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Asia and the EU

26 August 2006
by eub2 -- last modified 05 March 2008

Economic relations between the EU and ASEAN and ASEM, take the form of bilateral trade ties, region-to-region partnerships, and multilateral co-operation.


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EU-ASEAN BILATERAL TRADE RELATIONS

The Association of South East Asian Nations (ASEAN) encompasses 10 South East Asian countries (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Burma/Myanmar, Philippines, Singapore, Thailand and Vietnam). Its key position in the Asia-Pacific region, its dedication to peace and stability in the region and its important economic weight have made ASEAN a key partner for the European Union.

In 2006, EU-ASEAN trade represented 5% of total world trade. The EU is ASEAN's 2nd largest trading partner, accounting for 11.7% of ASEAN trade (2006). Significantly, 13% of ASEAN exports are destined for the EU, which makes it ASEAN's 2nd largest export market after the US. ASEAN as an entity represents the EU's 5th largest major trading partner, accounting to 127 billion EUR, just ahead of Norway and equivalent to Japan. ASEAN's trade with the EU has been growing steadily over the past five years, with an average annual growth rate of 4%. The EU main exports to ASEAN in 2006 were chemical products, machinery and transport equipment. The main imports from ASEAN to the EU were machinery and transport equipment, as well as chemicals, textiles and clothing.

South East Asia's current economic strengths and its great longer-term potential continue to make it an attractive region for investment by EU economic operators. On average, EU companies have invested 5.1 bil EUR a year for the period 2003 to 2005. EU is thus by far the largest investor in ASEAN countries: 27% of total FDI inflows from 2001 to 2005 come from the EU, compared to 15% for the US.

Since 2000, trade and investment issues are discussed at Ministerial (EC-ASEAN Economic Ministers) and official (Senior Economic Official Meeting) levels between the European Commission and ASEAN. The key challenge for our relations is to promote region-to-region economic relations, particularly by addressing non-tariff barriers through regulatory co-operation using the framework of TREATI (the Trans-Regional EU-ASEAN Trade Initiative), and ultimately to lay the foundations for a preferential regional trade agreement in the future.

The Trans-Regional EU-ASEAN Trade Initiative (TREATI)

TREATI is a framework for dialogue and regulatory co-operation developed to enhance EU trade relations with ASEAN. The initiative was officially launched as a key component of the Commission's Communication on "A New Partnership with South East Asia" in July 2003. The priority areas for co-operation under TREATI are closely linked to ASEAN's own drive for economic integration and comprise sanitary and phytosanitary standards in agro-food and fisheries products, industrial product standards and technical barriers to trade, and forestry and wood-based products. Trade facilitation and co-operation on investment will be tackled as cross-cutting issues.

Work under TREATI is based upon a gradual deepening of co-operation starting with exchange of experience and moving on to develop more substantial regulatory commitments between the two regions over time. Since the launch of TREATI a number of successful activities have already taken place under the framework. For the period 2008 to 2009, the EU will, together with the ASEAN Secretariat, conduct seminars on topics such as regional economic integration, liberalisation of services, technical barriers to trade and trade facilitation.

EU-ASEAN FTA

In April 2005 Commissioner Mandelson and ASEAN Economic Ministers set-up a "Vision Group" composed of senior economic officials, with the main objective to investigate the feasibility of new initiatives, including an FTA, to improve economic ties. The EU-ASEAN Vision Group has played a critical role in building mutual confidence and understanding at an early stage, essential precursors for the success of future negotiations.

Two external feasibility studies have supported the Vision Group in its deliberations. The results of the two studies have provided essential elements of the economic justification/criteria leading to the proposal to negotiate an FTA between the EU and ASEAN.

In October 2006, the Commission issued the Communication "Global Europe, Competing in the World" where ASEAN emerged as a priority FTA partner. Such an FTA would need to be comprehensive and ambitious in coverage, aiming at the highest possible degree of trade liberalisation including far-reaching liberalisation of services and investment.

On 23 April 2007 the Council authorized the Commission to start negotiating an FTA with ASEAN.

At the EU-ASEAN Economic Ministers (AEM) Consultations held in Brunei Darussalam on 4 May 2007, EU Trade Commissioner Peter Mandelson and ASEAN Economic Ministers launched the FTA negotiations. In doing so, both confirmed that a successful conclusion of the DDA round of multilateral trade negotiations remains their priority.

The negotiating process between EU-ASEAN will be based on a region-to-region approach, while recognizing and taking into account the different levels of development and capacity of individual ASEAN members. A Sustainability Impact Assessment, contracted by the Commission, will accompany the negotiating process. Since then, a Joint Committee was established and met twice and a work programme has been set-up: four negotiating rounds are scheduled in 2008.

ASEM - the Asia-Europe Meeting

ASEM (the Asia-Europe Meeting) is an informal process of dialogue and co-operation established in 1996, bringing since its enlargement 43 individual countries (10 ASEAN countries, China, India, Japan, Mongolia, Pakistan, South Korea and the 27 EU Member States) plus the European Commission and the ASEAN Secretariat. ASEM aimed to be an informal, non-binding dialogue forum based on equality and consensus. The ASEM dialogue addresses political, economic and cultural issues, with the objective of strengthening the relationship between the two regions.

The Economic Pillar can be seen as an instrument which fosters trade liberalization, is complementary to the WTO, and facilitates bilateral trade and investment. It is built on meetings of Economic Ministers (EMM) and their Senior Officials on Trade and Investment (SOMTI), of Financial Ministers, and of the Asia-Europe Business Forum (AEBF). The main focus for discussion and activity thus far has been WTO issues, regional economic integration, the implementation of a Trade Facilitation Action Plan (TFAP), aimed at the reduction and removal of non-tariff barriers to trade between the two regions, and the implementation of an Investment Promotion Action Plan (IPAP), aimed at promoting two-way investment flows between Asia and Europe.

A parallel independent structure organised by the private sector, the Asia Europe Business Forum (AEBF), aims to strengthen economic co-operation between the business sectors of both regions. It provides a platform for high level discussion and networking between business representatives covering trade and investment issues and recommendations to enhance the attractiveness of the Asia-Europe marketplace.

The Asian members of ASEM are key trading partners of the EU, accounting for one fourth of the EU's trade with the world in 2006. EU exports to Asian ASEM members were worth EUR 208 billion (18% of total EU exports) in 2006.

Concerning the economic pillar, the Sixth ASEM Summit (September 2006, Finland) focused on key economic issues, e.g. globalisation and competitiveness and adopted a Declaration on the future of ASEM. This Declaration identifies key areas for action, such as strengthening multilateralism and addressing global threats of common concern; globalisation, competitiveness and structural changes in the global economy; energy. It also underlines the need to further involve relevant stakeholders, including social partners and civil society. Next ASEM Summit should take place in China on 24-25 October 2008.

Next economic events are EMM in Indonesia on 10-11 July 2008 and SOMTI in Slovenia on April 2008.

Further information on the EU's trading relationship with China, India, Japan and Korea.

EU External Trade with Asia web links



Source: European Commission