ASEAN enters landmark free trade goal

ASEAN enters landmark free trade goal

P. Parameswaran, Manila, Agence France-Presse

Southeast Asia will enter the free trade era on Tuesday when six
of 10 nations in the region eliminate duties on almost all
products they had pledged under a tariff liberalization scheme a
decade ago.

Brunei, Indonesia, Malaysia, the Philippines, Singapore and
Thailand are scheduled to bring down tariffs on a wide range of
manufactured and agricultural products to between zero and five
percent on Jan. 1, 2002 under the ASEAN Free Trade Area (AFTA)
plan.

The six countries, the first members of the Association of
Southeast Asian Nations (ASEAN), account for more than 96 percent
of trade in the region.

"Jan. 1, 2002 is very significant because effectively, most of
Southeast Asia will be a free trade area by then," ASEAN
spokesman M.C. Abad told AFP.

The four other ASEAN members, newcomers Vietnam, Laos, Myanmar
and Cambodia, are scheduled to reduce tariffs to no more than
five percent from 2006.

With the dismantling of tariff rates under AFTA, Southeast
Asia would enhance its competitive advantage as an international
production base and serve as a catalyst for greater efficiency in
production, Abad said.

"At the same time, the free trade plan would give Southeast
Asian consumers wider choice for better quality consumer products
at competitive rates," he said.

The current average tariff on goods traded among ASEAN members
is estimated at about 3.5 percent -- down from 12.76 percent when
AFTA took off in 1993.

The ASEAN free trade pact gives duty free privileges to
products traded among member countries and which have at least 40
percent local content.

AFTA was adopted by the six original members in 1992 and
implemented a year later to bring intra-regional tariffs to zero
to five percent.

The original deadline to achieve the plan was 2008.

However, three years after AFTA's launching, ASEAN decided to
speed up its implementation by five years to 2003.

It was advanced by another year to 2002 as a result of the
regional financial and economic crisis of 1997-1998 and greater
pressure of competition from other countries.

"That decision clearly demonstrated ASEAN's commitment to
maintain Southeast Asia's economic competitiveness through
economic integration," Abad said.

Under the free trade pact, ASEAN members have the option to
temporarily exclude some products from AFTA to give breathing
space for key domestic industries to develop before facing full-
blown competition.

The two biggest products in intra-ASEAN trade at present are
electrical machinery and equipment, and machinery and mechanical
appliances.

Currently, only 1,675 of 44,062 specified items traded among
the ASEAN six would have tariffs above five percent, Abad said.

ASEAN leaders have agreed to completely eliminate all import
duties in the region by 2010 for the six original members and by
2015 for the new members.

Intra-ASEAN trade accounts for about 20 percent of the
region's annual total trade of more than US$700 billion,
officials say.

ASEAN's major trading partners are the United States, the
European Union and Japan.

Southeast Asian leaders are planning to establish a mega East
Asia free trade zone, covering ASEAN and China, Japan and South
Korea with a total market of more than two billion people.