Program Area: 2.21

Project Proposal

SCD/02/010

TRIPARTITE SEMINAR ON IMPLEMENTATION OF AFTA AND ITS IMPACT ON ASEAN LABOUR/HUMAN RESOURCES

TRIPARTITE SEMINAR ON IMPLEMENTATION OF AFTA AND ITS IMPACT ON ASEAN LABOUR/HUMAN RESOURCES

Background, Problem Analysis And Justification

The ASEAN Vision 2020 stressed the enhancement of economic cooperation through economic development strategies that promote equitable and sustainable growth as well as enhance national and regional resilience. Following this resolve, ASEAN countries have committed to move towards closer cohesion and economic integration, narrow the development gap among ASEAN countries and also ensure that the multilateral trading system remains fair and open. ASEAN also envisions a stable, prosperous and highly competitive economic region in which there is a free flow of goods, services and investments, a freer flow of capital, equitable economic development, and reduced poverty and socio-economic disparities.

As a corollary endeavour, ASEAN Member Countries have committed to the advancement of economic integration and cooperation by fully implementing the ASEAN Free Trade Area and accelerating liberalisation of trade in services; realizing the ASEAN Investment Area and free flow of investment by 2020.

Recently in January 2002, AFTA became a reality for the ASEAN Six (BruneiDarussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand) with 0 to 5 % tariff rates for about 85 % of the products traded among these countries. The maximisation of tariff lines between 0 to 5 % will occur in 2003 for Vietnam, 2005 for Laos and Myanmar and 2007 for Cambodia.

Given the complexity in the implementation of a free trade area, an information, education and communication program for various sectors of the ASEAN region is deemed vital in order to generate the necessary positive response from who will be involved: the business community, the social and economic partners, the media and the academe. More importantly, the implications of AFTA realisation on the labour and employment scenario of the region need to be explored. To address this, initially a series of information seminars for the tripartite partners will be undertaken so as to convey to the concerned sectors the intricacies of its implementation.

One of the important concerns that ASEAN, in particular the less economically developed members of the ASEAN, would have to face is in regard to the impact AFTA would have on the countries’ labour and employment scenario. Free flow of goods, services and investment could impact the employment and labour issue in many different ways:

  • Free flow of goods from other ASEAN countries could reduce the market for country’s own goods. This is based on the assumption that better developed industries of the more economically advanced member countries could supply goods of relatively better specifications and quality at affordable prices, and at lower prices for goods comparable to those produced in the receiving country. While it is possible that competition from imported goods could stimulate the national industry into searching for more efficient production methodologies and moving up the technology chain, it could also mean that they may be unable to withstand competition and simply surrender the ground to imported products and services. As a consequence, the scope and structure of local industries, and employment levels therein, could be adversely affected.
  • More developed member countries could set up service organisations across the border into the less developed economies and thereby limit the opportunities for local service providers; thus impacting negatively on employment levels in the service sector.
  • The flow of skilled persons into the less developed economies could undermine the country’s long-term efforts in education and training and its strategy of restructuring its labour force towards higher skill levels and thereby creating indigenous capacity for competing in higher technology based production. Further the current labour market for their own skilled persons may be undermined.

In contrast to the above negative scenario, it is also possible to envisage a positive one. Free trade in goods, services and investment also has the potential to stimulate economic growth and, consequently, employment opportunities within the less developed economies of the region. Greater investment could bring in the expansion of economic activities, both in existing and newer areas of production and services, and create larger opportunities for employment at different levels in the economy.

Just how the balance between these two scenarios would be articulated would depend largely upon the capacity and capability of the countries to derive benefits from the potential opportunities of a free- trade regime and, simultaneously take preparatory actions to mitigate possible negative impacts.

Apprehensions of a negative fall-out can prove to be a real stumbling block in the implementation of the proposed free flows. These can be dealt-with effectively mainly through wider and effective dissemination of the provisions of AFTA – just what it entails, what frameworks govern its operation, and how amenable these frameworks are to accommodating the contexts and concerns of the less developed economies. It would be necessary to consider in considerable detail and depth the implications AFTA could have on individual countries’ industrial growth and employment, skill structure and social/political environment, among others. The countries would also need to understand the options available to them for regulating the flows with reference to their own context of development, priorities and needs.

In dealing with AFTA’s impacts, it could be useful to extrapolate from the experience of WTO and GATS which also promote free trade of goods and services albeit at a different level. It has taken, and continues to take, extensive consultation and dialogue among member countries for proceeding on various specific aspects – including the larger issue of labour and employment. These agreements also provide for a series of options that member countries could invoke depending on their own context and stage of development. Options in respect of extended time frame for gradual implementation of different provisions are also available. A need for similar comprehensive consultations and gradual graduated frameworks of implementation may well exist within the ASEAN as well, particularly in the case of CLMV countries.

