Special report ASEAN and its free trade agreement

Published on January 30, 2013 by TFP   ·   No Comments

The objective of the establishment of the ASEAN Economic Community (AEC) in 2015 is to promote a single market, competitive economic region, an equitable economic development, and transition in the global economy. Allowing members to trade freely among themselves is among the keys to a successful regional integration.




Among many reasons for the establishment of the ASEAN Economic Community (AEC) are to increase the competitive edge as well as to attract foreign investment to this region. To achieve these goals, ASEAN Free Trade Area (AFTA) was formed in 1992 in Singapore.




It is an agreement which supports local manufacturing in the ASEAN member nations. AFTA has created a free trade zone in the Southeast Asian region, under which member countries, including Thailand and 9 others, can trade among themselves under relaxed trade barriers.




The tariff rates of 0 to 5%, which is also known as the Common Effective Preferential Tariff (CEPT) scheme, will be applied to imported goods among ASEAN nations. However, those who come from outside of the grouping will be required to pay the rates determined by each country.




All ASEAN states will be able to exclude their products from the CEPT on 3 following criteria: A request for temporary exclusion, those classified as sensitive farm products, and products deemed by an ASEAN member as significant to national security, history, human, animal and plant health, as well as to public morals.




The national customs and trade authorities in each member country will be responsible for ensuring compliance with the AFTA agreements. Despite having obligations to AFTA, there is no legal authority to enforce compliance among the Asean members, which may lead to disputes.




Often time, trade authorities of each country are reluctant to cede sovereignty to authorities from other ASEAN nations. Whenever they could not find common ground, their differences would be settled through a dispute review or other appropriate means. Members may seek mediation, consultations, or to establish a panel of independent arbitrators to resolve the dispute.




According to the research conducted by World Bank in 2008, ASEAN has the potential to reap enormous benefits from investments in trade due to the comprehensive tariff reform realized through AFTA. The ASEAN members have also been active in negotiating trade agreements with other countries. The goal of establishing a free trade area outside of ASEAN is no different from what they have already required from their peers within the ASEAN community, which is to eliminate trade barriers. Major importers of the ASEAN products include the European Union, the United States as well as Eastern Asia.




The upcoming ASEAN Economic Community in 2015 will empower regional businesses, tourism and trades. It will also render ASEAN an upper hand on a global stage. The AEC is certainly a work in progress. Some member may be progressing toward the regional cooperation faster than others; nonetheless, the future is in favor of the AEC, and there will certainly be opportunities and challenges that we need to be preparing for.

(NNT: Nuppol Suvansombut)

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Article source: http://www.thethailandlinks.com/2013/01/30/special-report-asean-and-its-free-trade-agreement/