ASEAN Charter, MRA, and IMP3: A Linkage for Regional Cooperation

1. An Outreach Programme to members of the IEM & ACEM on:- The ASEAN Charter, MRA and IMP3 – a linkage By: Engr. Rocky H.T. Wong, P.Eng., FIEM, Hon FAFEO, The Chairman, the IEM pro-ETI Bureau, Past Chairman, ACEM., The Head Commissioner – AER Commission RWHT/IEMACEM/AC/MRA/IMP3/Rev (3) 070708

2. 1.0 ASEAN is for PEACE (a post “Confrontation” desire against the backdrop of an on-going Vietnam conflict) – founded in 1967 (in Bangkok) by:- • Indonesia; • Malaysia; • Philippines; • Singapore; and • Thailand.

3. 2.0 Brunei became a member of the “ASEAN Six” after her independence in the early ‘80’s and the CLMV countries then round up the present ASEAN making it a 10 member state regional grouping of South East Asia. • 3.0 The Treaty of Rome in the ‘50’s resulted in the creation of the EU with the principle aim – PEACE (after the horrors of WWII). • 4.0 On an universal basis, the UN formed in 1945 (replaced the ineffective post-WWI League of Nations) was to be a global institution for all nations of the world to avoid wars and conflicts to attain PEACE.

4. 5.0 Since PEACE is paramount, the progression in ASEAN over the more than 40 years of existence; besides political and social measures and initiatives, there have also been economic cooperation which were formalized (at the early 1990’s ASEAN Summit in Singapore) by the creation of the ASEAN Free Trade Area (AFTA) underpinned by the Common Effective Preferential Tariff, i.e. CEPT Agreement – for trade in goods; to be realized by 2000, since achieved for the ASEAN Six.

5. 6.0 Of course in 1992/93 – there was no WTO yet – which only came into being on January 1st 1995; after the successful conclusion of 8 years of the GATT Uruguay Round at the end of 1994. • 7.0 WTO deals with liberalization of both trade in goods (GATT–1994) and trade in services – covered by the General Agreement on Trade in Services (GATS). • 8.0 WTO further deals with trade related intellectual properties (TRIPS), investment, trade facilitation, public procurement, trade and the environment, and also includes the agreement on Technical Barriers to Trade (the TBT Agreement), peer-group governance and disputes resolution mechanisms, etc., etc..

6. 9.0 Through the WTO agreements which spell out their rights and obligations, Member countries operate a non-discriminatory trading system that would result in world trade to grow – with the goal to help producers of goods and services, exporters and importers, conduct their business in a manner that ensures predictability and stability. • 10.0 The WTO is also a forum for continuous negotiations to create a more transparent, predictable, fair and liberal global trading environment – with negotiations aim at progressively removing barriers to trade in order to create better market access opportunities for its Member countries.

7. 11.0 WTO rules are evolving through periodical review of existing rules, and negotiations on new rules; and the on going round of negotiations – the Doha Development Agenda (DDA) Round started in 2001 but with no end-date in sight! • 11.1 WTO rules form the template for a Free Trade Agreement (FTA), and a FTA provides assurance of continued Market Access (MA) and non discriminatory treatment or National Treatment (NT) as well as high standard protections for investors. Such provisions encourage the creation of an open and stable policy environment. A bi-lateral FTA with measures which result in preferential trading arrangement is more likely styled a “Closer Economic Cooperation Agreement”, i.e. CECA – but will still be colloquially referred to as a FTA.

8. 12.0 Based on a GATS template, ASEAN soon included trade in services as a part of its economic agenda; and the ASEAN Framework Agreement on Services (AFAS) was developed by SEOM and signed by the AEM in 1995, on the side-line of the 5th ASEAN Summit in Bangkok, Thailand. • 12.1 The Objectives of AFAS are:- • Enhance Cooperation in Services amongst the ASEAN countries to improve efficiency and competitiveness, diversify production capacity within and outside the ASEAN region. • Eliminate restrictions to trade in services among the ASEAN countries • Liberalize trade in services by expanding the depth and scope of liberalization beyond that undertaken by the ASEAN countries under the GATS, with the aim of achieving a free trade area in services.

9. 13.0 AFAS is being operationalized by the Coordinating Committee on Services (CCS) which in turn has WG’s and EG’s to work out MRA’s for the various services (e.g. engineering, architectural, surveying, nursing etc..) and to establish related Coordinating Committees (made up of sectoral/discipline specific national regulators) to implement the respective MRA’s by operationalising, for example the ACPECC to implement the ASEAN MRA on Engineering Services (which came into being on 9 December, 2005 at the side-line of the ASEAN Summit held in Kuala Lumpur).

