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ASEAN Free Trade Area

ASEAN Free Trade Area. CEPT-AFTA Milestones. 2002 100% of products in the Inclusion List (IL) tariffs between 0% and 5% 2003 60% of products in the IL have 0% duty 2007 80% of products in the IL have 0% duty

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ASEAN Free Trade Area

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  1. ASEAN Free Trade Area

  2. CEPT-AFTA Milestones • 2002100% of products in the Inclusion List (IL) tariffs between 0% and 5% • 200360% of products in the IL have 0% duty • 200780% of products in the IL have 0% duty • 2010All products will have zero duties, except sensitive agricultural products (e.g. rice) • 2015/2018New ASEAN Members will eliminate their import duties

  3. CEPT-AFTA Implementation • Substantial realization on tariff elimination • 0-5% CEPT tariff rates • 99.77% in the 0-5% tariff band for ASEAN 6 - 98.83% for RP or 5,832 tariff lines using HS 2002 • 76.86 in the 0-5% band for CLMV 0% CEPT tariff rates • 65.09% at 0% tariffs for ASEAN 6 - 59% for RP or 5,732 tariff lines using HS 2002 • The average tariff for ASEAN-6 under the CEPT is 1.74 % low from 12.76% in 1993

  4. ASEAN-AUSTRALIA-NEW ZEALAND FREE TRADE AGREEMENT

  5. Background • Basis:Angkor Agenda (1997 Study) • High Level Task Force (1999): double each region’s GDP to US$1trillion and bring about $48B in additional GDP to the region by 2020) • Joint Declaration signed by Heads of States ASEAN-ANZ Commemorative Summit, Nov. 2004 • Leaders’ mandate to launch AANZFTA negotiations • Guiding Principles: • Comprehensive in scope • Deep integration • Flexibilities • Consistent with WTO • Builds on WTO commitments • Negotiations to commence in early 2005 to be completed within 2 years and to be fully implemented within 10 years.

  6. ASEAN: Staged Approach • ANZ: Single Undertaking • Agreed approach: Combination • Staged negotiations: • + Confidence-building measures in the form of capacity building and information exchange are built into the negotiation process • Single undertaking on the signing of the Agreement Timeline: • Start of negotiations: March 2005 • Expected finalization of negotiation: Before end-2007 Approach / Timeline

  7. PROGRESS to date • To date: 8 TNC Meetings : • Past 4 TNC meetings- exploratory and confidence-building phase, capacity-building workshops • 5th TNC meeting – marked the onset of the more substantive phase of the negotiations (preliminary negotiating proposals), putting forward draft chapter texts, fundamental elements, architecture • 6th, 7th and 8th TNC meetings- tabling of concrete negotiating proposals • Liberalization modalities for Goods • Progress discussions on draft chapter texts * Succeeding TNC meetings at substantive critical stage

  8. Elements of TIG Modalities: • Two-track approach – Normal and • Sensitive Track (NT and ST) • Coverage: 90% NT and 10% ST • Timeline for goods liberalization: • NT: 2008 – 2015 • ST: 2013 or 2015 up to 2018 (2020?)

  9. TIG Negotiations: Status / Issues • No final agreement yet on modality • ?Commitments upon EIF • ? Tariff lines in NT/ST • ? End-dates; End-rates • ? RP and Indonesia’s requests for unique modalities • Parties hope to reach agreement before • the 9th TNC meeting • Future work: Narrow down differences on • scope, end-dates, end-rates

  10. AANZTNC-TIG negotiations: Fundamental differences:

  11. MODALITY for ASEAN 6

  12. MODALITY for ANZ

  13. MODALITY for ANZ

  14. MODALITY OF TARIFF REDUCTION/ELIMINATION UNDER THE ASEAN-AUSTRALIA-NEW ZEALAND FREE TRADE AREA

  15. Indicative Expression of Interest in Goods – March 2007WITHOUT PREJUDICE

  16. Indicative Expression of Interest in Goods – March 2007WITHOUT PREJUDICE

  17. Indicative Expression of Interest in Goods – March 2007WITHOUT PREJUDICE

  18. ASEAN-JAPAN COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

  19. Background • Framework for the AJCEP signed by ASEAN and Japan Leaders in 2003 • AJCEP as the foundation for all FTAs between Japan and AMCs • Bilateral EPAs as avenue to commit further tariff elimination

  20. AJCEP TIG Modality Coverage (Trade Volume) 100% No more than 50% tariff rate（including no more than 20% tariff rate and tariff reduction by 10-50 %) Exclusion 1% 99% Highly Sensitive List Highly Sensitive List (other commitments) 96.8% Sensitive List Tariff reduction to 0-5% within 10 years (with particular safety-net measures for 2% (TV) at maximum) 2.2% Sensitive List (Tariff reduction to 0-5%) 92% 96.8% Phased elimination 88% Normal Track (Tariff elimination within 10 years) 95% Phased elimination Immediate tariff elimination Normal Track (elimination within 10 years) Immediate elimination ASEAN PROPOSAL JAPAN’s PROPOSAL

  21. Comparative Modality for AJCEP and JPEPA

  22. Summary of JPEPA offer list Philippines

  23. Summary of JPEPA offer list Japan

  24. Relationship between JPEPA and AJCEP • As for products covered by “Schedule of Concessions” under the AJCEP Agreement, the tariff rate in such schedule would be applied to that product traded from all ASEAN countries to Japan in condition that the rules of origin under the AJCEP is fulfilled. • As for a product which is not covered by the AJCEP but is covered by the Schedule of Concessions under the JPEPA, the tariff rate in Japan’s schedule of concessions under the JPEPA would be applied to that product traded from the Philippines.

