AFTA 2015 and Its Impact on Philippine Cooperatives

25 Jan
ASEAN: One Vision, One Identity, One Community

ASEAN: One Vision, One Identity, One Community (image credit:  

By now, the ASEAN Free Trade Area (Agreement for some) or AFTA 2015 concept may have hopefully permeated every Filipino’s psyche and consciousness. This is a very important event that everyone must be aware of and understand. Otherwise, its impact and repercussions may hit us like a speeding truck and leave us sprawled on the ground dumbfounded and confused.

For those who may have already forgotten what AFTA 2015 is all about below is a brief description.

The AFTA was signed on January 28, 1992 in Singapore by the ASEAN heads of state and governments. The original signatories include representatives from Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999.

The objective of this agreement is to increase the region’s competitive advantage as a production base with the end goal of penetrating the world market. Also included in the objectives were to encourage more foreign direct investments to the region and to liberalize trade through the elimination of tariffs and non-tariff barriers among the ASEAN members to 0-5%. This means that the agreement is expecting a fixed period of downward preferential tariff adjustments until those tariffs come down to zero.

Once implemented, this will expand the intra-regional trade allowing the ASEAN consumers wider choice and better quality consumer products.

However, before the plan can be implemented it is imperative that each country of the region must have seamless coordination and integration in terms of common processes and systems. In the field of education for example, among the many reasons why the K+12 Program of the Department of Education (DepEd) and the shift of the tertiary level school calendar were implemented were to synchronize our educational system with the rest of our neighbors. Thus, students can enroll in schools and universities within ASEAN without much hassle and interruption.

The target date of implementation of the agreement will be this year 2015 especially for the six original ASEAN member countries. While for the newer member-countries, the target date of implementation will be by year 2018.

In the cooperative movement where we all belong, there is a growing apprehension especially among the production and agricultural-based cooperatives. It is perceived that this intense competition from the ten ASEAN neighbors will open the doors and allow the entry into the country of cheaper agricultural products. Aside from this, the free flow of other products like electronics, semiconductors, garments among others will imperil our country’s export capacities.

Credit-based cooperatives like our Baguio-Benguet Community Credit Cooperative (BBCCC) might also encounter stiff competition from foreign banks and other financial institutions. War on this front will be waged on better interest rates and other offerings meant to attract customers. The question that bears deep thought is how these local organizations and even co-ops can compete with our ASEAN neighbors that have long practiced better production system and more sustainable business models.

The ASEAN or the Association of Southeast Asian Nation is a political and economic organization that was formed on August 8, 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Indeed, AFTA 2015 is now upon us and knocking at our doors. Are we really ready to welcome it?


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