AFTA and APEC

Question 1

Preferential Trading Arrangement

Answer 1

• Members grant preferential tariffs on approved items with ASEAN origin
• Limited effect in boosting intra-ASEAN trade; restricted list of approved items
• Some items hardly traded in ASEAN
• Long exclusion list to protect industries

Question 2

Reasons for forming AFTA

Answer 2

• Liberalisation and outward oriented industrialisation policies
• External competition for foreign investments
• Fear of other trade blocs

Question 3

Common Effective Preferential Tariff

Answer 3

• All tariffs reduced to 0-5%
• Promote intra-regional trade within the time frame, under fast track, normal track or temporary exclusion product list categories

Question 4

Benefits of AFTA

Answer 4

• Increase intra-ASEAN trade
• Can exploit comparative advantage
• Attract investments - huge potential market
• Increase market-scale economies
• Enhance competitiveness of ASEAN products in the world

Question 5

APEC Objectives

Answer 5

• Sustain regional growth and development
• Contribute to world growth and development
• Enhance positive gains for region and world resulting from increasing economic independence of nations
• Develop and strengthen multi lateral trading system
• Reduce barriers to trade in goods services and investments

Question 6

Characteristics of APEC

Answer 6

• Dynamic economic growth
• Decisions are not legally binding
• Simultaneous participation of PRC, Taiwan and Hong Kong
• Consensus-based management
• Diversity of member economies