What Scope for an EU—ASEAN Free Trade Agreement?

Abstract

The starting point of this article is that a free trade agreement will, sooner or later, be negotiated between ASEAN and the EU. As a result, the objective of the article is not to examine the rationale for such an agreement but to outline its possible scope. Because the content of a potential agreement depends very much on the nature of the relationship between the two partners, the first section of the article examines briefly their characteristics. It highlights substantial disparities between the two partners (primarily in terms of economic size and internal homogeneity) and a strong asymmetry in their trade and investment relations. The section also shows that the greatest divergence in trade restrictiveness between the two regions arises in the service sector and through non-tariff barriers. Finally, past trade tensions further substantiate the hypothesis of large disparities in the two regions’ competition policies and IPR protection. After taking stock of existing free trade agreements (FTAs) negotiated on both sides, the second section concludes that a potential EU–ASEAN FTA can be expected to be quite broad, encompassing both goods and service liberalization as well as trade-related issues such as competition policy or IPR protection. Despite this relatively high level of ambition, realism must also prevail and the depth of the commitments can be expected to remain modest in a number of areas. Moreover, because of the differentiated levels of development and of regulatory capacity among the countries of the partnership, realism calls for some differentiation in the level of commitments, as well as in the timelines imposed on the various partners (within the limits provided by the World Trade Organization (WTO)). Finally provisions on technical assistance and trade-related capacity building should be an integral part of the future ASEAN–EU partnership agreement.