ASEAN Single Market : Revisiting Rules and Strategies on the Enforcement of Free Flow of Goods in ASEAN

Whether we are ready or not, people in Indonesia and the rest of Southeastern Asia will soon welcome the ASEAN Economic Communities (AEC) by the end 2015. Therefore, there are needs to evaluate the progress in ASEAN rules and strategies thus far. By employing normative study, this paper finds and further recommends the following: Firstly, ASEAN almost reached its peak points in eliminating the tariff barriers, yet to come are the elimination on ‘sensitive’ and ‘highly sensitive list’ tariffs on imported agriculture commodities; Secondly, Non-Tariff Barriers (NTB) remain to be one of the major problems in intra-ASEAN trades; Thirdly, Member States reluctances to invoke the ASEAN dispute settlement mechanism for their trading disputes may potentially hinder the effectiveness of AEC in the future; and Finally, the protection of intellectual property remains low in the region as the ASEAN Intellectual Property Rights (IPR) Action plan 2011-2015 is still deemed ineffective to reforms the IP regulations within Member States.


INTRODUCTION
pursue their own commercial-policy agenda; and d) The recognition since the Asian Crisis that cooperation in the real and financial sectors must be extended concomitantly, and that free flows of skilled labor will be necessary to do this. 2 The ASEAN Economic Community (AEC) is an ambitious effort at deep market integration, characterized by the free flow of goods, services and investment, a freer flow of financial capital, enhanced connectivity, and expanded opportunities for intra-regional labor migration.It can be seen as a significant step in the region's post-1997 reorientation -away from traditional economic partners, such as Japan, the United States and the European Union, and towards the region itself, as well as to emerging markets such as China and India. 3e current design of ASEAN regional The numbers alone would not be enough to determine ASEAN readiness on the free flow of goods era.This paper will address some vital rules on ASEAN's free flow of goods and discuss how well the implementation of those rules.The following paper divided its sources into 3 (three) criteria, that is: 1) Primary law materials (consists of international treaties and regulations relevant to the Thesis concerned); 2) Secondary law materials (consists treatises and other academic publication relevant to the issue concerned) and; 3) Tertiary law materials (consists of dictionary and translation tools to help deciphering the foreign sources) Data obtained will be selected through validation procedure in effort to test data reliability as written reference for this publication.Any valid data would subsequently be classified based on substance and its hierarchy as international treaties, judicial decisions and doctrines.The data would then be analysed using inductive and deductive methods.These methods commonly derived in scientific analysis of international law.  the cost of services rendered.16 Since the creation of AFTA until the very day ATIGA was enforced, ASEAN efforts to remove tariff barriers have been significant, whereby in 2010, duties were eliminated on 99.2% of tariff lines for the ASEAN-6 Member States; in the remaining Member States, 97.52% of tariff lines have been reduced to 0-5 percent.17 Having said that, the next round for this tariff reforms shall be challenging, as the rests of tariff elimination would then address 'sensitive list' and 'highly sensitive list' goods.The sensitive list and highly sensitive list are country specific list of unprocessed agricultural products which are offered a longer time for the implementation of tariff elimination.This delay is mainly because ideas to cut down regional barriers to trade in agricultural commodities are very sensitive politically and socially.18 Tariff elimination on sensitive and highly sensitive goods would economically affect the agriculture based countries in ASEAN -particularly for poverty reduction in the region, as the main parties affected by agricultural integration will be the poor farmers and urban workers.19

Elimination of Non-Tariff Barriers
Apart from eliminating tariff barriers, single market and production base by AEC require more than mere elimination on import tariffs since NTBs had emerged as a serious trade impediment in ASEAN. 20  posed solution is that there should be a fully 26   are obliged to establish their own national repository and made accessible to the public through the internet. 30The ATR, among others will be expected to carry information on tariff nomenclature; preferential tariffs offered under the ATIGA; Rules of Origin; NTB measures; national trade and customs laws and rules; documentary requirements; and list of authorised traders of Member States. 31ce established and fully functioning, the ATR and the information contained therein will be accessible through the internet to economic operators like exporters, importers, traders, as well as government agencies and the interested public and researchers. 32It is the ASEAN Secretariat which shall maintain and update the ATR based on the notifications submitted by Member States. 33Currently, ASEAN is developing the design and mechanism of the ATR 34  At the heart of this Protocol is a mandatory dispute settlement process involving panels and an appellate body to assess disputes that cannot be settled through good offices, mediation or conciliation.Based on the findings of the panel or appellate body, a member state may be requested to take measures to bring itself into conformity with an ASEAN economic agreement.This protocol is problematic in twofold.First, the whole processes are considered costly and time consuming.The 35

