Notes

I. Introduction
ASEAN Free Trade Area or in short AFTA is a community of trade agreement that was created by the Association of Southeast Asian Nation. It involves the elimination of high tariffs or taxes on traded products and other trade barriers without common policy toward non-members. There are ten ASEAN member countries and this community agreement was signed on 28 January 1992 in Singapore between six members, such as, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. The four last members were Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. Those four last remaining members were required to sign the AFTA agreement to join ASEAN. However, they were given a period of time before meeting AFTA's tariff reduction obligations (Misa & Shujiro, 2013).
This paper will mainly illustrate how AFTA was established and benefits given by AFTA.

In the first point of the body, the establishment and the purpose of ASEAN Free Trade Area (AFTA) will be described. In January 1992, at the fourth ASEAN Summit, the ASEAN Heads of Government approved the establishment of ASEAN Free Trade Area (AFTA) by the year 2008 in order to boost their economies in the age of globalization. The date of establishment was renewed to 2003 during the ASEAN Economic Ministers (AEM) meeting in September 1994. ASEAN Free Trade Area (AFTA) includes the withdrawal the hindrances of free trade among member states. The supreme objective of AFTA is to further grow the production based. Production based is a cooperation needed in order to accelerate the members’ economies. A main move to achieve this is the development of trade in the area through the abolishment of intra-regional tariff and non-tariff barriers. By doing so, AFTA would be productive and competitive in the world market. If AFTA has a production based, AFTA’s production would be cheaper, better, and competitive to sell to the global market. AFTA will have a bigger market if it is achieved, and by having a larger market, ASEAN expects more foreign direct investment into the region. ASEAN Member Countries have made significant progress in the lowering of intra-regional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA. The Common Effective Preferential Tariff (CEPT) is a mutual accord among ASEAN members that they will reduce intra-regional tariff and non-tariff barriers for over 10 years starting from January 1, 1993. More than 99 percent of the products in the CEPT Inclusion List (IL) of ASEAN-6 have been brought down to the 0-5 percent range. Almost 80 percent of the products of ASEAN’s newer members, namely Cambodia, Laos, Myanmar and Viet Nam, have been move into their respective CEPT ILS. Of these products, about 66 percent already have tariffs within the 0-5 range. AFTA’s current biggest trading partners are the United States, European Union and Japan. These three continued to be ASEAN’s largest export markets. Japan, followed by the U.S. were the largest sources of ASEAN imports.

Another key fact to remember is that ASEAN Free Trade Area also provides huge benefits to its members. Each members proceeds essential help in exporting oriented economy and attracts investors by taking advantage of the elimination of tariffs on goods and services. The member states are encouraged to merge into an enormous single market which gives them an approach to trade their domestic products. Thus, ASEAN Free Trade Area makes a greater and wider market opportunity for the members to introduce their domestic products. According to Kawai and Naknoi (2015), Malaysia, the Philippines, Singapore, Thailand, Cambodia, Brunei, and Indonesia are engaged in supply chain activities by trading primary goods, intermediate goods, and final goods such as oils, gases, and textiles. Because of the wider markets and the costs of running businesses is low, investors are given incentives to invest in each ASEAN member country. The multinational corporations or investors are able to seek more opportunities to expand their companies with larger population or customers who are willing to purchase. ASEAN Free Trade Area undoubtedly attracts foreign direct investors who are willing to gain from the economic integration by manufacturing domestic products for exporting. Singapore and Indonesia have known as large investors in ASEAN (Kawai & Naknoi, 2015). Furthermore, consumers also gain profits from the integration. They have variety of choices in choosing products with different types of brands such as foods, engine parts, textiles, and garments from different manufactured countries. With the integration, the low price of each primary goods like oil helps consumers to access in their local businesses with less production costs or labor costs.






Bibliography
Kawai, M., & Naknoi, K. (2015, October). ASEAN Economic Integration through Trade and Foreign Direct Investment: Long-Term Challenges. Retrieved from http://www.adb.org/sites/default/files/publication/174835/adbi-wp545.pdf
Misa, O., & Shujiro, U. (2013, May). The Impact of AFTA on Intra-AFTA Trade. Retrieved from http://www.eria.org/ERIA-DP-2013-05.pdf
Runckel, C. (2010). BENEFITS FROM ASEAN FREE TRADE AREA (AFTA) TARIFF CUTS. Retrieved from Business-in-Asia: http://www.business-in-asia.com/asia_freetrade.html