With the above in view it would be important to ensure that comprehensive documentation is prepared on AFTA, on all its dimensions but particularly so on the labour and employment dimension keeping the context of CLMV countries in mind. The documentation should be such as to be easily comprehensible by the non-specialist stakeholders. The documentation should be disseminated widely through different media and modalities, over a period of time, to suit the characteristics and requirements of the target audience. Seminars and consultations at the regional, sub-regional and national levels would be needed to progressively generate sensitisation and understanding of the issues and available options, identifying possibilities of working together on shared concerns, developing recommendations for actions at various levels – regional, sub-regional and national, and, preparing specific action plans at individual country levels.

Regionality

The problem has a regional context in as much extension of AFTA throughout the region is envisaged. But it would be particularly important for the CLMV countries which have a more vulnerable labour and employment scenario. Actions, however, are required at all levels- ASEAN region as a whole, the CLMV sub-region and individual countries – CLMV as well as others.

Participation

All ASEAN countries need to participate and are expected to participate as per design of the project.

Beneficiaries

The labour in all countries would benefit by ensuring that adverse impacts are contained and benefits of freer flow accrue to them by way of better employment opportunities and incomes. Countries also should benefit from enlarged opportunities for cooperation and growth and better integration of newer members in the framework of ASEAN initiatives.

Commitment And Sustainability

Once better understanding of AFTA’s impact on countries’ development, in particular on employment and labour aspects which are generally high in national priorities is achieved a favourable ground condition would be created for a sustained and effective implementation/ extension of AFTA within the entire ASEAN region.

Objectives:

  • To describe the concepts and modalities of a free trading system under AFTA in laymen’s terms
  • To raise awareness and inform unions, employers and labour ministers on the concepts, modalities and status of AFTA
  • To discuss its possible impact on the country’s industries and labour.

Outputs

  1. Availability of seminar curricula/ materials on AFTA and the implications of its implementation for the social partners;
  1. Recommendations for responses to sector-specific problems and questions on AFTA; and
  1. Identified issues specific to the CLMV countries.

Activity Plan

Three main activities would be undertaken:

  1. Prepare documentation on AFTA. A series of documents on different aspects of AFTA, its modalities of operation and the framework of arriving at specific agreements would be prepared in a manner and format suitable for appreciation by non-technical audiences.
  1. Organise a tripartite seminar at the Regional level to discuss concept, issues, problems to be addressed at the country and regional level, institutional mechanisms needed for its implementation, and generate recommendations for further consideration at the national level.
  1. Organise a regional meeting of the CLMV countries to consult among themselves in some depth on the issues which came up for discussion at the Regional seminar and consider their implications to the CLMV countries which share among themselves many similarities in their socio-economic contexts and are likely to require dealing with similar issues, possibilities with similar strategies. The meeting would identify what further delineation of the issues should be attempted to understand the specific impacts of AFTA’s implementation on their labour and employment contexts and also examine the possibility of working collaboratively at the sub-regional level to deal with them.
  1. Organise country level seminars cum workshops to inform and sensitise a larger group of stake holders, inclusive of the three parties, and discuss specific impact AFTA would have on the growth and development of different industrial sectors, employment prospects of country’s labour-force, and availability of skilled/unskilled labour for its industries, in the context of the country’s specific socio-economic, industrial, and employment situation and plans of development. The country level seminars would also discuss the recommendations of the Regional seminar in some detail and work out the specific actions needed within the country in terms of changes in: policies; legal frameworks; fiscal and non-fiscal trade barriers and other protective measures available to industry; restrictions on labour mobility; rules and regulations; procedures; and administrative machinery.

For meaningfully implementing the above activities:

  • A consultant would be appointed to examine and collate all relevant documents on AFTA. In addition the consultant would prepare an analytical study cum discussion paper for a broader non-technical audience outlining the concept and rationale of AFTA, issues involved, likely areas to be impacted by the introduction of AFTA and the nature and potential dimension of impact. The study would make reference to the way other free-trade-areas have operated elsewhere in the world and extrapolate the experience to project the way AFTA might operate in the region and the likely impact it would have on industrial development and labour issues. A separate section would specifically consider the industrial and labour contexts of CLMV countries and discuss AFTA’s potential impact on them. The study would also examine AFTA in the context of emerging global regime of WTO and GATS and how AFTA would interface with these arrangements. The study would be an objective and dispassionate analysis of the potential benefits and problems in the current as well as future scenario of developments in the region, and serve as a useful guide to the countries in evolving their respective positions vis a vis different provisions of AFTA. The study would go on to describe briefly the nature of institutional arrangements that will need to be set up at the regional and national levels and indicate broadly the nature of changes that may be needed in national policies, rules and regulations.
  • A regional seminar would be organised to consider the study cum discussion paper and make recommendations for further consideration by the countries at the sub-regional level of the CLMV and at national level in-country workshops. Participants would be representatives of each of the three groups from each member country, ASEAN representatives, experts drawn from relevant agencies operating other free trade arrangements – to be identified with the help of the consultant, and a few NGOs dealing with labour concerns. The consultant would act as the resource person and would be responsible for drawing up the report and recommendations of the seminar.
  • A regional seminar of the CLMV countries would be organized to consider issues and recommendations with specific reference to CLMV countries’ shared contexts and characteristics of employment and labour market situations. The seminar would also explore and identify opportunities to work together in dealing with common concerns and issues.
  • National in-country workshops will be organised to consider the report and recommendations of the regional seminar as outlined in point 3 of Activities above. Of these the four workshops in CLMV countries will be assisted by the Consultant and a few chosen national resource persons. In other countries the workshops will be conducted with the help of local resource persons alone.
  • At the conclusion of these national workshops the consultant will prepare a report compiling the responses of individual countries on different aspects and prepare an issues- paper of the issues to be taken up for discussion, resolution and decisions at a minister-level conference. The ASEAN Secretariat will undertake the organisation of the conference following usual procedures.

