Effects of Preferential Trade Agreements on Agricultural by ezb18168

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									  Effects of
  Preferential
  Trade
  Agreements
  on Agricultural
  Liberalization




Gloria O. Pasadilla
Senior Research Fellow
Philippine Institute for Development Studies
         Presentation Outline

• Preferential Trade Agreements and
  Agriculture
  – China-ASEAN
  – Korea-Chile
• Effect of AFTA on Protection Structure
• Effect of AFTA on Trade Flows
• Summary and Conclusions
       PTAs involving East and Southeast
                      Asia
Preferential Trading Arrangements

                                                                                       Number
     WTO Notification (1948-2005)                                                        180
     WTO Notification (2000-2005)                                                         89
     PTAs in Southeast and East Asia (2000-2005)                                          23
     Percentage Share to Total WTO Notification (2000-2005)                             25.84

     Notification for Southeast and East Asia (1990-2005)                                22
     Under Negotiation for Southeast and East Asia                                       17
                           ---of which bilateral                                         15
So urces:
Regio nal Trade A greement Gateaway, www.wto .o rg and RTA -B TA Database, UN ESCA P
              PTAs and Agriculture
• Negotiations are mostly on market access, not on
  domestic support or export subsidies (multilateral)

• Market access negotiations
   – Exclude some sectors (permanent, temporary)
   – Extended time for adjustment
   – Agriculture issue: affects choice of BTA partner

• Market access negotiations at least starts with applied
  tariffs in PTAs

• Most Asian PTAs do not go substantially beyond WTO
  provisions in safeguard and non-tariff measures
                China-ASEAN

• Three tracks: Early Harvest, Normal, and
  Sensitive Track
  – Positive list approach for normal and sensitive track
  – Both negative list approach (HS Ch 1-8) and positive
    list (other chapters) for EHP

• Goal: 0% tariff by 2010 (ASEAN6); 2015 (CMLV)

• EHP: reduction of tariff starting Jan 2004 to Jan
  2006 ; reciprocity
T ab le 2. C h in a ASE AN FT A Early H arv est Prog ram

                               An nex 1 -          N u m b er
                               E xclu sio n        T ariff Lin es               Ann ex 2 -
                             C h ap ters 1 -8      (C h 1-8) 2                Inclu sio n L ist

Brunei                          0                       510                     to m atch C hina
C am bodia                      30                      248
Indonesia                       0                       512                                   14
Laos                            n.a.                    208                                    0
M alaysia                       n.a.                    504
M yanm ar                       0                       345                                    0
                                       1
Philippines                     209                     586                                    5
Singapore                       0                       510                     to m atch C hina
T hailand                       0                       539                                    2
Vietnam                         15                      510                                    0
S ource: C hina-A S E A N Fram ework A greem ent, A nnex 1 and 2
N ote:
1
 P hilippines chose an inclusion list instead of exclusion list for annex 1
2
    B ased on 2004 C E P T R ates
               Korea-Chile
• Negative listing with phased tariff
  reductions

• Korean conceded 1,432 farm products
  with ten types of schedules; exempts rice,
  apples, pears

• Manufacturing – liberalized upon entry into
  force of agreement
Table 3. Korea’s Tariff Limitation Schedule
(Unit : Korea’s 10-digit HS codes, %)

                                                  Industrial           Farm           Forest         Marine
     Category                     Total           Products           Products        Products       Products          Main Description
                                                                                                                   Mixed feeds, pure-bred
    Year 0                      9,740(87.2)       9,101(99.9)          224(15.6)      138(58.2)     277(69.5)      breeding animals, silk
                                                                                                                   fabrics, coffee
                                                                                                                   Bracken, roses, bean
    Year 5                           701(6.3)                    -      545(38.1)      70(29.5)       86(21.5)
                                                                                                                   curd, wine, almonds
                                                                                                                   Fruit juice, prepared
    Year 7                            41(0.4)            1(0.01)           40(2.8)              -              -   fruit, meat of poultry or
                                                                                                                   heading, soup, potatoes
    Year 9                            1(0.01)                   -          1(0.07)              -              -   Other fruit juices
                                                                                                                   Tomatoes, pork,
    Year 10                          262(2.3)                    -      197(13.8)      29(12.3)        36(9.0)
                                                                                                                   cucumbers, kiwis
    10S*                              1(0.01)                   -          1(0.07)              -              -   Grapes
    Year 16                           12(0.1)                   -          12(0.8)              -              -   Prepared dry milk
    TRQ**+
                                     18(0.15)                    -       18(1.26)               -              -   Beef, chicken, mandarins
    DDA***
                                                                                                                   Garlic, onions, red
    DDA                              373(3.3)                    -        373(26)               -              -
                                                                                                                   peppers, dairy products
    E****                             21(0.2)                 -           21 (1.5)           -               -     Rice, apples, pears
    Total                             11,170              9,102             1,432          237             399
Source: Chung (2003)
Notes:
    * liberalization over a transitional period of 10 years on a seasonal basis
    ** Liberalization with tariff quota
    *** Tariff elimination schedule shall be negotiated after the end of the Doha Development Agendas of the WTO
    **** Customs duty applied shall not be eliminated.
                                  AFTA
•   1992: Brunei, Indonesia, Malaysia, Philippines, Singapore, and
    Thailand

