Background

  • The Framework for Comprehensive Economic Partnership (CEP) between ASEAN and Japan was signed by the Leaders of ASEAN and Japan on 8 October 2003 in Bali during the ASEAN-Japan Summit.

Scope

  • The AJCEP Agreement will be comprehensive and will include Trade in Goods and separate chapters on Services, Investment, Rules of Origin (ROO), Sanitary and Phyto-Sanitary (SPS), Technical Barriers to Trade (TBT), Dispute Settlement Mechanism (DSM) and Economic Cooperation.
  • For Services and Investment, the AJCEP Agreement provides for enabling clauses for future discussions by the Sub-Committees which will be set up upon signing.

Status

  • Negotiations on AJCEP Agreement, which commenced in April 2005, were concluded in December 2007.
  • ASEAN Member States and Japan completed the process of signing the AJCEP Agreement by circulation on 14 April 2008, the date when Malaysia signed.
  • This Agreement will come into force after Japan and at least one ASEAN Member State notifies the Governments of the other signatory states in writing that their legal enactments have been gazetted. It is expected to come into force before end of 2008.
  • Although the AJCEP is based on the respective bilateral Economic Partnership Agreements (EPAs) signed by Japan with individual ASEAN countries, including Malaysia, there is substantial value-adding to these EPAs under the AJCEP.

Benefits

  • Japan is the largest trading partner of ASEAN. In 2006, ASEAN's trade with Japan expanded to US$163.1 billion from US$154 billion in 2005. Malaysia's total trade with Japan has also increased significantly from RM60 billion in 1994 to RM120.7 billion in 2007. Japan, with a GDP per capita of US$34,188 continues to be an important market for ASEAN and Malaysia.

  • An FTA between ASEAN and Japan will also strengthen and deepen economic integration and help build capacity through sharing of available resources and expertise.

  • The FTA will enable ASEAN and Japan to share the huge resources available through joint collaboration to further promote the growth of both the manufacturing and services industries.

  • For Malaysia, the AJCEP provides additional benefits in terms of immediate and accelerated elimination of duties for products vis-à-vis progressive liberalisation under the JMEPA. Chemical and petrochemical, plastics and textiles products are expected to expand its exports under the AJCEP.

  • Apart from this, additional areas for capacity building in economic cooperation vis-à-vis the JMEPA include:
    • Trade Related Procedures;
    • Business Environment;
    • Energy;
    • Transportation and Logistics; and
    • Competition Polic