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HISTORY AND BACKGROUND

The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967 in Bangkok, Thailand, with the signing of the Bangkok Declaration by the five original Member Countries namely Indonesia, Malaysia, Philippines, Singapore and Thailand. Brunei Darussalam joined the Association on 8 January 1984. Vietnam became the seventh member of ASEAN on 28 July 1995.

The Bangkok Declaration united the ASEAN Member Countries in a joint effort to promote economic cooperation and the welfare of the people in the region. The Bangkok Declaration set out guidelines for ASEAN's activities and defined the aims of the organization. The ASEAN nations came together with three main objectives in mind: to promote the economic, social and cultural development of the region through cooperative programmes; to safeguard the political and economic stability of the region against big power rivalry; and to serve as a forum for the resolution of intra-regional differences.

The First Summit Meeting was held in Bali, Indonesia in February 1976, during which, the five Member Countries signed the Treaty of Amity and Cooperation in Southeast Asia and the Declaration of ASEAN Concord. Both documents signified ASEAN's aims towards ensuring regional peace and stability and to foster economic and social growth and enhancing the need for cooperation with all peace-loving nations. At this meeting, a small permanent secretariat was also established in Jakarta to provide administrative support and to help in coordination of ASEAN activities.

The Second Summit Meeting was held in Kuala Lumpur, Malaysia in August 1977 to commemorate the Tenth Anniversary of ASEAN and to assess the progress in the implementation of the decisions taken at the Bali Summit.

The Third Summit Meeting took place in Manila, Philippines in December 1987. The thrust of this Summit was on economic cooperation. The Member Countries signed the Manila Declaration and set up the ASEAN Plan of Action. The Protocol Amending the Treaty of Amity and Cooperation in Southeast Asia was also signed to enable countries outside the ASEAN region to accede to the Treaty.

The Fourth Summit was held in Singapore in January 1992. The ASEAN Heads of Government signed the Singapore Declaration of 1992 and the Framework Agreement on Enhancing ASEAN Economic Cooperation. One of the major outcomes of this Summit is the decision to set up the ASEAN Free Trade Area (AFTA) within 15 years. Member Countries also signed the Agreement on the Common Effective Preferential Tariff (CEPT) Scheme which is the main instrument to establish AFTA. The Fourth Summit also enhanced the role of the Secretary-General of ASEAN and enlarged the functions of the ASEAN Secretariat to carry out its new mandate.

The Fifth Summit will be held in Bangkok, Thailand in December 1995.

ASEAN FREE TRADE AREA (AFTA)

The most significant step in enhancing trade in ASEAN was the decision of the Fourth Summit in 1992 to establish the ASEAN Free Trade Area by the year 2008. In September 1994, the ASEAN Member Countries agreed to accelerate the establishment of AFTA by reducing the initial time frame of 15 years to 10 years.

Aside from influencing intra-regional trading activities, the primary objective of AFTA is to promote greater foreign direct investment and intra-ASEAN investment in the region. Another important aim of AFTA is to promote ASEAN as a competitive production base geared towards servicing the global market.

The Common Effective Preferential Tariff (CEPT) Scheme which is the main mechanism for realizing AFTA was launched on 1 January 1993. The CEPT Scheme covers manufactured and agricultural products. The product coverage in the CEPT Scheme is the most comprehensive ever in any ASEAN trading arrangement. For instance, more than 90% of the total ASEAN tariff lines are already included in the Scheme. In addition, more than 85% of intra-ASEAN trade values and about 86% of the overall trade of ASEAN Member Countries are covered by the CEPT Scheme.

While there are provisions in the AFTA agreement for products to be placed under the Temporary Exclusion List (TEL) and Exception List, nonetheless by the year 1998 all existing products in the TEL would have to be transferred to the Inclusion List. Thus, starting from the year 2000, more than 95 % of the total ASEAN tariff lines would be placed under. the CEPT Scheme. The remaining tariff lines or products such as ammunition, drugs, and phonographic materials would be in the Exception List for national security and public safety reasons.

The CEPT Scheme entails tariff reduction exercises all across the board and the elimination of quantitative restrictions and non-tariff' barriers (NTBs). By the year 2003 the region will have experienced a tariff regime of not more than 5% tariff rate. Tariff reductions have been effected since I January 19')4. To ensure that AFTA is realized expeditiously, other trade facilitation measures are also being undertaken concurrently to expedite the AFTA process. ASEAN cooperation in customs matters (harmonization of tariff nomenclatures, harmonization of customs valuation and procedures and establishment of the Green Lane System to help expedite customs clearance for CEPT products) have been intensified. Work on harmonization of products standards and promotion of mutual recognition to support the trade liberalization process have also made good headway.

The AFTA Unit in the ASEAN Secretariat and National AFTA Units in Member Governments have been established to provide support to the private sector in encouraging it to participate actively in the AFTA process.

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