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ASEAN FREE TRADE AGREEMENT

(AFTA)
GROUP MEMBERS
• ZAHARI
• ZULKIFLI
• DHIAUDDIN
• SYAIFUDIN
• SALLEHUDDIN
• SAIFUL
• ROSMINIZAM
INTRODUCTION
• Established in January 1992
• AFTA is aimed at enhancing economic
development, growth, and linkages among
the ASEAN member countries through a
liberal trade and investment regime.
• AFTA will lead to increased intra-regional
trade and investment and rapid economic
development in the region.
• With the widespread, rapid and sustained
economic development, AFTA will narrow
economic gaps among the ASEAN
member countries through trade-creating
effect, improved resource allocation and
greater employment opportunities.
• AFTA will facilitate efficient utilizations of
scarce resources and provide
opportunities for the ASEAN member
countries to further strengthen their
competitive advantage.
Objectives
• it is aimed at creating an integrated regional
market and enhancing ASEAN international
competitiveness against other major competing
economies in the global economy.
• AFTA is an economic initiative to position
ASEAN as regional investment area in order to
continuously attract foreign direct investment.
This initiative is necessary in the light of keen
competition with some of the fast emerging
economies such as China and India to attract
foreign investment because of their abundant
labour supply and low wages.
HISTORY
• The proposal to set up a Free Trade Area in
Asean was first mooted by the Thai Prime
Minister Anand Panyarachun
• The proposal was agreed upon with
amendments during the ASEAN Seniors
Economic Official Meeting (AEM) in Kuala
Lumpur.
• In January 1992, the ASEAN members then
signed the Singapore Declaration at the heart of
which was the creation of AFTA in 15 years.
• AFTA was designed during the rapid
reemergence of regional trade arrangements in
the late 1980s and early 1990s, despite the
multilateral efforts to liberalize international trade
through the General Agreement on Tariffs and
Trade. Increased regionalism was a major issue
then. The birth of NAFTA in 1994 and the
deepening and broadening process of the EC in
1990s partly hastened the AFTA process.
• The creation of AFTA is to complement the
forward and outward-looking ASEAN countries
in promoting economic growth through export
and investment-promotion strategies.
ASEAN MEMBERS
• Indonesia
• Brunei
• Malaysia
• Philippines
• Singapore
• Thailand
• Vietnam (1995)
• Laos (1997)
• Myanmar (1997)
• Cambodia (1999)
Time Frame
• In 1992, it was decided that AFTA would be
completed within a time frame of 15 years from
1993 to 2008. However, in 1994, the six original
members of ASEAN (Brunei, Indonesia,
Malaysia, Philippines, Singapore, and Thailand)
agreed to accelerate the completion process by
2003.
• Later in 1998, these six original members
decided to further accelerate the process by
another year, i.e. by 2002. For the new
members, the time frame varies: Vietnam 1996-
2006, Lao PDR and Myanmar 1998-2008, and
Cambodia 2000-2010
Common Effective Preferential
Tariff Scheme
• The objectives of AFTA are to be achieved
through a tariff reduction scheme known as the
Common Effective Preferential Tariff (CEPT)
Scheme for:-
 manufactured products,
 processed products
 unprocessed agricultural products.
• The scheme adopts two approaches, namely
normal track and fast track, which will result in
tariff rates for all relevant products being
reduced to 0-5 per cent by 2002/2003.
Implementation
• For implementation purposes, manufactured and
processed agricultural products have been divided into
three lists:
 Inclusion List,
 Temporary Exclusion List
 General Exception List.
• Products under the Temporary Exclusion List would be
transferred to the Inclusion List by 1 January 2000.
Products under the General Exception List are not
included in the CEPT scheme. Unprocessed agricultural
products have been categorized into three main lists as
well: Inclusion List, Temporary Exclusion List and
Sensitive List.
Malaysia’s Commitment
• To date, about 96.6 per cent of Malaysia’s products are
already in the CEPT scheme, of which 91.7 per cent are
already at tariff rates between 0 and 5 per cent. About
60.4 per cent of the products are already at zero tariff.
• The average CEPT tariff rate for Malaysia’s products in
2000 was 2.8 per cent and is expected to decline further
to 2.45 per cent by 2002 and 2.07 per cent in 2003.
• The remaining products which have yet to be included
into the CEPT scheme are CKD and CBU automotive
products, unprocessed agriculture products in the
Sensitive List, and products in the General Exception
List.
THE PRIMARY GOALS OF AFTA
• Increase ASEAN's competitive edge as a
production base in the world market
through the elimination, within ASEAN, of
tariffs and non-tariff barriers.
• Attract more foreign direct investment to
ASEAN.
Membership Benefits
• Financial
· Special negotiated low merchant fee rates
· Reduced rates for AFTA members at AFTA
Seminars, Professional Development Programs
and AFTA Conferences
· Advice on implementation of Service Fees
· Discounted rates on Professional Indemnity
Insurance
• Industry
· AFTA is your voice when addressing
policy issues and representation at
state and federal government level, and
with principals, IATA, the TCF, ACCC
and other regulatory bodies
• Legal
· One annual free legal
advice/consultation for members
· Assistance in dispute resolution
· Assistance in Industrial Relations
issues (A copy of the current Travel
Industry - Agencies - General Award
and sample employment agreements
are available to all members)
• Marketing
· Members decals provided to assist customers with
identifying AFTA Members
· The National Travel Industry Awards for Excellence
program to promote and reward excellence within the
Industry
· Internet Listing on the AFTA Website with search
facility for use by prospective clients
· AFTA WebMAIL service
· Members only web site information
· Specific AFTA Location advertising and tagged supplier
advertising
· Annual AFTA Wallplanner
· Ability to use the AFTA Logo on stationery and
advertising
· Ability to use the WTAAA logo designating membership
of the travel agents' global organisation
Policy Issues
· AFTA is your voice when addressing industry policy
issue, and in representation at government level and
with principals, IATA, the TCF, ACCC and other
regulatory bodies

• Education, Training & Continuing Professional


Development
- Providing quality graduates from the AFTA Travel
and Tourism Colleges
- Raising the industry standard through the
Professional Development and Certification
Programs
CONCLUSION
• This article has highlighted the developments and
benefits of AFTA to the ASEAN region. Although the
date of AFTA’s completion is 2002/2003, more than 90
per cent of the products from the six original AFTA
members are already in the CEPT scheme with tariff
rates between 0 and 5 per cent. Because of this, the
transition process from pre- to post-AFTA period is
expected to be smooth.
• AFTA promises significant economic benefits to the
region. Increased intra-regional trade and investment
through the liberalisation process will lead to higher
income, economic welfare and rapid development in the
regional economies. While AFTA promotes trade in
merchandise or goods, its positive effect on the services
sector within each of the ASEAN economies cannot be
ignored.