Implications of AEC and Trade and Investments on Regional Food Security

Universitas Gadjah Mada

Background

In response, partly, to the food crisis and to avert the repeat of the financial turmoil, the Association of Southeast Asian Nations (ASEAN) has put in place specific trade agreements with new and emerging markets as well as with already strong economies in the Asia-Pacific region. For instance, the ASEAN and China in 2002 signed the Framework Agreement on Comprehensive Economic Cooperation which led to the creation of the ASEAN-China Free Trade Agreement (ACFTA). In 2003, the Framework Agreement for ASEAN-India Free Trade Area (AIFTA) was signed; and in 2005, the ASEAN-Republic of Korea FTA (AKFTA) was ratified. More recent developments include the 2008 ASEAN-Japan Comprehensive Economic Partnership (AJCEP) Agreement and the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) which was signed in 2010.

At the same time, to facilitate growth through more efficient trade and open markets and to attract more foreign direct investments (FDI), ASEAN Leaders declared in 20031 that the ASEAN Economic Community (AEC) shall be the goal of regional economic integration by 2020. Furthermore, in 2006 during the ASEAN Economic Ministers meeting2 (AEM), it was agreed that a “single and coherent blueprint for advancing the AEC will be developed. Specifically, the AEC aims to: develop a single market and production base within the region; 2) develop and achieve a highly competitive economic region; 3) establish a region of equitable economic development; and 4) create a region that is fully integrated into the global economy3.

To evaluate the initial impacts of AEC among ASEAN countries, a project entitled “Implications of AEC and Trade and Investments on Regional Food Security” was initiated in May 2015 and will be implemented until May 2020 (Five phases). For Phase 1, the study will initially cover the countries of Philippines, Indonesia, Malaysia and Thailand. Succeeding phases will include countries in the Greater Mekong Subregion particularly that of Cambodia, Laos, Myanmar and Vietnam). The project will be spearheaded by Universitas Gadjah Mada (UGM) in partnership with the other members of the Southeast Asian University Consortium for Graduate Education in Agriculture and Natural Resources (University Consortium).

Objectives

This project aims to assess how AEC can affect the trade agreements and related commitments made by ASEAN with its regional partners; and its implications on food security in the region.

Specifically, this project seeks to:

1st year
  • Examine the implications of AEC on the FTAs between ASEAN as a whole, and between specific countries, and regional partners;
  • Identify competitive advantage of commodities in each country;
2nd year
  • Identify the implications of AEC on trade facilitation issues, especially on regional trade and investments, by examining the feasibility as well as the constraining and facilitating factors on AEC components;
3rd year
  • Examine the effects of non-tariff barriers, being imposed to counter domestic pressures, to food availability and access, and on food utilization;
4th year
  • Identify the implications of AEC to regional food security, by looking into the following factors: integrated markets, financial investments, and investments by public and private on agricultural and food supply chains; and
5th year
  • Identify supply and demand surplus for main food commodities.

Methodology

Coverage of the study will include the five main commodities based on the ASEAN Food Security Information System (AFSIS), namely, rice, maize, sugarcane, soybeans, and cassava. For the first year, Specific activities to be conducted include the following:

  • Desk review and preliminary survey to assess country’s understanding of the AEC and its implications.
    Currently, the project team has been conducting desk review on topics related to FTA, AEC, and food trade.
  • Analysis of AEC implications in ASEAN countries through Revealed Comparative Advantage (RCA), Acceleration Ratio (AR) and Trade Specialization Ratio methodologies.

Expected Outputs

This project is expected to:

  1. Identify the implication of AEC on the FTAs between ASEAN as a whole, and between specific countries, and regional partners; and
  2. Identify the commodities of competitive advantage in each country.

 

1 Bali Summit, October 2003

2 Kuala Lumpur, August 2006

3 Adapted from ASEAN Economic Blueprint, 2008