Introduction
During the past year, there has been a rapid increase in, ASEAN's trade, both with the rest of the world and within the region. Total exports from ASEAN increased by about 20% from a level of US $ 205 billion in 1993 to US $ 247 billion in 1994. This increase made ASEAN the fourth largest trade group in the world after the US, the EU and Japan.
However, intra-ASEAN trade is expanding even faster. Exports to other ASEAN Member Countries increased by 34% from about US $ 44 billion in 1993 to US $ 59 billion in 1994. This increase has been brought about by the rapid expansion of economic growth in the region and by the implementation of the trade liberalisation scheme under AFTA.
The past year has seen significant progress in accelerating the realisation of the ASEAN Free Trade Area (AFTA). The ASEAN Economic Ministers, at their 26th meeting in Chiangmai, Thailand in September 1994 had agreed, among others, to reduce the timeframe of AFTA from 15 to 10 years so that by 2003, all products in the CEPT will have tariff rates of not more than 0-5%. They had also agreed to increase the coverage of the products to be liberalised under the CEPT by including unprocessed agricultural products into the CEPT Scheme and to phase in all goods which were temporarily excluded from tariff cuts into the CEPT by 1 January 2001. Important commitments were also made on trade facilitation measures and in establishing the necessary institutional Infrastructure to ensure the smooth implementation of CEPT for AFTA. The activities over the past year has focussed on the preparations for implementing these decisions by 1 January 1996.
b). The decision to phase in products from the Temporary Exclusion List into the Inclusion List would also increase the coverage of the sectors which ill be subjected to the tariff reductions. The phasing-in process will occur over a period of five years, in five equal installments beginning 1 January 1996. The preparation of the revised Products and Tariff Reduction Programmes under the Common Effective Preferential Tariff (CEPT) Scheme to reflect the new timeframe will be published by the end of 1995 in time for its implementation on 1 January 1996.
c). The increased coverage of the products will be subjected to trade liberalisation under CEPT for AFTA. The decision to include II products into the CEPT Scheme, including unprocessed agriculture products will ensure such comprehensive coverage ie. it will reach 98% of total tariff lines 'In ASEAN by 2000. Unprocessed agricultural products will be classified into three lists viz.: Inclusion, Temporary Exclusion and Sensitive. Products in the Sensitive List will be subjected to a separate liberalisation mechanism. This mechanism will have a different tariff reduction scheme than the CEPT but will nevertheless represent commitments that go beyond ASEAN's commitments in agriculture under the Uruguay Round.
d). The Sixth AFTA Council in Phuket in April 1995 agreed that products in the Preferential Trading Arrangement (PTA) will be phased into the CEPT Scheme. This would further deepen the rate of tariff reduction and broaden the coverage of products in the CEPT Scheme.
Tariff cuts are a necessary but not a sufficient measure for a comprehensive programme for liberalisation. Decisions have been made to ensure such a comprehensive liberalisation package. These refer to the technical, administrative and regulators, aspects of trade. One aspect involves non-border areas of cooperation. The 26th AEM had agreed to accelerate the harmonisation of tariff nomenclatures, customs valuation systems and procedures. The harmonisation of these areas would facilitate the flow of trade across borders, supporting the liberalisation process.
All ASEAN Member Countries are members of the WTO and are currently cooperating in the training of their customs officials o. the GATT Valuation Code to ensure its smooth implementation by 2000. Common customs declaration forms, importation and exportation procedures are also currently being formulated to facilitate trade. The 1983 ASEAN Customs Code of Conduct has also been revised and updated in 1995 to cover the increased comprehensiveness and depth in ASEAN customs cooperation to support the CEPT for AFTA.
Progress is also well underway in the elimination of Quantitative Restrictions (QRs) and other Non-Tariff Barriers (NTBs). A working definition of NTBs has already been agreed upon and a list of NTBs in the various ASEAN Member Countries verified. ASEAN is now in the process of formulating modalities and a work programme for elimination. Since NTBs are wide-ranging and cut across sectors, the various sectoral working groups in ASEAN are working in close cooperation with one another to ensure a comprehensive elimination of NTBs. In addition to the trade-related Interim Technical Working Group (ITWG) on CEPT for AFTA, the ASEAN Consultative Committee on Standards and Quality (ACCSQ) is involved in the elimination of NTBs related to technical standards, which is the major, NTB in ASEAN. Also, sectoral working groups under SOM-AMAF are working on harmonisation and mutual recognition in the area of sanitary and phytosanitary (SPS) measures for agricultural products. The First Meeting of the Working Group o SPS Measures under SOM-AMAF was held on 19-21 June 1995 in Jakarta.
Vietnam will become the seventh member of ASEAN in 1995. The accession of Vietnam will increase- significantly the size of the market for ASEAN and will enhance the economic prospects of the region. Preparations are currently being undertaken to expedite Vietnam's accession to the CEPT Scheme for AFTA and other economic agreements in ASEAN by January 1996.
Various decisions and efforts have been made to establish the necessary institutional infrastructure to maintain the momentum, and ensure the acceleration of CEPT for AFTA. The 26th AEM had decided to establish an AFTA Unit in the ASEAN Secretariat and National AFTA Units in the respective Member Governments. These units will ensure the smooth implementation of AFTA by monitoring progress and improving the coordination and net-working between the ASEAN Secretariat and Member Governments. Various problems in the implementation, of CEPT will be raised by these Units at the relevant ASEAN meetings for appropriate solutions.
The private sector 's the key actor in the Implementation of AFTA. The AFTA and National AFTA Units will also act as channels for communication to the private sector and will receive complaints or enquiries on AFTA. The AFTA Unit also has a publicity function for AFTA through various publications, creation of computer databases (on NTBs, tariff reduction schedules, trade values etc.) and organisation of AFTA seminars. This reflects the importance accorded to ASIAN on private sector participation in the AFTA process.
Efforts are now underway to formulate mechanisms for the settlement of disputes and for the modification of CEPT concessions. Such efforts will provide the necessary Institutional mechanisms to ensure the effective and efficient settlement of disputes.
Emphasis has been laid on AFTA committing itself to open regionalism and to contribute to the global trade liberalisation process. ASEAN is looking into ways of cooperation between AFTA and the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA or CER). Trade facilitation measures such as customs and standards have already been prioritised. Moreover, the provisions in the CEPT accord considerable incentive to ASEAN Member Countries to liberalise unilaterally. For instance, products with reductions 'n their MFN rates will be eligible to enjoy concessions assuming they have at least 40% ASEAN content. Moreover, even products in the Preferential Trading Arragement which are in the Temporary Exclusion List of the CEPT will be eligible for their Margins of Preference of 50%, thus contributing to tariff cuts. During the course of 1994/95, ASEAN Member Countries themselves have been undertaking substantial reductions in their MFN rates.