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Although AEC is a regional initiative, implementation is carried out by the
national economies
Though AEC is a regional initiative, implementation of AEC with very different levels of development, have only had
commitments depends on national-level action. Initiatives eight years since 2007 to implement all the measures
like tariff cutting, removal of non-tariff barriers, services under the AEC. Furthermore, the 2008-09 crisis drew
sector liberalisation, national treatment of foreign resources and attention away from the pursuit of the
investors, customs modernisation, and many others have AEC. It should not be ignored that “successful” economic
to be adopted in domestic law and policy decisions. cooperation takes time to happen. For example, after the
Treaty of Rome, the European Economic Community took
These are not easy to realise, as each of the AEC actions nearly 40 years to achieve its objective of a single market.
is not restricted to one but multiple government ministries
and agencies. For example, the ASEAN Single Window Even after a regional integration agreement is
is a key deliverable for the organisation under AEC. But negotiated, domestic implementation remains a bigger
prior to that, each of the ten countries need to set up their challenge. Information about the AEC was spread only
National Single Window (NSW). Though the responsibility after it was negotiated. Increasing awareness also poses
of the NSW resides with the national customs agency, it additional challenges as interest groups coalesce around
has to work with a number of other government agencies, specific issues. The emergence of organised groups
certification authorities, banks, ports and with the private opposing the process can also slow down implementation.
sector.
Hence, one cannot fault ASEAN as an organisation for
This could be challenging as other agencies may not delivering on its commitments towards the AEC. It is
not have the same sense of responsibility and vision. also too soon to conclude that AEC will not be effective. A
For less developed ASEAN countries, there could be better way to follow development towards the AEC is to look
bottlenecks in terms of financial assistance, Information at its individual measures (more than 150) and relevant
and Communications Technology (ICT) systems, human developments within member economies. Furthermore,
resources and legal environment. the AEC encompasses many initiatives and each one may
need different skill sets to achieve.
ASEAN members, which include a range of countries
AEC should not be blamed for every policy change within a national economy
As the AEC deadline draws close, member economies are WTO membership by itself is not helpful as there are 150
worried that they will soon face increased competition other countries representing different levels of economic
and in the process vulnerable firms (mostly small and developments, and thereby dimming hopes for quick
medium scale businesses) may be eliminated, leading outcomes. Moreover, the concerns and objections of small
to job losses. economies like the ones in Southeast Asia are not likely
to get heard. In that scenario, ASEAN or AEC is a small
It is very important to note that the vision for the grouping where the member economies will consider
AEC was developed with an awareness of current global the interests of all and may also accord flexibility for a
economic trends. Production networks (implying that short period. Of course, this is likely to slow down the
the goods are not produced in one country, but multiple establishment of the AEC, but advanced member countries
countries) were fast developing in a few key industries (like Singapore, Malaysia, Thailand) are not restricted to
(electronics, automobile, textiles) and were spreading this framework only. They have pursued bilateral Free
across Asian economies. China was becoming the “factory Trade Agreements (FTAs) with their key trading partners,
of Asia” with its entry into the World Trade Organisation which cover not only trade and investment liberalisation
(WTO) in 2001 and Western economies were forming but go beyond to include issues like education and
trade blocs, namely the European Union and the North government procurement, thereby making it much deeper
American Free Trade Agreement (NAFTA). than the measures mentioned under the AEC cooperation.
Indeed, the 1997-98 Asian financial crisis became the Hence, AEC should not be the only cause of anxiety for
catalyst for the ten Southeast Asian countries to think increased competition. For any single country, domestic
of a self-help mechanism that was more comprehensive reforms and other policy changes are required to address
and ambitious than what they possessed in the 1990s (e.g. the challenges of globalisation and there are several
the ASEAN Free Trade Area, ASEAN Investment Area and bilateral, regional and multilateral frameworks available
ASEAN Framework Agreement of Services). as modes for economic cooperation.
The ten countries of ASEAN realised quite soon that Back to Contents
6 AEC – IMPACT ON INSURANCE • DECEMBER 2015