•   1995: Vietnam; 1997: Laos and Myanmar; 1998: Cambodia

•   Common Effective Preferential Tariff (CEPT) – negative list approach;
    four different lists
    – Inclusion Lists (IL); Temporary Exclusion Lists (TEL); Sensitive Lists (SL);
      and Highly Sensitive Lists; General Exceptions List.

•   Initially excluded unprocessed agriculture product

•   When UAP was added for liberalization, AFTA used SL and HSL.

•   Goal: 2010: 0-5% tariff for all products (ASEAN 6)
Summary: PTAs and Multilateral Trade
Positive:
- Removal of sensitive sectors allows some
  negotiations to move forward, avoids stalling of
  agreement, puts focus on sectors where there is
  mutual benefit

- Extended adjustment: prepares political
  economy about workability of a liberalized
  environment; eventual incorporation later e.g.
  sugar
Summary: PTAs and Multilateral Trade

Negative:
- Distraction from multilateral effort; thin
  negotiating resources

- Different sensitive agricultural sectors means
  difficulty in future harmonization of PTAs.
Effect of AFTA on Protection Structure

• Mean CEPT tariffs are significantly lower than
  MFN

• Concentration of 0-5% tariff rates for CEPT and
  5-20% tariff rates for MFN

• Low tariff concentration is greater in industry
  than in agriculture

• Relative Tariff Ratio Index: ASEAN has relatively
  higher protection vis-à-vis non-ASEAN
                          F ig u re 3. Co m p a ra tive ta riff stru ctu re o f AS EAN 6 in a g ricu ltu re
                                    b a se d o n M F N a n d CEP T ra te s a t HS 8 d ig it le ve l


                                                                                                           30
Thailand




                         M FN                                                                             29.49

                        CE P T                5
                                            4.26
Philippines Singapore




                         M FN                                                                                        Mean CEPT
                                                                                                                       tariffs are
                        CE P T
                                                                                                              significantly lower
                         M FN                       7
                                                             11.6
                                                                                                                       than MFN

                        CE P T          3
                                            4.37
Malaysia




                         M FN               4.22

                        CE P T       1.11
Indonesia




                         M FN                   5
                                                              11.75

                        CE P T                  5
                                        2.86

                         M FN                                            M edian
Brunei




                                                                         M ean
                        CE P T

                                 0          5           10          15             20        25          30        35
                 Figure 4. Percent distribution of CEPT and MFN tariff rates, ASEAN
Thailand


              MFN 3.51            29.13                                   41.48                             12.69        0.01


              CEPT                  48.35                                                50.19

                                                                                                                                      Concentration
Singapore




              MFN                                               100
                                                                                                                                 of 0-5% tariff rates
              CEPT                                              100                                                                    for CEPT and
Philippines




              MFN 3.55                     53.41                                          37.34
                                                                                                                 4.04     1.65    5-20% tariff rates
                                                                                                                        0.13               for MFN
              CEPT                   49.16                                              49.41                             0.52
                                                                                                                       0.37
              MFN                           56.98                                7.87           16.89           7.32
Malaysia




                                                                                                                          2.67

                                                                                                                          0.06
              CEPT                           64.25                                               35.33
                                                                                                                        0.36
                                                                                                                3.15
Indonesia




