By Nam Nguyen
After more than 10 years of lowering tariffs as part of proactive efforts to integrate with the Association of Southeast Asian Nation (ASEAN), VN is preparing to dismantle non-tariff barriers (NTBs). Having been consistently eliminating tariffs and trade barriers is expected to bring about more benefits than harms to the country?
Indeed, since 1992, ASEAN has launched the Common Effective Preferential Tariff area (CEPT) and VN has cut nearly VND 10,000 tariff after joining to ASEAN in 1995.
However, CEPT has certain limitations. The intra-regional trade volume has not achieved its full potential. While the absolute value of the import-export activities increased, its share of total regional commerce value has remained unchanged, accumulating about only 25%.
Aside fromthe objective reason regarding the similarities in economic structure between the ASEAN countries, there is still a big gap between CEPT and related companies. In other words, policy makers could set an appropriate policy direction but only a few companies are paying attention to them.
To overcome these obstacles, ASEAN is trying to create more favorable and friendly environment to conduct business through the elimination of NTBs. Economic cooperation in ASEAN, therefore, doesn’t merely imply reducing tariff by 0-5% but lifting NTBs in such a consistent, appropriate, and more business-oriented.
It should also be acknowledged that ASEAN countries has outlined the roadmap to remove NTBs. It is expected in 2015 and no later than 2018 that ASEAN countries will eliminate all trade barriers toward the goal of building a new economic community among ASEAN countries by 2015.
Roadmap to remove NTBs
In order to eliminate all NTBs, all ASEAN countries will have to investigate their non-tariff measures (NTMs) which are currently implemented. Then the results are going to be sent to the ASEAN Secretary for synthesis. The list of NTMs for each country is divided into three categories, namely green, yellow and red. Later, a team of experts will cross-examine each country to identify and evaluate which NTMs are truly non-tariff barriers for removal.
Under the agreed plan, the ASEAN 6 countries (except Philippines) will dismantle all NTBs by 2010 while ASEAN 4 countries will have a flexible deadline which can be extended until 2018. Like other ASEAN 6 countries, VN will have to eliminate all NTBs before 2015.
Currently, many ASEAN countries still use NTBs. In contrast, VN has no non-tariff barriers to protect its trade but only methods complied with WTO.In collaboration with other relating ministries, the Ministry of Trade has reviewed the 297 NTMs within the country. NTBs are not only quotas orobvious import prohibited regulations but also anti-dumping measures, technical standards, or the falsifying of goods origin to benefit from CEPT tax incentives, etc. After meeting with enterprises, the Ministry of Trade will implement the outlined plan accordingly.
Opportunities when NTBs are removed
Removing NTBs will certainly promote positive reforms in trade and investments. Unlike tax cuts, it will be very difficult to assess the immediate benefit from removal of NTBs. However, there is one thing for sure at present: the import and export enterprises in ASEAN are still having trouble or are hampered by NTBs but for some reasons, they have not fully reflected the situation to the Ministry of Trade.
The implementation of NTBs removal will significantly facilitate the import and export activities within ASEAN because import and export companies will no longer face cumbersome procedures or invisible barriers countries set out to protect their domestic firms. NTBs removal is only effective when enterprises are also actively involved. Feedback from enterprises will be the basis for the Ministry of Trade intervene directly with the ASEAN countries to target which barriers to be removed.
Advantages and benefits for services sectors
Services are also considered a priority in economic integration.ASEAN has accelerated the deadline for the liberation of services from 2020 to 2015. Tourism services, health care, air transport will have the priority over other services between 2008 and 2010.
VN, in the role of the coordinator in ASEAN, has drafted the scheme for logistics service by the end 2014. Only for aviation services, the framework of ASEAN Agreement on the full liberalization of air services in 2008 has been negotiated and will be signed in the near future.