ASEAN Economic Integration
and Trade-Related Assistance
Kiichiro Fukasaku
OECD Development Centre
Thailand-OECD Seminar on Aid for Trade: Meeting New
Challenges, Bangkok, 24 September 2007
2
Key Messages
1.
The greater integration of CLMV countries into the
regional and global markets is an important process for
narrowing the development gap with ASEAN-6.
2.
For CLMV to reap the full benefits of integration, it is
important to strengthen the private sector’s production
capacity.
3.
“Aid for trade” can complement CLMV’s own efforts to
address supply-side constraints and strengthen policy
formulation and implementation capacities.
4.
Monitoring and evaluation can help support various
initiatives undertaken at both bilateral and regional
levels and improve their effectiveness.
3
Managing the integration of CLMV into the
regional and global markets poses
a major challenge...
• Realising expected benefits:
– Better access to markets, FDI and knowledge
– Gains from more efficient resource allocation and
larger economies of scale
– Greater incentives to sustain domestic reform
• Addressing concerns over:
– Adjustment of domestic firms to greater competition
(weak supply response, limited diversification)
– Economies in transition (non-competitive SOE sector,
structural unemployment, social safety nets)
– Impact on government revenues
4
…because the development gap remains
large between ASEAN-6 and CLMV…
• The aggregated population of CLMV
corresponded to almost 40 % of ASEAN-6 in
2006, but their trade share amounted to only 7
% in the same year.
• Per-capita incomes in CLMV are much lower
than most of ASEAN-6; for instance, the percapita income in Vietnam was still roughly a
fourth of Thailand’s at the 2005 exchange rate
and nearly 40% in PPP terms.
5
The need to narrow the development
gap has been increasingly recognised…
• ASEAN Vision 2020 (1997)
– the ASEAN Economic Community (AEC) to be
realised by 2020 (brought forward to 2015) with
free trade in goods and services, free flow of skilled
labour and freer flow of capital
– ASEAN implemented AFTA in 1992, AFAS in 1995
and AIA in 1998, with longer time frames for
fulfilling obligations granted to CLMV
6
ASEAN’s own efforts to narrow the
development gap have recently
attracted more political attention…
• The launch of the Initiative for ASEAN
Integration (IAI, 2000)
• The Hanoi Declaration on Narrowing the
Development Gap for Closer ASEAN
Integration (2001)
7
ASEAN’s own efforts are also
supported by donors…
• The IAI Work Plan was approved in 2002 for the
six-year period of July 2002 – June 2008, with
focus on 4 priority areas, namely,
– Infrastructure development (transport and energy);
– Human resource development (public sector capacity
building, labour & employment and higher education);
– Information and communications technology; and
– Promoting regional economic integration (trade in
goods and services, customs, standards and
investment) in CLMV countries
• In addition to ASEAN-6, 11 donor countries and
agencies have also supported IAI Work Plan
projects by providing financial assistance.
8
ASEAN has further strengthened
its own efforts…
•
Declaration of ASEAN Concord II (2003)
– “Deepening and broadening the integration of
ASEAN states shall be accompanied by technical and
development co-operation in order to address the
development divide …”
– The Vientiane Action Programme (VAP, 2004-2010)
– The IAI Work Plan has been broadened under the
VAP to include the poorer sub-regions in ASEAN-6.
