ASEAN AND
SAFTA
Prepared by
Dr. Ruchi Sharma
GGDSD College Chandigarh
ASEAN
The Association of Southeast Asian Nations
(more commonly known as ASEAN) is an
intergovernmental organization aimed primarily
at promoting economic growth and regional
stability among its members.
There are currently 10 member states:
Indonesia
Malaysia
Philippines
Singapore
Thailand
Brunei
Laos
Myanmar
Cambodia and
Vietnam
Fundamental Principles of ASEAN
Respect for the independence, sovereignty, equality, territorial
integrity and national identity of all ASEAN Member States;
Shared commitment and collective responsibility in enhancing
regional peace, security and prosperity;
Renunciation of aggression and of the threat or use of force or
other actions in any manner inconsistent with international law;
Reliance on peaceful settlement of disputes;
Non-interference in the internal affairs of ASEAN
Member States;
Achievements of ASEAN
ASEAN aims to promote collaboration and cooperation among member states,
as well as to advance the interests of the region as a whole, including
economic and trade growth.
It has negotiated a free trade agreement among member states and with
other countries such as China, as well as eased travel in the region for
citizens of member countries.
In 2015, it established the ASEAN Economic Community (AEC), a major
milestone in the organization’s regional economic integration agenda.
The AEC envisions the bloc as a single market with free flow of goods,
services, investments and skilled labour, and freer movement of capital
across the region.
The organization strives towards peace and stability in
the region: members have signed a treaty pledging not
to develop nuclear weapons, and most have agreed to
a counter-terrorism pact, which includes sharing
intelligence and easing the extradition process of terror
suspects.
To promote technical and research cooperation among its
members,the ASEAN Outstanding Scientist and Technologist Award
is presented every three years to recognize nationally and
internationally acclaimed achievements in the field.
Areas of research include safeguarding the region’s environment
and wildlife. The association’s Center for Biodiversity was
established to promote cooperation on conservation and
sustainability throughout the region and serves as secretariat of
ASEAN Heritage Parks, which oversees 37 protected sites.
In the field of education, the ASEAN University Network was
founded in 1995 to promote academic and youth cooperation
between member states. As part of this initiative, the
University Games have been held every two years since 1981.
If ASEAN were a country, it would be the seventh-largest
economy in the world, with a combined GDP of $2.6 trillion in
2014. By 2050 it's projected to rank as the fourth-largest
economy.
Home to more than 622 million people, the region has a larger
population than the European Union or North America. It also has
the third-largest labour force in the world, behind China and
India.
What does the future hold?
Despite their distinct cultures, histories and languages, the 10
member states of ASEAN share a focus on jobs and prosperity.
Household purchasing power is rising, propelling the region into
the next frontier of consumer growth.
The region must now meet the challenges of providing enormous
investment in infrastructure and human-capital development to
ensure it realizes its full potential.
Global hub … Singapore's Central Business District.
Image: Reuters/Edgar Su
Between 2007 and 2014, ASEAN trade increased by a value of
nearly $1 trillion.
While nearly a quarter (24%) of trade was within the region, this
was followed by trade with China (14%), Europe (10%), Japan
(9%) and the United States (8%).
During the same period, foreign direct investment rose from $85
billion to $136 billion.
CHALLENGES
The technological advancements brought on by the
Fourth Industrial Revolution (4IR) are placing new
demands on governments and businesses across the
region.
However, the 4IR also presents great opportunity, if
member states can respond to its challenges with
speed, flexibility and agility in order to make these new
technologies part of its success.
The South Asian Free Trade Area (SAFTA) is an agreement
reached on January 6, 2004, at the 12th SAARC summit in
Islamabad, Pakistan.
It created a free-trade area of 1.6 billion people in Afghanistan,
Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri
Lanka to reduce customs duties of all traded goods to zero by
the year 2016.
SAFTA required the developing countries in South Asia (India,
Pakistan and Sri Lanka) to bring their duties down to 20 percent
in the first phase of the two-year period ending in 2007.
The tariff reduction by the Least Developed States from existing
tariff rates will be to 30% within the time frame of 2 years from
the date of coming into force of the Agreement .
The subsequent tariff reduction by Non-Least Developed
Contracting States from 20% or below to 0-5% shall be done
within a second time frame of 5 years, beginning from the third
year from the date of coming into force of the Agreement.
However, the period of subsequent tariff reduction by Sri Lanka
shall be six years.
Contracting States are encouraged to adopt reductions in equal
annual installments, but not less than 15% annually.
The subsequent tariff reduction by the Least Developed
Contracting States from 30% or below to 0-5% shall be done
within a second time frame of 8 years beginning from the third
year from the date of coming into force of the Agreement.
The Least Developed Contracting States are encouraged to
adopt reductions in equal annual installments, not less than 10%
annually.
The Agreement was signed in 2004 and came into
effect on 1 January 2006, with the desire of the member
states of the SAARC (Afghanistan, Bangladesh, Bhutan,
India, the Maldives, Nepal, Pakistan and Sri Lanka) to
promote and sustain mutual trade and economic
cooperation within the SAARC region through the
exchange of concessions.
The basic principles underlying the
SAFTA
Overall reciprocity and mutuality of advantages so as to benefit
equitably all Contracting States, taking into account their
respective level of economic and industrial development, the
pattern of their external trade, and trade and tariff policies and
systems;
Negotiation of tariff reform step by step, improved and extended
in successive stages through periodic reviews
Recognition of the special needs of the Least Developed
Contracting States and agreement on concrete preferential
measures in their favour;
Inclusion of all products, manufactures and commodities in their
raw, semi-processed and processed forms.
Objectives
The main objective of the agreement is to promote competition
in the area and to provide equitable benefits to the countries
involved.
It aims to benefit the people of the countries by bringing
transparency and integrity among the nations.
Trade Liberalisation Programme
According to the Trade Liberalisation Programme Contracting
countries must follow the following tariff reduction schedule.
There should be a fall to 20% tariff from the existing tariff by the
non-Least Developing Countries and
30% reduction from the existing tariff by the Least Developing
Countries.
But trade liberalisation scheme is not to be applied for the
sensitive list because this list is to be negotiated among the
contracting countries and then to be traded.
SENSITIVE LIST
A sensitive list is a list with every country which does not include
tariff concession.
Bangladesh has 1,233 products on the sensitive list for the Least
Developing countries and 1,241 for the non-Least developing
countries under the SAFTA.
Bangladesh will reduce the sensitive list by 246 items for the
least developed countries (LDCs) and 248 for the non-LDCs.
India has 25 items on the sensitive list for the LDCs and 695 for
the non-LDCs. Manmohan Singh, then Indian Prime Minister,
announced in September in Dhaka that he will reduce the
Sensitive List by 46.
Bhutan has 150 items for both the LDCs and non-LDCs and has
no plan of shortening its list.
Nepal has 1,257 for the LDCs and 1,295 for the non-LDCs. Nepal
has reduced its list by 259 from its previous list of 1295. Now it's
1036
The SAFTA was also formed in order to increase the
level of trade and economic cooperation among the
SAARC nations by reducing the tariff and barriers and
also to provide special preference to the Least
Developed Countries (LDCs) among the SAARC nations
to establish framework for further regional cooperation.