              MFN         20.92                       38.90                               32.14                        4.62


              CEPT                 45.65                                                53.23


              MFN                             68.07                                     8.19             22.46         0.06
Brunei




              CEPT                                 68.63                                                22.38           1.50


                     0%   10%     20%      30%        40%       50%      60%       70%          80%        90%         100%

                                     0%      0 - 5%        5 - 20%    20 - 30%     > 30%
                                               Figure 5. Percent Distribution of CEPT Tariff Rates of Agricultural and
                                                                  Industrial Products in ASEAN 6
Thailand



                                    Industry                         53.63                                               46.37

                                                                                                                                                0.31
                                 Agriculture        18.72                                            80.51                                          0.46
                                                                                                                                                                Lower tariff
Malaysia Philippines Singapore




                                    Industry                                                 100                                                           concentration is
                                 Agriculture                                                 100                                                                  greater in
                                                                                                                                                            industry than in
                                    Industry                     50.49                                                 48.80                           0.43
                                                                                                                                                                agriculture
                                                                                                                                              1.05
                                 Agriculture                 41.70                                             51.54                                  4.28

                                                                                                                                                 0.36
                                    Industry                             64.25                                                 35.33                 0.05

                                 Agriculture                                    74.44                                                 25.56
Indonesia




                                    Industry                    46.93                                                 52.60

                                 Agriculture                39.51                                             54.02

                                    Industry                              64.90                                          25.66                1.73
Brunei




                                 Agriculture                                              92.95                                                 0.33


                                           0.00     10.00    20.00      30.00     40.00     50.00     60.00      70.00        80.00     90.00        100.00


                                               0%           0 - 5%              5 - 20%             20 - 30%              > 30%
Have tariffs been lowered on products
              that matter?
 - Compute export-weighted tariffs or imposed
   tariffs

 - If imposed tariffs are higher than simple
   average tariff, importing country might have
   lowered tariff on non-exported product by
   another –> farcical liberalization
                        Imposed Agriculture Tariffs on ASEAN by ASEAN

                                   Indonesia                                                                                                                                               Malaysia
                        Figure 5.1. Preferential vs MFN Imposed Agriculture Tariff: Indonesia                                                                     Figure 5.2. Preferential vs MFN Imposed Agriculture Tariff: Malaysia




                                                                  1.43                                                                                                 0.32
    Thailand                                                                                                                            Thailand




                                                                                                                        2.92                                                                                                                      1.22
   Singapore                                                                                                                          Singapore




  Philippines                                                                             2.11                                                                                  0.44
                                                                                                                                     Philippines



                                                                                                             CEPT
                                                                1.36
    Malaysia                                                                                                                                                                                                                                                           1.47
                                                                                                                                       Indonesia



                                                                                                                   2.86                                                                                                                                             CEPT
  Indonesia*                                                                                                                                                                                                                            1.11
                                                                                                                                       Malaysia*


             0.00           0.50             1.00                      1.50         2.00         2.50                      3.00
                                                                                                                                                0.00          0.20            0.40         0.60              0.80               1.00             1.20           1.40                 1.60
                                                               Tariff Rate (in %)
                                                                                                                                                                                                      Tariff Rate (in %)
* Simple average rate                                                                                                               * Simple average rate




                              Philippines                                                                                                                                        Thailand
                        Figure 5.3. Preferential vs M FN Im posed Agriculture Tariff: Philippines                                                                 Figure 5.4. Preferential vs MFN Im posed Agriculture Tariff: Thailand




                                                                                                         10.50                                                                                                                                                            4.69
     Thailand                                                                                                                         Singapore




                                           3.67                                                                                                                                                                                  3.19
   Singapore                                                                                                                         Philippines




                                                        4.63
     M alaysia                                                                                                                          M alaysia                                                                                                                             4.86




                                           3.75
   Indonesia                                                                                                                                                                                                                                   3.67
                                                                                                                                       Indonesia
                                                                                                                                                                                                                                                                    CEPT
                                                                                                                 CEPT
                                                      4.37
 Philippines*                                                                                                                                                                                                                                                4.26
                                                                                                                                       Thailand*


                 0            2                   4                      6            8             10                         12
                                                                                                                                                    0       0.5          1           1.5          2           2.5           3            3.5             4          4.5               5
                                                               Tariff Rate (in %)
                                                                                                                                                                                                      Tariff Rate (in % )
* Simple average rate                                                                                                               * Simple average rate
                               Figure 6. Imposed Tariff by Non-ASEAN




