ASEAN Free Trade Area

(AFTA)
AFTA is an Economic Cooperation in
ASEAN
which covers only Trade in Goods
Other Economic Cooperation:
• Trade in Goods: ASEAN PTA ; Customs; Standard and Conformance
• Industry: AICO
• Trade in Service: AFAS
• Investment: AIA
• ASEAN Economic Community (AEC)
• ASEAN External Economic Cooperation: China ( ACFTA), India ( AIFTA),
Korea ( AKFTA), Japan (AJCCEP), AANZ
 ASEAN PTA
Agreement on ASEAN Preferential Trading Arrangement(PTA): Assigned
by ASEAN Ministers of Foreign Affairs on 24 February 1997 in Manila.

• Preferential tariff: MOP, as of 31 Dec 2002.

• Local ASEAN Content: CEPT rules of origin( Initially 50%)

 AFTA
Establishment:
• 28 January 1992 (Singapore)
- The 4th ASEAN Summit: the Leader signed the framework agreement
on enhancing ASEAN economic cooperation; which contains amongst
others, agreement to establish AFTA
- The main legal basis to implement AFTA is the common effective
preferential tariff (CEPT) agreement signed by ASEAN Economic
Ministers on 28 Jan 1992.
• 1 Januaury 1993
- AFTA was officially started with time frame of 10 years(initially 15
years)
 Objectives of AFTA
• To increase ASEAN’s competitiveness as production base geared for
the world market

• To attract more foreign diret investment into ASEAN

• To expand intra-ASEAN trade

 Benefits of AFTA
• ASEAN companies can benefit by:
- Being able to import production inputs from other ASEAN countries at
lower costs
- Being able to export to other ASEAN countries at lower tariffs and less
trade barriers

• ASEAN consumers can benefit by:

- Having more choices of products for consumption at lower prices
 CEPT Scheme
• CEPT ( Common Effective Preferential Tariff) Scheme in the main
mechanism for AFTA
• It covers all manufactured and agricultural products (processed or
unprocessed);
• Products must have a 40% ASEAN content to enjoy tariff preferences
or CTH
• The legal basis: CEPT Agreement
 CEPT Agreement
• Gradual reduction of intra- ASEAN tariff rates to 0-5%
- ASEAN-6 : 2003
- Viet Nam: 2006
- Laos & Myanmar: 2008
- Cambodia:2010
• Elimination on intra-ASEAN tariff:
- AEAN-6:2010
- CLMV:2015
• Granting of concessions on a reciprocal basis
• Elimination of quantitative restrictions upon enjoyment of the concessions
• Gradual elimination of other non tariff barriers within a period of 5 years after
the enjoyment of CEPT concessions
 CEPT Product List
• Four categories of products in the CEPT Scheme:
- Inclusion List (IL)
- Temporary Exclusions List (TEL)
- Sensitive List ( SL)
- General Exception List (GEL)
 Rules of Origin
• General Rules:
- Regional Value Content of 40% (RVC(40%)
- Regional Value Content of 40% or Change in Tariff Headings (CTH)

• Produt Specific Rules (PSR)

- Implementation: Each sub-heading (HS 6-digit) has its rules
1. Look at PSR List;
2. If not listed in the PSR, look at the ROO  RVC40 or CTH
Formula for Calculating Regional Value Content of 40%:

Value of Imported Value of

non-ASEAN + Undetermined origin
Materials, Parts or Materials, Parts or
Produce Produce
_____________________________________________ < 60%
FOB PRICE
 Ultimate Target of AFTA
• 3rd Informal Summit in Novemeber 1999(Manila), the Leaders agreed
to eliminate a import duties. Protocol to amend the CEPT-AFTA
agreement for the eliminations of import duties was signed on 30
January 2003:
- By 2010 f0r six original members;
- By 2015 for the new members, but allowing some sensitive products
by 2018.
- Not applicable for products listed in Protocol on Special Arrangement
for sensitive and highly sensitive products
 ASEAN Economic Community(AEC)
• Decision: 9 ASEAN Summit, 7-8 October 2003 in Bali
• The declaration of ASEAN Economic Community(AEC) by the Leaders
• AEC: A single market and production base, with free flow of goods,
services, investment and labor, and freer flow of capital. This is the
realization of the end goal economic intergration as outlines in the
ASEAN vision 2020.
 ASEAN Framework Agreement on
the Integration of Priority Sectors
• 10th ASEAN Summit, 29-30 November 2004 di Vientiane;
• Towards the ASEAN economic Community (AEC), the ASEAN leaders
agreed to accelerate the integration of 11 priority sector(electronics,
e-ASEAN, healthcare, wood-based products, textiles, and apparels,
agro-based products, fisheries, air travel and tourism)
• Import duties of these products will be fully eliminated by 2007 for
ASEAN-6 and 2012 for the new members.
 ASEAD TRADE IN GOODS
AGREEMENT(ATIGA)
• Signed by all member states on 26 February 2009

• Objective: to achieve free flow of goods in ASEAN as one of the

principal means to establish a single market and production base for
the deeper economic integration by the region towards the realization
of the AEC by 2015
OTHER ASEAN FTAs
 ASEAN-China (ACFTA)
• Framework Agreement on comprehensive economic cooperation
between the association of south east Asian nations and the People’s
Republic of China
- Signed by the Leaders in ASEAN-china Summit, Phnom Penh, 4
November 2002
- To strengthen and enhance economic trade and investment
cooperation.
• Agreement on Trade in Goods
- Signed by Economic Ministers at the 10th ASEAN Summit, 29-30
November 2004 in Vientianne.
- Normal Tract: eliminate import duties by 2010 for ASEAN-6
• Agreement on Trade in Goods
- Signed by Economic Ministers at the 10th ASEAN Summit, 29-30
November 2004 in Vientianne.
- Normal Tract: eliminate import duties by 2010 for ASEAN-6
- Sensitive Track: reduce to 0-5% of import duties by 2018(ASEAN-6);
- Highly Sensitive: reduce to 50% of import duties by 2015(ASEAN-6);
- Longer time frame for CLMV
 ASEAN-India (AIFTA)
• Framework Agreement on Comprehensive Economic Between the
Association of Southeast Asian Nation and the Republic of India
- Singed in ASEAN-India summit in Bali, 8 October 2003
- To enhance close economic cooperation and to work towards an
ASEAN-India Regional Trade and Investment Area
 ASEAN-Japan (AJCEP)
• Framework for Comprehensive Economic Partnership between ASEAN
and Japan

- Signed by the Leaders in ASEAN-Japan Summit in Bali, 8 October 2003

 ASEAN-Korea(AKFTA)
• Framework Agreement on Comprehensive Economic Cooperation
Among the Governments of ASEAN and Korea, signed by the leaders
in ASEAN-Korea Summit in Kuala Lumpur, 13 December 2005
• Agreement on Trade in Goods(TIG), signed in August 2006. The
implementation is after the ratification by at least one ASEAN
member and Korea.
 ASEAN-Australia-New
Zealand(AANZ)
• Agreement Establishing the ASEAN-Australia-New Zealand Free Trade
Area.
• Signed in Cha-am, Thailand on 27 February 2009