Will the ASEAN-China free trade zone create trade diversion within ASEAN?

Abstract

The ASEAN Free Trade Area (AFTA) has now been virtually established. ASEAN Member Countries have made significant progress in the lowering of intra-regional tariffs through stir the Common Effective Preferential Tariff (CEPT) Scheme for AFTA. More than 99 percent of the products in the CEPT Inclusion List (IL) of ASEAN-6, comprising Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have been brought down to the 0-5 percent tariff range. ASEAN's exports had regained its upward trend in the two years following the financial crisis of 1997-1998 reaching its peak in 2000 when total exports was valued US$ 408 billion. After the United States, the European and Union and Japan, recent data show that China tends to be come ASEAN's largest trading partner, in export as well as import.