Protectionism is re-emerging as a common challenge that all regional and global mechanisms try to address. That holds true for both the European Union (EU) and the Association of Southeast Asian Nations (Asean).
Despite sharing determination to fight against trade barriers and protectionism, interactions between the EU and some Asean member states (AMS) do not show that this mission is equally practised.
For instance, recently, the EU is trying to ban Malaysia’s palm oil, ban Thai fishery products and considering whether to withdraw a trade preference scheme from 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) trade tariff scheme.
While the first two cases involve the possible banning of specific products, Cambodia’s case, if the preferences are withdrawn, does not involve the banning of products or the closure of specific markets but rather the application of normal tariffs to the Least Developed Countries (LDCs) to which the EU is supposed to provide preferential treatment.
The EU has market power that can combine force and strength of the proposed sanctions and non-tariff measures (NTMs). The actions taken by the EU against AMS provoked the issues of asymmetrical relations between a united organisation, the EU, against specific members of another organization, Asean, that is not a union.
Asymmetrical issues also drew the questions whether the EU, as an organisation, has better compliance than Asean in terms of human rights, democracy and environmental values. Although the EU’s actions affect particular AMS’ trade in generic term, they can also hamper Asean’s institutional image as a region that gives less consideration to human rights, democracy and the environment. Whether Asean, as an organisation can accept such labelling or not is another issue for discussion between these two organisations.
At the bilateral level, the unpleasant interactions between the EU and AMS that the AMS cannot fully foresee are the scope and scale of the impact of the EU’s legislations and complicated procedures while the EU’s decision is largely dependent on bureaucrats and politicians in Brussels who may not clearly understand AMS’s challenges, complexities and values as well as the sustainability impact of each decision. One Thai analyst said, “Thailand sacrificed blood, sweat and tears to overcome the stringent criteria outlined by the EU.”
Apart from the pure application of their technical procedures, the EU’s decisions can also be swayed by internal political situations, such as European parliamentary elections, as well as the EU’s own geopolitical calculations, for instance the China factor in regard to Cambodia’s EBA.
Once the procedure is launched, it is hard to stop or reverse. Malaysia had tried to lobby some EU member states with the belief that some of them may block the EU’s legislations.
The case of Thailand offered a successful example by way of conforming to the EU’s demands. Thailand could make it because the EU’s demands are involved largely with law enforcement and amelioration of technical management of the issues. Therefore, responses from Thailand can be visible, measurable and, most importantly, “do-able”.
Malaysia’s case is relatively harder than Thailand’s to comply with because the nature of the product itself is considered by the EU as not environmentally friendly. It involves much larger schemes than simply elevating the quality of products or enhancing consideration over the environment. The environmental standard imposed by the EU is very vague and, as the case has proved, the EU did not accept the certification standard set by Malaysia in terms of environmental acknowledgement criteria over the products.
The EU’s demands with regard to Cambodia’s case are seen as the most difficult to comply with because the latter considered some of the EU’s requests as going beyond the red line of respect for sovereign independence and the principle of non-interference in domestic affairs of state. It is not about the issue of law enforcement, product quality, labour standards or environment considerations but about the perception regarding space for civil and political rights, which is hard to measure because the standard of compliance can vary even within the members of the EU.
Despite the fact the EU is proving it is adhering to moral standards of human rights in providing trade preferential treatment, for Cambodia or other LDCs, the application of standards can equate to the denial of market access itself regarding the development phase of LDCs. For the post-conflict nations, it is an unrealistic expectation to demand they fully comply with all human rights conventions and treaties that they have ratified.
At the regional level, while the EU has mechanisms to resolve NTMs applied to EU member states or to utilise NTMs against third countries, Asean as an organisation does not have such tools and it does not appear that it is heading in that direction.
The EU side has many organisational tools in its approaches towards external partners, ranging from technical NTMs to non-technical NTMs, such as the cases of Malaysia using environmental justification, or the case of Thailand applying compliance issues of IUU or the case of Cambodia over the issues of democracy and human rights or geopolitical balance against China in the EU’s foreign policy.
As Asean is applying consensus in the decision-making process, AMS can block any progress or decision regarding cooperation with a specific dialogue partner. A case in point: In January 2019 Malaysia and Indonesia had deferred Asean’s decision in elevating its relations with the EU towards strategic partnership because of the EU’s discrimination against palm oil.
There are several lessons learned and applicable tools for member states to interact with one another when the NTMs are applied. The ideal is that states 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 a growing inter-dependent world, NTMs and sanctions rarely yield satisfactory results unless the affected states are totally isolated, which can never be the case. Moreover, as the above cases have shown, it may also provoke political, economic and geopolitical backlashes against states that choose to utilise NTMs.
If states intend to pursue equal partnerships, they should seek to balance mutual interests, to understand the specific context of their partners and to seek agreeable win-win solutions over differences instead of one-sidedly imposing their own agendas or interests because such actions are proven to be counterproductive.
Sim Vireak is strategic adviser to the Asian Vision Institute (AVI)