering is of particular importance since there is now less than one year to go before the implementation of the ASEAN Economic Community (AEC).
Dec. 10 – The Asian Development Bank’s new ASEAN Infrastructure Fund (AIF) has granted its inaugural loan to an Indonesian electricity project.
The US$25 million loan will go towards developing power links and expanding transmission networks from Java to Bali. Improvements are needed to solve widespread power outages and blackouts that are negatively impacting Indonesia’s tourism-reliant economy.
May 8 – The Indonesian government has shown interest in joining the United States-led Trans-Pacific Partnership (TPP), saying that its entry into the TPP negotiations would depend on trade agreements with key partners in the region.
The TPP is a trade bloc that links together trans-pacific nations, negotiations for which began in 2005. The countries that are part of or are negotiating on the TPP include Brunei, Chile, New Zealand, Singapore, the United States (U.S.), Australia, Peru, Vietnam, Malaysia, Mexico, Canada and Japan. Their combined gross domestic product (GDP) accounts for US$21 trillion or 30 percent of global output.
Taiwan, Thailand, the Philippines, Laos, Colombia and Costa Rica have all also expressed interest in joining the partnership, which aims to assist lesser developed manufacturing nations conform to internationally held standards.
Mar. 18 – The first issue of Asia Briefing Magazine, titled Are You Ready For ASEAN 2015?, is out now and available as a PDF download on the Asia Briefing Bookstore. Although both China and India have recently signed free trade agreements with ASEAN, many businesses still seem blissfully unaware of the free trade agreements and economic partnerships that are dramatically changing Asia’s business opportunities. These are agreements that do away with customs duties and tariffs on thousands of products. In this first issue of the bi-monthly Asia Briefing magazine, we focus on the new dawn that ASEAN free trade brings to the entire region, as well as the dramatic added impact of pan-Asian free trade agreements such as the Regional Comprehensive Economic Partnership.
ASEAN – the Association of Southeast Asian Nations – comprises 10 Asian countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) as an economic trade bloc. That means reduced or zero customs duties across a space that includes the 10 ASEAN nations, and includes additional agreements, still under negotiation, that are expected to link in China, India, Australia, New Zealand, Japan and South Korea with the same ASEAN bloc.
By Nathanael Susanto, Business Manager, Singapore, Dezan Shira & Associates
Mar. 13 – The Trans-Pacific Partnership (TPP) framework is fundamentally designed to be identical to the free trade agreement model, and is also known as a “high standard” agreement aiming at emerging trade issues in the 21st Century. The 16th round of the TPP negotiations were recently held in Singapore, where the following countries participated: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.Japan plans to agree to TPP free trade liberalization as a negotiating partner.
By Sondre Solstad
Mar. 8 – Over 600 delegates from 11 countries are currently meeting in Singapore with an aim to continue progress on the Trans-Pacific Partnership (TPP) agreement.
“This is the 16th round of negotiations, and a very important one,” stated Malaysia’s Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed.
The TPP stems from the Pacific Three Closer Economic Partnership between Brunei, Chile, New Zealand and Singapore that was concluded in 2005. This agreement serves as the basis of the current negotiations, which aim to establish a comprehensive free trade agreement to effectively eliminate tariffs and other non-tariff barriers to trade among signature countries. The agreement is also set to cover a range of other trade-related issues.
Issues currently under discussion include customs, telecommunications, technical barriers to trade, competition policies, e-commerce, environment, services, investment, government procurement, intellectual property rights, market access and regulatory coherence across member countries.
Feb. 6 – The Trans-Pacific Partnership trade bloc that the United States has entered into with 10 nations and of which China has been highly critical, is set to bite into China’s textiles industry later this year when U.S.-Vietnamese negotiations over tariffs and tax rates are concluded. The TPP – which includes the United States, Vietnam, Japan, Australia, Chile, Singapore, New Zealand, Brunei, Peru, and Malaysia – specifically excludes China as the United States wishes to assist with the development of other manufacturing markets as alternatives to China.
Plus Myanmar issues new foreign investment law
Nov. 9 – China is set to commence negotiations to create a 16-nation trade bloc, known as the Regional Comprehensive Economic Partnership (RCEP), with its launch expected to be formally announced at the ASEAN summit in Phnom Penh later this month. The RCEP will include the 10 members of the Association of Southeast Asian Nations (ASEAN) plus China, India, Japan, South Korea, Australia and New Zealand, and will have the effect of lowering trade barriers and custom duties across the region by the end of 2015. ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. A map of the participating members of the proposed RCEP can be seen below.