Trade Between FTA Signatories In Asean+6 Hits US$ 521.7 Bln

Trade Between FTA Signatories In Asean+6 Hit A Staggering US$521.7 Bln


KUALA LUMPUR, Aug 8 (Bernama) -- As Free Trade Agreements (FTA) have gone into effect one after the other in the Asia-Pacific region, trade between the FTA signatories has reached US$521.7 billion (US$1=RM3.45), or 44.3 percent of the US$1.1768 trillion total of trade inside the ASEAN 6 region.
Asean is a grouping of ten countries namely Malaysia, Singapore, Brunei, Philippines, Thailand, Indonesia, Vietnam, Laos, Cambodia and Myanmar, while Asean 6 includes Japan, China, South Korea, India, Australia and New Zealand.
Assuming that FTA negotiations now underway between ASEAN countries and Japan, India, and Australia move forward, the proportion of trade accounted for by FTA signatories is sure to increase, said the Japan External Trade Organisation (JETRO) in a research report released here, today.
Intra-regional trade has expanded and, as of 2006, already accounted for 43.3 percent of ASEAN 6's total trade, up from 40.6 percent in 1999.
JETRO said as the World Trade Organization (WTO) talks in the previous Uruguay Round and the current Doha Round have been slow to bear fruits, more countries have started to pursue FTAs to supplement the lagging WTO.
As of July this year, 143 Free Trade Agreements (FTAs) were effected worldwide.
"Until 1989 there were only 19, but starting in the 1990s the number has increased dramatically. In the 1990s, 48 agreements were formed, and 76 new agreements have been created since 2000," said JETRO in the 42-page report.
It said the shift towards FTAs by the major trading countries such as United States, which has driven other competing countries to turn to FTAs, as another possible reason for this acceleration.
"In other words, each new FTA spurs the creation of yet more FTAs."
Recent years have also seen an increase in regional FTAs that cut across regional boundaries and create a global network of agreements.
FTAs between advanced and developing countries are also on the rise. This type of FTA represented only about 30 percent of all agreements prior to 2004, but the figure has increased to more than 50 percent since 2005.
On a regional basis, notable examples include the European Union with West Asia East, Eastern Europe and Africa, the U.S. with Central and South America, and Japan with other Asian nations, including those in ASEAN, aimed at securing fast-growing markets in each region, said JETRO.
Recent FTAs also go beyond the elimination of tariff and non-tariff barriers to cover a wide range of fields including services, investments, intellectual property, competition policy and dispute settlement.
According to a WTO report, until 1999 there were only 11 FTAs that included services but since 2000, that number has increased by 32 to a total of 43.
It said that 63.2 percent of FTAs concluded since 2005 include services.
Turning to the Asean region, JETRO said last year the total value of exports from Thailand and Malaysia taking advantage of Common Effective Preferential Tariff (CEPT) was US$8.4 billion. This figure accounted for 23.5 percent of all exports from the two countries to ASEAN, excluding Singapore.
"If we look at breakdowns by destination country, the highest proportion of CEPT utilisation was for exports to Vietnam, where the share of exports falling under CEPT was 42.4 percent for both Thailand and Malaysia."
Given that Vietnam's simple average most favoured nation (MFN) tariff rate had been a high 16.8 percent, the January 2006 reduction for most products to the AFTA's 0-5 percent level significantly expanded use of the CEPT advantage.
Utilisation of FTAs between ASEAN countries and China remains limited, but the trend is upward for Thailand and Malaysia totalling 10.6 percent, it said.
In the case of Malaysia, 2006 utilisation of FTAs accounted for 8.9 percent of total exports, up dramatically from 2.9 percent in 2005.
Of total exports for both Thailand and Malaysia, utilisation of FTAs rose from 4.8 percent in 2005 to 10.6 percent in 2006, it added.

-- BERNAMA
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