The ASEAN Free Trade Agreement Impact on Trade Flows and External Trade Barriers
The ASEAN Free Trade Agreement (AFTA) was established in 1992 with the goal of promoting free trade among the member states of the Association of Southeast Asian Nations (ASEAN). It was designed to create a single market and production base, reduce trade barriers, and increase economic cooperation among the member states.
The implementation of AFTA had a profound impact on the trade flows and external trade barriers in the region. Under AFTA, tariffs were eliminated or reduced on goods traded among the ASEAN member states. This facilitated the flow of goods and services across borders and led to a significant increase in trade volume among the member states.
The elimination of tariffs on intra-ASEAN trade also had a ripple effect on external trade barriers. As ASEAN countries became more integrated through the free trade agreement, they were able to negotiate better trade deals with non-ASEAN countries. The reduction in tariffs on intra-ASEAN trade allowed ASEAN countries to lower their overall tariff rates, making them more attractive to non-ASEAN trading partners.
The AFTA has also had an impact on the distribution of trade among ASEAN countries. Prior to the establishment of AFTA, trade among ASEAN countries was limited due to high trade barriers and protectionist policies. After the implementation of AFTA, trade among the ASEAN countries grew significantly.
Intra-ASEAN trade now accounts for a significant share of ASEAN member states’ total trade. In 2019, intra-ASEAN exports and imports made up 22% and 17% of ASEAN’s total exports and imports respectively. This highlights the importance of AFTA in facilitating trade among ASEAN countries.
The implementation of AFTA has not been without challenges, however. There are still non-tariff barriers that hinder the flow of goods and services among ASEAN countries. These include regulatory barriers, technical barriers, and administrative barriers. The member states must work together to address these barriers and improve the implementation of AFTA.
In conclusion, the ASEAN Free Trade Agreement has had a significant impact on trade flows and external trade barriers in the region. It has facilitated the flow of goods and services among the member states, led to an increase in intra-ASEAN trade, and improved the negotiating power of ASEAN countries with non-ASEAN trading partners. The member states must continue to work together to address the remaining trade barriers and enhance the benefits of AFTA for all stakeholders.