ASEAN trade body endorses enhanced 'rules of origin'<\/p>\n
Zakki P. Hakim, The Jakarta Post, Jakarta<\/p>\n
Trade ministers of the Association of Southeast Asian Nations
\n(ASEAN) member countries endorsed on Thursday a revised agreement
\non the \"rules of origin\" in a bid to help boost regional trade.<\/p>\n
The decision was taken during a one-day meeting of the 18th
\nASEAN Free Trade Area (AFTA) council here.<\/p>\n
The rules of origin include, among other things, a stipulation
\nthat products manufactured in an ASEAN country must have a
\nminimum 40 percent local or ASEAN content (raw materials or
\ncomponents) to be able to enjoy low tariffs when exported to
\nother countries within the region. This is part of the game rules
\nunder AFTA, where import tariffs are cut to between zero and 5
\npercent through the Common Effective Preferential Tariffs (CEPT)
\nscheme.<\/p>\n
The revision of the rules of origin cut the threshold of the
\nlocal content requirement to 20 percent, a move that
\ntheoretically should boost trade within the region as more
\nexported products can enjoy the lower tariff facility.<\/p>\n
Indonesia's Minister of Industry and Trade Rini Soewandi, who
\nalso chairs the AFTA council, told a press conference that the
\nnew 20 percent threshold would still be reviewed in the coming
\nyears with a possibility of further reductions to around 10
\npercent.<\/p>\n
Rini said that the enhanced CEPT rules of origin was expected
\nto boost trade within ASEAN countries from 23 percent of the
\nregion's total trade last year to up to 27 percent at the end of
\n2007.<\/p>\n
ASEAN exports to the world were valued at US$403.39 billion
\nlast year, a 12.12 percent increase from $383.85 billion in the
\nprevious year.<\/p>\n
Trade among ASEAN countries has been consistently low since
\nAFTA gradually started more than a decade ago, compared to
\nregional trade among European Union member countries and the
\nMercosur, where it reached 75 percent and 35 percent of the
\nregion's total trade.<\/p>\n
Mercosur, a South American economic group, consists of Brazil,
\nArgentina, Paraguay, Uruguay, Chile and Bolivia.<\/p>\n
The reason behind the low trade among ASEAN member countries
\nis that the private sector in the region has been reluctant to
\nexploit the CEPT scheme due to additional paperwork,
\ninsignificant benefits and potential loss of revenue for local
\ngovernment.<\/p>\n
Moreover, the regional group has yet to streamline customs
\nprocedures and to adopt shared product standards.<\/p>\n
Elsewhere, the AFTA council has also completed the conformity
\nof standards for electrical and electronic products, which would
\nopen more market access for production within the region.<\/p>\n
The meeting also discussed the status of various requests made
\nunder the protocol regarding the implementation of CEPT scheme's
\ntemporary exclusion list.<\/p>\n
Indonesia had requested that sugar be included in the highly
\nsensitive list, which enabled the country to impose an unlimited
\nimport duty without a time frame, but had to face opposition from
\nThailand although all other countries granted the request.<\/p>\n
It was concluded that Indonesia and Thailand would solve the
\nmatter on a bilateral basis.<\/p>\n
ASEAN's founding members are Brunei Darussalam, Malaysia, the
\nPhilippines, Singapore, Thailand, and Indonesia, with Cambodia,
\nLaos, Myanmar and Vietnam its newer members.<\/p>",
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