Agence France Presse

Singapore, July 20:

The Association of Southeast Asian Nations (ASEAN) is on track to achieve a zero-tariff regime by 2015, a key ingredient for its ambitious plan to create a single market and production base by 2020, regional officials said.

Regional trade officials said the 10-member group was working its way through the difficulties of implementing the proposed ASEAN Free Trade Area (AFTA). The process has been fraught with problems due to the wide variations in economic development of the nations, from wealthy Singapore at one end of the spectrum to Cambodia, Laos, Myanmar and Vietnam (CLMV) at the other. Overall, AFTA aims to abolish tariffs on traded goods by 2010 for Singapore, Malaysia, the Philippines, Indonesia, Brunei and Thailand, the most developed nations of the group collectively known as the ‘ASEAN 6’.

Tariffs for the four poorer countries, who are known in trade circles by the acronym of ‘CMLV’ — will be wiped out by 2015.

“By and large, AFTA remains on track towards achieving zero tariffs by 2010 for ASEAN-6

and 2015 for CMLV,” a Singapore trade ministry spokesman said, with the sentiment backed by a trade ministry official from another ASEAN member, “I think all the political leaders

of ASEAN have reaffirmed their commitments to AFTA.”

While trade is not normally a frontline issue at ASEAN’s annual foreign ministers’ meeting, the issue of economic integration is expected to be touched at this year’s edition in Laos later this month. ASEAN trade officials point out the successes for the region — a market of 550 million people with a combined GDP of $1.0 trillion — since the AFTA process began in 1993. In particular, the ASEAN 6 have already trimmed tariffs on goods in their inclusion list to not more than five per cent as of 2003.

Vietnam was given until 2006 to slash tariffs to 0-5 per cent, Laos has until 2008, while Myanmar and Cambodia have until 2010. “Undoubtedly, Thailand has greatly benefitted from AFTA,” a Thai ministry of commerce official said.

Thai exports to the region rose to $21.25 billion in 2004 from only $6.56 billion in 1993, and ASEAN has become Thailand’s largest export market. But analysts say the group still has many big challenges to overcome if it is to realise its AFTA goals, particularly in removing protectionist ba-rriers on certain sectors deemed ‘sensitive’ to domestic interests.

The group must also ensure that members’ tariff liberalisation commitments are honoured and prod the bloc’s less developed members to include more products in a basket headed for tariff cuts.

Moreover, ASEAN should speed up implementation of non-tariff measures — another pillar in the overall goal.