     US


                                                                                                        Imposed tariff
  Korea
                                                                                                        on ASEAN
                                                                                                        agri products
                                                                                                        are generally
  Japan                                                                                                 less than
                                                                                  Thailand
                                                                                  Singapore
                                                                                                        simple
                                                                                  Philippines           average of
  China
                                                                                  Malaysia              tariff of non-
                                                                                  Indonesia
                                                                                                        ASEAN
                                                                                  Simple Average


Australia



        0.00   10.00   20.00         30.00         40.00          50.00   60.00   70.00         80.00
                                             Tariff Rate (in %)
           Of top agriculture exports, only few have higher than
                                 5% tariff
Table 7. CEPT nad MFN Tariffs of Top ASEAN Agriculture Exports

                                      Product Description
                                                                                                    Share to
                                                                                                   Agricultural
 HS Code    Top Ten Agricultural Exports of ASEAN                                    Trade Value    Exports           Malaysia              Philippines              Thailand
                                                                                                                   CEPT        MFN        CEPT        MFN        CEPT        MFN
                                              Indonesia
151190      Palm oil and its fractions refined but not chemically modified             1,392,411            0.25         5            5         5           15         0           5
151110      Palm oil, crude                                                            1,062,215            0.19         0            0         3           15         0           5
180100      Cocoa beans, whole or broken, raw or roasted                                 410,278            0.07         0            0         3            3         5        27.3
090111      Coffee, not roasted, not decaffeinated                                       250,882            0.05         0            0         5           35        40          40
151321      Palm kernel or babassu oil, crude                                            206,242            0.04         0            0         3           15         0           5
240220      Cigarettes containing tobacco                                                135,550            0.02         0            0         5           10         5          60
180400      Cocoa butter, fat and oil                                                    118,340            0.02         0           25         0            3         5          10
151311      Coconut (copra) oil crude                                                     99,368            0.02         0            5         3           10         0           5
090411      Pepper of the genus Piper,ex cubeb pepper,neither crushd nor ground           93,203            0.02         0            0         5           12         5          30
090240      Black tea (fermented) & partly fermented tea in packages exceedg 3 kg         90,509            0.02         5           25         0            3         5          60


                                                                                                                      Indonesia             Philippines              Thailand
                                               Malaysia
151190      Palm oil and its fractions refined but not chemically modified             4,117,561            0.50         0           0           5         15          5           0
151620      Veg fats &oils&fractions hydrogenatd,inter/re-esterifid,etc,ref              753,520            0.09         5          10         2.7        13.9         5        27.3
151110      Palm oil, crude                                                              512,078            0.06         0           0           3          15         5           0
151329      Palm kernel/babassu oil their fract,refind but not chemically modifid        241,966            0.03         0           0           5          15         5           0
180400      Cocoa butter, fat and oil                                                    147,808            0.02         5           5           0           3         5          10
151790      Edible mx/prep of animal/veg fats&oils/of fractions ex hd No 15.16           121,936            0.01       1.8           5           3          15         5          30
240220      Cigarettes containing tobacco                                                111,143            0.01         5         15            5         10          5          60
170199      Refined sugar, in solid form, nes                                             96,307            0.01         0           0        28.8        34.9         5           0
210690      Food preparations nes                                                         90,326            0.01         5        47.6         2.7         5.9       4.9        25.7
230660      Palm nut/kernel oil-cake&oth solid residues,whether/not ground/pellet         88,168            0.01         0           0           3          15         5         9.1


