TRADE is a key driver of economic growth in ASEAN and is also key to deeper regional integration. Reducing the cost of trade is essential for countries to effectively use trade as an engine of growth and sustainable development.
Over the past decade, much of the reductions in trade costs were achieved through the elimination or reduction of tariffs.
ASEAN has done well in eliminating 98.64 per cent of all tariffs in the region. Further reductions will now have to come from tackling non-tariff sources of trade costs, such as unnecessarily cumbersome customs and documentation procedures.
ASEAN is working towards becoming a single market and production base. Trade facilitation measures - such as the harmonisation and integration of customs procedures, as well as the removal of tariffs and non-tariff barriers - are key to the free flow of goods and services within ASEAN.
There is also increasing international recognition on the importance of trade facilitation and the digitalisation of trade procedures. On this, ASEAN has taken an early global lead in developing regional initiatives aimed at enabling trade for micro, small and medium enterprises and reducing trade costs.
Various initiatives are being undertaken in a bid to deepen regional connectivity and make economic activity in ASEAN more seamless.
The ASEAN Single Window (ASW)
The region is working towards full implementation of the ASEAN Single Window (ASW), a digital platform that simplifies customs clearance, expedites cargo clearance and reduces paperwork.
ASEAN-Wide Self-Certification (AWSC) regime
ASEAN Member States are working towards an ASEAN-wide Self-Certification regime that will allow authorised exporters to self-certify that their goods meet ASEAN's requirements for preferential treatment under the ASEAN Trade in Goods Agreement.
The AWSC will introduce greater convenience to businesses as there is no need to apply for an authorised Certificate of Origin (which would require the exporting ASEAN Member State's issuing authority's approval). This will translate into improved timeliness as self-certification can be performed 24/7 by the certified exporter itself.
Feasibility Study for an ASEAN Mutual Recognition Agreement (MRA) on Authorised Economic Operators (AEO)
On May 4, 2018, the ASEAN Directors-General of Customs endorsed the commencement of a feasibility study on an ASEAN Mutual Recognition Arrangement (MRA) on Authorised Economic Operator (AEO).
The study would allow ASEAN Member States to fact-find and analyse the feasibility of establishing an ASEAN MRA on AEO at a multilateral level.
Authorised Economic Operators (AEO) (for example, importers, exporters, freight forwarders) are companies involved in cross-border movement of goods, which have been certified by their home customs administrations to be compliant with the World Customs Organisation standards on supply chain security.
Through AEO MRAs, partner customs administrations mutually undertake to recognise each other's AEOs as having robust security practices.
Goods exported to or imported by these AEO companies potentially enjoy a higher level of facilitation and faster customs clearance at the border. This translates into better predictability on goods movement and lower administrative costs for traders.
An ASEAN MRA on AEO at a multilateral level would not only facilitate and simplify mutual recognition negotiations and programme administration by ASEAN customs administrations but also serve to reduce the regulatory burden and compliance costs of the trading community in ASEAN.
ASEAN has eliminated 98.64% of all tariffs in the region. Further reductions will now have to come from tackling non-tariff sources of trade costs, such as customs and documentation procedures.
- With the ASW, businesses only need a one-time electronic submission of information; costs of doing business are reduced as there will be faster clearance of cargo and release of shipment.
- With the ASEAN-wide Self-Certification regime, businesses do not need to apply for an authorised Certificate of Origin any longer. Self-certification can be performed anytime.