Feasibility of AFTA or ASEAN Free Trade Area in the Philippines

Feasibility of AFTA or ASEAN Free Trade Area in the Philippines

AFTA stands for ASEAN Free Trade Area which involves the removal of
obstacles to freer trade among member states. This includes the
abolition of high tariffs or taxes on traded goods and the scrapping
of quantitative restrictions (QR’s) and other non-tariff barriers
(NTB’s) that limit the entry of imports.

AFAT envisioned that member states of ASEAN has to lower down its
tariffs or taxes for export materials to 0-5% up to 2003.  The basic
purpose of such reduction of taxes was to make it more productive to
member states to socialize in terms of exchanges of manufactured
products.  Such act will make the prices of commodities not within the
exceptions; will make other member countries of ASEAN compete
globally, although it will start within its ASEAN neighbours.  AFTA
will promote harmonious relationship among member states since, those
countries not actively involved in exporting their products to a
specific state because of high tariffs or taxes will now be given an
opportunity to compete or market its products in a larger scale.

Such decline of tariffs, though will definitely affect the profit of
the manufacturers and business establishment in the member states, but
on the whole, there will be more positive impact such as more export
business that will emerge within the member sates, as well as more
interrelations and opportunity for small scale business establishments
to compete a larger scale of marketing arena.

The AFTA convention highlighted possible areas for conflicts such as
the following:

Among the factors to be considered in determining whether injury to
the domestic industry is serious are:

1.      Decline in sales or prices; downward trends in production, profits,
wages, or productivity;

2.      Inability to generate capital for modernization or maintain
existing levels of expenditures on research and development;

3.      Inability of significant number of firms to carry out production at
a profit; significant idling of production facilities including the
closure of plants or underutilization of production capacity;

4.      Significant unemployment/ underemployment; significant reduction in
market share as a proportion of market demand; and

5.      nrowing inventories of subject article, whether maintained by
domestic producers, importers, wholesalers or retailers.

For threat of serious injury, the following factors are considered:

1.      significant increase in imports (evidenced, among others, by the
existence of letters of credit, supply/sales contracts, awards of a
tender, irrevocable offers or other similar contracts);

2.      Decline in sales, prices or market share and downward trends in
production, profits, wages, productivity or employment;

3.      Inability to generate capital for modernization or maintain
existing levels of expenditures on research and development;

4.      Sufficient freely disposable, or an imminent substantial increase
in production capacity of foreign exporters including access
conditions they face in third country markets indicating the
likelihood of substantially increased exports to the Philippines; and

5.      Growing inventories of subject article, whether maintained by
domestic producers, importers, wholesalers or retailers.

Despite the numerous possible negative implications of lowering the
tariffs and amounts to decline of manufacture products prices that may
cause shot down of some establishments and just rely on affordable
products, still AFTA has to be viewed as milestone to now be able to
globally compete with the market, to let people know that products of
a country at a minimal price with a high quality.

In the end it will open new doors for business opportunity as well as
employments since more investors will not offer to merge if not
consolidate with our home-grown business firms.
It is about time that the Philippines have to accept changes in terms
of global competition in the world market.  We have to face the fact
that exportation and inviting investors in the country will solve
poverty.  More people will be given a chance to afford basic needs as
well as companies be given an opportunity to compete its products in a
larger scale.
Let us embrace these new change in our conservative marketing strategy.





Prepared by:


Jayson A.Ramos, CPA



Submitted to:


Atty.  Berne Michael Guerrero
Prof. Tech and the Law