                                                                                                                      Indonesia              Malaysia                Thailand
                                                    Philippines
151311      Coconut (copra) oil crude                                                    399,436            0.22         0           0          0            5         5           0
080300      Bananas including plantains, fresh or dried                                  333,000            0.18         5           5          0            0         0          42
151319      Coconut (copra) oil&its fractions refined but not chemically modified        105,424            0.06         0           0          0            5         5           0
080111      Coconuts, dessicated                                                          95,745            0.05         0           5          5           20         0        54.6
200820      Pineapples nes,o/w prep or presvd,sugared,sweetened,spirited or not           84,279            0.05         5           5          0           10         5          60
170111      Raw sugar, cane                                                               62,023            0.03         0           0          0            0         5           0
040229      Milk and cream powder sweetened exceeding 1.5% fat                            57,160            0.03         0           5          0            0         0           5
130239      Mucilages&thickeners nes,modifid or not,derivd from vegetable products        47,167            0.03         0           5          0            0         5          20
200940      Pineapple juice,unfermented&not spiritd,whether or not sugard or sweet        46,810            0.03         0           0          0           30         0           0
080450      Guavas, mangoes and mangosteens, fresh or dried                               44,734            0.02         0           5          5            0         0          42
             Table 7. Continued
             Of top agriculture exports, only few have higher than
                                   5% tariff
                                        Product Description
                                                                                                    Share to
                                                                                                   Agricultural
 HS Code Top Ten Agricultural Exports of ASEAN                                         Trade Value Exports             Malaysia                Philippines               Thailand
                                                                                                                    CEPT        MFN          CEPT        MFN         CEPT        MFN


                                                                                                                         Indonesia               Malaysia                Philippines          Thailand
                                                      Singapore
240220        Cigarettes containing tobacco                                                346,687          0.13            5          15           0          0             5          10      5         60
220820        Spirits obtained by distilling grape wine or grape marc                      161,788          0.06            0         170           0          0             5           10     5          60
151190        Palm oil and its fractions refined but not chemically modified               126,150          0.05            0           0           5          5             5          15      5           0
210690        Food preparations nes                                                        108,417          0.04            5        47.6         3.2       11.4           2.7          5.9   4.9        25.7
220410        Grape wines, sparkling                                                        88,877          0.03            0         170           0          0             0            5     5        54.6
210111        Coffee extracts, essences, concentrates                                       82,359          0.03            5           5           0          5             5         37.5     5        49.6
240310        Smokg tobacco,whether o not cntg tobacco substitutes in any proportion        73,602          0.03            5          15           0          0             5            7     5          60
220300        Beer made from malt                                                           67,854          0.03            0          40           0          0             5          15      5         60
190190        Malt extract&food prep of Ch 19 <50% cocoa&hd 0401 to 0404 < 10% coco         64,866          0.02          4.7           5         2.8          5           3.1          4.3   4.4          18
220830        Whiskies                                                                      57,418          0.02            0         170           0          0             5           15     5          60

                                                                                                                   Indonesia                Malaysia               Philippines
  Thailand
100630        Rice, semi-milled or wholly milled, whether or not polished or glazed      1,572,222          0.20            0           0              0       0S                        50
020714        Fowls (gallus domesticus), cuts & offal, frozen                              597,883          0.07            0           5              0       0            40           40
170199        Refined sugar, in solid form, nes                                            502,369          0.06            0           0              0       0          28.8         34.9
170111        Raw sugar, cane                                                              425,678          0.05            0           0              0       0            48         57.5
160232        Fowl (gallus domesticus) meat, prepared/preserved                            379,281          0.05            0           5              0       0             5          40
200820        Pineapples nes,o/w prep or presvd,sugared,sweetened,spirited or not          282,515          0.04            5           5              0      10             5           10
230910        Dog or cat food put up for retail sale                                       273,948          0.03            0           0              0       0             0            5
210690        Food preparations nes                                                        257,536          0.03            5        47.6              0    11.4           2.7          5.9
071410        Manioc (cassava), fresh or dried, whether or not sliced or pelleted          252,468          0.03          2.5           5              5       5            35           40
100640        Rice, broken                                                                 225,428          0.03            0           0              0       0             0          50

Source: ASEAN Secretariat, UNCTAD - PC-TAS
       Relative Tariff Ratio Index
• Summarizes tariff and trade information

• Ratio of “faced tariff” over “imposed tariff”.
  Ratio > 1 => country faces more protection than it
  imposes

• ASEAN, in general, impose higher agriculture
  tariff than what they face abroad