Management Arrangements:

A three-tier coordination is proposed. On behalf of the ASEAN Secretariat, coordination and monitoring at the first level will be provided by a Project Coordinator to be appointed for the purpose. The Project Coordinator will regularly monitor the implementation, bring out any issues and modifications which may need handling during implementation, obtain guidance/decisions on the issues and generally ensure that various activities envisaged in the work plan are indeed carried out as per schedule. Functions and responsibilities of the Project Coordinator are indicated in the annexure.

At the next level periodic Senior Labour Officials Meeting will monitor progress and provide coordination. With the help of the Project Coordinator the ASEAN secretariat will assist in the organisation of SLOM and undertake interim follow up. At the apex level the review, monitoring, coordination and guidance for the future would be provided by the ASEAN Labour Ministers Meeting. Once again, with the help of the Project Coordinator ASEAN secretariat will assist organization of the meeting and following up on the recommendations of ALMM.

Implementation Arrangements:

  • Consultant will be appointed by the ASEAN Secretariat who will also draw up the TORs and guide the consultant in the execution of assigned tasks. The consultant will report to the ASEAN Secretariat.
  • National focal points will assist in organizing the in-country seminar cum workshops and provide logistic, physical and other support as necessary. Costs of in-country consultation and workshops, other than those provided for in the budget will be borne by respective national focal points.
  • Regional conference will be organized by the ASEAN Secretariat who will make all necessary arrangements.

Success Criteria:

  1. Compilation of documents on AFTA and preparation of the analytical study cum discussion paper for the regional seminar
  2. Availability of the report and recommendations of the regional seminar
  3. Availability of the report and recommendations of individual country workshops.
  4. Compilation of country responses and identification of issues to be discussed and resolved at a ministerial conference.
  5. Organisation of the ministerial conference and its report.

1

Program Area: 2.21

Indicative Scheulde of Activities for Programme 2.21: Tripartite Seminar on AFTA

Outputs and Activities / Start Date / Finish Date / Action By / 2002 / 2003
O / N / D / J / F / M / A / M / J / J / A / S / O / N / D
Output 2.21
AFTA
1. International consultant identified and contracted / Dec-02 / ASEAN
Sectt.
2. Consultant prepares documentation / Jan-03 / Int’l
Consultant
3. Initial documentation / 1/1/03 / 31/1/03 / Int’l
Consultant
& Nat’l
Focal Pts
4. Regional seminar / 1/3/03 / 7/3/03 / ASEAN
Sectt.
5. Report of the regional seminar / 15/3/03 / 21/3/03 / Int’l
Consultant
6. Report of regional seminar sent to all including CLMV as input for preparations of the CLMV regional seminar / 15/3/03 / 31/3/03 / ASEAN
Sectt.
7. CLMV seminar / 1/5/03 / 7/5/03 / ASEAN
Sectt.
8. Report/recommendations for final consideration at national workshops / 7/5/03 / 21/5/03 / Int’l
Consultant
9. In-country seminars / 1/6/03 / 30/6/03 / Nat’l
Focal Pt.
10. Consultant produces compilation / 1/7/03 / 31/7/03 / Int’l
Consultant
11. Considerations by Ministerial conference / Oct/Nov / ASEAN
2003 / Sectt.

Inputs And Indicative Budget - Detailed Estimates:

  • Consultancy services
  • One consultant for three months @ $12000 = $36,000

Sub-total $ 36,000

  • Regional Seminar for three days at Jakarta

Participants: Tripartite participation from all ASEAN countries, 3 experts from outside the region with direct experience of free trade arrangements, one NGO from each country dealing with labour concerns, consultant, 2 ASEAN officials. 46 in all.

Airtickets for 40 persons @ $ 800 = $32,000

Airtickets for three external persons @ $1000= $ 3,000

Per diem for 44 persons @ $170 for 4 days = $29,920