1. The Eighteenth Meeting of the ASEAN Free Trade Area (AFTA) Council was held on 2 September 2004 in Jakarta, Indonesia.

2. The Meeting was attended by Ministers from Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The Secretary-General of ASEAN was also in attendance. The Meeting was chaired by H.E. Ms. Rini M.S. Soewandi, Minister of Industry and Trade, Indonesia. The AFTA Council Meeting was preceded by a meeting of the ASEAN Senior Economic Officials on 31 August 2004.

3. The Ministers discussed, among others, the progress made in the implementation of the Common Effective Preferential Tariff (CEPT) Scheme; the status of the various requests made under the Protocol Regarding the Implementation of the CEPT Scheme Temporary Exclusion List; the ASEAN Integration System of Preference (AISP); the liberalization of ICT goods under the e-ASEAN Framework Agreement; work on the elimination of non-tariff barriers; and the developments in the work on Rules of Origin.

Realization of the ASEAN Free Trade Area

4. The Ministers welcomed the realization of the ASEAN Free Trade Area (AFTA) as 98.62% of the products in the CEPT Inclusion List (IL) of ASEAN-6 have been brought down to the 0-5% tariff range. As of this date, products in the IL which continue to have tariffs of above 5% are those which have been transferred from the Sensitive Lists (SL) and General Exception Lists (GE) in 2003. For the new ASEAN Member Countries (Cambodia, Lao PDR, Myanmar and Viet Nam or CLMV), 79.13% of the products traded in the region have been moved into the IL and tariffs on 69.88% of these items have already been brought down within the 0-5% band.

5. The Ministers were also pleased to note that tariffs on 60.89% of the products in the IL of ASEAN-6 have been eliminated as Thailand and the Philippines have complied with their commitment under the Protocol to Amend the CEPT-AFTA Agreement for the Elimination of Import Duties. The average tariff for ASEAN-6 under the CEPT Scheme is now down to 1.91% from 12.76% in 1993.

6. The Ministers lauded Malaysia for its decision to accelerate the transfer of automotive CBUs and CKDs into the IL by one year, i.e. from 1 January 2005 to 1 January 2004. The Council underscored that such decision underpins the integration of ASEAN in the automotive sector, which is one of the eleven sectors for priority integration.

Review of the GE List

7. The Ministers noted the review being undertaken on the GE Lists. The Ministers agreed to task Senior Officials to work towards instituting further improvements in the GE Lists, to make it more consistent with the CEPT Agreement.

Elimination of Non-Tariff Barriers

8. The Ministers reiterated the importance they attach to the elimination of non-tariff barriers and called on Member Countries to intensify efforts in the identification of these barriers for subsequent elimination. The Council welcomed the establishment of the Database on ASEAN Non-Tariff Measures (NTMs) which can be accessed at the ASEAN Secretariat website (http://www.aseansec.org). Encouraged by this development, the Ministers renewed their call for greater business sector involvement in the process so that unknown or unlisted NTMs can be notified and cross-notified within the region and those posing as barriers to trade subsequently eliminated.

Enhanced CEPT Rules of Origin

9. The Ministers commended the Task Force on the CEPT Rules of Origin for their relentless effort in enhancing and strengthening the CEPT Rules of Origin. They noted with satisfaction the progress made in this regard. They endorsed the revised CEPT Rules of Origin and its Operational Certification Procedures for the CEPT Rules of Origin, which has been amended to keep it in line with the dynamics in the business environment. The Ministers were pleased to announce the improvement made on the CEPT Rules of Origin with the adoption of partial cumulation in the calculation of ASEAN content. They tasked relevant officials to work out the implementing guidelines for this enhanced ASEAN Cumulative Rules of Origin for consideration of the AEM Retreat in 2005.

10. The Ministers expressed optimism that with the improvements made on the CEPT rules, the business sector in the region would be encouraged to make use of the CEPT Scheme.

11. Noting the on-going negotiations on rules of origin under ASEAN’s free trade arrangements with Dialogue Partners, the Ministers underscored the importance of keeping these rules consistent with the CEPT Rules of Origin.

Standards and Mutual Recognition Arrangements

12. The Ministers noted the progress made in implementing the Framework Agreement on Mutual Recognition Arrangements (MRAs) and the harmonization of standards. They were pleased to announce the completion of the harmonization work on 81 standards which was recognized to be necessary in facilitating intra-ASEAN trade and promoting market access of electrical and electronic products produced in the region.

