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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 percent of GDP in Asean countries.
Asean exports of commercial services to the world market have grown steadily from US$57.4 billion in 1998 to US$153.2 billion in 2007. Of relatively similar trend and magnitude, Asean imports of commercial services from the world market grew steadily from US$66.5 billion in 1998 to around US$176.3 billion in 2007.
Asean initiatives in trade in services
Recognising the growing importance of trade in services, Asean countries officially launched their joint effort to work towards the free flow of trade in services within the region through the signing of Asean Framework Agreement on Services (AFAS) on December 15, 1995 by Asean Economic Ministers (AEM) during the 5th Asean Summit in Bangkok, Thailand.
AFAS is aimed at substantially eliminating restrictions to 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 September 2, 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 embarked 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 AEM. Following the decision of AEM at their informal meeting held on June 28, 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 7 packages of commitments under the AFAS signed by the AEM through 5 rounds of negotiations since January 1, 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 three additional packages of commitments in financial services signed by the Asean finance ministers (the second, third, and fourth Packages 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 Asean leaders at the 13th Asean Summit on November 20, 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 the Asean region.
At present, Asean has concluded seven MRAs:
• MRA on Engineering Services signed on December 9, 2005 in Kuala Lumpur, Malaysia;
• MRA on Nursing Services signed on December 8, 2006 in Cebu, the Philippines;
• MRA on Architectural Services and Framework Arrangement for the Mutual Recognition of Surveying Qualifications both signed on November 19, 2006 in Singapore.
• MRA on Medical Practitioners, MRA on Dental Practitioners, and MRA Framework on Accountancy Services all signed on February 26, 2009 in Cha-am, Thailand.
vientiane times
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