'Action first, talk after'<\/p>\n
Hadi Soesastro, CSIS, Jakarta<\/p>\n
ASEAN Free Trade Area (AFTA) at last became a reality on Jan.
\n1, 2002 -- on paper, anyway. This fact, however, is not to be
\ntrifled with.<\/p>\n
A decade ago, ASEAN leaders decided to establish a free-trade
\narea and this decision received many skeptical reactions. Some
\nworried that AFTA might be just another futile trade agreement,
\njust like ASEAN PTA (Preferential Trading Agreement), agreed upon
\nin 1977.<\/p>\n
AFTA has got its official seal of agreement in a document less
\nthan 10 pages thick. The document has also come short of
\nmentioning how its final goal is to be attained as it simply
\nrefers to CEPT (Common Effective Preferential Tariffs) as its
\nmethod of achieving the target.<\/p>\n
This is quite unlike NAFTA (North American Free Trade Area),
\nwhich is established by the United States, Canada and Mexico. The
\ndocument marking its establishment is a thousand pages thick.<\/p>\n
Hence the cynical comment that AFTA stands for \"Action First,
\nTalk After\", a reference towards getting things agreed first with
\nthe formulation coming later.<\/p>\n
As it happened, the establishment of AFTA, scheduled
\noriginally for 2008, was accelerated to 2003 and then to 2001.
\nPerhaps this is the uniquely ASEAN way of getting things done.<\/p>\n
Whatever may be said about AFTA, since Jan. 1, 2001, the trade
\ninvolving six old members of ASEAN (Brunei Darussalam, the
\nPhilippines, Indonesia, Malaysia, Singapore and Thailand) has
\nbeen almost completely liberalized.<\/p>\n
As originally agreed, Indonesia will postpone the lowering of
\ntariffs for 66 products until 2003, including petrochemicals and
\nplastics. Malaysia will do so until 2005 with respect to some
\nautomotive products.<\/p>\n
Over 90 percent of ASEAN-6 tariff headings are already placed
\nin the Inclusion List (IL), with tariffs ranging between zero and
\nfive percent in this 2002. Most of these tariff headings have
\nbeen made zero percent and it has also been agreed that in 2010
\nall will be zero percent.<\/p>\n
Today the average tariffs of the tariff headings in IL are
\nalready very low, namely 2.91 percent. Compare this with the
\naverage tariffs of 12.76 percent when AFTA was launched in
\n1993\/94.<\/p>\n
However, there is the Temporary Exclusion List (TEL) for
\ntemporarily excluded products in the AFTA.<\/p>\n
Those products must have been gradually shifted into the IL
\nsince 1996. There are products in the Sensitive List (SL), mostly
\nconsisting of agricultural products like rice and sugar.<\/p>\n
Those products must have entered the IL by 2010. Products in
\nthe General Exception List (GEL) including dangerous goods like
\nammunition and environment spoiling products will remain in the
\nexception list. Thus, the import tariff is almost eliminated.<\/p>\n
The present of non-tariff barriers still becomes a problem.
\nThe AFTA includes the elimination of non-tariff barriers, but the
\ndetail of the process has never been given.<\/p>\n
Perhaps the process is expected to run based on good will. But
\nexporters usually complain when they are facing non-tariff
\nbarriers, especially the suddenly imposed barriers. There is fear
\nthat the decrease in tariff will be followed by the imposition of
\ntariff barriers. It is also necessary to develop various dispute
\nsettlement mechanisms, including anti-dumping regulations.<\/p>\n
The procedure to obtain permits for import with the AFTA
\npreferential tariff also need simplification. So far only five
\npercent of intra-ASEAN trade has applied the preferential tariff,
\nprobably because of the procedure that needs time and cost. Apart
\nfrom that, perhaps the AFTA tariff is not far below the tariff
\nfor the most favored nation (MFN) implemented by all members of
\nthe World Trade Organization (WTO).<\/p>\n
The ASEAN countries have continuously lowered their MFN
\ntariff. The acceleration of the AFTA process may widen the tariff
\ndifferential and stimulate the use of the AFTA tariff.<\/p>\n
The AFTA is actually not aimed at promoting intra-ASEAN trade,
\nbut mainly intended to make the ASEAN economy more competitive
\nand the ASEAN countries more attractive to global investment.
\nASEAN wants to become one of the world's production and export
\nplatforms.<\/p>\n
If intra-ASEAN trade barriers are eliminated, the ASEAN region
\nconsisting of countries with different comparative advantages
\nwill become a production zone attractive to the world investors.<\/p>\n
Various multinational companies have also come to that idea
\nand begun to rationalize their production in the ASEAN region so
\nas to make their products highly competitive and to stimulate
\ntheir production activities.<\/p>\n
To ensure the optimum result, the AFTA needs to be expanded to
\nservices and investment in an integrated program. It is necessary
\nto bolster an AFTA plus idea.<\/p>\n
The AFTA also constitutes the first step of ASEAN economies
\nto integrate themselves into the world economy. Integrated
\nefforts will more guarantee the possibility of making a success
\nthan individual efforts. The implementation of the AFTA is an
\nexercise for trade liberalization. We must try the concept in
\ntrade with our neighbors first before implementing the concept in
\ninternational trade.<\/p>\n
Similarly, if we want to play golf and compete with
\nprofessional golfers like Tiger Woods, a serious exercise is
\nrequired.<\/p>\n
The Asia-Pacific Economic Cooperation (APEC) also needs an
\nexercise in trade liberalization through what is called concerted
\nunilateral liberalization. APEC functions as a driving range for
\neach of its member to improve their strokes while glancing at
\ntheir sides to examine the technique applied by their rivals.<\/p>\n
The AFTA can be regarded as a mini-golf course. It is small
\nbut beautiful and needed in striving to play a role in the global
\neconomy.<\/p>",
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