Economist fears for ASEAN free trade

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)