9
Other measures includes…
• The ASEAN Integrated System of Preferences
(ASIP, 2005)
– Preferential market access targeted for exports
originating from CLMV and provided by ASEAN-6 on
voluntary and bilateral basis
• Mekong Basin Development
– ASEAN Mekong Basin Development Cooperation
(AMBDC, 1995)
– ADB Greater Mekong Sub-region (ADB-GMS, 1992)
10
In a nutshell, trade-related
development assistance is critical for
• Promoting ASEAN economic community
building
• Supporting CLMV’s own efforts to reap
the full benefits of integration
11
“Aid for Trade” Objectives
• Make trade more effective for development
• Help build supply-side capacity and traderelated infrastructure
• Help facilitate, implement and adjust to trade
reform and liberalisation
• Assist regional integration
• Assist smooth integration into the world trading
system; and
• Assist in implementation of trade agreements
Source: WTO Aid for Trade Task Force Recommendations (WT/AFT/1, 27/07/2006)
12
Aid for Trade as defined by
the WTO Task Force
Trade Policy Regulations
Trade Development
Trade-Related Infrastructure
Building Productive Capacity
Trade-Related Adjustment
Other Trade-Related needs
As defined by the
WTO/OECD Joint Database
If explicitly identified as
trade-related priorities in the
recipient country’s national
development strategies
13
Three broad AfT categories
1. Trade policy and regulations (TPR)
2. Building productive capacity (BPC)
(including trade development for non-DAC reporting
countries and agencies)
3. Trade-related infrastructure (TRI)
(energy, transport and telecom)
14
ODA and Aid for Trade Commitments
140
120
120
100
98
98
18
20
24
2002
2003
2004
ODA
Aid for Trade
81
80
60
40
20
22
0
Source: OECD/DAC CRS database; WTO/OECD database
Note: USD billion in 2004 constant prices
2005
15
Global Aid-for-Trade Commitments
by Category
11,247
12,000
10,000
8,928
8,000
6,000
4,000
2,000
804
0
Trade policy and
regulations
Building productive
capacity
Source: OECD/DAC CRS database; WTO/OECD database
Note: USD million in 2002-2005 average, constant 2004 prices
Trade-related
infrastructure
16
ODA and AfT Projections to 2010
140
USD billion (2004 constant)
DAC Members' net ODA 2001-05 and DAC Secretariat
simulations of net ODA, 2006-2010
120
100
140
120
Total ODA
100
80
80
Doubling 2005 volume
60
60
40
40
‘Aid for Trade’
20
20
Stable relative shares
0
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
17
ODA and AfT to Southeast Asia
cum.2002-2005, USD million (commitments) in constant 2004 prices
14000
12000
10000
8000
6000
4000
2000
0
CA
IN
LA
Total ODA
MY
PH
Total AfT
TH
VN
18
AfT to Southeast Asia
annual ave. 2002-2005, USD million (commit) in constant 2004 prices
3471
3500
3000
2458
2500
2000
1500
954
1000
59
500
0
ASEAN (7)
Total AfT
TPR
BPC
TRI
19
AfT to Southeast Asia* by Donors
annual ave. 2002-2005, USD million (commit) in constant 2004 prices
Total
AfT
Bilateral
Multilateral
TPR
BPC
TRI
Japan
2157
4
267
1886
Germany
160
0
66
94
France
99
3
72
25
IDA
509
17
170
322
ADB
271
9
176
85
* ASEAN (7)
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Requirements for Effective
Monitoring
• Develop PRSP, DTIS and government strategies
• Set up a medium-term budget framework

budget allocation to each sector
• Sectoral allocation of aid

Identify gaps and duplications
• Performance evaluation according to Paris
Declaration on Aid Effectiveness
21
WTO Process of Global Monitoring
at Three Levels
• Global data on financial commitments
and disbursements
- Analysis of global trends
- Comparable data across time and countries
• Donors’ self-assessments
- Tracking fulfillment of pledges
- Finer detail on Aid for Trade coverage
• In-country assessments
- Connecting measurement to national strategies
22
CLMV can also offer useful lessons…
• Three of CLMV are signatories of the Paris
Declaration on Aid Effectiveness
– Cambodia and Vietnam have taken part in the 1st
Baseline Survey on Monitoring the Paris Declaration
– Laos has yet to join the survey, but it has established with
22 donors the Vientiane Declaration on Aid Effectiveness
(2006)
• CLMV experience with multi-donor assistance
(e.g.)
– The Integrated Framework in Cambodia (> Laos)
– The Mekong Private Sector Development Facility
(MPDF)
23
Concluding Remarks
• Mainstreaming trade into support to
infrastructure and productive sectors is
key
• Ensuring the neutrality of Aid for Trade
• More co-ordination and specialisation
among donors needed
24
Concluding Remarks (cont)
• To make regional reviews work, it is
necessary to…
- develop aid tracking schemes from
commitments to disbursements
- engage major non-traditional donors
- ensure participation of private-sector
stakeholders
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Thank you!