global Tax Understanding ASEAN’s Free Trade Agreements June 23, 2016 ASEAN has become a key influence on trade flows in China, India, & Asia at large. Investors (U.S. included) looking to operate in Asia must take notice of this growing trade bloc. ASEAN, the Association of South-East Asian Nations, is gaining considerable importance as a trade bloc and is now the third largest in the world after the European Union and the North American Free Trade Agreement. The ten Asian countries have a combined GDP of $2.4 trillion, with around 600 million inhabitants altogether. It is the second-fastest growing economy in Asia, after China, and has expanded 300 percent since 2001. Understanding opportunities in ASEAN are critical for U.S investors who are looking to, or currently operating in Asia. What countries are included in ASEAN? Vietnam Singapore Thailand Indonesia Malaysia The Philippines Brunei Cambodia Laos and Myanmar What FTAs has ASEAN entered into? ASEAN nations have largely cancelled all import and export duty taxes on items traded between them and have entered into a number of free-trade-agreements (FTAs) with other Asian nations that are now radically altering the global sourcing and manufacturing landscape. Its FTA with China has eliminated tariffs on nearly 8,000 product categories, or 90 percent of imported goods. ASEAN has a similar FTA with India, which is in the process of reducing tariffs on 90 percent of all traded goods between the countries. In 2016, it is expected that import-export duties on over 4,000 products will be abolished. ASEAN also has a combined FTA with Australia and New Zealand, known as the AANZFTA. The deal, being phased in, has eliminated tariffs on 67 percent of all traded products between the regions, and will expand to 96 percent of all products by 2020. In addition, ASEAN has negotiated FTAs with both Japan and Korea. Opportunities for U.S. Investors It is the first time ASEAN has embarked on FTA negotiations which cover all sectors, including goods, services, investment, and intellectual property rights, making it the most comprehensive trade agreement that ASEAN has ever negotiated. This in conjunction with the TPP and RCEP mean big things for the ASEAN market and U.S investors. Interested in learning more about ASEAN and its FTAs? Contact us today.
