Understanding Asean Free Trade Agreements

Efforts to close the development gap and expand trade among ASEAN members are essential elements of the political debate. According to a 2008 research mandate published by the World Bank as part of its “Trade Costs and Relief” project,[11] ASEAN members have the potential to reap significant benefits from investment in new trade facilitation reforms, as a result of the important customs reform already implemented by the ASEAN Free Trade Agreement. The management of THE AFTA is managed by the national customs and trade authorities of each ASEAN member. The ASEAN secretariat is authorized to monitor and ensure compliance with AFTA`s measures, but it does not have the legal authority to enforce them. This has led to inconsistent decisions taken by the ASEAN national authorities. The ASEAN Charter aims to strengthen the capacity of the ASEAN secretariat to ensure consistent implementation of AFTA`s measures. The United States, the European Union and Japan continued to be ASEAN`s main export markets. Japan, followed by the United States and the EU, was ASEAN`s main source of imports. In the first half of 2002-03, ASEAN-6 trade with major markets increased by 11.71% for exports and 6.91% for imports. However, ASEAN exports to the United States and India, as well as imports from Canada and India, declined over the same period. [Figure 5] In addition to the China-India free trade agreement, ASEAN also has a combined free trade agreement with Australia and New Zealand, known as AANZFTA.

The agreement, which will also be phased in, has eliminated tariffs on 67% of all products traded between regions and will be extended to 96% of all products by 2020. This is the first time ASEAN has entered into negotiations on a free trade agreement covering all sectors, including goods, services, investment and intellectual property rights, making it the most comprehensive trade agreement ever negotiated by ASEAN. For more details on this agreement, click here. An Introduction to Tax Treaties Across Asia In this issue of Asia Briefing Magazine, we examine the different types of trade and tax agreements that exist between Asian nations.