Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
98
declined to close to zero by 2010). Source: WITS (TRAINS database - aggregated from 6digit data).
MFN applied tariff for Malaysia (for 2012) taken from WTO et al (2013).
In February 2009 a new ASEAN Trade in Goods Agreement (ATIGA) was adopted,
subsequently entering into force in May 2010. It was mainly meant to unify in one documents
commitments and provisions of CEPT and ministerial decisions. Tariff schedules (including
exclusion lists) remain country specific and for instance in the case of Malaysia non-zero tariffs
appear to be restricted to a very small number of products such as rice (15-20% tariff),
tobacco and related product (5%), and certain fruits (5%)18 . General Exclusion List includes
e.g. weapons, and alcoholic drinks. Tariff liberalisation can therefore be considered close to
complete.
ATIGA preferences apply to goods wholly obtained or produced in exporting ASEAN country as
defined by specific rules (mainly agriculture and aquaculture products and waste and scrap).
For the goods not wholly obtained or derived in exporting country are eligible for tariff
preferences if at least one of the two conditions are met:
1. Regional (ASEAN) value content (RVC) is not less than 40% (calculated by either of the
two allowed methods), or
2. All non-originating materials used in the production of the goods have undergone a
change in tariff classification (CTC) at four-digit level of the Harmonised System.
For yarns, fabrics, textiles, clothing materials product specific transformation rules apply. As
yet another exception, different rules of origin apply to a list of products related to information
technology (these are deemed to be originating in a Member State if assembled from materials
covered under the same list). ATIGA allows diagonal origin cumulation across all ASEAN
countries if each satisfy RVC or CTC rule. In addition, partial cumulation is possible provided
that RVC is at least 20%.
Overall, the ASEAN Rules of Origin appear relatively simple. However, there is some evidence
of potential complexity of administrative procedures involved that increase transaction costs
and may in practice limit the benefits of tariff reduction/elimination.19
Intra-ASEAN trade as a share of total trade in the region increased slightly between 1990s and
2000s, especially with respect to imports. For the three OIC ASEAN members some increase in
ASEAN import share is visible, but only Indonesia strongly increased the share of ASEAN in its
exports, whereas for Malaysia and Brunei Darussalam there is no clear long- term trend.
18 Based on a quick scan of the tariff schedule available a
schedules. Again, this suggests that data reported in the table above are not reliable as concerns tariffs for applied
to imports from ASEAN.
19 This point was in particular highlighted in earlier studies on AFTA showing how cost of compliance and
administration discourages companies to use AFTA preferences: Medalla and Yap (2008), and UNCTAD (2008).