During the event, BlueNotes spoke to trade ministers from Australia (Steven Ciobo), New Zealand (Todd McClay) and Canada (Chrystia Freeland) to get their thoughts on those relationships.
" Each minister understands the significant opportunities a strengthened and expanded trade relationship with ASEAN."
Anna Green, CEO, ANZ Laos
From those talks, it was clear each minister understands the significant opportunities a strengthened and expanded trade relationship with ASEAN bloc countries would present for their economies.
How these strengthened relationships will take shape and whether they will deliver the tangible economic returns they are being implemented in pursuit of remains to be seen.
Below are the key points I took from the ministers.
ASEAN continues to be viewed as a key growth market for all of Asian geographies. According to McKinsey, with a combined GDP of $US2.5 trillion, the ASEAN region represents the seventh largest economy in the world.
With a population of 600 million people and the third-largest labour force in the world, along with projected year-on-year economic growth of over 5 per cent for the next 50 years, the ASEAN region looks set to become the world’s fourth largest economy by 2050.
The region’s population is young (half under the age of 30 by 2020) and demand far outstrips supply with respect to skilled labour in a market where industries such as manufacturing, retail and telecommunications are taking centre stage.
Ciobo was alive to the possibilities ASEAN presents for Australian business and encouraged them to support the development of human capital in the region.
He said Australian industry was often held up as an example of industry best practice in ASEAN and Australia was therefore in a unique position to capitalise on this - by not only trading but also partnering with ASEAN business to strengthen regional trade ties.
These partnerships prove their worth when it comes to dealing with issues specific to the region, Ciobo said.
Comparative analysis of ASEAN to the Global economies. Source: Asia Matters
“Not only should businesses and investors entering the region be aware of local cultural sensitivities, but also industry specific preferences (in that, they cannot rely on a one-size-fits-all strategy across such widely varying markets),” he said.
“ASEAN remains a key market for Australia, in which strengthened bilateral and multilateral trade agreements remain and will continue to be honed to promote trade and tourism.”
The ASEAN region is a market brimming with opportunities a lot of Australian businesses are taking advantage of. But such is the scope of the area many more could - and should - be, Australian Trade, Tourism and Investment Minister Steven Ciobo believes.
Speaking to BlueNotes on video in Laos, Ciobo said increasing population growth, forecast economic growth and structural reforms taking place across ASEAN economies meant now was the best time for business to consider making the move.
“The opportunities throughout ASEAN are quite significant,” he said. “There is tremendous potential among the 10 ASEAN members and Aussie businesses should be at the forefront of that.
“Many are, but frankly a lot more should be.”
He also touched on trade deals and recent global economic volatility. Watch the video above to find out more.
Reduction of tariffs via regional trade agreements are a continued focus for the leaders. Various means to reduce trade tariffs continue to be on the negotiating table for countries on the Pacific Rim, primarily the negotiation of key regional trade agreements including the Regional Comprehensive Economic Partnership (RECP) and the Trans Pacific Partnership (TPP).
With the impending departure of one of the TPP’s strongest advocates, US President Barack Obama, the deal’s future looks uncertain. The RCEP however continues to gain momentum.
With 16 parties and a trading group that would contemplate a combined GDP of around $US17trillion, the RCEP would cover relationships relating to approximately 40 per cent of world trade flows.
If negotiated successfully, the RCEP seeks to achieve a modern and comprehensive trade agreement among members that would cover trade in goods and services, investment, economic and technical cooperation and dispute settlement.
ASEAN’s Regional Free Trade Agreements. Source: Beyond Markets
At present, two options are being discussed in relation to a reduction in tariffs for Australia and New Zealand as part of the RCEP.
The first option is to have a common list of tariff reductions across all RCEP members. The second is to have one list of reductions for ASEAN members and an individual list for the other countries.
There is also the possibility of having carve-outs for individual countries (which could maximise gains for Australia and New Zealand).
McClay said that New Zealand continues its focus on incrementally reducing trade tariffs through strengthened bilateral trade agreements such as the TPP, RCEP and also AANZFTAA (ASEAN – Australia New Zealand Free Trade Agreement).
“Whilst current trade flows are relatively minor, we would see an exponential increase in the numbers once these reductions are implemented,” he said. “We expect this to be cemented in the next three-to-five years.”
All ministers acknowledged entry to market in ASEAN remained a challenge. Freeland said the key to successful entry relied on the implementation of policy reforms to reduce complexities associated with commercial engagement.
These policies, which need to be understood and implemented on both sides of the trade relationship, will assist businesses in engaging in the region more effectively to understand and take advantage of the existing tariffs already in place.
“To engage external investors and businesses, it is also important for the current governments in ASEAN to promote the progressive stance that they are ‘Open for Business,” Ciobo said.
Anna Green is CEO of ANZ Laos
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
07 Oct 2016
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09 Sep 2016