Saturday, 2 January 2010

Zero tariffs for Asean-6 starting January 1

Milestone in free trade in regional bloc

MANILA, Philippines—Starting 1 January 2010, Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand can import and export almost all goods across their borders at no tariff as the Common Effective Preferential Tariffs for Asean Free Trade Area (CEPT-Afta) takes effect.

This move which will bring the total tariff lines traded under the agreement to 54,457 or 99.11 percent is a major milestone in efforts to transform Asean into a more integrated regional bloc economically, politically, socially, and culturally.

“The elimination of tariffs by Asean-6 underscores Asean’s commitment to dismantle tariffs and keep intra-Asean trade open. It will also serve as a catalyst for the development of the single market and production base projected by the Asean Economic Community (AEC) Blueprint,” the Jakarta-based Asean Secretariat said in a statement.

Dr. Surin Pitsuwan, Asean Secretary General, said the landmark agreement could mean savings for the 600 million Asean consumers depending on the market dynamics of the respective Asean-6 countries.

“We sincerely hope that all parties will act to ensure that the man on the street will benefit from these reductions in tariffs,” he said.

The business community, especially the downstream producers, also stands to gain in this new regional setup, Pitsuwan said. “Lower cost of inputs will allow the business community a wider choice of goods, and in the process, they will move towards becoming more competitive globally, as envisaged in the AEC Blueprint,” he added.

Under CEPT-Afta, an additional 7,881 tariff lines will come down to zero tariffs for the so-called Asean-6, the secretariat said.

“Additionally, with the reduction, the average tariff rate for these countries is expected to further decrease from 0.79 percent in 2009 to just 0.05 percent in 2010,” it said.

In 2008, intra-Asean import value of commodities for these 7,881 tariff lines amounted to $22.66 billion, or 11.84 percent of Asean-6 import value within Asean.

The tariff lines include final consumer products such as air conditioners, and chili, fish, and soya sauces, as well as intermediate materials such as motorcycle components and motor car cylinders. Other products include iron and steel, plastics, machinery and mechanical appliances, chemicals, prepared foodstuff, paper, cement, ceramic, and glass.

The CEPT-Afta covers the whole range of products traded by the Asean members-states and provides for the gradual reduction in tariffs of these products starting 1993. It specifies zero-tariff by 2010 for Asean-6 and 2015 for the remaining four countries of Cambodia, Laos, Myanmar, and Vietnam. In 2010, these four countries will also see tariff reductions to 5 percent, where the average tariff rate will decrease from 3 percent in 2009 to 2.61 percent.

Under the CEPT-Afta, agricultural products such as tobacco, coffee, live animals, and animal products, which come under the Sensitive List (SL), will have their tariffs reduced to 5 percent on 2010 and to zero tariff by 2015. The Highly Sensitive List (HSL), comprising rice, will have their tariffs capped on a specified date. As for the General Exclusion List (GEL), the tariffs will remain based on factors such as national security and morals/health/aesthetic/archaeological grounds (e.g.: weapons and opium). As of today, 487 tariff lines or 0.89 percent of tariff lines for Asean-6 still remain in the SL, HSL, and GEL categories.

To facilitate trade, Asean also seeks to complement tariff reduction by: formulating streamlined and simplified customs procedures for clearance of goods, eliminating non-tariff measures, developing the Asean Single Window and the Asean Trade Repository, improving investment protection, providing for dispute settlement and better Intellectual Property Rights regime, and removing the obstacles hindering the movement of professional and skilled workers.

Asean, or the Association of Southeast Asian Nations, groups together Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

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