Economist fears for ASEAN free trade
JAKARTA (JP): An economist warned yesterday that non-tariff barriers between members of the Association of Southeast Asian Nations (ASEAN) could disrupt the implementation of the ASEAN Free Trade Area (AFTA) agreement.
Mari E. Pangestu, head of the economic department of the Center for Strategic and International Studies, said yesterday that AFTA, to be implemented under a Common Effective Preferential Tariffs (CEPT) scheme, will only reduce tariffs by the year 2003, while non-tariff barriers are not affected.
"What you need is an AFTA plus as CEPT alone is not enough. You also need to reduce non-tariff barriers...," Mari said at a seminar on ASEAN strategies and actions, hosted by the ASEAN Secretariat.
Under AFTA quantitative restrictions on products in the inclusion lists are set to be eliminated by 2003, while non- tariff barriers are to be eliminated within five years of the enjoyment of concessions.
"However, it is not clear yet what is defined and included in the category of non-tariff barriers," Mari said.
According to the ASEAN secretariat, the list of non-tariff barriers affecting intra-regional trade includes mostly technical measures and customs surcharges.
Customs surcharges on CEPT products are scheduled to be removed by the end of this year. As for Indonesia, it has removed or transferred all of its surcharges to its tariff structure.
Technical measures, such as non-tariff barriers, are to be eliminated through transparency, harmonization of standards and mutual recognition agreements. Priority products, including electronic appliances, machinery, plastics, base metals, chemicals and agricultural goods, have been targeted for harmonization by the end of this year.
Meanwhile, quantitative restrictions and non-tariff barriers for products which fall under the category of temporary exclusion lists, sensitive lists and permanent lists will not be touched by CEPT until the products enter the inclusion list.
The temporary inclusion lists among ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam -- cover 3,130 tariff lines or about seven percent of all tariff lines in ASEAN, while some agricultural produce fall under the sensitive list, in which Indonesia has 15 tariff lines.
Mari noted that it is possible that non-tariff barriers will exist or be introduced after the year 2003 because each member country puts its national interests above those of ASEAN.
"Once cross-border barriers are reduced, a country wanting to protect its industries will try to find other ways to do so," Mari said.
An export-oriented firm operating in a bonded zone in Indonesia, for instance, has no problem in selling its products. However, once it targets the domestic market, it will face various barriers.
Mari also noted that ASEAN countries, under AFTA, can forge closer cooperation and complement their endowments to improve their competitiveness in the global market.
She suggested that ASEAN countries work closer to build an ASEAN competitiveness in three sectors, namely electronics, textiles and automotive industries.
By adopting the AFTA spirit, ASEAN countries can also forge closer cooperation in defending their common interests in multilateral trade forums, such as the inaugural ministerial conference of the World Trade Organization in Singapore in December. (rid)