Regional currency crisis could expedite AFTA

By Riyadi

KUALA LUMPUR (JP): The current regional currency turmoil may prompt the Association of Southeast Asian Nations (ASEAN) to speed up the implementation of a free trade arrangement in the region ahead of schedule.

Malaysian Minister of International Trade and Industry Rafidah Aziz said yesterday that ASEAN's economic and trade ministers agreed to accelerate the process toward a free trade area by cutting tariffs ahead of 2003 as earlier scheduled.

She said the ministers, grouped as the AFTA Council, shared the view that the implementation of AFTA (the ASEAN Free Trade Area) would facilitate a long-term adjustment to their economies to enhance ASEAN's resilience toward external volatility.

The current regional currency crisis had created a window of opportunity for regional industries to enter a period of consolidation and to make necessary adjustments to increase competitiveness, Rafidah said when reporting on the result of the meeting of the AFTA council ahead of an annual meeting of ASEAN economic ministers starting Thursday,

The ministers reviewed the progress of the implementation of the Common Effective Preferential Tariff (CEPT), the main instrument designed to implement AFTA by 2003.

Already, the average CEPT rate on products on the inclusion list had fallen to 6.38 percent from 12.76 percent in 1993, and was scheduled to fall to 2.55 percent by 2003.

As a result of tariff reduction under the CEPT scheme, intra- ASEAN exports grew 13.4 percent to US$77.8 billion last year from US$68.7 billion in 1995.

Rafidah said the AFTA Council also agreed to develop a plan for the establishment of mutual recognition arrangements in ASEAN to eliminate technical trade barriers.

"The council also agreed that barriers to trade, including bureaucratic and administrative barriers, delays in decision and so forth, should be eliminated to support the AFTA process," she said.

At yesterday's meeting, new ASEAN members Laos and Myanmar submitted complete product lists to the AFTA Council, and the council endorsed them.

Laos and Myanmar acceded to the CEPT agreement last July and agreed to implement their CEPT commitment on Jan. 1, 1998, and complete it within 10 years, or by 2008.

Laos was committed to including 553 tariff items, or 15 percent of its total tariff items, on CEPT's inclusion list, 2,820 on the temporary exclusion list, 96 on the sensitive list and 102 on the general exception list.

Myanmar was committed to including 2,355 tariff items, or 43 percent of its total tariff items, on the inclusion list, 2,987 on the temporary exclusion list, 21 on the sensitive list and 108 on the general exception list.

Import tariffs on products on the inclusion list must be reduced to 5 percent or less by 2003 for the six advanced members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- by 2006 for Vietnam and by 2008 for Laos and Myanmar.

Laos and Myanmar have until 2015 to add products from the sensitive list to the inclusion list. Vietnam has until 2013. The six other ASEAN members have an earlier deadline of 2010.

To facilitate Laos, Myanmar and Vietnam's CEPT obligations, Rafidah said, the AFTA Council agreed to provide technical assistance to those countries in areas ranging from setting up a trade database to implementing the General Agreement on Tariff and Trade (GATT) valuation code.

"We even agreed to provide assistance for human resources development and trade policy issues," Rafidah said after the meeting.

The council also agreed that the six most-developed ASEAN member countries would implement the GATT Valuation Agreement, governing the value of import tariffs, by this year or early next year. Laos, Myanmar and Vietnam would implement it by 2000 at the latest.

Yesterday's AFTA Council meeting was attended by Rafidah, Brunei Minister of Industry and Primary Resources Abdul Rahman Taib, Indonesian Minister of Industry and Trade Tunky Ariwibowo, Philippine Secretary of Trade and Industry Cesar B. Bautista, Singaporean Minister of Trade and Industry Lee Yock Suan, Thai Deputy Minister of Finance Thawachwong Na Chiengmai, Vietnamese Vice Minister of Finance Le Thi Bang Tam Hung, Lao Vice Minister of Finance Bounlit Kennavong and Myanmarese Minister for National Planning and Economic Development David O. Abel.

Cambodian Minister of Rehabilitation and Development and Minister of Economy and Finance Keat Chhon also attended yesterday's AFTA Council meeting as an observer.