ASEAN trade pact strengthens Myanmar’s ties with Australia, New Zealand

THE free trade agreement (FTA) between ASEAN, Australia and New Zealand makes Myanmar products more competitive in the two biggest markets in Australasia, according to trade commissioners from Australia and New Zealand. There is a huge potential for trade to grow in the agriculture sector, as all three countries are rich in farms and fisheries.

The FTA improves the efficiency, transparency and certainty in import-export processes. The AANZFTA seminar was held in Park Royal Hotel in Yangon on September 14.

Shwe Sin Oo, deputy director of the Department of Trade under the Ministry of Commerce, presented an overview of certificates of origin and verification processes related to the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA). The Australian and New Zealand officials explained the specific trade opportunities which derive from the FTA.

The AANZFTA culminated from a series of consultations and negotiations which started back in 2005. It was signed in February 2009 and entered into force in January 2010.

ASEAN and Australia reaffirmed their strong determination to further strengthen strategic partnership at the 7th ASEAN-Australia Joint Cooperation Committee Meeting, held in Jakarta on June 16, according to the ASEAN Secretariat. The meeting welcomed the commencement of the General Review of AANZFTA in making it more business-friendly.

The AANZFTA was designed to foster increased trade and greater economic integration between the economies of Australia, New Zealand and ASEAN. It provides exporters of the parties with better access into other economies through reducing tariffs for most products.

Shwe Sin Oo explained that rules of origin (ROO) are used to determine whether a good can claim preferential rates of duty. In order to reap the benefits of preferential tariff under the FTA, exporters need to obtain the certificates of origin (COO) form and then submit it to the relevant authorities of member countries.

The certificates of origin refer to the evidences which are needed for companies to take advantage of the AANZFTA and its lower tariff rates. Exporters need to provide certificates showing that the goods originated in one of the signatory countries to the FTA before they can be granted the lower tariff rate.

The Ministry of Commerce is the body which issues the COO documents, whereas the customs department is the receiving authority for preferential tariff treatment.

The Myanmar Times subsequently asked the speakers to comment on the FTA.

Australia

Ross Bray, senior trade commissioner in Yangon for the Australian Trade and Investment Commission (Austrade), told The Myanmar Times that there are opportunities to scale up exports of goods and services. In particular, seafood export from Myanmar has seen robust growth.

“The economies of Myanmar and Australia complement each other in many ways with both being rich in aquaculture, agricultural and mineral resources, dry zones and offshore energy reserves, so there are lots of opportunities to grow trade in these areas in particular.

“For Myanmar, seafood exports to Australia have also been growing strongly,” he said.

The FTA offers transparency and certainty to exporters with fixed tariff rates and encourages businesses in the two countries to study each other’s market, the trade commissioner continued. In a number of cases, the tariff rate under the FTA are 5 or 10 percent lower than the Most Favoured Nation (MFN) tariff rate. This makes imports from the two countries more competitive in the market and creates savings that can be passed onto individual consumers.

The trade commissioners highlighted a few challenges in capitalising on the AANZFTA. One of them is about educating Australian suppliers and Myanmar importers on the FTA and the documentation required.

The use of the COOs presents another challenge. There are delays in the processing of shipment upon arrival due to unfamiliarity with the AANZFTA, confusion with requirements of other FTAs and the costs of providing COOs.
Processes are complicated for some products.

According to Mr Bray, sometimes there are multiple components which form an end product – such as a box of coffee-flavoured biscuits that have Australian flour, New Zealand milk and Myanmar coffee beans. As the ingredients all come from within the AANZFTA area, then the regional rules of origin apply and certificates of origin can be issued. But if the majority of a product comes from an outside country with only a small amount from an AANZFTA country, then they are not eligible to use the FTA to ship within the group at a lower tariff rate.

New Zealand

Karen Campbell, trade commissioner at the New Zealand Trade and Enterprise, New Zealand’s international business development agency, said that the FTA helps cut down the bureaucracy and clarify the processes.

“The FTA means that respective governments have a forum through which to manage trade relationships, including establishing clear processes and resolving impediments. This benefits exporters and importers in both countries by reducing red-tape and improving certainty around processes,” she told The Myanmar Times.

“In terms of products – there is a wide range of products which benefit from a progressive program of tariff reductions – including meat, seafood, dairy products, fruit and nuts, as well as mechanical, electrical and marine equipment.

“Products that Myanmar exports to New Zealand are largely all tariff-free already and of course the lower tariff makes Myanmar product more competitive in the market,” she added.

The trade deficit between Myanmar and New Zealand is currently significant. Ms Campbell expected that New Zealand’s export will continue to be greater than Myanmar’s, and the former’s low tariffs make it an attractive market for Myanmar products.

“The growth rate of Myanmar exports to New Zealand over the last three years has been higher than the reverse leg, however it is from a smaller base, and so it’s likely that, for the near future, New Zealand’s exports to Myanmar will still be greater.

“As Myanmar’s economy grows, there is likely to be both strong domestic consumption as well as production for export. Lower wage rates in Myanmar will enable many products to be produced more cheaply than in New Zealand or from other Asian exporting countries,” she observed.

Dairy products dominate New Zealand export to Myanmar. It’s likely that as the economy grows there will be an increasing demand for dairy products in the country, according to Ms Campbell.

“Some of this [growing demand] will be met by New Zealand products, but not only that –

New Zealand is supporting dairy farming knowledge transfer to Myanmar farmers and is working on several projects to help develop local capabilities too.

– Karen Campbell, New Zealand Trade and Enterprise

Source: Myanmar Times

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