In 1992 when ASEAN launched the CEPT Agreement for the ASEAN Free Trade Area, the time frame from achieving the free trade region was set at 15 years, i.e. from 1 January 1993 to 1 January 2008. However, in September 1994, the ASEAN Economic Ministers (AEM) agreed to reduce to reduce the time frame from 15 to 10 years, so that AFTA will be realized by the year 2003. At the same time, the Ministers decided to expand the coverage of the CEPT Scheme by phasing-in products in the Temporary Exclusion List into the Inclusion List by the year 2000 and including Unprocessed agricultural products. This represents the first major effort to accelerate AFTA.
In July 1995, His Majesty the Sultan of Brunei Darussalam urged Member Countries to further accelerate the realization of AFTA to the year 2000. In September 1995, the ASEAN Economic Ministers (AEM) agreed to maximize the number of tariff lines in the 0-5% categories in the year 2000 and in the 0% tariff category by the year 2003. This call for further acceleration of AFTA was also echoed at the Fifth ASEAN Summit in December 1995.
Since then, Member Countries have been accelerating their tariff reduction schedules on a voluntary or unilateral basis. Progress in the efforts to accelerate AFTA further are summarized below utilizing the tariff reduction schedules submitted by Member Countries and recent intra-ASEAN trade statistics (July 1994-June 1995) Tariff reductions for these began on 1 January 1996.
From the current tariff reduction schedules of products in the CEPT Scheme, about 87.76% of the total tariff lines in the Inclusion List will be in the 0-5% category by the year 2000 (see Table 7). In terms of trade value, these products account for US$ 40.35 billion or 97.83% of total intra-ASEAN imports. In other words, almost all imports among ASEAN Member Countries would be subjected to no more than 5% import tariff, based on present trade statistics. Thus for all intents and purposes, AFTA 2000 has already been accomplished.
The remaining US$ 897 million (or 2.17%) of intra-ASEAN imports are dominated by a few product particularly in the Machinery and Electrical Appliances (US$ 302 million), Base Metals and Metal Articles(US$ 141million) and Plastics (US$ 95 million) sectors.
Products in the 0% category by the year 2003
Again the current tariff reduction schedules show that 40.91 % of total tariff lines will be at 0% in the ending year 2003 (see Table 8). However, in terms Of trade value, these products account for a large proportion of intra-ASEAN trade i.e. US$ 32.46 billions or 78.67% of the total] intra-ASEAN imports. Hence, nearly 80% of intra-ASEAN imports in the year 2003 will have their tariffs completely eliminated.
Major sectors which will have minimal tariff rates (5% or less) in the year 2003 are Machinery and Electrical Appliances (US$ 4,002 million or 9.7% of total import value), Chemicals (US$ 1,358 million or 3.3% of total import value) and Base Metal and Metal Articles (US$ 706 million or 1.7% of total import value).
This shows that AFTA has been further accelerated since it commenced in 1992. While the target of AFTA 2000 has been essentially accomplished, additional efforts are currently made to reduce CEPT tariffs to zero by the year 2003. Further acceleration of tariff reductions are being made on a voluntary basis by Member Countries in close consultation with the private sectors.
Aside from the tariff reduction under the CEPT Scheme, it should be noted that ASEAN Member Countries have also – reduced tariffs on a Most Favoured Nation (MFN) basis over the past two years. Table 9 shows that almost all ASEAN Member Countries have undertaken MFN tariff reduction during the 1994-96 period with some Member Countries conducting the effort more than once.
Table 9
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Country Date the Package was Issued
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Brunei Darussalam July 1995
Indonesia May 1995; January 1996; June 1996
Malaysia October 1995
Philippines January 1995
Thailand December 1994 and May 1996
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Source: ASEAN Secretariat
There have also been smaller packages of tariff cuts during, the past two years which have been made by Member Countries. The unilateral tariff reductions by ASEAN Member Countries reflects ASEAN’s adherence to the principle of open regionalism.
