ASEAN speeds up tariff reductions in 11 sectors

Meidyatama Suryodiningrat, The Jakarta Post, Vientiane

Leaders of the Association of Southeast Asian Nations (ASEAN) agreed on Monday to accelerate tariff reductions by eliminating Common Effective Preferential Tariffs (CEPTs) in 11 sectors by 2007.

The 11 sectors are agro-based, automotive, electronics, fisheries, rubber-based, textile and apparels, wood-based, air travel, e-commerce (also known as "e-ASEAN"), health care and tourist industries.

"This is a significant decision since these 11 sectors constituted more than 50 percent of intra-ASEAN trade in 2003," ASEAN Secretariat spokesman M.C. Abad said.

Data from the ASEAN Secretariat shows that intra-ASEAN trade last year reached US$84 billion, or 23 percent of the region's trade with the world, a slight drop from the previous year's $80 billion but higher than the $79 billion in 2001.

The decision, endorsed under the Framework Agreement for the Integration of Priority Sectors, is aimed at hastening further economic integration toward a single market and production base in the region.

Under the ASEAN Free Trade Area (AFTA), all tariffs within ASEAN will be eliminated by 2010.

With Monday's agreement, the ASEAN-6 countries -- Indonesia, Singapore, Malaysia, the Philippines, Brunei and Thailand -- will achieve the elimination of tariffs in these 11 priority sectors by 2007.

Tariffs averaged about 12 percent during the start of AFTA and now stand at an average of 2 percent.

Due to the economic disparity between the first six ASEAN member states and the last four -- Cambodia, Laos, Myanmar and Vietnam (known by the acronym CLMV) -- a later deadline of 2012 has been set for the CLMV countries for the elimination of tariffs in the 11 priority sectors.

ASEAN also agreed to establish criteria for identifying non- tariff barriers by June next year, to be followed by a definitive program for the removal of these barriers starting Dec. 31, 2005.

While ASEAN officials were upbeat about this new initiative, a closer examination of the agreement revealed the stipulation that products "on the sensitive list, highly sensitive list and general exception list would be exempt from the acceleration".

The director general of international cooperation at the Indonesian Ministry of Trade, Pos M. Hutabarat, earlier said a country could only place on the "sensitive list" an average of 15 percent of its total products from each sector.

He said Indonesia had proposed a sensitive list dominated by automotive products and their components.

ASEAN Framework Agreement for the Integration of Priority Sectors

-- Eliminate tariffs in priority sectors by 2007 for ASEAN-6 and 2012 for CLMV countries.

-- A work program for the removal of non-tariff barriers by Dec. 31, 2005.

-- Accelerate the liberalization of services in priority sectors by 2010.

-- Encourage recognition of test reports by accredited laboratories to enhance harmonization of product standards and technical regulations.

-- Visa exemption for intra-ASEAN travel by ASEAN nationals by 2005.

-- Develop an agreement to facilitate movement of businesspeople, experts, professionals and skilled labor by Dec. 31, 2005.