Executive Summary

• This paper aims to conduct comparative study of the Non-Tariff Measures (NTMs) imposed by the European Union on ASEAN Member States (AMS) by reviewing the cases of Malaysia, Thailand and Cambodia. Malaysia’s case relates to the banning of palm oil. Thailand’s case relates to the issuance of Yellow Card for Illegal, Unreported and Unregulated Fishing (IUU). Cambodia’s case relates to the possible withdrawal of trade preferences under the Everything but Arms (EBA) scheme.
• These cases offer many lessons learned and applicable tools for member states to interact with one another when the NTMs are applied. The ideal is that state should not apply NTMs, but if they face NTMs, they may choose to conform or retaliate or use both approaches.
• NTMs have caused mistrust and are considered as hindrances to the enhancement of cooperation, mutual respect and understanding. In the growing inter-dependent world, NTMs and sanctions rarely yield satisfied results. In contrast, it may provoke political, economic and geopolitical backlashes against states that choose to utilize NTMs.

I. Introduction

Protectionism has re-emerged as a common challenge that all regional and global mechanisms are trying to address. That holds true for both the European Union (EU) and the Association of Southeast Asian Nations (ASEAN). The Chairman’s Statement of the 32nd ASEAN Summit in Thailand on 28 April 2018 states, “We are deeply concerned over the rising tide of protectionism and anti-globalisation sentiments. We also reiterated ASEAN’s continued support for the multilateral trading system and reaffirmed our commitment to uphold the open regionalism principle while maintaining ASEAN centrality.”

Since 2011, the EU has published its own annual Trade and Investment Barriers Report (TIBR) in its efforts to create the best possible conditions for European firms to export around the world and to make sure international trade rules are enforced.

In the TIBR 2018, the EU’s Trade Commissioner Cecilia Malmström wrote:

Markets are like parachutes: they are at their best when they are open… As self-defeating and
destructive as protectionism is, it is clearly on the rise. Since the financial crisis, every year we
have witnessed double-digit increases in barriers affecting our companies abroad. Technical
barriers, unjustified customs delays, protectionist policies and other stumbling blocks cost EU
entrepreneurs billions of euros every year. This is as unacceptable as it is unjustified.

Despite sharing determination to fight against trade barriers and protectionism, interactions between the EU and some ASEAN Member States (AMS) have shown that this mission is not equally practiced. For instance, the EU has recently been trying to ban Malaysia’s palm oil and Thai fishery products. It is also considering withdrawing trade preference scheme from Cambodia.

Therefore, this paper aims to conduct comparative study of the Non-Tariff Measures (NTMs) imposed by the European Union on AMS by reviewing the cases of Malaysia, Thailand and Cambodia. Based on these three cases, the paper seeks to answer the following three main research questions:

1. What are the rationales being used by the EU to impose NTMs on AMS? What are the impacts caused by those NTMs?

2. What are the possible measures taken by the AMS in response to the EU’s NTMs?

3. What are the policy implications and lessons learned from these cases?

Broadly defined, NTMs include all policy-related trade costs incurred from the production phase to final consumers, with the exclusion of tariffs. NTMs are categorised depending on their scope and design and are broadly distinguished in technical and non-technical measures. They are measures that have the potential to substantially distort international trade regardless of whether or not their trade effects are protectionist.

Malaysia’s case relates to the banning of palm oil. Thailand’s case relates to the issuance of Yellow Card for Illegal, Unreported and Unregulated Fishing (IUU). Cambodia’s case relates to the possible withdrawal of trade preferences under the Everything but Arms (EBA) scheme. While the first two cases involve the possible banning of specific products from entering European markets, Cambodia’s case, if the preferences are withdrawn, does not involve the banning of products or the closure of specific markets but rather the application of normal tariff on products from the Least Developed Countries (LDCs), which the EU is supposed to provide preferential trade treatment.

For EBA specifically, as it is a unilateral grant, it can thus be argued that the withdrawal of the scheme is also a unilateral discretion of the provider, which cannot be considered as NTMs. However, the author applies a narrower interpretation and considers the withdrawal as comparable to the NTMs because its application is understood as a punishment or sanction. Moreover, it is being decided before the actual expiration of eligibility period, and thereby it will restrict trade activities of the recipient states beyond the expected scope and its readiness for graduation from the scheme.

The paper examines the above three cases and then conducts comparative analysis to draw policy implications for the EU and ASEAN in their common endeavour to curb protectionism and usage of NTMs.

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