  25. Relationship between JPEPA and AJCEP • As for product which is covered by the AJCEP Agreement as well as the bilateral EPAs, • When the preferential tariff rate for that product under the JPEPA is lower than that under the AJCEP in the same period of time (due to the different staging schedule), private companies would prefer to apply for the tariff rate in the schedule of concessions under the JPEPA. • In other cases, private companies would prefer to apply for the tariff rate under the AJCEP since the rules of origin under the AJCEP enables cumulation in Japan and ASEAN from all directions of trade.

  26. Benefits of the AJCEP • AJCEP will: • Allow cumulation of qualifying value contents among ASEAN and Japan for industrial goods • Deepen and enhance specialization in ASEAN and Japan • Encourage investments from Japanese businesses • Strengthen ASEAN industries’ competitiveness in the global market

  27. ASEAN-India Free Trade Area

  28. Background • Framework Agreement (FA) on Comprehensive Economic Cooperation Between the Association of South East Asian Nations and the Republic of India • Establishes FTA • - 2011 for ASEAN 5 and India • - 2016 for RP, CLMV • - With flexibility on sensitive sectors and commodities

  29. Milestones • Trade in Goods - January 2004 to 30 June 2005 • Extended by the Leaders to July 2007 due to unresolved issues on Modalities • ROO and Modality for the EHP – November 2004 • Implementation of the EHP was scrapped due to unresolved ROO issues • Trade in Services and Investment – 2005 to 2007 • Other Areas of Economic Cooperation-Negotiations shall proceed at a pace acceptable to all parties concerned

  30. Modality for Tariff Reduction and Elimination Proposed Categories • Normal Track – MFN tariffs gradually reduced or eliminated • [1 January 2006]* to 31 December 2011 for ASEAN 5 and India • 1 January 2006 to 31 December 2016 for RP and new ASEAN Members * Due to delay in the original implementation date, the actual date of implementation shall depend on the date of conclusion of the negotiations for the Trade in Goods Agreement

  31. Indicative Modality for Tariff Reduction & Elimination for the Normal Track* * Final Modality to be determined after conclusion of negotiations with India

  32. Modality for Tariff Reduction and Elimination • Sensitive Track – MFN tariffs progressively reduced or eliminated in accordance with mutually agreed end rates and dates

  33. Modality for Tariff Reduction and Elimination • Special Products • Crude palm oil, refined palm oil, black tea and pepper • ASEAN and India to negotiate tariff concessions from the signing or entry into force of the Agreement

  34. Modality for Tariff Reduction and Elimination • Exclusion Track*– MFN tariffs not subjected to any tariff reduction and elimination schedule • India with 490 tariff lines excluded • ASEAN can also maintain on a reciprocal basis, same number of exclusions subject to 5% trade value cap * The coverage of the exclusion track shall be limited to products whose tariff reduction/elimination sensitivities of each respective parties are the greatest.

  35. Updates • 5th ASEAN-India Summit extended negotiations and the conclusion of the TIGA by July 2007 • TIGA proposed signing in August 2007 • Implementation of tariff concessions expected to enter into force by 1 January 2008

  36. Proposed ASEAN-EU Free Trade Area

  37. ASEAN – EU Vision Group • Established by the ASEAN Economic Ministers and the EU Trade Commissioner at their 6th Consultation on 27 April 2005 • Tasked to look into the feasibility of a possible ASEAN-EU Free Trade Area (FTA) and other new initiatives for enhancing economic cooperation and ties between ASEAN and the EU • Vietnam was designated as the coordinator for ASEAN; the European Commission for the EU • The Vision Group’s findings and recommendations were presented to the ASEAN and EU Economic Ministers in May 2006 in Manila

  38. ASEAN – EU Vision Group Report • Overall, there is a compelling case to take the economic • partnership between the EU and ASEAN to a higher level. • ASEAN and the EU offer lucrative opportunities for expansion and improvement • ASEAN is home to 530 million people of rapidly rising income • Within the EU, 450 million people of high and growing income continue to thrive • The EU, however, is relatively far more well-off than ASEAN looking at the per capita GDP • FTA opens opportunities for deepening trade and investment linkages due to observed complementarities between the two regions in a number of industries

  39. ASEAN – EU Vision Group Report • FTA can boost growth in ASEAN and increase ASEAN’s presence in the EU, enhancing inter-regional FDI flows in both directions. • FTA will allow the EU to consolidate the commercial presence of its firms in one of the most dynamic markets in the world (particularly in service activities). • FTA would have a major impact on trade, production and welfare. The bulk of the gains are associated with liberalization in services. • FTA gains accruing to ASEAN members are estimated to lead to a 2% growth in GDP in 2020.

  40. ASEAN – EU Vision Group Recommendations • The Transregional Partnership for Shared and Sustainable Prosperity (or the ASEAN-EU FTA) must: • be mutually beneficial • support the process of ASEAN integration • complementary to the successful conclusion of the Doha Development Agenda (DDA) • The ASEAN-EU FTA should be based on two pillars: • (a) An FTA that is in accordance with WTO rules • (b) An expanded ASEAN-EU economic co-operation

  41. Update EU Trade Commissioner Peter Mandelson may attend the ASEAN Economic Ministers’ Retreat in Brunei Darussalam in May 2007, with the objective of possibly launching the negotiations for the ASEAN-EU FTA.

  42. Philippine Concerns on the Proposed ASEAN-EU FTA • What are the Political and Economic Considerations in participating in the ASEAN-EU FTA? • Will our participation in an ASEAN-EU FTA be beneficial to us, especially for our business and economic interests? • If we are to participate in such an endeavor, what do we (potentially) gain from it? • What are the potential downsides to such an engagement?

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