STATUS OF THE ASEAN FREE TRADE AREA

Mr Chia Shi Teck asked the Minister for Trade and Industry what is the status of the ASEAN Free Trade Area.

Mr S. Dhanabalan: The initiative for an ASEAN Free Trade Area (AFTA) was launched at the fourth ASEAN Summit in Singapore in January 1992. ASEAN agreed to establish the AFTA using the Common Effective Preferential Tariff (CEPT) Scheme as the main mechanism within a time frame of 15 years beginning 1st Janaury 1993 with the ultimate effective tariffs ranging from 0% to 5%.

While ASEAN countries had earlier committed to begin implementation on 1st January 1993, Singapore was the only country to actually implement tariff reductions on this date. Duties on a total of 373 tariff lines were reduced. Malaysia introduced notional cuts. The other ASEAN member countries were not able to implement reductions on time due to internal administrative constraints.

At the 25th ASEAN Economic Ministers Meeting in Singapore in October 1993, ASEAN member countries reached an agreement to operationalise the CEPT Scheme. They agreed to commence tariff reductions by 1st January 1994. This inital package would cover between 15% and 38% of member countries' total number of tariff lines. With these impending tariff cuts, MNCs would find it more attractive to invest in the ASEAN region, thereby enhancing intra-ASEAN trade. Furthermore, this also demonstrates ASEAN member countries' belief in the benefit from a free trade area, and their commitment to implementing the CEPT Scheme on schedule. Singapore is reasonably satisfied with the progress in the implementation of the CEPT Scheme.

In order to facilitate businessmen and investors in their commercial plans and decisions, Singapore and others felt that it was important for the private sector to have as much information as possible on ASEAN member governments' plans for the CEPT. ASEAN countries agreed to publish all the Inclusions and Exclusions lists, as well as the full list of actual tariff reductions. The ASEAN Secretariat had since followed up and released, as scheduled, on 1st November 1993, the publications showing these lists. The private sector may make reference to these lists at the Trade Development Board. Hard, as well as software, copies of these lists may also be purchased from the ASEAN Secretariat.