10. 14.0 Whilst AFAS is operationalized by the CCS and its WG’s and CC’s; trade in goods for AFTA (underpinned by CEPT) and in accordance to the TBT Agreement principles is operationalized by the ACCSQ and its various WG’s and sectoral JSC.For example, the EEMRA (which is IEC Standards centric) by the (ACCSQ) EEE JSC. • 14.1 The MRA’s (for services) concluded and signed (to date) are:- • MRA on Engineering Services; and • MRA on Nursing Services. • Other sub-sectors currently in various stages of negotiations include:- • Architecture, • Accountancy, • Surveying, • Medical, • Tourism • Additional possible MRA’s in other sub-sectors are also under • consideration and construction.

11. 15.0 A study of the ASEAN MRA on Engineering Services (signed pre-ASEAN Charter) makes references to Bali Concord II and the GATS plus template. 16.0 Bali Concord II calls for the establishment of the ASEAN Economic Community (AEC) by way of ASEAN Economic Integration (AEI) – with the AEC being modeled after an EU type common market and borderless production base to be realized by 2015. 17.0 To tidy up the bits and pieces over the 40 odd years of economic cooperation among ASEAN Member-States, the ASEAN Summit held in November last year in Singapore agreed upon and signed the ASEAN Charter on 20 November, 2007.

12. 17.1 ASEAN Charter • The ASEAN Charter is a landmark constitutional document embodying fundamental principles, goals, objectives and structures of ASEAN Cooperation. • It serves as a legal and institutional framework of ASEAN to support the realization of ASEAN’s goals and objectives. • It codifys all ASEAN views, rules and values, and reaffirm that ASEAN agreements signed and other instruments adopted before the establishment of the ASEAN Charter continue to and be legally binding where appropriate.

13. 17.1 ASEAN Charter(contd.) • The ASEAN Charter also reaffirms principles, goals and ideals contained in ASEAN’s milestone agreements and confers a legal personality to ASEAN and determines the functions, develop areas of competence of key ASEAN bodies and their relationship with one another in the overall ASEAN structure.

14. 18.0 The ASEAN Charter reaffirms the end goal of ASEAN Vision 2020 to establish an ASEAN Community based on three pillars :- • ASEAN Security Community • ASEAN Economic Community (AEC) • ASEAN Socio-Cultural Community • 19.0 Therefore, by the ASEAN Charter, the ASEAN Community will, from now on, be a rules based organizations, with:- • Political and Security Community Council; • Economic Community Council; and • Socio-Cultural Community Council.

15. 20.0 The ASEAN Charter has established a strong and structured disputes settlement mechanism. • 21.0 The ASEAN Charter caters for permanent representatives from Member-States at the ASEAN Secretariat in Jakarta.

16. 22.0 The significant events to note and comprehend concerning AEI are:- • AEC Blueprint • AEC Scorecard • ASEAN Trade Facilitation Work Programme • ASEAN Trade in Goods Agreement • ASEAN Charter • 23.0 The AEC Blueprint covers 4 main objectives, viz:- • Single Market and Production Base; • Highly competitive Economic Region; • Region of equitable economic development; and • Region fully integrated into the global economy

17. 23.1The AEC Blueprint would also include a brief assessment of where ASEAN is now with self existing integration initiatives through a reporting system to monitor progress, track non-progressand highlight implementation gaps. • => The AEC Scorecard:- A mechanism to track non-compliance and non- implementation of initiatives.

18. 24.0 Single Market and Production Base has five core elements, which are for:- • Free flow of goods; • Free flow of services; • Free flow of investment; • Freer flow of capital; and • Freer flow of professionals, para-professionals, skilled workers and talents.

19. 25.0 Highly competitive Economic Region – meaning enhanced cooperation, among other issues, in new areas such as:- • Competition policy; • Consumer protection; • Intellectual property rights; • Infrastructure development; and • Taxation and e-commerce. • 26.0 Region of equitable economic development – the policy of “prosper thy neighbour” – to ensure peace and security. Inclusive rather than Exclusive, in-spite of the 10-X principle.

20. 27.0 Region fully integrated into the global economy – ASEAN should matter in the globalized, borderless and flattened market of the 21st century dealing with k-economy. An economically integrated AEC can be a regional power-house, able to compete with the rest of the world. Otherwise, we could vegetate! • 28.0 Progress in services liberalization in ASEAN covered by the AFAS, since 1995:- • 4 rounds of services liberalization negotiations have been completed, the 5th round is on-going and to be completed by end 2008.

21. 29.0 Services liberalization will be for the following 4 modes of supply of services:- • Mode 1 – Mobility of supply; • Mode 2 – Mobility of consumption; • Mode 3 – Mobility of capital – or mobility of legal-persons (for Commercial Presence); • Mode 4 – Mobility of natural persons (Professionals, para-professionals, skilled workers and talents). • 30.0 Sectoral coverage – based on the 128 sectors/sub- sectors identified in the ASEAN Universal List which is based on the WTO/120 Document.

