Preferential Trade Agreement Asean


With the proliferation of PTAs, a domino effect increases the incentive for other countries to join. PTAs can jeopardize the export prospects of non-members, including through trade diversion, and the creation of a EPZ may therefore encourage other countries to join or enter into competing agreements. This is illustrated by the sequence of events that followed the opening of negotiations between ASEAN and China. As expected, Japan made a similar proposal within a few months, and India and Korea were quick to follow. As a result, ASEAN is now seen – at least temporarily – as a strategic hub in the region. Ng and Yeats (2003) also indicate that the “reorientation” of intra-local trade in East Asian ATTs is weaker than in Mercosur. 2The list contains agreements regarding the pre-program program. A useful classification of ATPs based on the extent of political harmonization was discussed in Krueger (1999). The simplest form of the preferential agreement is a free trade agreement that reduces tariffs for members and maintains them for non-members. The next step is the customs union, which removes tariffs between members and adapts non-member tariffs to a common level. A common market is a customs union that allows the free movement of factors of production, including labour and capital, between members. An economic union is a common market with common economic laws that cover topics such as standards for members.

Several factors contribute to delaying AFAS. The current approach to GATS plus encourages countries to wait for any GATS decision before making commitments to AFAS. ASEAN members, who are signatories to the GATS, have been very cautious about GATS plus offers under AFAS and have made little progress in liberalizing trade in services. The voluntary nature of the approach allows a country to fail to make commitments in certain sectors. Differences in the level of economic development between ASEAN members are also justified by complications. These agreements are concluded through regular meetings of the Ministry of Finance and members of the central bank. The Asia-Pacific region has benefited in the past from multilateral liberalization, but the recent increase in ATPs reflects strong interest in regionalism. Over the past two decades, multilateral and unilateral trade liberalization has resulted in a relatively open trading system and a rapid process of trade integration in the region. However, the delay in multilateral trade negotiations, the failure of APEC to implement the STSV, the Asian financial crisis and certain strategic and political considerations contributed to a wave of regionalism in the late 1990s.

Many of these EPZs are a bit flexible (first agree, negotiated later) and weak in terms of institutional rules (no application, no supranational institution).