• Impose higher industrial tariff than what they face
  abroad
Table 8: Relative Tariff Ratio (RTR) Index in ASEAN 6 by type of commodity
                                          Relative Tariff Ratio Index
                                  Indonesia            Malaysia         Philippines       Thailand
                               CEPT      MFN       CEPT        MFN    CEPT       MFN    CEPT     MFN
Agricultural Commodities                                                                                    ASEAN
Indonesia                                           0.93       1.01   0.56       0.64   0.23    0.35
Malaysia                        1.08     0.99                          0.1       0.41   0.07    0.34       actually
Philippines                     1.78     1.56      10.52       2.44                     3.29    1.04      imposes
Thailand                        4.39     2.86      15.19       2.97    0.3       0.96
Australia                                0.02                  0.34              0.15           0.04   higher tariff
China                                    3.63                  6.13              0.87           1.13
Japan                                    0.26                  0.69              1.07           0.22
                                                                                                         relative to
Korea                                    0.69                  1.14              2.26           1.99     what they
US                                       0.27                  2.01              0.26           0.24
                                                                                                            impose
Industrial Commodities
Indonesia                                         1.6       0.44      0.33      0.49    1.51    0.68
Malaysia                       0.63     2.28                          0.33      1.43    0.96    1.51
Philippines                    3.05     2.06      3.02       0.7                         2.6     0.9
Thailand                       0.66     1.47      1.04      0.66      0.38      1.11
Australia                               0.91                0.24                0.55            0.58
China                                   0.89                0.42                0.51             0.6
Japan                                    2.8                0.59                1.75              1
Korea                                   0.65                0.18                0.39            0.32
US                                      0.38                 0.1                0.29            0.23

All Commodities
Indonesia                                         1.52      0.47      0.35      0.48    1.07    0.62
Malaysia                       0.66     2.14                          0.29      1.16    0.73    1.34
Philippines                    2.89     2.10      3.50      0.86                        3.11    1.09
Thailand                       0.93     1.61      1.37      0.75      0.32      0.92
Australia                               0.53                0.30                0.54            0.35
China                                   1.10                0.59                0.57            0.71
Japan                                   2.90                0.89                2.52            1.41
Korea                                   0.77                0.23                0.62            0.77
US                                      0.38                0.14                0.28            0.24
Source: Author's Calculation
  T a b le 5 . R e la tiv e ta r iff r a tio (R T R ) in d e x in A S E A N 6 ,
            b y ty p e o f c o m m o d ity


                             R e la tiv e T a r iff R a tio (R T R ) In d e x                                 Yet when you
                 In d o n e s ia      M a la y s ia      P h ilip p in e s    T h a ila n d                 consider share
                    CEPT M FN CEPT M FN CEPT M FN CEPT M FN
                                                                                                              of agriculture
A g r ic u ltu r a l   c o m m o d itie s                                                                  to total trade as
I n d o n e s ia                             0 .8 5      0 .8 6    0 .3 2   0 .3 5     0 .2 5   0 .3 8               weights,
M a la y s ia          1 .1 8    1 .1 6                            0 .0 6   0 .2 7     0 .0 8   0 .4 4
P h ilip p in e s      3 .0 9    2 .8 3     1 8 .0 0     3 .7 2                        6 .5 6   2 .0 8     ASEAN actually
T h a ila n d          4 .0 7    2 .6 0     1 2 .6 7     2 .2 8    0 .1 5    0 .4 8                            faces higher
A u s t r a lia                  0 .0 1                  0 .1 3              0 .0 4              0 .0 2
C h in a                         8 .9 7                 1 3 .1 2             1 .2 0              3 .0 9
                                                                                                            tariff relative to
Japan                            6 .2 6                 1 4 .3 7            1 4 .2 7             5 .9 8            what they
K o re a                         6 .2 3                  8 .8 6             1 1 .2 3            1 9 .8 0              impose
US                               0 .2 6                  1 .6 6              0 .1 4              0 .2 6

In d u s tr ia l c o m m o d itie s
                                                                                                                   (because
I n d o n e s ia                             1 .6 3      0 .4 5    0 .3 5   0 .5 2     1 .4 1   0 .6 4         denominator
M a la y s ia        0 .6 1  2 .2 2                                0 .3 4   1 .4 8     0 .8 8   1 .3 8      becomes small
P h ilip p in e s    2 .8 8  1 .9 4          2 .9 2      0 .6 8                        2 .3 0   0 .8 0
T h a ila n d        0 .7 1  1 .5 7          1 .1 4      0 .7 2    0 .4 3   1 .2 5                         as share of agri
A u s t r a lia              1 .1 5                      0 .3 2             0 .7 5              0 .6 9      to total trade is
C h in a                     0 .8 3                      0 .4 0             0 .5 1              0 .5 2
Japan                        2 .5 6                      0 .5 5             1 .7 0              0 .8 5
                                                                                                           insignificant for
K o re a                     0 .5 9                      0 .1 7             0 .3 7              0 .2 7           developed
US                           0 .3 9                      0 .1 1             0 .3 1              0 .2 2           countries).
S o u r c e : A u t h o r 's c a lc u la t io n s . W I T S
        Effect of AFTA on Trade