22. 31.0 By 2015 all ASEAN Member-States would have made offers in all the 128 sectors/sub-sectors with None in the “offers” for Modes 1 and 2. • 32.0 For Mode 3, the following targets have been set:- • Priority Sectors

23. 33.0 For Mode 3, offers come under Market Access Limitations as defined by Article XVI of GATS, and also being dealt with under National Treatment Limitations as defined by Article XVII, also of GATS. • 34.0 Mode 4 for Engineering Services (e.g. CPC 8672 and CPC 8673) or other services which are qualification, certification and standards based are to be dealt with by MRA’s.

24. 35.0 Having had an over-view of AFTA and AEC driven by the AEI agenda, and now the all important ASEAN Charter for an EU type common market and borderless production base by 2015 – we must begin to appreciate how the ASEAN MRA on Engineering Services or other MRA’s based on TBT Agreement pronciples, such as the ASEAN EEMRA can become a true ASEAN instrument for trade facilitation of the ETI industry. • 35.1 Recognizing the importance of MRA’s which have a bearing on Technical Regulations and/or Domestic Regulations which are standards based, ETI stake-holders must adopt a new mind set. Standards development is no more a question of academic exercise, but an important foundation for products/services specific technical regulations which form the relevant technical benchmarks for exported and imported goods, merchandise and services . What is equally important besides standards development is the issue of product testing and certification.

25. 36.0 MRA’s are meant to facilitate freer or preferential trade; and for the AEC now being propelled by the ASEAN Charter, there shall by “None” to the limitations for all the 4 modes of supply for Trade in Services – at least with close to zero limitations – as we have for the Trade in Goods (under the CEPT for AFTA) wherein 95% of goods attract 0 to 5% import duties. • 37.0 ASEAN is for PEACE and has adopted a “Prosper thy neighbour” approach; therefore this should translate to having MRA’s that operate on “inclusive” rather than “exclusive” basis.

26. 38.0 Question: How can we, the ASEAN ETI stake- holders promote the inclusive approach among the perceived “different standards” for accreditation or recognition for gratification to supply of services – especially professional services such as engineering services? • 38.1 Before proceeding further, let’s step-back a bit to appreciate the objectives of AFAS; one of which is: “to eliminate substantially restrictions to trade in services amongst ASEAN Member States….with the aim to realizing free trade in services”. This provides for ASEAN Member States to recognize the education or experience obtained, requirements met, and license or certification granted in other ASEAN Member States for the purpose of licensing or certification of services suppliers/providers.

27. 39.0 A study of the ASEAN MRA on Engineering Services tells us that a RFPE (who is an ASEAN guest ACPE) cannot work in independent practice – but must work in collaboration with a domestic Professional Engineer (however the engineer is accredited or recognized – a point of national sovereignty). There is no MRA compulsion for these ASEAN partnering to be of the “same” standing in terms of qualifications and standards for experience. So what is the fuss about higher and lower standards among the various communities of engineers in the ten (10) ASEAN Member-States?

28. 40.0 To ensure “inclusiveness”, why don’t we consider the following:- • Develop the ASEAN/Asian Accord for engineering education (targeting the WA as the desired end-goal bench-mark), but with the absence of a “Go/No Go” drop-dead, all or nothing criteria; replaced by a step-by-step progression of incremental outcomes to achieving the end-goal. A true and functioning engineering team will consist of experts, professionals (who are WA engineers), para-professionals (e.g. engineering technologists bench-marked to SA) and technicians (to DA); and • Developed or mature PRA’s (MC’s) to cooperate with twinned counterparts to up-lift and to up-scale standards for accreditation or recognition for the engineering team.

29. 41.0 The ASEAN MRA on Engineering Services is supposed to support trade facilitation towards the realization of the AEC by the AEI agenda. Therefore, this first generation (i.e. 1st G) MRA should be implemented without further delay by operationalising the ACPECC, have the operational processes tested and in due course the MRA modified and expanded in scope to cover all engineering services which shall include; besides CPC 8672 for Engineering Services (which is equated to consulting engineering services only) CPC 8673 - for Integrated Engineering Services.

30. 41.1 One example of an MRA for CPC8673, is the aspiration and position of the ASEAN Federation of Electrical Engineering Contractors (AFEEC) which has since more than 3 years ago, called on the AEM/SEOM/CCS to construct the E2WMRA i.e. the Electrical Engineering Works MRA to cater for the qualified and competent engineering team consisting of licensed professional electrical engineers, certified and licensed para-professionals and skilled workers, who are expected to deliver safe electrical installations and facilities, comprising installation and testing; and operation and maintenance, including modifications and realignment of circuits to accommodate changes in technology and functions.

