The aim of the initiative is to build a closer dialogue on trade issues between ASEAN and OECD members over time, building confidence in the region about the relevance of the OECD’s work on trade and identifying areas of mutual interest in trade policy.
Much of the OECD Trade Committee’s work is highly relevant to ASEAN’s efforts to improve market “connectivity”. This is particularly the case in relation to on-going work on trade facilitation, services trade and the factors that shape effective participation in global value chains.
The ASEAN Economic Community (AEC) Blueprint contains strong commitments in the area of trade facilitation, including the harmonisation, simplification, and modernisation of trade and customs processes, customs integration, and the development of an ASEAN Single Window.
The OECD has developed a set of trade facilitation indicators (TFIs) to support governments as they undertake trade facilitation reform. Corresponding to the policy areas of the WTO Agreement on Trade Facilitation, the TFIs identify key areas for action and enable governments to prioritise trade facilitation reforms and mobilise technical assistance and capacity-building in a more targeted way. OECD analysis has shown that by implementing trade facilitation measures, ASEAN and its member countries can boost trade flows and reduce trading costs across the region.
International production, trade and investment are increasingly organised within global value chains (GVCs) in which different stages of the production process are located across different countries.
Most ASEAN members are part of the OECD-WTO Trade in Value Added (TiVA) database, which was developed to measure trade in value added terms to generate new insights about the commercial relations among economies and the process of value creation.
The ASEAN framework, and its core goal of establishing the ASEAN Economic Community by 2015, has promoted trade and investment liberalisation which in turn has facilitated participation in regional and global value chains.
OECD analysis shows that participation by ASEAN economies in GVCs has grown across the board. Natural resource rich economies such as Indonesia and Brunei Darussalam are engaged in upstream activities through sales of raw materials, while others such as Singapore are engaged in the sale of high-skill intensive products and services. This diversity suggests there are good opportunities to exploit complementary sectoral specialization patterns through further regional economic integration.
OECD research also shows that even as the share of domestic content of exports has fallen slightly in ASEAN, the value of those exports has grown exponentially over the last decade. This underscores a key lesson from OECD research –openness to imports is critical to competitive exports.
Trade in services drives the exchange of ideas, know-how and technology. It helps firms cut costs, increase productivity and boost competitiveness. OECD analysis shows that access to world class services inputs are also crucial for moving manufacturing up the value chain as well as for boosting growth and jobs in the services sector.
However, international trade in services is often impeded by trade and investment barriers and domestic regulations. The OECD’s Service Trade Restrictions Index (STRI) identifies which policy measures restrict trade. It provides policy makers with information and measurement tools to help governments identify best practice and then focus their domestic reform efforts on priority sectors and measures.
For more information on the Southeast Asia Regional Programme and related work, download the free documents below.