ASEAN Free Trade Area

Introduction

The Association of Southeast Asian Nations Free TradeArea (AFTA) is an intergovernmental trading bloc among the ten members ofthe Association of Southeast Asian Nations (ASEAN): Brunei, Cambodia,Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand andVietnam. It was established in 1992 with the signing of the AFTAAgreement. It seeks to promote economic cooperation among its members byreducing tariffs, eliminating non-tariff barriers and eventually achievingfree trade area of ASEAN member countries. At present, the goal of AFTA isto eliminate most of the tariffs and non-tariff measures of trade by2008, and to develop a free trade area by the year 2020.

History

The selection of AFTA as a way to promote ASEAN economiccooperation was first proposed in the Kuala Lumpur Declaration of 1971,which declared the formation of ASEAN. Then, in 1976 the ASEAN issued the Bandar Seri Begawan Declaration,which established the goals of economic cooperation, including theestablishment of a common market and the elimination of tariffs, as wellas the development of transportation and communication networks,technology transfer and the promotion of investment.

In 1987, the ASEAN countries signed the Agreement for the Establishment of the ASEAN Free Trade Area (AFTA), which established the goal of creating a free trade area among the ASEAN countries by the year 2020. The agreement also set the timeline for reachingthis goal with the ASEAN countries committing to reduce the tariffrates on certain import products from each other.

The AFTA agreement was further amended in 1995with the signing of the CommonEffective Preferential Tariff (CEPT) scheme, which reduced tariffs on over 5000 product categories among the members of ASEAN.

Objectives

The main objectives of AFTA are to promote economic cooperationand integration among the ASEAN countries, and to promote thefree movement of goods and services among member countries. By eliminating trade barriers, AFTA seeks to increase intra-ASEAN trade and investment, create more jobs in the region and increase incomes and opportunities for the people of ASEAN.

AFTA also seeks to establish and strengthen initiatives aimedat the mutual recognition of standards and technical regulations, thecoordination of investment promotion activities, the promotion ofcooperative activities in the areas of finance, research anddevelopment and technology transfer, and the promotion of greenenvironmental practices.

Impact

Since its inception, AFTA has had a positive impact on theeconomies of ASEAN. Intra-ASEAN trade has grown significantly, from around$25 billion in 1992 to more than $210 billion in 2018. The increasedtrade has led to a significant increase in investment in the region,with ASEAN countries attracting investments from multinationalcorporations.

AFTA has also helped to reduce poverty in the region. As member countries reduce tariffs and open their markets to foreign investors, they create more job opportunities and attract investment that can spur economic growth. This has led to a reduction in poverty levels in Southeast Asia as more people benefit from increased economic activity.

Conclusion

The Association of Southeast Asian Nations Free Trade Area (AFTA) has been successful in its attempts to promote economic cooperation among its members. Through the elimination of taxes and non-tariff barriers and the establishment of preferential trade areas, AFTA has been successful in increasing intra-ASEAN trade and investment, creating jobs and reducing poverty in the region. It has also served to strengthen political and economic ties among member countries, helping to further solidify ASEAN as a regional powerhouse.

The Association of Southeast Asian Nations – or ASEAN – has been a leader in the globalization of global trade and business. In 2015, the ASEAN Economic Community was established to further promote regional economic integration. One of the most promising initiatives of the ASEAN Economic Community is the ASEAN Free Trade Area (AFTA).

AFTA is the culmination of several decades of regional economic integration that began in 1992 when the ASEAN states signed the ASEAN Free Trade Agreement (AFTA). This agreement opened up the region to trade, investment and services and set out progress targets for the nations within the region. Since then, the friendly relationship between ASEAN countries has resulted in various improvements in the AFTA agreement and the establishment of the ASEAN Free Trade Area.

The main purpose of AFTA is to abolish tariff and non-tariff barriers to trade and services among the ten ASEAN nations, thus creating a single market and production base. In addition, the overall goal of AFTA is to spur free trade and reduce disparities in economic development between developed and developing member states. This has been done by harmonizing trade rules and procedures, reducing tariffs and establishing a common external tariff. AFTA has also led to the harmonization of investment policies, the reduction of non-tariff measures, and the simplification of customs procedures.

Moreover, AFTA has created a more cooperative business environment that encourages the expansion of trade within the region. This has led to the emergence of a strong regional supply chain and a more efficient system of trade. Additionally, some ASEAN countries have used AFTA as a vehicle to attract foreign investment. Through AFTA, ASEAN countries have also managed to lower their production costs, while improving the quality of their products.

Overall, the ASEAN Free Trade Area has had a positive impact on the economies of the ASEAN member countries. AFTA has helped increase intra-regional trade, reduce economic disparities, attract foreign investments, and create a free trade environment. These benefits have reinforced the view that the ASEAN region can serve as a model for economic integration in the global market.