31. 42.0 To have a seamless functioning AEC, as envisaged by the ASEAN Charter, the regulatory regimes of all the 10 ASEAN Member-States governing the delivery systems of ALL and the total of engineering services (for both CPC 8672 and CPC 8673) should be aligned and harmonized. It is possible as the domestic regulations are standards based; and a start has been made by the EEE Agreement signed in November, 2005 (supplementing the ASEAN EEMRA) where all the 10 ASEAN Member-States are now in the process of amending their respective electrical safety regulatory regimes (which are IEC Standards centric) to conform to an agreed format based on Essential Requirements addressing safety, health and environmental issues. This can lead to developing (eventually) a set of ASEAN Standards or ASEAN Standards based directives. After all, we already have in place international standards to guide us.

32. 43.0 For the first time the Government’s industrial master plan, the IMP3, places much importance on ‘Services” which is expected to be the second engine for growth in the Plan’s period (of 2006 to 2020) – targeting some 60% of the GDP by 2020. • 44.0 IMP3 has set out many initiatives, among which are the creation of the MSDC and the MLC – one council dealing with services (i.e MSDC) and the other focusing on logistics (i.e. MLC).

33. 45.0 As the Government has made a success of our export in goods (as encouraged by the earlier IMP 1 and 2) MITI has organized both MATRADE and MIDA to embark on similar success – roadmaps for “Services”. MIDA is encouraging FDI’s in services so that Malaysia can tap into the international supply loop, and MATRADE, among other measures, organize MSE’s overseas.

34. 46.0 Liberalization in Trade in Goods is undertaken through reduction in tariff and disbandment of NTB’s (i.e. standards based); however, corresponding liberalization in Trade in Services involves realignment of domestic regulations (which have bearing on the 4 modes of supply as stated in Para 29.0 above), especially in the direction of international best-practice benchmarks for accreditation or recognition for gratification to supply of services.

35. 47.0 As stake-holders, we must identify regulations that impede the export of services; identify issues that impede the growth and development of related services sectors/sub-sectors; identify incentives that could assist the industry to become more competitive; undertake M&A to strengthen the industry; pursue MRA’s with trading countries (e.g. ASEAN and FTA partner-countries); help domestic capacity – building efforts, and identify niche; and last but not least, seek opportunities overseas through foreign (especially ASEAN) partnership, and take part in MSE’s.

36. 48.0 On the issue of domestic regulations, the WTO has a draft on the table, which is the draft text on disciplines for domestic regulations which deal with:- • Scope of application; • Transparency; • Licensing requirements and procedures; • Qualification requirements and procedures; and • Technical standards.

37. 49.0 It is the belief at the WTO that disciplines for domestic regulations are needed to ensure that domestic regulations do not constitute unnecessary barriers to trade. • 50.0 The writings are on the wall – we have to rise to the occasion; beginning with ASEAN; the AEC by the AEI agenda (target 2015), and the importance of the ASEAN Charter, the ASEAN MRA on Engineering Services and our own IMP3.

38. 51.0 INDEX OF ACRONYM • (not otherwise defined in the paper) • ACCSQ = ASEAN Coordinating Committee on Standards Quality • ACPECC = ASEAN Chartered Professional Engineer Coordinating Committee • AEM = ASEAN Economic Ministers’ (Meeting) • ASEAN = Association of South East Asian Nations • CLMV = Cambodia, Laos, Myanmar & Vietnam • CPC = (UN) Centralised Product Code • DA = Dublin Accord • EE = Electrical & Electronic • EEE = Electrical & Electronic Equipment • EG = Experts Group

39. 51.0 INDEX OF ACRONYM • (not otherwise defined in the paper) (contd.) • ETI = Engineering, Technology & Innovation • GATT = General Agreement in Trade & Tariff • IMP = Industrial Master Plan • JSC = Joint Sectorial Committee • WG = Working Group • M&A = Merger & Acquisition • MC = Monitoring Committee • MLC = Malaysian Logistic Council • MRA = Mutual Recognition Arrangement/Agreement • MSDC = Malaysian Services Development Council • MSE = Malaysian Services Exhibition • N.T.B = Non Technical Barriers (to trade)

40. 51.0 INDEX OF ACRONYM • (not otherwise defined in the paper) (contd.) • PRA = Professional Regulatory Authority • RFPE = Registered Foreign Professional Engineer • SA = Sydney Accord • SEOM = Senior Economic Officers Meeting • S.E.T = Science, Engineering & Technology • WA = Washington Accord • WWII = World War Two

41. 52.0P.S:- H.E. Dr. Surin Pitsuwan (Thailand) took over office from Ambassador Ong Keng Yong (Singapore) as the Secretary General of ASEAN for the period 2008 to 2012. Thank you.