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GMS-BF & ASEAN  Description

All of the members of the GMS except for Yunnan are concurrently members of the Association of South-East Asian Nations (ASEAN). ASEAN was formed in 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand, and then later welcomed Brunei in 1984. ASEAN originally proclaimed that its intention was to foster economic and social cooperation, but the organization implicitly focused on political and security matters for the first few decades.
Although the goal since ASEAN's formation in 1967 was to encompass all 10 South-East Asian countries, the political and economic complexities in the region kept the ASEAN members apart from their other neighbors until the mid-1990s, when the remaining South-East Asian countries gradually became members. Vietnam joined in 1995, followed by the Lao People's Democratic Republic and Myanmar in 1997. Cambodia's domestic turmoil postponed its membership until 1999, and after 32 years ASEAN finally became complete. As the political landscape in South-East Asia changed in the 1990s, as well as ASEAN's membership, there has been a noticeable shift in ASEAN's goals. Nowadays, the association focuses on economic cooperation such as the ASEAN Free Trade Area (AFTA), cultural and social cooperation (women, health, poverty eradication, and other issues), and the environment.

ASEAN does not compete with GMS, nor is it contrary to the GMS's goals and strategies.  In fact, ASEAN and GMS are highly complementary and work towards the same goals, only with slightly different arrangements.  ASEAN has an explicit focus on raising the standard of living and closing the gap between the original members and the newer (and poorer) members.  As early as 1996, ASEAN devised its "Basic Framework of ASEAN-Mekong Basin Development Cooperation," which provided the foundation for the ASEAN Mekong Basin Development Scheme.  The seven members of ASEAN at that time formed a "core group" for the Mekong Basin scheme that included Cambodia, Lao People's Democratic Republic, and China.

The framework laid out the objectives and principles for cooperation, and also identified priority sectors: infrastructure, trade and investment activities, agriculture, forestry and minerals, industry, tourism, human resource development, and science and technology.  It also recognized the role of the other Mekong-related multilateral institutions in the development process and sought to complement their activities.

Of particular interest to the local and foreign business communities are the various economic cooperation programmes that the newest members of ASEAN will benefit from, and even Yunnan is likely to benefit at least indirectly. The most ambitious economic programme is AFTA, which aims to reduce tariffs in most product categories. ASEAN agreed on the AFTA framework in 1992, but it has been amended several times as a result of the new members and other circumstances. Under the Common Effective Preferential Tariff (CEPT) for AFTA, many manufactured products will have tariffs at 0-5 percent by 2003 (the original schedule was 2008). A 1999 agreement allows the member states to phase in tariff reductions on sensitive and highly sensitive products.  Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand must phase in the 0-5 percent tariff on sensitive products by January 1, 2001 or at least by January 2003, with full implementation complete by January 1, 2010. For highly sensitive products, such as rice and other agricultural goods, the end tariff rates are flexible but will likely be around 20 per cent. These will be phased in beginning in January 2001 or by 2005, with fully implementation by January 2010.

The newer members of ASEAN were granted extensions on sensitive products as follows:

Table 1. New ASEAN members’ timetable for sensitive products tariff reductions
  Sensitive products
Country Start phase-in Completion
Cambodia 2008-2010 2017
Lao People's Democratic Republic 2006-2008 2010
Myanmar 2006-2008 2010
Vietnam 2004-2006 2013

AFTA also includes a schedule for eliminating quantitative restrictions between 2010 and 2017, depending on the agreement made by each state.

The five GMS members who are also a part of ASEAN are participating in the ASEAN Industrial Cooperation Scheme (AICO), which was created in 1996. AICO promotes joint manufacturing industrial activities involving two or more companies from two or more ASEAN states. The objective is to promote investment in technology-based industries and enhance value added activities among the members. Firms participating in AICO receive special tariff and non-tariff incentives.

Another ASEAN economic cooperation scheme is the ASEAN Investment Area (AIA). The agreement, reached in 1998, intends to promote investment from within and outside of ASEAN. AIA's main objectives/benefits are to coordinate investment facilitation programmes; open industries for investment; and grant national treatment to firms that qualify.
Last Updated
14 Dec 2010 23:29 pm

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