Properties
As companies shift or expand operations for the AEC, a major consideration for many will be the protection and the development The upcoming AEC has recognized the need for a cohesive set of IP laws in the region, and has sought to craft an approach to IP that takes into account the diverse needs and varying levels of capacity of its member states. 49Instead of trying to formulate a single set of laws and designing a harmonized regional system in IP, ASEAN The idea of evolving ASEAN into a more integrated economic community could be traced way back in 2002.Back in November 2002, the ASEAN Heads of Government proposed that the region should consider the possibility of creating an 'ASEAN Economic Community' (AEC) by 2020, with even more recent proposals to move up the date to 2015. 1 1 Michael Oborne."International Economic Integration and Asia" in Organisation for Economic Co-operation and Development (OECD).(2005).
The reasons behind the decision to create the AEC are many, including: a) The desire to create a post-AFTA agenda that would be comprehensive; b) The perceived need to deepen economic integration in ASEAN in light of the new international commercial environment, especially the dominance of FTAs; c) The possibility that bilateral FTAs could actually jeopardize ASEAN integration since all Member Countries were free to Regional Integration in the Asia Pacific: Issues and Prospects.Paris: OECD, p. 4 Submitted: Jul 13, 2015; Reviewed: Jul 27, 2015; Accepted: Aug 8, 2015

4 2
economic cooperation has also been shaped by more recent global economic shocks, such as the collapse of the United States subprime mortgage market and the euro zone debt crisis.While ASEAN economies have weathered these storms, many of the world's leading industrialized countries are struggling to shake off the effects of recession.According to Plummer, the free flow of all labor, including unskilled labor, was deemed too politically difficultto consider in the AEC.See Michael G. Plummer and Erik Jones.(2006).International Economic Integration and Asia: Advanced Research in Asian Economic Studies.Vol. 3. Singapore: World Scientific, p. 5 3 Asian Development Bank.(2014).ASEAN Community 2015: Managing integration for better jobs and shared prosperity.Thailand: International Labour Organization and Asian Development Bank, p. 2 4 Asian Development Bank.(2014)., Ibid One AEC pillars are the creation of single market and production base 5 where the single market will be expected to provide an integrated market with reduced barriers to trade and investment.Investors can move more freely in the region and have greater access to capital and benefit from moving goods easily across borders. 6AEC also provides that the single market and production base pillar will comprise five core elements: the free flow of goods, services and investment, a freer flow of capital and the free flow of skilled labor. 7ASEAN's economic performance towards ASEAN single market has been remarkable.In 2013, ASEAN's gross domestic product (GDP) stood at $2.4 trillion, accounting for 3.3 per cent of the world's economy.During the period 2007-13, ASEAN economies, with the exception of Brunei Darussalam, grew faster than the global average, proving relatively resilient to successive international crises in the late-2000s.In 2013, GDP growth for the world as a whole was 3.0 per cent, where ASEAN showed distinct trend by standing on 4.9 per cent. 8

5ASEAN.
ASEAN Economic Community Blueprint (AEC Blueprint).2007, Action Plan 6 6 ASEAN.AEC Blueprint, Action Plan 6 7 ASEAN.AEC Blueprint, Action Plan 9 8 IMF.World Economic Outlook Database.April 2014.As cited in Asian Development Bank.(2014)., Op.Cit., p. 2 -5 METHODS This paper mainly employs library based research or pure theoretical research, where the research concerned with analysis of the legal doctrine and how it has been developed and applied which consists of either simple research directed at finding a specific statement of the law or a more complex and in depth analysis of legal reasoning, 9 by reading through legal literatures, treatises, magazines, newspapers, essay and research report relevant to the concerned problems.

