asean

                                 

                                                                     

                           asean


                   

Member Countries

Brunei Darussalam	Cambodia	Indonesia	Laos	Malaysia
Myanmar	Philippines	Singapore	Thailand	VietNam

ASEAN Free Trade Area (AFTA )

I. Overview and History
The ASEAN Free Trade Area (AFTA) was first agreed upon at the fourth ASEAN summit in Singapore in 1992. At the time all six ASEAN member states, Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand, signed the agreement that laid out a comprehensive program of regional tariff reduction, to be carried out in phases through the year 2008. The initiative turned out to be a great success: Over the next few years the program of tariff reduction was broadened and accelerated. In fact, in order for Vietnam, Laos, Myanmar and Cambodia to join ASEAN they had to sign the AFTA agreement. The original six AFTA signatories finally decided to move the 2008 deadline forward to 2003, however the newer ASEAN members were granted more time to meet the tariff reduction obligations.
The Common Effective Preferential Tariff (CEPT) is the mechanism through which tariff reduction is achieved. Members can exclude certain products in any of the three following cases:

1. Temporary exclusions
2. Sensitive agricultural products
3. General exceptions

By 2003 the CEPT scheme already covered 98% of all tariff lines in the original 6 AFTA nations. The only products not covered were those that fell under the special categories of either "general exceptions" or "sensitive agricultural products". The ASEAN countries have decided to enact zero tariff rates on virtually all imports by 2010, and 2015 for the newer members. (13)
The reduction of CEPT rates in the individual ASEAN countries from 1998 to 2003, as well as the average overall ASEAN tariff rate throughout this period is depicted graphically here.

II. Global significance
Today the ASEAN Free Trade Area is one of the most active and important regional blocs in the world, and has helped trade in the South China Sea increase dramatically. The population living in the 10 member states that comprise AFTA is larger than that of both NAFTA and the EU. Key statistics on ASEAN and other major regional blocs are summarized in the following table:

Most Active Regional Blocs
	Area (km²)	Population	GDP (PPP) in M $US	GDP per capita	Members
NAFTA	21,588,638	430,495,039	12,889,900	29,942	3
EU	3,977,487	460,124,266	11,723,816	25,480	25
SAARC	5,136,740	1,467,255,669	4,074,031	2,777	8
CSN	17,339,153	370,158,470	2,868,430	7,749	10
ASEAN	4,400,000	553,900,000	2,172,000	4,044	10
Source: http://en.wikipedia.org/wiki/Trade_bloc#Most_active_regional_blocs

For a detailed map of today's active regional blocs please click here.
The 2004 agreement with China to establish an ASEAN-China Free Trade Area (ACFTA) will of course further boost the economic significance of the region. As the vice president of the Chinese Academy of International Trade and Economic Cooperation Shen Danyang points out, the FTA agreement provides an excellent opportunity to further accelerate economic growth in all participating countries, by improving trade relations, encouraging mutual investments, and greatly increasing the trans-border flow of goods and services. The liberalization of trade and investment will help enhance production capability, efficiency and competitiveness, and therefore create more export opportunities to the world. This could perhaps even be a step towards the formation of a Pan-Asian Community that would also include India, Japan, and South Korea. However, at the moment such plans are still in a very early stage and it might take years, if not decades, before their realization. (10)