Structural Change and Protection: Non-Tariff Measures in ASEAN

Please cite the paper as:
Gemelee Hirang, (2017), Structural Change and Protection: Non-Tariff Measures in ASEAN, World Economics Association (WEA) Conferences, No. 1 2017, Public Law and Economics, 1st June to 30th June, 2017

Abstract

As part of their regional integration measures, the members of the Association of Southeast Asian Nations (ASEAN) entered a commitment to remove non-tariff barriers and harmonize non-tariff measures by 2015. Despite this, non-tariff measures have steadily increased in the region.

This paper examines the non-tariff measure incidence in ASEAN within the context of the structural changes which occurred in the region during the 1990s. The 1990s was a period of tariff liberalization and outward-oriented policies. These marked the transition of these coun- tries from agricultural to increasingly manufacturing countries. The importance of production network-related trade for ASEAN countries makes the rising incidence of non-tariff measures even more noteworthy. On one hand, non-tariff measures can signal the quality of products of processes, thus stimulating demand. On the other hand, non-tariff measures can act as disguised protectionist measures. Are the ASEAN non-tariff measures motivated by a desire to protect industries which are adversely affected by recent structural changes? Or are these non- tariff measures promoting and enhancing these countries’ participation in production networks?

Using a qualitative approach, this paper examines the trends in the imposition of non- tariff measures vis-a`-vis the characteristics of the ASEAN Members. The trends in this region provide evidence for both scenarios. That the rising incidence of non-tariff measures coincided with increased participation in production networks supports the argument that these measures promote trade by signaling quality. However, the incidence of non-tariff measures in declining industries suggest that protectionist motives may be at play. These results imply that the idea that non-tariff measures need to be harmonized and even eliminated to promote trade needs to be reexamined.

6 comment

  • Maria Alejandra Madi says:

    Your interesting paper really contributes to the discussion on the current trends in global and regional trade by the imposition of nontariff
    measures vis-`a-vis the characteristics of the ASEAN Members.

    I would like you to further analyse some of your conclusions by answering the questions below

    1. How non-tariff measures could be harmonized to avoid the challenges you described?

    2. Which could be the effects of the elimination of NTM on the regional networks in Asia?

    3. Which could be the effects of Trump’s protectionist decisions on the future of the NTMs among the ASEAN members?

    • Gemelee Hirang says:

      Thank you for your comments.

      1) Given the differences in legal systems and economic levels, the feasible way would be for the countries to conform to international standards and best practices. But each country should, at the outset, evaluate whether their NTMs are trade creating or not.
      2) At this point, it’s not easy to predict. If the NTMs were performing a legitimate function, such as signalling, the blanket removal would actually hurt trade.
      3) After the 2007 financial crisis, when trade to the US declined, the intra-ASEAN trade increased. The same could happen now. In addition, ASEAN members have trade negotiations and agreements with other Asian countries (China, Japan, Korea). Protectionist policies from the US may lead to more NTMs which function to foster intra-industry and intra-regional trade.

  • Mary Catherine Lucey says:

    I enjoyed reading your paper which I found well structured. I appreciate that it is not written from a legal perspective but think that you might find the forthcoming publication of interest.
    Its title is “The Regionalisation of Competition Law and Policy in ASEAN” edited by Burton Ong, published by Cambridge University Press it contains chapters written by leading US (eg Prof Eleanor Fox) and EU academics ( Alison Jones, Josef Drexl, Barry Rodgers) and several top authors from various ASEAN jurisdictions

  • Joé Rieff says:

    Dear Gemeel,

    First of all I have to point out that your paper is well structured and well researched. It is written in a reader-friendly way. However, I have some suggestions on the content, which may be helpful.

    A first, minor observation, is about section 2, end of page 4. Here you mention capture by interest groups. I think this argument may apply to both, the legislators (politicians) and to the executive (administrators). Similarly, the principal-agent argumentation does also apply to both, however you only mention administrators. One can also argue that elected legislators are the agents of the voters and thus the argument you make in the beginning of page 5 applies also to these. Terry M Moe has published on these relations, you might be interested in some of his work. I think that a stronger focus on the interest group theory might be beneficial, given your analysis towards the end of section 3, where you mostly refer to interest groups as an explanation for suboptimal regulation.

    When reading the introduction of the paper, I was wondering, whether there is not more (scientific) literature on this specific topic with regard to ASEAN countries, which you could use to support your research question?

    After section 2, you start with the analysis of the specific regulation within the ASEAN countries. Until the last third of section 3, the theory review of section 2 plays almost no role. Maybe you could link section and 3 slightly better. Furthermore a stronger focus on those regulations which can be assumed to be influenced by capture and interest groups would be beneficial for the paper, in order to make it more precise and up to the point.

    In section 3, around page 5, you mention interest groups in the respective countries. Is there no (anecdotal) evidence of their influence (from any source) in order to support this arguments. Additionally, could you give example of existing interest groups, in order to provide for some illustration?

    I hope, that some of this comments are useful for you.

    Best wishes,
    Joé

    • Gemelee Hirang says:

      Dear Joe,

      Thank you for taking the time to read and comment. I will try to address them below:

      1) I agree that capture applies to both legislators and administrators. I focused on administrators simply because most of the NTMs were issued by administrative agencies. But I agree with you that it will be useful to have a more complete discussion of this topic. \

      2) There isn’t a lot of literature on NTMs in ASEAN countries primarily due to lack of data. An ASEAN database on NTMs was released by the UNCTAD only last year. I’ve seen a few papers, but these didn’t look at all the Member Countries.

      3) Thank you for these suggestions. These are very helpful, especially as this is still a work in progress.

      4) I apologize for this oversight. The draft which I submitted for this conference was significantly shortened, in order to comply with the conference guidelines. I do have some anecdotal and historical evidence of interest groups in some of the countries which I removed due to space constraints. I realize that I should have retained these parts for clarity.

      Again, thank you for the comments.

      Best,
      Gem

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