a)
Charge equivalent to an internal tax impose consistently with the provision of Article III(2) GATT, in respect of the like domestic goods or in respect of goods from which the imported goods have been manufactured or produced in whole in part; 14 b) Anti-dumping or countervailing duty applied consistent with the provisions of Article VI GATT, the Agreement on Implementation of Article VI of GATT 1994, and the Agreement on Subsidies and Countervailing Measures in Annex 1A to the World Trade Organization [WTO] Agreement; 15 or c) Fee or any charge commensurate with 13 ASEAN.Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (CEPT-AFTA).1992, Art.2(4) 14 ASEAN.ATIGA, Art.1(c)(ii) 15 ASEAN.ATIGA, Art.1(c)(ii) constitute barriers to trade. 26Based on the information submitted by Member States, AFTA Council could identify at least 2 major NTB, those are: a) Customs surcharges: Customs surcharges and technical measures were initially identified as major NTBs affecting intra-ASEAN trade.A customs surcharge, also called surtax or additional duty, is an ad hoc trade policy instrument to raise fiscal revenue or to protect domestic industry. 27b) Technical measures: Technical measures are those measures referring to product characteristics such as quality, safety or dimensions, including the applicable administrative provisions, terminology, symbols, testing, and test methods, packaging, marking and labelling requirements as they apply to a product. 28As previously explained, forms of NTB are evolved from the time being, making above list insufficient in preparing the Small Medium Enterprise (SME) from predicting any NTB it might face when exporting goods to other ASEAN countries.One of key solutions to resolve this was presented during Regional Economic Cooperation Forum in Bangkok on March 2014.The pro- operational and accessible database which is able to regularly identify any non-tariff barriers within ASEAN in order to assist small medium enterprises (SME) to well adapted in the upcoming AEC. 29ASEAN, during the time ATIGA was drafted, tried to resolve the following issue by proposing the creation of ASEAN Trade Repository (ATR), a record containing trade and customs laws and procedures of all Member States in which on separate obligation each of ASEAN Member States while relying any dissemination of trading information on the respective national repositories maintained by the Member States.Dispute Settlement With the existence of the exception clauses, any interstate disputes arising in intra-ASEAN trades could be well expected after AEC is established.ATIGA tries to anticipate the issue by referring any differences on its interpretation to be settled under the ASEAN Protocol on Enhanced Dispute Settlement Mechanism [ASEAN-PEDSM]. 35ASEAN-PEDSM, as the name suggests, is an ASEAN Protocol that listed several means of resolution, such as the Forum of Consultation 36 , Establishment of Panel 37 and Initiation of Appellate Body to review the Panel's report and legal interpretations developed by the Panel. 38This Mechanism is applied on disputes relating to all subsequent economic commitments in ASEAN as well as retroactively to earlier key economic agreements.
Court has been assisted by 3326 preliminary statements from its advocates-general.These normally conform to what the Court later decides, but not necessarily so.46    Adopting TFEU ways to give certain institution mandate such as the 'optional' preliminary rulings would not constitute breach on ASEAN's 'non-interference' value.Firstly, ATIGA rules on the free flow of goods already embedded on national laws the moment ASEAN States have ratified the Treaty.Secondly, procedure such as 'preliminary rulings' would not deprive local courts from its judiciary powers, since Appellate Body under ASEAN-PEDSM could only provide suggestive interpretations where the local courts still retain its final says on any disputed caused by ATIGA.If there is any implication, it would be to prevent local courts from interpreting ATIGA outside its commonly agreed terms, contexts or even against the intentions of the drafters.
ABC Website, Available from: http://en.euabc.com/?word_id=242.[Accessed 06/04/2015] of Intellectual Property (IP).Many have concerned over the IP protection in ASEAN, where the concept of IP only to receives cold welcome by some authorities in ASEAN's developing states and are still evolving in many of the more developed nations. 47Investors and international traders are likely to focus on countries where IP is adequately protected.Singapore for example, has concentrated on positioning itself as an IP hub in Asia for a number of years.Significant thought has gone into development of laws and regulations for the protection of IP as well as incentives for IP and Research and Development activities.Singapore's strengths in this area bring a distinct advantage, and, as pointed out in the Blueprint, are a major determinant of external competitiveness. 48

ANALYSIS AND DISCUSSION ASEAN Rules on Free Flow of Goods
the import duties on originating goods of other Member States.12WhenMemberStatesdecided to reduce the duties instead of eliminating it, the duties should be lowered to the minimum percentage allowed by the Treaty (Commonly no higher than 5%).In addition, for goods which receive the benefits of free flow of goods.They have to 'originate' from any of ASEAN Member States.ATIGA adopted CEPT's Rule of Origin where "a product shall be deemed to11The rationale behind this division is because when the AFTA agreement was originally signed, ASEAN had only six members (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand).Vietnam later joined in 1995, Laos and Burma in 1997, and Cambodia in 1999.When the CLMV joined ASEAN, the countries have not fully met AFTA's obligations, but they are officially considered part of the AFTA as they were required to sign the agreement upon entry into ASEAN.Therefore, they were given longer time frames in which to meet AFTA's tariff reduction obligations.See Asian Economic Institute.(2015).Trade Organizations: ASEAN.Available from: http://www.asiaecon.org/trade_relations/get_to_item/4.[Accessed 27 June 2015] 12 ASEAN.ASEAN Trade in Goods Agreement (ATIGA).2010, Art.19(2) be originating from ASEAN Member States, if at least 40% of its content originates from any Member State". 13Based on that threshold, Article 28(1)(a) ATIGA provides that: To practically determine whether the goods are 'ASEAN-originated', ATIGA set out a formula which can be found in Article 29 to calculate the goods' RVC.In addition, we should aware that some trans-border charges are exempted from custom duties, those are: Ibid 20 Siow Yue Chia.(2013).The ASEAN Economic 17ASEAN.(2014).Thinking Globally, Prospering Regionally: ASEAN Economic Community 2015.Jakarta, Indonesia: ASEAN, p. 4 18 See OECD.(2005).Op.Cit., p. 15 19 See OECD.(2005).