ASEAN Integration System of Preferences (AISP)

13. The Ministers discussed the status of the implementation of the AISP Scheme. The Ministers, concerned over the low utilization of the AISP Scheme, agreed on the need to expand the coverage of the Scheme. They strongly urged preference-receiving countries (CLMV) to request products highly traded in the region and those preference-giving countries (ASEAN 6) to be more forthcoming in considering these requests. The Ministers also urged preference-receiving countries to maximize the use of the AISP Scheme.

14. They emphasized the usefulness of the AISP Scheme in narrowing the development gap between ASEAN’s original and newer members and in hastening the integration of CLMV into the mainstream of the global and regional market for goods and services.

ASEAN Consultation to Solve Trade and Investment Issues

15. The Ministers welcomed the progress made in the establishment of the ASEAN Consultation to Solve Trade and Investment Issues (ACT), which was envisaged to form a network of government focal points where the private sector can channel operational problems encountered in the implementation of ASEAN economic agreements, such as the CEPT Agreement, for speedy resolution. They expressed their appreciation to the ASEAN-EU Programme for Regional Integration Support (APRIS), which is lending technical assistance and expertise to the ACT, which was modelled after EU’s SOLVIT.

16. The Ministers encouraged the ASEAN Secretariat and APRIS to intensify their efforts to ensure that the ACT is established by the end of 2004, which is the deadline specified in the ASEAN Declaration of Concord II (Bali Concord II).

ASEAN Trade Performance

17. The Ministers noted with satisfaction ASEAN’s trade performance, which continued to improved compared to the 2001-2002 performance. For 2002-2003, total ASEAN exports registered a growth rate of 12.12%, i.e. from US$ 383.85 billion in 2002 to US$ 430.39 billion in 2003. Total ASEAN imports, on the other hand, increased by 9.51%, i.e. from US$ 328.112 billion in 2002 to US$ 359.32 billion in 2003.

18. The Ministers were particularly pleased that intra-ASEAN exports continue to grow at a rate higher than ASEAN’s total exports. Intra-ASEAN exports increased from US$ 86.39 billion in 2002 to US$ 99.7 billion in 2003, up by 15.4%. The growth in intra-ASEAN imports, on the other hand, remained modest as it registered a 3.1% increase or from US$ 72.23 billion in 2002 to US$ 74.49 billion in 2003. Intra-ASEAN export as a percentage of total ASEAN export increased from 22.51% in 2002 to 23.16% in 2003 while for import, the percentage went down from 22.01% in 2002 to 20.73% in 2003.

19. The United States, Japan, the European Union, China and Korea also remained as ASEAN’s largest trading partners. The share of ASEAN trade (exports + imports) with these countries in overall ASEAN trade in 2003 were 14.1%, 13.7%, 11.5%, 7.0% and 4.1%, respectively.

LIST OF AFTA COUNCIL MINISTERS

The 18th AFTA Council Meeting was attended by:

  1. H.E. Ms. Rini M.S. Soewandi, Minister of Industry and Trade, Indonesia; AFTA Council Chairperson
  2. Mr. Lim Jock Hoi, Director General, Representing Minister, Ministry of Industry and Primary Resources, Brunei Darussalam;
  3. H.E. Mr. Kong Vibol, First Secretary of State, Ministry of Economy and Finance, Cambodia;
  4. H.E. Mr. Somdy Douangdy, Vice-Minister of Finance, Lao PDR;
  5. H.E. Dato’ Ahmad Husni Mohamad Hanadzlah, Deputy Minister of International Trade and Industry Malaysia;
  6. H.E. U Tin Winn, Minister for Economic Cooperation, Myanmar;
  7. H.E. Dr. Thomas G. Aquino, Undersecretary of Trade and Industry, Philippines;
  8. H.E. Mr. Lim Hng Kiang, Minister for Trade and Industry, Singapore;
  9. H.E. Dr. Virachai Virameteekul, Vice Minister of Finance, Thailand;
  10. H.E. Mr. Truong Chi Trung, Vice-Minister of Finance, Viet Nam;
  11. H.E. Mr. Ong Keng Yong, Secretary-General of ASEAN