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Asean Bilateral Agreements

Introduction to tax treaties across Asia In this issue of Asia Briefing Magazine, we see the different types of trade and tax treaties that exist between Asian nations. These include bilateral investment agreements, double taxation treaties and free trade agreements that have a direct impact on companies operating in Asia. Traditionally, ASEAN national authorities have also been reluctant to share or cede sovereignty to the authorities of other ASEAN members (although ASEAN trade ministries regularly conduct cross-border visits to carry out on-site inspections as part of anti-dumping investigations). Unlike the EU or NAFTA, joint enforcement and enforcement teams are not widespread. Instead, ASEAN national authorities must rely on the verification and analysis of other ASEAN national authorities to determine whether AFTA measures, such as the rule of origin, are being complied with. Discrepancies may arise between national authorities. Again, the ASEAN secretariat can help resolve a dispute, but does not have the legal authority to resolve it. These two agreements have the collective influence of making ASEAN a strategic centre for global sourcing and manufacturing. With the middle class of 150 million ASEAN consumers, this market, then associated with China and India, alone represents a global consumer market of the middle class, with a total free trade of about 650 million people – today. The European Union has been considering a bilateral trade agreement with the Association of Southeast Asian Nations (ASEAN) for many years. On 4 May 2007, the two sides agreed to start negotiations. ASEAN has a series of free trade agreements with other Asian countries, which are radically changing the global landscape of government procurement and manufacturing. It has, for example, a contract with China that effectively eliminated tariffs reduced to nearly 8,000 product categories or 90% of goods imported at zero.

These favourable conditions have entered into force in China and in ASEAN home members such as Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. ASEAN, the Association of Southeast Asian Nations, is gaining importance as a trading bloc and is now the third largest in the world after the European Union and the North American Free Trade Agreement. Composed of the Asian Tigers of Indonesia, Malaysia, philippines, Singapore, Thailand and Vietnam (ASEAN 6) with smaller players such as Brunei, Cambodia, Laos and Myanmar, it has a combined GDP of $2.31 trillion (2012) and hosts about 600 million people. The ASEAN-Japan Comprehensive Economic Partnership (AJCEP) entered into force in December 2008. The agreement covers trade in goods, trade in services, investment and economic cooperation. The free trade agreement provides for the elimination of tariffs on 87% of all tariff headings and provides for a dispute settlement mechanism. It also enables back-to-back of goods between Member States, invoicing of goods by third parties and CUMULATION OF ASEAN….