New members to get grace on tariff cuts from ASEAN
New members to get grace on tariff cuts from ASEAN
KUALA LUMPUR (AFP): Would-be entrants Myanmar, Cambodia and Laos will get five extra years to adhere to the liberalization commitments of a plan to create an ASEAN Free Trade Area (AFTA) by 2003, ministers said Saturday.
The three under-developed nations will have 10 years from January 1, 1998 to integrate into AFTA, ministers of the Association of Southeast Asian Nations (ASEAN) decided at a meeting here, allowing five years for them to phase in the changes after the area comes into forces.
Myanmar, Cambodia and Laos are to join the trade-driven organization at the annual ASEAN ministerial meeting here in July, Malaysian Foreign Minister Abdullah Ahmad Badawi announced. Current members are Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Experts have seen the integration of the three countries into AFTA, which would create a free trade area of 500 million people, as one of the biggest challenges facing ASEAN.
Concern
Concern over their ability to meet the market liberalization requirements of AFTA and other economic agreements had clouded their bid for elevation from observer status to full membership of ASEAN.
Philippine Foreign Minister Domingo Siazon said the ministers who met here, however, believed it was better to induct the three countries sooner than later to allow them to adjust faster to the AFTA tariff-cut schedule.
"We are convinced of the argument that it is better to get them in earlier so that we can help them faster," Siazon told reporters.
He said the three countries needed assistance to initiate and implement economic reforms to catch up with the others.
Indonesian Foreign Minister Ali Alatas said 10 years would be enough for the three would-be entrants to integrate with the AFTA process.
"We will cross the bridge when we are there, but I think right now everybody is confident it can (be achieved)," Alatas said.
The grace period given to Myanmar, Cambodia and Laos is part of a "two-track" approach adopted by ASEAN to the creation of AFTA, its most ambitious economic endeavor.
Vietnam, which joined ASEAN in 1995, has been given leeway until 2006 to match the tariff cuts of the more mature economies.
By 2003, tariffs on goods traded within ASEAN would be lowered to a range of zero-to-five percent. The average ASEAN tariff rate is expected to decrease from 7.1 percent in 1996 to 2.7 percent when AFTA is created.
Disparities between older member-states and Vietnam as well as aspiring members in their level of economic development has been seen as the main hurdle in opening up markets and negotiating tariff-cut schedules.
Liberalization would increase the attractiveness of ASEAN as a production center for foreign investors and boost intra-regional trade, which has grown to more than 70 billion dollars from 27 billion dollars in 1990.
Eighty-eight percent of the products traded within the region would see tariffs brought down to zero-to-five percent by 2000 itself, three years before AFTA's formal creation.
Member-states have agreed to consider the possibility of even eliminating tariffs altogether by 2003.
ASEAN Secretary-General Ajit Singh said here recently that ASEAN should move on beyond AFTA to create an open investment area to attract greater investment flows.