Nevertheless, it is true that hitherto ASEAN integration has not had the desired effect on
regional welfare. In fact, it has been reported that less than 5% of ASEAN trade takes place
under CEPT-AFTA. In part this is no doubt due to the fact that ASEAN already has such low
tariffs. For example, Malaysia places a zero external tariff on digital monolithic integrated
circuits. This is a major import of Malaysia; indeed, the US alone exports $3 billion of these
products (as of 2001) to that market (its biggest export to Malaysia). Now, if there is even a
trivial bit of customs bureaucracy under CEPT-AFTA (and there would have to be at least
some, given the need to certify, inter alia, rules of origin), a Thai exporter would not
bother with it: AFTA offers no additional advantage because the Malaysian market is already
free.
Nevertheless, it is true that hitherto ASEAN integration has not had the desired effect on
regional welfare. In fact, it has been reported that less than 5% of ASEAN trade takes place
under CEPT-AFTA. In part this is no doubt due to the fact that ASEAN already has such low
tariffs. For example, Malaysia places a zero external tariff on digital monolithic integrated
circuits. This is a major import of Malaysia; indeed, the US alone exports $3 billion of these
products (as of 2001) to that market (its biggest export to Malaysia). Now, if there is even a
trivial bit of customs bureaucracy under CEPT-AFTA (and there would have to be at least
some, given the need to certify, inter alia, rules of origin), a Thai exporter would not
bother with it: AFTA offers no additional advantage because the Malaysian market is already
free.
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