EU Enlargement and the Doha Development Agenda
Dr Willem van der Geest

A paper presented at the European Union-Japan Conference, on  25 November 2003, by Dr Willem van der Geest, Director, EIAS.

In the aftermath of the stalled launch of a new WTO round of global trade talks (December 1999), Singapore and Japan initiated a joint study into the feasibility and desirability of a possible bilateral Free Trade Agreement. The subsequent negotiations led to a 'New-Age Economic Partnership Agreement' signed in January 2002, reducing barriers in trade and investment in goods as well as services, technical standards and public procurement. New initiatives for economic cooperation in, inter alia, human resource development, science and technology and SMEs were agreed. During 2000 talks had also began between Singapore and the United States and these are resulting in a bilateral Free Trade Agreement (FTA). Responding to these developments, several other ASEAN countries initiated negotiations towards bilateral FTAs with other major players, most notably Thailand (with India) as well as Malaysia (with Japan and others). Moreover, China stated its intention to enter into a Free Trade Agreement with the ASEAN by 2012.  It is against this background of deepening of trade and investment links between the several ASEAN Member States (Singapore, Malaysia, Thailand) and several major players that the question of a possible EU-ASEAN FTA is investigated. The stalling of the multi-lateral trade talks in Cancun in September 2003, implying that the Doha Development Agenda process will not be able to reach agreement within the time-frame set, also provides a new argument for assessing the scope for an inter-regional free trade agreement between EU and ASEAN. 

This lecture note addresses the possible opportunities and risks to the European Union of entering into negotiations with ASEAN Member States with a view to realising a bilateral EU-Singapore FTA. It assesses the pre-feasibility of such a course of action, while noting a number of questions which deserve further policy discussion as well as economic and statistical analysis. At this stage a simple 'for or against' evaluation will be premature, in view of the multitude of scenarios at both the bilateral and multilateral levels.

The ASEAN's trade policy regime is opening up and the gains of further tariff elimination will be modest, because most ASEAN countries already apply low , while those of the EU on import from ASEAN are low as well - eg for Singapore the tariff rate is merely 1.04 per cent (trade weighted). Nevertheless, a further reduction could benefit both EU and ASEAN  because a significant share of imports is intra-firm trade, with EU firms operating from ASEAN as a production platform for the EU markets.

Therefore for an EU-ASEAN FTA to be worthwhile, it must generate benefits on issues relating to non-tariff barriers to trade, e.g. technical standards, SPS and mutual recognition of testing. Further significant benefits to both the EU and Singapore may be realised by tackling the issue of further liberalisation of international trade in services (e.g. banking and insurance licences, air and sea transport). Finally, reducing restrictions on foreign direct investment in selected service sectors is bound to enhance investment flows from the EU to ASEAN.


Download the Full Presentation (pdf)