ASEAN is an Important Market of Trade in Services
The services sector is a sizeable and continuously expanding component of GDP in ASEAN countries. On average, the services sector contributes 40-50% of GDP in ASEAN countries.
Service as % of GDP (2005 Figures)
Source: ASEAN Statistical Yearbook 2006
ASEAN exports of commercial services to the world market have grown steadily from US$54.8 billion in 1998 to US$97.6 billion in 2004. The current estimate of the 2006 export level is US$120.9 billion. Of relatively similar trend and magnitude, ASEAN imports of commercial services from the world market grew steadily from US$60.4 billion in 1998 to around US$122.0 billion in 2004. The current estimate of the 2006 import level is US$150.3 billion.
ASEAN Exports and Imports of Services
Source: WTO Secretariat, ASEAN Secretariat Analysis
ASEAN Initiatives in Trade in Services
Recognising the growing importance of trade in services, ASEAN countries officially launched their joint effort to work towards free flow of trade in services within the region through the signing of ASEAN Framework Agreement on Services (AFAS) on 15 December 1995 by ASEAN Economic Ministers (AEM) during the 5th ASEAN Summit in Bangkok, Thailand.
AFAS is aimed at substantially eliminating restrictions to trade in trade in services among ASEAN countries in order to improve the efficiency and competitiveness of ASEAN services suppliers.
AFAS provides the broad guidelines for ASEAN Member Countries to progressively improve Market Access and ensure equal National Treatment for services suppliers among ASEAN countries. All AFAS rules are consistent with international rules for trade in services as provided by the General Agreement on Trade in Services (GATS) of the World Trade Organisation (WTO). In fact, liberalisation of services trade under AFAS shall be directed towards achieving commitments beyond Member Countries’ commitments under GATS, or known as the GATS-Plus principle.
With a desire to expedite liberalisation of trade in services within ASEAN, the AEM signed the Protocol to Amend the ASEAN Framework Agreement on Services on 2 September 2003 in Phnom Penh, Cambodia. The Protocol enables for the application of “ASEAN Minus X” formula in the implementation of Member Countries’ services commitments. Under this formula, countries that are ready to liberalise a certain service sector may proceed do so without having to extend the concessions to non-participating countries.
What Has Been Achieved?
Following the signing of AFAS, officials of ASEAN countries immediately embark on negotiations to achieve the objective of AFAS of creating a freer trade in services within the region. This was implemented through several rounds of negotiations, each round resulting in packages of commitments from each ASEAN country in each agreed economic sector/sub-sector and mode of supply.
The services negotiations are undertaken under the purview of ASEAN Economic Ministers (AEM). Following the decision of AEM at their Informal Meeting held on 28 June 1999 in Auckland, New Zealand, ASEAN Finance Ministers and ASEAN Transport Ministers subsequently took the lead in the liberalisation of financial services and air transport services, respectively.
At present, ASEAN has concluded 6 packages of commitments under the AFAS signed by the AEM through 4 rounds of negotiations since 1 January 1996. These packages provide for details of commitments from each ASEAN Member Country in the various services sectors and subsectors.
In addition, there has also been two additional packages of commitments in financial services signed by the ASEAN Finance Ministers (the second and third Package of Commitments of Financial Services under the AFAS) and two additional packages of commitments in air transport signed by the ASEAN Transport Ministers (the Fourth and Fifth Packages of Commitments on Air Transport Services under the AFAS).
ASEAN Member Countries continue to work on further expanding the negotiations to cover all sectors and all modes of supply. The ASEAN Economic Community Blueprint adopted by the ASEAN Leaders at the 13th ASEAN Summit on 20 November 2007 in Singapore sets out concrete steps to be taken to achieve a free flow of services by 2015 with flexibility.
Mutual Recognition Arrangements
Mutual Recognition Arrangements (MRAs) is the more recent development in ASEAN cooperation on trade in services. MRAs enable the qualifications of professional services suppliers to be mutually recognised by signatory member countries, hence facilitating easier movement of professional services providers in ASEAN region.
At present, ASEAN has concluded 4 (four) MRAs:
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MRA on Architectural Services and Framework Arrangement for the Mutual Recognition of Surveying Qualifications both signed on 19 November 2006 in Singapore.
A number of other MRAs in other areas are currently in different stages of negotiations, which include Accountancy, Medical Practitioners, Dental Practitioners, and Tourism.
(Note: Update as of November 2007)