EU-ASEAN talks buoy hopes of a real estate turnaround

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EU building bridges, not walls, with ASEAN

ASEAN flag waving on the wind. Image: Jiri Flogel/Shutterstock

The European Union (EU) and the Association of Southeast Asian Nations (ASEAN) are alike in many ways. In the end, they could not be more different in terms of wealth and standards, and it is this disparity that stalled talks of a free trade agreement (FTA) between the regions eight years ago.

Now discussion is back on the table. Economic ministers from the 10-nation bloc began outlining the steps toward resuming preliminary negotiations for the establishment of a trade treaty with European Trade Commissioner Cecilia Malmstrom during her visit to Manila earlier this month.

So far the EU has seen eye to eye with only a handful of states in Southeast Asia, with trade agreements bilaterally signed with Singapore and Vietnam, the latter still pending implementation. After all, ASEAN constituted only 2 percent of the EU’s export market.

One could only turn a blind eye to Southeast Asia’s rambunctious growth for so long. Indonesia will be the fourth largest economy in the world by 2050, while Philippines, Vietnam, Thailand and Malaysia will rise to the top 25, alongside Germany, the UK, France and Italy.

More: Both the most expensive, cheapest cities in the world are in Asia

As dewy as ASEAN’s economic prospects are, Malström made it clear that she welcomes further engagement with ASEAN and other countries in the context of sustainable development and inclusive growth and accede to EU product standards in terms of health, safety, and environment.

“If you look at the European free market, it had quite a lot of social legislation enacted at the same time,” said CBRE global economist Richard Barkham. “The trade barriers came down and the monetary union was adopted. The treaties also had a high degree of social welfare response written into them, and structural adjustments helping regions, helping categories of people that would be badly affected.”

One roadblock to an EU-ASEAN FTA is the increase of non-tariff measures (NTMs) in ASEAN, a situation is being ameliorated byt the creation of an NTM database (asean.i-tip.org) by the ASEAN (national think tanks and government officials) together with the Economic Research Institute for ASEAN and East Asia (ERIA), the United Nations Conference on Trade and Development (UNCTAD) and the WTO.

Businesses can access all information on export and import requirements at the national tariff lines.

Whatever trade agreements Southeast Asia gets to iron out with Europe will be a matter of malleable policy. “Any change to trade barriers brings about the kind of structural shifts within economies,” Barkham warned. “Sometimes, they can be well-handled by governments, and sometimes, they can’t.”

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