ASEAN Economic Community - Kaula Lumpur declaration signed

 ASEAN countries decide to form ASEAN Economic Community to facilitate free flow of goods, capital and skilled labour in region.

ASEAN ECONOMIC COMMUNITY BLUEPRINT


  INTRODUCTION
The ASEAN Leaders at their Summit in Kuala Lumpur in December 1997 decided to

1. transform ASEAN into a stable, prosperous, and highly competitive region with equitable economic development, and reduced poverty and socio-economic disparities (ASEAN Vision 2020).

At the Bali Summit in October 2003, ASEAN Leaders declared that the ASEAN Economic Community (AEC) shall be the goal of regional economic integration (Bali Concord II) by 2020.

In addition to the AEC, the ASEAN Security Community and the ASEAN Socio-Cultural Community are the other two integral pillars of the envisaged ASEAN Community.

All the three pillars are expected to work in tandem in establishing the ASEAN Community in 2020.
Subsequently, the ASEAN Economic Ministers Meeting (AEM) held in August 2006 in Kuala  Lumpur, Malaysia, agreed to develop “a single and coherent blueprint for advancing the AEC by identifying the characteristics and elements of the AEC by 2015 consistent with the Bali Concord II with clear targets and timelines for implementation of various measures as well as pre-agreed flexibilities to accommodate the interests of all ASEAN Member Countries.”

At the 124 ASEAN Summit in January 2007, the Leaders affirmed their strong commitment to accelerate the establishment of an ASEAN Community by 2015 as envisioned in the ASEAN Vision 2020 and the ASEAN Concord II, and signed the Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015.

In particular, the Leaders agreed to hasten the establishment of the ASEAN Economic Community by 2015 and to transform ASEAN into a region with free movement of goods, services, investment, skilled labour, and freer flow of capital.

II. CHARACTERISTICS AND ELEMENTS OF AEC
The AEC is the realisation of the end goal of economic integration as espoused in the 5. Vision 2020, which is based on a convergence of interests of ASEAN Member Countries to deepen and broaden economic integration through existing and new initiatives with clear timelines. In establishing the AEC, ASEAN shall act in accordance to the principles of an open, outward-looking, inclusive, and market-driven economy consistent with multilateral rules as well as adherence to rules-based systems for effective compliance and implementation of economic commitments.

The AEC will establish ASEAN as a single market and production base making ASEAN more 6. dynamic and competitive with new mechanisms and measures to strengthen the implementation of its existing economic initiatives; accelerating regional integration in the priority sectors; facilitating movement of business persons, skilled labour and talents; and strengthening the institutional mechanisms of ASEAN. As a first step towards realising the ASEAN Economic Community, ASEAN has been implementing the recommendations of the High Level Task Force (HLTF) on ASEAN Economic Integration contained in the Bali Concord II.

At the same time, the AEC will address the development divide and accelerate integration of  Cambodia, Lao PDR, Myanmar and Viet Nam (CLMV) through the Initiative for ASEAN Integration
and other regional initiatives. Other areas of cooperation are also to be incorporated such as human resources development and capacity building; recognition of professional qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating industries across the region to promote regional sourcing; and enhancing private sector involvement for the building of the AEC.

Based on the above and taking into consideration the importance of external trade to ASEAN and the need for the ASEAN Community as a whole to remain outward looking, the AEC envisages the following key characteristics:
(a) a single market and production base,
(b) a highly competitive economic region,
(c) a region of equitable economic development,
 and (d) a region fully integrated into the global economy.

These characteristics are inter-related and mutually reinforcing.  Incorporating the required elements of each characteristic in one Blueprint shall ensure the consistency and coherence of these elements as well as their implementation and proper coordination among relevant stakeholders.
 
A. Single Market and Production Base
An ASEAN single market and production base shall comprise five core elements:
(i) free flow of goods;
(ii) free flow of services;
(iii) free flow of investment;
(iv) freer flow of capital; and
(v) free flow of skilled labour. 
In addition, the single market and production base also include two important components,
namely, the priority integration sectors, and food, agriculture and forestry. 

A1.  Free flow of goods
Free flow of goods is one of the principal means by which the aims of a single market and production base can be achieved. A single market for goods (and services) will also facilitate the development of production networks in the region and enhance ASEAN’s capacity to serve as a global production centre or as a part of the global supply chain.
Through ASEAN Free Trade Area (AFTA), ASEAN has achieved significant progress in the removal of tariffs. However, free flow of goods would require not only zero tariffs but the removal of non-tariff barriers as well. In addition, another major component that would facilitate free flow of goods is trade facilitation measures such as integrating customs procedures, establishing the ASEAN Single Window, continuously enhancing the Common Effective Preferential Tariffs (CEPT) Rules of Origin including its Operational Certification Procedures, and harmonising standards and conformance procedures. 
The Common Effective Preferential Tariffs for ASEAN Free Trade Area (CEPT-AFTA) Agreement  will be reviewed and enhanced to become a comprehensive agreement in realising free flow of goods and applicable to ASEAN needs for accelerated economic integration towards 2015.
Elimination of Tariffs
 Tariffs on all intra-ASEAN goods will be eliminated in accordance with the schedules and commitments set out in the CEPT-AFTA Agreement and other relevant Agreements/Protocol

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