Japan-ASEAN Cooperation and Japan's initiative for

AJCEP and RCEP

8 August 2018

Ministry of Economy, Trade and Industry

Kunihiko SHINODA

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ASEAN-JAPAN Cooperation towards Innovation-led Inclusive Growth

ASEAN-Japan Cooperation towards Innovation-led Inclusive Growth

Support through research and policy recommendation

Various Challenges in ASEAN

Support for ERIA’s Activity

Necessity of MSMEs promotion and

human resourcesdevelopment

Advent of advanced industrial structures, and digital economy

Calls for further integration into

GVC

• Creation of Innovation in ASEAN• Productivity Enhancement by IoT and AI

ASEAN-Japan Cooperation for

Further Innovation

Support for MSME’s Inclusive Growth

Support for Introduction of

RCEP rules

• Surveys and workshops to introduce e-commerce rules• Training programs for intellectual property

experts• Development of custom infrastructures development

and training programs for custom workers• Seminars regarding public enterprise reform

• Overseas expansion support• Promoting quality infrastructure investment and

enhancing infrastructure connectivity in the Mekong region

• Capacity building

ASEAN-Japan Cooperation for Further Innovation Japan aims to create innovation in ASEAN so as to add discontinuous value and expand productivity of the ASEAN economy.

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1) Introduction of ASEAN-JAPAN-Wide Connected Industries

2) Joint Creation of Cutting-Edge Industries by Utilizing AI, IoT, Robots, etc.

3）Japan-ASEAN Fair and Startup Pitch Events

4）ASEAN Enterprises’ Overseas Expansion Support by Utilizing E-commerce Technology

5）B to B platform for Further ASEAN-JAPAN Innovation Cooperation

ASEAN-Japan Innovation PlatformFunds HR

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VietnamGood access to US, EU, and

south China

Lao PDRAbundant water resource

and fertile soil

CambodiaLabor intensive work

including agro and CMT

ThailandExisting automotive and

electronic industry cluster

MyanmarLabor intensive work

including agro and CMT

<Concept of Vision>◆ Developing the Mekong region together with surrounding countries, advancing industries and enhancing

the value-chains, by reflecting the unique advantage and competitiveness of each country and mutual complementarity under the spirit of "Specialization & Collaboration“,

◆ Integrating the Mekong region as the core of the production network in Asia and the world as a whole.

Unique Advantages

Growth in neighboring economies

China

India

“Work Programme” to be formulated in 2016. Its progress to be monitored annually

Pillar I: Partnering with neighboring countries

Pillar II: Building a footing

for more advanced industrial structure

Pillar III: Strengthening infrastructure

and resources that support regional value chain

TradeStructure

ForeignDirect

InvestmentHRDLocal Business

Collaboration R&D RegionalConnectivity

CompetitiveSME

Energy supply &

Environment

Expected Outcome GDP increase of USD 20 billion in Mekong (i.e. 2% of Mekong’s GDP) by 2020(Intra-regional trade: 10 bil, Inter-regional trade: 8 bil, FDI: 2 bil)

Mekong IndustrialDevelopment Vision

(2016-2020)

Work Programme(2016-2020)

*CMK: cutting making trimming

Mekong Industrial Development Vision

Promoting Further “Responsive ASEAN”1. Dialogue mechanism in introducing/revising ASEAN Agreements2. NTBs: More workable and effective coordination mechanism

Strengthening Existing Businesses towards Steady Industry Upgrading

1

2

3. MRAs: more effectiveness to existing MRAs, early conclusion to automotive MRA, and inclusion of other industries (e.g. iron & steel)4. IPR: harmonization of patent examination process5. FTA/Customs: smooth introduction of e-Form D and self-cert / introduction of sophisticated Customs systems6. Free Zone: introduction of “Non-resident inventory” scheme7. Capital/Finance: relaxation of financial system and foreign exchange regulation

Creating and Adopting New Values3

8. Services: Liberalization of “innovation-related” service sectors / high level and swift conclusion of ATISA negotiation 9. Data: harmonization of personal data definition / development of data-related contract guideline10. Cross-cut discussion: holding meetings to broadly discuss innovation-related business fields

FJCCIA 10 Proposals with 3 Pillars

6It is applied only when the Rules of Origin of ATIGA（ASEAN Trade in GoodsAgreement） and Bilateral EPA satisfy the Rules of Origin of AJCEP.

E

B

C

G

I

Japan

ASEAN

D

F

J

H

Japan-ASEAN

Added Value more than ４０％

Example:

0％ Tariff

AJCEP

OutsideAJCEP

ASEANCountries

JapanFinished Product

Parts/Materials

parts

parts

Finished Product

Outside ASEAN

A

7575

9344

12623

1507715817

4000

6000

8000

10000

12000

14000

16000

2013FY 2014FY 2015FY 2016FY 2017FY

The Number of AJCEP CO Issued in Japan (Annually)

(Source) Made by METI based on the data of JCCI

AJCEP is a regional Economic Partnership Agreement (EPA) between Japan and 10 ASEAN countries. In fact, the first Multilateral EPA for Japan.

＜Trade in Goods： Sequentially entered into force since December 2008 ＞

The number of issuance of AJCEP certificates of origin has doubled in recent five years. The provision on accumulation of ACJEP Rules of Origin (ROO) has strengthened the production network within Japan-ASEAN region. For

example, it realizes the tariff elimination in the case of processing into products in ASEAN region using parts produced in Japan and supplying those products within the region.

＜The Protocol to Amend the AJCEP Agreement, including Chapters on Investment and Trade in Service＞

The Ministers agreed the conclusion of the negotiation at the AEM-METI in November 2017. Currently preparing for the early signing of the Protocol.

→ It enables further liberalization and facilitation of investment and trade in services, and improves business environment in ASEAN.

AJCEP（ASEAN-JAPAN Comprehensive Economic Partnership) Agreement

Example of utilization of AJCEP accumulation

⃝RCEP is an Economic Partnership Agreement among the ASEAN Member States and ASEAN’s FTA Partners (AFP: Japan, China, Korea, India, Australia, and New Zealand), which aims to create a wide economic zone that covers about half of the world’s population and accounts for about 30% of its GDP.

⃝The RCEP will make rules to contribute to high-level supply chains covering the East Asian region and to realize user-friendly EPAs with common procedures across the region.

Regional Comprehensive Economic Partnership (RCEP)

History of NegotiationsNov. 2012 Announcement of the Launch of RCEP negotiations.

Mar. 2013 First round of negotiations in Brunei (→22 rounds）

Sep. 2016 ASEAN related summits in Laos

- The leaders reiterated the importance of the swift conclusion of the RCEP

negotiations

May. 2017 The RCEP Intersessional Ministerial Meeting in Vietnam

- Minister Seko proposed to start the work to identify key elements that will

contribute to well-balanced progress of overall negotiations not only in market

access but also on rules, such as E-commerce and custom procedures.

Sep. 2017 The RCEP Ministerial Meeting in Philippines- The Ministers endorsed the Key Elements which cover not only market access

but also rules.

Nov. 2017 The RCEP Ministerial Meeting and Leaders Summit

in Philippines

Mar. 2018 The RCEP Intersessional Ministerial Meeting in Singapore

July. 2018 The RCEP Intersessional Ministerial Meeting in Tokyo

Overview

Australia

China

New Zealand

Korea

IndiaJapan

MalaysiaSingapore

Philippines

Indonesia

Laos

Thailand

Cambodia Vietnam

Brunei

Myanmar

ＲＣＥＰ

ASEAN have a separate EPA/FTAs with each AFP.⇒RCEP will create larger economic region