ASEAN, Canada look forward to further discussion on FTA

02 Jun '21
4 min read
Pic: Shutterstock
Pic: Shutterstock

The Association of Southeast Asian Nations (ASEAN) and Canada recently reaffirmed their commitment to strengthening cooperation under their new Plan of Action 2021-2025 in areas of mutual interest at the 9th ASEAN-Canada Joint Cooperation Committee (JCC) Meeting via videoconference. Both sides looked forward to further discussion on a possible ASEAN-Canada Free Trade Agreement (FTA).

The proposed FTA is also one of the key deliverables of Brunei Darussalam’s chairmanship of ASEAN this year. The pursuit of such an FTA was initiated three years ago but has so far harvested no results.

The meeting agreed to deepen collaboration in trade and investment; micro, small and medium enterprises (MSMEs) development; public health; innovation including entrepreneurship and start-ups; digital economy; education; gender equality; women, peace and security; and connectivity.

Meanwhile, Cambodia is collecting inputs from stakeholders on a wide spectrum of issues, including environmental concerns, to be incorporated in a draft framework document for negotiations on the ASEAN-Canada FTA. Canada is a major buyer of Cambodian bicycles, as well as apparel and other finished textile products.

Trade between the two countries was worth a total of $800.40 million last year, down by 16.44 per cent compared to 2019, the commerce ministry reported.

Cambodia exported $745.04 million worth of merchandise in 2020, declining by 10.95 per cent, and imported $55.36 million, down by 54.31 per cent.

In August 2016, at the ASEAN Economic Ministers (AEM)-Canada Consultations (Vientiane, Lao PDR), ASEAN and Canada's economic ministers agreed to jointly develop a feasibility study to explore the potential for a Canada-ASEAN FTA.

The in-depth study was jointly conducted by the Global Affairs Canada Office of the Chief Economist and the Economic Research Institute for ASEAN and East Asia (ERIA), on behalf of ASEAN.

The study demonstrated that a comprehensive agreement, one which moves beyond simple tariff elimination and includes services and investment liberalization, a reduction in non-tariff measures (NTMs), and improvements to trade facilitation, is in the best interest of both Canada and ASEAN member states.

The analysis conducted by ASEAN showed that the impact of an FTA, which includes goods liberalisation, a reduction of NTMs and improvements to trade facilitation, would increase ASEAN's GDP by $39.4 billion (1.6 per cent) and Canada's GDP by $5.1 billion (0.3 per cent). Likewise, such an agreement would increase ASEAN's exports to Canada by $3.36 billion (18.7 per cent) and Canadian exports to ASEAN by $3.18 billion (26.5 per cent).

The analysis conducted by Canada showed that such an FTA would increase ASEAN's GDP by $6.01 billion (0.12 per cent) and Canada's by $2.54 billion (0.10 per cent). Furthermore, a potential agreement would increase ASEAN exports to Canada by $4.81 billion (15.5 per cent) and Canadian exports to ASEAN by $2.67 billion (13.3 per cent).

ASEAN countries that are party to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will gain from such an FTA. This would, in part, be as a result of new Canada-ASEAN rules of origin that would permit ASEAN CPTPP countries to build on and strengthen their supply chains with non-CPTPP ASEAN countries, according to the joint feasibility study.

“The [Canadian] Government heard that there are significant opportunities for Canadian agricultural products in the ASEAN market, and that a possible FTA would level the playing field in ASEAN with Canada’s regional competitors, especially Australia (which already enjoys preferential tariff rates through an FTA with ASEAN),” a summary of the public consultations held by the government said.

“Many agriculture stakeholders also suggested that Canada’s long-term goal should be to encourage ASEAN members to join the CPTPP,” it added.

Fibre2Fashion News Desk (DS)

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