ASEAN Automotive Parts Import under the Free Trade Structure

Abstract

This paper analyzes ASEAN automotive parts import under the free trade structure. In 2015, ASEAN Economic Community (AEC) was established. AEC is expected to increase regional trade. However external trade of ASEAN is bigger than regional trade. The reason for such phenomenon is that Free Trade Agreement /Economic Partnership Agreement (FTA/EPA) is signed outside of ASEAN. The difference of tariff rate between AEC and FTA/EPA is not so large, especially the ASEAN-Japan tariff rate is preferential. If the tariff rate is similar between AECs tariff rate and ASEAN-Japan tariff rate, ASEAN automobile maker will choose Japanese products.

Until now, the effect of regional trade in ASEAN is limited; however, some labor-intensive items trade is on a rise. Since the increase in the amount of automotive parts trade is interrelated to the development of automotive industry, the automobile industry development policy is the factor of the increase of automotive parts trade in ASEAN.