• Past studies show that AFTA is a building block,
  not a stumbling block

• Both intra- and extra-ASEAN trade grew over
  the period

• Increase in intra-ASEAN trade came mostly from
  industry, not from agriculture

• Agriculture exports are mostly due to extra-
  ASEAN agriculture trade
Table 13. Direction of ASEAN 6 Trade: 1995, 2000, 2003
                                                  Imports                      Exports         Percentage Share to Total Trade
                                       1995        2000      2003     1995      2000      2003 1995 2000 2003

A. ASEAN 6 Trade (in million US $)
ASEAN 6                             53,244 72,511 75,393 69,518 87,634 88,476                        20.23     29.25     29.61
ASEAN 10                            54,900 75,237 79,140 74,994 94,047 96,504                        21.41     30.92     31.74
Non-ASEAN                          258,058 174,113 164,086 218,810 204,112 213,718                   78.59     69.08     68.26

B. ASEAN 6 Agricultural Trade (in million US $)
ASEAN 6                                   2,997      2,792    4,097    4,021      3,909    5,101      1.16      1.22      1.66
ASEAN 10                                  3,536      3,292    4,523    5,224      4,767    6,003      1.44      1.47       1.9
Non-ASEAN                               11,237       7,481    7,242   18,147      6,970   10,334      4.84      2.64      3.18

Source: UNCTAD PC-TAS
                Figure 2. Percent Share of Intra-ASEAN trade to Total ASEAN Trade: 1993-2003

100.00
 90.00
 80.00
 70.00
 60.00
 50.00
 40.00
 30.00
 20.00
 10.00
  0.00
         1993    1994     1995       1996      1997       1998    1999      2000      2001     2002   2003

                                 Agriculture   Industry          SEA
                                                          Intra-A N             SEA
                                                                         Extra-A N


                                                Industry accounts for a significant portion of
                                                                           intra-ASEAN trade
                                                           Figure 8. Intra, Extra and Total Agricultural Trade Share: ASEAN 6 to ASEAN 6

Intra-ASEAN Agriculture trade share                                                      Extra-ASEAN Agriculture trade share         Total Agriculture Trade Sha

                                                       8

                                                       7
 A g r i c u l tu r a l T r a d e S h a r e (i n % )




                                                                                                                                                           Agriculture
                                                       6                                                                                                   trade – mostly
                                                                                                                                                           due to extra-
                                                       5
                                                                                                                                                           ASEAN
                                                       4

                                                       3

                                                       2

                                                       1

                                                       0
                                                           1993    1994   1995    1996   1997      1998   1999    2000     2001   2002   2003


                                                                                                Year
                 Individual Country Differences

                            Figure 9. Ratio of Intra/Extra-ASEAN Agricultural Trade                               Intra-
                                                                                                                  Extra
 0.6                                                                                                              ASEAN
                                                                                             Indonesia            Trade
                                                                                             Malaysia
 0.5                                                                                         Philippines          ratio
                                                                                             Singapore            shows all
                                                                                             Thailand
 0.4                                                                                                              had
                                                                                                                  increased
 0.3                                                                                                              inter-
                                                                                                                  regional
 0.2
                                                                                                                  trade in
                                                                                                                  agricul-
 0.1
                                                                                                                  ture
   0
   1993         1994        1995    1996      1997     1998     1999     2000         2001   2002          2003
Source: ASEAN Secretariat
           Figure 11. Intra-ASEAN Total Agricultural Trade (Index Total Value, 1993=100)
 500
                                                    Indonesia     Malaysia
 450                                                Philippines   Singapore
 400                                                Thailand
                                                                                                   Philippine
 350                                                                                               growth in
 300                                                                                               inter-
                                                                                                   regional
 250                                                                                               trade is
 200                                                                                               among the
                                                                                                   fastest
 150                                                                                               compared
 100                                                                                               to pre-
                                                                                                   AFTA
  50
                                                                                                   levels.
   0
   1993      1994      1995   1996     1997     1998       1999    2000       2001   2002   2003

