Utilization of Preferential Tariff under ASEAN Free Trade Area (AFTA): Case of Malaysia
DOI:
https://doi.org/10.1956/jge.v11i4.413Keywords:
Tariff Utilization, AFTA, AFTA Utilization, Malaysia Exports, Certificate of Origin, Rules of Origin, ASEAN, AFTA MalaysiaAbstract
Reducing numbers of tariff lines to 0% and increase in intra-regional trade are often indicators of success of ASEAN Free Trade Area (AFTA). With more members liberalizing their economies and actively reducing the Most Favoured Nation (MFN) rates, the preferential tariff under AFTA would have a minimal impact on trade patterns unless the preferential tariff treatment is effective. Based on the value of Certificate of Origin (COO) and its export to ASEAN countries, this paper plans to estimate and analyse the utilization of tariffs under AFTA in the case of Malaysia for the period of 2007-2011 to examine the effectiveness of preferential tariffs under AFTA. Analysis is expanded with a “MFN proxy†by excluding Singapore. The results show that the utilization rates remain low and this suggests that preferential tariff rates are only used for the similar products and there will always be a limited level of utilization as some product lines were liberated under MFN tariffs.
References
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14. Helpman, Elhanan, & Krugman, P. R. (1989). Trade Policy and Market Stucture. Cambridge: MIT Press.
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16. Krishna, K. (2006). Understanding Rules of Origin. In A. Estevadeordal, A. Suwa-Eisenmann, & T. Verdier, The Origin of Goods. Oxford University Press.
17. Leelawath, W. (2012). Utilization of tariff preferential under AFTA: a case of Thailand. International Institute for Trade and Development (ITD), Bangkok, Thailand.
18. Manchin, M., & Pelkmans-Balaoing, A. O. (2007). Clothes without an Emperor: Analysis of the Preferential Tariffs . ASEAN Centro Studi Luca D’Agliano Development Studies Working Paper .
19. Pomfret, P., Kaufmann, U., & Findlay, C. (2010). Are Preferential Tariffs Utilized? Evidence from Australian Imports, 2000-9. Research Paper 2010-13, University of Adelaide, School of Economics.
20. World Bank. (2007). Trade Issues in East Asia: Preferential Rules of Origin. Policy Research Report, East Asia and Pacific Region (Poverty Reduction and Economic Management), Washington DC.
2. ASEAN Secretariat. (2015, September 28). ASEAN Secretariat. Retrieved September 28, 2015, from ATIGA Annex 8: http://www.asean.org/images/2013/economic/afta/Annex%208%20amended%20ATIGA%20Operational%20Certification%20Procedures.pdf
3. ASEAN Secretariat. (2015). Average CEPT/ATIGA Rates. Retrieved from http://www.asean.org/images/2015/april/information_on_average_tariffs/average%20CEPT-ATIGA%20tariff%20rates%201993-2015_1.pdf
4. ASEAN Secretariat. (2015, September 10). Official Website of the ASEAN Secretariat. Retrieved September 10, 2015, from www.asean.org
5. ASEAN Secretariat Statistics Database. (2015, September 10). ASEAN Secretariat Statistics Database. Retrieved September 10, 2015, from http://aseanstats.asean.org/
6. Bagwell, K., & Staiger, R. W. (2002). The Economics of the World Trading System. Cambridge, Massachusetts, USA: The MIT Press.
7. Brenton, P., & Ikezuki, T. (2004). Initial and Potential Impact of Preferential Access to the U.S Market under the African Growth and Opportunity Act. World Bank, International Trade Department, Washington.
8. Bureau, J.-C., Chakir, R., & Gallezot, J. (2006). The Utilization of EU and US Trade Preferences for Developing Countries in the Agri-Food Sector. IIIS Discussion Paper No. 193.
9. Candau, F., Fontagne, L., & Jean, S. (2004). The utilisation rate of Preferences in the EU. 7th Global Economic Analysis Conference, Washington D.C. CEPII.
10. Hakobyan, S. (2012). Accounting for Underutilization of Trade Preference Programs: The U.S Generalized System of Preferences.
11. Hayakawa, K., Hiratsuka, D., Shiino, K., & Sukegawa, S. (2009). Who Uses FTAs? Institute of Developing Economies , 2-3.
12. Hayakawa, K., Kim, H., Laksanapanyakul, N., & Shiino, K. (2013, September). FTA Utilization: Certificate of Origin Data versus Customs Data. IDE Discussion Paper No. 428 .
13. Hayakawa, K., Laksanapanyakul, N., & Shiino, K. (2013). Some Practicial Guidance for the Computation of Free Trade Agreement Utilization Rates. Institute of Developing Economies. JETRO.
14. Helpman, Elhanan, & Krugman, P. R. (1989). Trade Policy and Market Stucture. Cambridge: MIT Press.
15. Kohpaiboon, A., & Jongwanich, J. (2006). Does FTA export creation exist? Evidence from Thai manufacturing . Globalization and Regional Economic Development Conference, Gyeong Ju, Korea, December 15-16.
16. Krishna, K. (2006). Understanding Rules of Origin. In A. Estevadeordal, A. Suwa-Eisenmann, & T. Verdier, The Origin of Goods. Oxford University Press.
17. Leelawath, W. (2012). Utilization of tariff preferential under AFTA: a case of Thailand. International Institute for Trade and Development (ITD), Bangkok, Thailand.
18. Manchin, M., & Pelkmans-Balaoing, A. O. (2007). Clothes without an Emperor: Analysis of the Preferential Tariffs . ASEAN Centro Studi Luca D’Agliano Development Studies Working Paper .
19. Pomfret, P., Kaufmann, U., & Findlay, C. (2010). Are Preferential Tariffs Utilized? Evidence from Australian Imports, 2000-9. Research Paper 2010-13, University of Adelaide, School of Economics.
20. World Bank. (2007). Trade Issues in East Asia: Preferential Rules of Origin. Policy Research Report, East Asia and Pacific Region (Poverty Reduction and Economic Management), Washington DC.
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Published
31.12.2015
How to Cite
Shaul Hamid, M. F. and Aslam, D. M. (2015) “Utilization of Preferential Tariff under ASEAN Free Trade Area (AFTA): Case of Malaysia”, Journal of Global Economy, 11(4), pp. 273–290. doi: 10.1956/jge.v11i4.413.
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