The ASEAN Free Trade Area (AFTA) is a regional trade agreement among the ten member countries of the Association of Southeast Asian Nations (ASEAN): Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The AFTA aims to promote free trade and economic cooperation among the ASEAN member states.
One of the important components of the AFTA is the Rules of Origin (ROO) under the ASEAN Trade in Goods Agreement (ATIGA). The ROO is a set of criteria used to determine the origin of a product, which is essential for determining whether a product qualifies for preferential treatment under the AFTA.
Under the ROO, a product is considered to be of ASEAN origin if it meets certain criteria. These criteria include the following:
– Product must be wholly obtained or produced in an ASEAN country
– Product must be produced using materials that are also of ASEAN origin
– Product must have undergone sufficient processing or manufacturing in an ASEAN country
– Product must meet the value-added criteria, which considers the value of the materials, labor and overhead costs that are added to the product during the production process
The ROO also provides for specific rules for different types of products, such as agricultural products, textiles and footwear, and motor vehicles.
The ROO is important because it helps to prevent non-ASEAN products from entering the ASEAN market using the preferential tariffs provided under the AFTA. This maintains the integrity of the AFTA and ensures that only products of ASEAN origin receive the tariff benefits.
However, complying with the ROO can be challenging for businesses, especially small and medium-sized enterprises (SMEs) that do not have the resources to navigate the complex rules. To help SMEs, the ASEAN member states provide assistance in the form of ROO workshops and training programs.
In conclusion, the Rules of Origin under the ASEAN Trade in Goods Agreement are essential for determining the origin of a product and ensuring that only products of ASEAN origin receive the tariff benefits provided under the AFTA. While complying with the ROO can be challenging for businesses, governments provide assistance to help SMEs navigate the complex rules. The ROO is an important component of the AFTA that promotes free trade and economic cooperation among the ASEAN member states.