TRADE
ASEAN Free Trade Area (AFTA)
65. Intra-ASEAN trade continued to expand rapidly in 1995 as a result of ASEAN's commitment to the CEPT scheme. During 1993, its first year of implementation, the trade in CEPT products amounted to four-fifths of total intra-ASEAN exports or 80.27%. The sectors that contributed to by this were machinery and mechanical appliances, mineral products, textiles, chemicals and plastics. The intra-ASEAN trade scene has been dominated by the ASEAN Dialogue Partners, Australia, Canada, the European Union, Republic of Korea, Japan, New Zealand and the United States of America. In 1993, Dialogue Partner trade accounted for 71.22% of total extra-ASEAN trade. This trend continued well into the following two years. In 1994, total exports by the Member Countries to each other amounted to US$60.3 billion. This figure climbed to US$ 70 billion in 1995, an increase of 16.9%. Intra-ASEAN exports for products under the CEPT Scheme posted a US$10.3 billion or 20.94% increase over 1994 to reach US$ 59.3 billion last year. While the increase cannot be attributed solely to the CEPT Scheme, the scheme has undoubtedly contributed to the current expansion of intra-regional trade (see Tables 3 and 4).
66. The Philippines, Malaysia and Thailand experienced the highest increases in their exports to other ASEAN countries in 1995, posting increases of 65.7%, 22.8% and 11.3% respectively over the corresponding figures for 1994. Singapore remained the region's biggest exporter of ASEAN products, accounting for over 47% of intra-ASEAN exports while Malaysia's and Thailand's share in intra-ASEAN exports rose 26% and 13% respectively in 1995.
Implementation of AFTA
67. Further acceleration of the AFTA process was discussed at the Fifth ASEAN Summit. Prior to the Fifth ASEAN Summit, the 27th ASEAN Economic Ministers� Meeting of 7-8 September 1995 in Brunei Darussalam moved to implement a revised accelerated ten-year tariff reduction programme. The Fifth ASEAN Summit endorsed the revisions and implementation of the ten-year tariff reduction package which began on 1 January 1996. Following her admission into ASEAN in July 1995, it was agreed that Vietnam would begin the implementation of the CEPT Scheme on 1January 1996. This is scheduled to end on 1 January 2006.
68. The package also contained important commitments on trade facilitation measures particularly in the areas of customs and the elimination of non-tariff barriers (NTB's). In addition, mechanisms to ensure the effective and efficient settlement of disputes have begun to be formulated.
69. The revised package comprises four components: the existing Inclusion List (42,678 tariff lines), the first batch of products transferred from the Temporary Exclusion List (687 tariff lines), the Immediate Inclusion List of the Unprocessed Agricultural Products (1,387 tariff lines) and the first package of the Inclusion List from Vietnam (857 tariff lines). This package brings the total number of tariff lines in the Inclusion List to 45,609 tariff lines, approximately 94% of the total tariff lines in ASEAN. The CEPT Product List, which contains the list of these products and the corresponding tariff reduction programme, is already available to the public in both hardcopy and diskette form. ASEAN Countries have already completed the process of legally enacting their various tariff reduction commitments and their CEPT Concessions Exchange Manuals (CCEMs).
70. The Eighth AFTA Council of 10 December 1995 also endorsed the inclusion of unprocessed agricultural products into the CEPT Scheme. Nearly 1,358 tariff lines representing 68 % of all unprocessed agricultural items now come under the CEPT Scheme. Over the next seven years, another 402 tariff lines or 20% of unprocessed agricultural products will be phased in.
71. The Ninth AFTA Council of 26 April 1996 continued the work begun by the Eighth. Noting that certain agricultural products require a degree of flexibility, the Council made special provisions for them. Trade liberalization commitments, different from the CEPT Scheme but better than
those offered by Member Countries at the WTO were created specifically for these products. But this special arrangement will expire in 2010 and all unprocessed agricultural products will be phased into the CEPT Scheme no later than this date.
72. The realization of AFTA requires more than the reduction of tariffs. Moves to harmonise tariff nomenclature, customs procedures and customs valuation have already been made. Tariff nomenclature at the eight-digit level is now being harmonised and is expected to be completed by 1997. Member Countries are already preparing to implement the GATT Valuation Agreement (GVA) by 1997, well ahead of the WTO deadline of year 2000 for developing countries. ASEAN is also considering harmonising its implementation of the GVA, to enhance the uniformity of trade and customs valuation. Member Countries will also simplify and harmonize customs procedures such as formalities prior to lodgment of goods declaration at time of import, customs clearance for home use and examination of goods. The ASEAN Directors-General of Customs are finalizing a new ASEAN Agreement on Customs which calls for greater transparency, efficiency and simplicity of customs administrations. This agreement will also provide for the harmonisation of tariff nomenclature, customs valuation and customs procedures. On 1 January 1996, the Green Lane which accelerates customs clearance for CEPT products kicked off.
73. As tariffs on intra-ASEAN trade under the CEPT Scheme for AFTA come down, the elimination of non-tariff barriers has become the new focus. The CEPT Agreement calls for the elimination of NTBs for each product five years after its enjoyment of CEPT concessions. The Eighth AFTA Council agreed to eliminate NTBs earlier than initially planned for and no later than the year 2003. It also called for the initial activities for the elimination of NTBs to begin in 1996. Such activities include the removal of customs surcharges, and in the case of technical standards, the achievement of transparency, harmonization and mutual recognition in priority sectors.
74. Recognising the private sector as an important source of information on barriers to trade, the Council agreed to establish a mechanism for the private sector to report to the National AFTA Units and to the AFTA Unit at the ASEAN Secretariat. Member Countries also agreed to prioritize the sectors which are widely traded such as electrical appliances and machinery, base metals, plastics, and chemicals to remove NTBs and promote harmonisation. The technical working groups in ASEAN which are responsible for developing product standards for Member Countries will correspondingly prioritise work pertaining to these sectors. A short list of products in these sectors has already been identified for harmonization.
75. In keeping with the principle of "open regionalism", the ASEAN Economic Ministers met with their counterparts from the CER countries in September 1995 in Bandar Seri Begawan where short- and long-term programmes to enhance trade and investment linkages between the two regions were developed. The initial activities identified are listed in Table 2.
The ASEAN and CER Economic Ministers will review the progress of the linkage later this year. The private sector has been encouraged to participate in this process.
76. On the further acceleration of AFTA, the Fifth ASEAN Summit agreed to expand the number of items with tariff rates reduced to 0-5% by the year 2000, and maximise the number of items with tariff rates reduced to 0% in the year 2000. Since the Summit, some Member Countries have made unilateral moves to increase the number of tariff lines where tariffs can be set at 0-5% by the year 2000. The latest figures show that there is a total of 38,373 tariff lines which will have tariffs in the 0-5% range by the year 2000. This represents nearly 88% of all the tariff lines in the CEPT Scheme and 81% of all the tariff lines in ASEAN and covers about 98% of intra-ASEAN imports (based on trade statistics of July 1994 to June 1995). The Summit also considered reducing the ending tariff rate of AFTA to 0% by the year 2003 on a voluntary basis.
77. To keep the public informed and enhance awareness of the CEPT Scheme for AFTA, the ASEAN Secretariat has continued to publish the AFTA Reader and disseminate information on AFTA through the ASEAN Homepage in the ASEANWEB.