AEC Advent Nears – Non-Tariff Trade Barriers Need to Fall (Current Issue No. 2688 Full Ed.)

KResearch expects that the ASEAN economy should benefit from the ASEAN Economic Community (AEC) that will support growth amid a weak global recovery and China's economic slowdown. In 2016, ASEAN economy may expand within a range of 4.3-5.1 percent, while in 2015, the regional economy is expected to end the year with 4.4 percent growth.

After the AEC officially begins, meeting the target to become a single market and production hub will be most significant to sustainable growth for the ASEAN economy. To achieve that, it will be necessary to lower tariff and non-tariff trade barriers to enhance trade and investment via supply chains within the region. Previously, ASEAN was successful in reducing tariff barriers using the ASEAN Free Trade Agreement (AFTA). In 2015, ASEAN imposed a zero-percent tariff on 96 percent of all tariff lines. However, each member state has introduced non-tariff measures, e.g., Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS) that increase operators' costs and import/export procedures. These impediments have inevitably obstructed the region's trade growth.

Thai businesses likely to be affected by SPS are those involved in food and agricultural products, while electrical appliances and electronics are usually impacted by TBT. These items represent about 20 percent of Thailand's total exports to ASEAN. Therefore, what the AEC needs to do is urgently reduce/eliminate non-tariff trade barriers, while implementing other facilitations toward international trade, e.g., the ASEAN Single Window, which will lead to greater trade and investment, as well as sustainable economic growth in the region.