These are complex questions and they formed the subtext of discussions around global economic relationships in the Laos capital of Vientiane, as Laos hosted East Asia Summit and ASEAN Business Summit.
" Worrying for ASEAN is the continuing existence of non-tariff barriers which [have] negated the efforts of business in the region."
Anna Green, CEO Laos, ANZ
Global leaders including Barack Obama, Shinzo Abe, Christine Lagarde, Malcolm Turnbull, John Key and Ban Ki-Moon arrived in Vientiane to discuss the way forward on ASEAN related regional and global economic and political issues.
In my view, three key themes were evident.
UNCERTAINTY WITH RESPECT TO THE FUTURE OF THE TRANS PACIFIC PARTNERSHIP AGREEMENT (TPP)
Most delegates expressed their concerns over the United States’ ongoing commitment to the 12 nation TPP.
The Malaysian foreign minister would not be drawn on Malaysia’s ratification of the TPP except to say they were in principal supportive of its tenants. Questions were asked about why the Japanese had still not ratified. The Indonesian foreign minister confirmed Indonesia was still reviewing it.
With the uncertainty surrounding what the next US administration will look like, the opportunity the TPP presents for the ASEAN region to shift the dial and move forward with the US on trade relationships will inevitably be frustrated for a period.
Whilst US President Barack Obama repeatedly confirmed ratification of the TPP would be a key focus for his administration prior to the end of his term, expectations are that ASEAN governments will need to increase their dialogue with the US via bilateral and other trade agreements to ensure momentum is not lost around key US/ASEAN economic and political issues.
INCREASED FOCUS ON THE EFFECT OF PROTECTIONIST ECONOMIC POLICIES
Christine Lagarde, Managing Director of the International Monetary Fund, highlighted the challenges to world economic growth posed by protectionist economic policies.
Noting a disappointing top line global economic growth number for 2016 of 3.7 per cent, Lagarde suggested the shift to protectionist economic policies globally will likely impede any efforts to improve this number in the short term.
More worrying for the ASEAN business community is the continuing existence of non-tariff barriers which delegates noted have so far stifled and to some extent negated the efforts of business in the region to take advantage of the reduction in explicit tariff barriers the newly formed AEC has sought to implement.
Lili Yan Ing, an economist at the Economic Research Institute for ASEAN and East Asia noted a 3.6 fold increase in non-tariff barriers across ASEAN in the period between 2000 and 2015.
Lagarde said ASEAN member states need to focus on the promotion of joint trade and infrastructure initiatives which will encourage regional trade and support the continued growth of the ASEAN region which has weathered the post GFC slow down with an average GDP growth number above 5 per cent year-on-year.
IMPROVING THE EASE OF DOING BUSINESS IN ASEAN WILL BE KEY TO ITS FUTURE GROWTH AND SUCCESS
There was widespread acknowledgement the establishment of the AEC was a positive step forward for ease of doing business in the region. In particular delegates were encouraged by ASEAN’s stated agenda to standardise trade regulation in the region.
Carsten Hess, Deutsche Post DHL Group’s Vice President for the Asia Pacific, Eastern Europe and Africa observed in panel discussions that implementing a single trade facilitation measure has resulted in a boost to some countries’ GDP by up to 4 per cent.
However some delegates questioned the ability of the 10 ASEAN member states, which represent disparate and culturally distinct operating environments, to harmonise and standardise their trade procedures to facilitate freer trade in the region.
The challenge in achieving this appears to be ASEAN member states continue to be unable to reach a consensus on the practical implementation of standardisation and harmonisation initiatives with some suggesting the adoption of a “majority” rather than “consensus” approach to such initiatives in order to speed up the process for change around these issues.
Whether this will be an effective barrier to increased growth in the region remains to be seen.
Anna Green is CEO Laos at ANZ
PHOTO CREDIT: Getty Images