This weekend the ASEAN-EU Business Summit (AEBS) will take place in Kuala Lumpur in parallel to the ASEAN Economic Ministers Meeting. The AEBS, which has been organised annually since 2011, continues to attract many business people from both regions and provides the opportunity for public-private sector dialogue.
Ahead of the AEBS, we take a closer look at EU-ASEAN economic relations. You might be aware that trade and investment flows between the EU and ASEAN have intensified considerably over the past decade, but did you know that:
(1) The EU is ASEAN’s second largest trading partner (after China) accounting for around 19% of ASEAN trade.
(2) ASEAN is the EU’s third largest trade partner outside Europe (after the United States and China) with bilateral trade in goods and services reaching a value of nearly EUR 180 billion in 2014.
(3) The EU has also built a solid investment stock of over EUR 156 billion in the ASEAN region. It accounts for the biggest proportion of total foreign direct investment in ASEAN (almost a quarter).
(4) ASEAN investment in Europe has also been growing steadily and reached a total stock of over EUR 57 billion at the end of 2013.
(5) Despite these impressive figures, there is still significant scope for EU-ASEAN trade relations to grow. ASEAN is about to become a single market with over 600 million consumers and a growing middle class; this offers great investment and export opportunities for European business.
Freeing up trade. The EU has engaged actively with the ASEAN region and increasingly with its individual member states. As stepping stones for a deepening of inter-regional trade between EU and ASEAN, negotiations for bilateral Free-Trade Agreements (FTAs) have been concluded with Singapore and very recently in principle with Vietnam. Other FTAs negotiations have been launched with Malaysia and Thailand while some other ASEAN countries are in the scoping phase.
Beyond trade agreements and financial assistance, the EU will also work with ASEAN to promote smart, sustainable and inclusive growth. This will focus on encouraging a business-friendly environment in other countries, eliminating non-tariff barriers, harmonising standards, strengthening the rule of law and the implementation of international labour standards.
Creating business opportunities for European SMEs in ASEAN countries will involve inter alia improving the regulatory environment, access to finance, intellectual property rights and market access, and developing corporate governance.
Encourage the establishment of the ASEAN Economic Community. In 2012 the EU launched its third programme to sustain the ASEAN Economic Community, set to be achieved by 2016. The new phase of the ASEAN Regional Integration Support (ARISE Plus) programme will play a primary role in spurring sustainable socio-economic growth. The programme aims to support the capacities of the ASEAN Member States in harmonising and implementing policies and regulations in economic sectors so as to contribute to the realisation of the ASEAN Economic Community by facilitating the free movement of goods across ASEAN and help build the ASEAN single market and production base.
EU-ASEAN: partnering in integration and connectivity
Natural connectivity partners. As two regional integration initiatives, the EU and ASEAN regularly share their experiences on how to make integration work. Following the two 2014 ASEAN-EU Policy Dialogues on Connectivity, the EU engaged with the ASEAN Connectivity Coordinating Committee in upholding the Master Plan on Connectivity (MPAC).
Towards an air transport agreement. Air traffic between the EU and ASEAN nearly doubled over the last 15 years to reach more than 10 million passengers and is expected to grow 5% per year over the next 20 years. Recognising the potential for comprehensive aviation cooperation on a region-to-region basis, at the first EU-ASEAN Aviation Summit held in Singapore in 2014, the EU and ASEAN launched consultations on an open air agreement. The ASEAN Air Transport Integration Project (AATIP) aims to establish a single aviation market in the region based on high regulatory standards.
EU-ASEAN: growing cooperation
The EU is a major development partner of ASEAN and a unique donor. Besides the above-mentioned programs, for the period 2014-2020, over €170 million has been earmarked to fund the on-going and post-2015 ASEAN regional integration agenda, with an increase of €100 million compared to the period 2007-13.