Source: ASEAN Secretariat
          Non-tariff Measures
• Fast pace of removal of tariff barriers but
  agriculture trade flows show relatively little
  progress

• Problem of non-tariff measures, especially
  applied on agricultural products

• Multilateral Liberalization Index (MLI)
  ranks AFTA among the lowest.
Ta ble 14. Non-ta riff me a sure s in ASEAN

                                   Number of     Number of Agricultural
                                   Tariff Line       Tariff Line           %
                                       (1)               (2)              (2)/(1)
Brune i (2004)
Price Control Measure                  34                 18              52.9
Automatic Licensing Measure             3                  3              100
Quantity Control Measure               205                118             57.6
Monopolistic Measures                   4                  4              100
Technical Measures                     49                 44              89.8

Indone sia (2003)
Price Control Measure                  35                  1               2.9
Quantity Control Measure               259                81              31.3
Monopolistic Measures                  62                 25              40.3
Technical Measures                     486                411             84.6

Ma la ysia (2003)
Price Control Measure                   8                  0                0
Finance Licensing                       2                  0                0
Automatic Licensing Measure            16                  1               6.3
Quantity Control Measure               412                138             33.5
Monopolistic Measures                   6                  6              100
Technical Measures                     215                167             77.7

Philippine s (2001)
Price Control Measure                  18                  0               0
Automatic Licensing Measure            26                 18              69.2
Quantity Control Measure               264                168             63.6
Technical Measures                     339                284             83.8

Singa pore (2001)
Price Control Measure                  16                  0               0
Automatic Licensing Measure            24                 18              75.0
Quantity Control Measure               212                97              45.8
Monopolistic Measures                   1                  1              100
Technical Measures                     264                182             68.9

Tha ila nd (2003)
Price Control Measure                  13                  0               0
Finance Licensing                       1                  0               0
Quantity Control Measure               127                66              52.0
Technical Measures                     600                449             74.8

Source: WITS.
M a jo r R T As ra n k e d in te rm s o f
     m e a s u re lib e ra tio n in d e x

              R T As                   R AN K

    S in g a p o re -N Z                     1
            ANZCERTA                         2
    C h ile -M e x ic o                      3
  C h ile - M E R C O S U R                  4
             ANDEAN                          5
                  EU                         6
            E U -P o la n d                  7
           MERCOSUR                          8
                EFTA                         9
             PATCRA                         10
               NAFTA                        11
            SPARTECA                        12
    C h ile -C o lo m b ia                  13
             E U -E g yp t                  14
                 L A IA                     15
    A S E A N -F T A                        16
             Is ra e l-U S                  17
             E U -S w itz                   18
Table 16. Ranking of Preferential Trading Arrangements


                                     All trade       Agriculture         Industry

          Singapore-NZ                           1                1               1
          EU                                     2                6               2
          ANZCERTA                               3                2               4
          Chile-MERCOSUR                         4                4               3
          Chile-Mexico                           5                3               6
          NAFTA                                  6               11              10
          EU-Poland                              7                7              13
          ANDEAN                                 8                5               5
          MERCOSUR                               9                8               7
          Chile-Columbia                        10               13               9
          ASEAN-FTA                             11               16              14
          EFTA                                  12                9               8
          PATCRA                                13               10              12
          Israel-US                             14               17              15
          EU-Switz                              15               18              11
          EU-Egypt                              16               14              17
          SPARTECA                              17               12              16
          LAIA                                  18               15              18
          Source: Adams, 2003
          Note: Rank 1 means PTA provisions contain very liberalizing elements
     Summary and Conclusions

• PTAs helped accelerate the bringing
  down of tariff barriers against ASEAN;
  CEPT<MFN; Most are within 0-5% tariff;
  except for a few major country exports,
  products of interest can enter at
  preferential rates

• RTR shows agriculture tariff barriers
  remain relatively high vis-à-vis
  developed countries
      Summary and Conclusions
• Countries with low tariff barrier in agriculture
  may nonetheless have many NTMs on
  agriculture products.

• PTAs allow liberalization of agriculture, albeit
  with extended timetable and several
  exclusions; still, sensitive products are
  included in liberalization

• Is AFTA a building bloc? For total
  trade, yes; for agriculture trade, Hmmm
Thank You!

								
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